Under a DCF method, forecast cash flows are discounted back to the present date, generating a net present value for the cash flow
stream of the business.
A terminal value at the end of the explicit forecast period is determined and that value is also discounted back to the Valuation Date to
give an overall value for the business.
(i) A Discounted cash flow methodology typically requires the forecast period to be of such a length to enable the business to achieve a stabilised level of earnings, or to be reflective of an entire operation cycle for more cyclical industries.
(ii) The rate at which the future cash flows are discounted ("the discount rate") should reflect not only the time value of money, but also the risk associated with the business future operations. The discount rate most generally employed is Weighted Average Cost of Capital ("WACC"), reflecting an optimal as opposed to actual financing structure.
(iii) In calculating the terminal value, regard must be had to the business potential for further growth beyond the explicit forecast period. The Constant Growth Model, which applies an expected constant level of growth to the cash flow forecast in the last year of the forecast period and assumes such growth is achieved in perpetuity, is a common method. These results would be cross-checked, however, for reasonability to implied exit multiples.
Generally, a change in the assumption made for the estimated rental value is accompanied by:
(a) A directionally similar change in the rent growth per annum and discount rate (and exit yield).
(b) An opposite change in the long term vacancy rate.
4.4 Fair value
As at March 31, 2023 the fair values of the properties are ' 2,51,447.52 lakh (' 2,45,764.94 lakh). These valuations are based on valuations performed by independent registered valuer. All fair value estimates for investment properties are included in level 3.
The Company has no restrictions on the readability of its investment properties subject to note 20.
18.2 Terms/rights attached to equity shares
The Company has only one class of equity shares having par value of ' 10 per share. Each shareholder of equity shares is entitled to one vote per share. The Company declares dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
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 shareholders.
The Board of Directors of the Company has proposed dividend of ' 4 (' 3) per equity share for the financial year 2022-23. The payment of dividend is subject to approval of the shareholders in the ensuing Annual General Meeting of the Company. The total cash outflows on account of Proposed Equity Dividend would be ' 14,544.09 lakh (' 10,908.07 lakh).
(a) General reserve - The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.
(b) Cap ital redemption reserve - The Company recognises profit and loss on purchase, sale, issue or cancellation of the Company's own equity instruments to Capital redemption reserve.
(c) Cap ital reserve - Upon redemption of preference shares, the excess of face value over the redemption value of preference shares has been recognized as Capital reserve by the Company.
(d) Securities premium - Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.
(e) Retained earnings - The cumulative gain or loss arising from the operations which is retained by the Company is recognised and accumulated under the heading of retained earnings.
(a) In December 2021, the Company availed a working capital credit limit of ' 30,000.00 lakh from Axis Bank Limited for meeting working capital requirement of its various under construction projects. The said credit limit is repayable on demand and is to be renewed annually. The closing balance thereof as on March 31, 2023 is ' 10,076.78 lakh (' Nil). The Loan is secured by mortgage of the identified commercial units in one of the projects of the Company. The security cover as required under the terms of the loan was maintained (refer note 4).
(b) In January 2023, the Company availed a credit facility of ' 1,00,000.00 lakh (Term Loan of ' 1,00,000.00 lakh with an Overdraft facility not exceeding ' 10,000.00 lakh and Working Capital Demand Loan of ' 6,000.00 lakh as a sublimit of the said Overdraft facility) from ICICI Bank Limited for meeting the operational costs of the Company and acquisition cost of units. Currently this credit facility is on a monthly interest payment of 8.45% p.a. (N.A.) (MCLR Spread), and closing balance thereof as on March 31, 2023 is ' 92,072.66 lakh (Term loan ' 90,354.21 and Working Capital Demand Loan ' 1,718.45) (N.A.). The term loan is for a period of 48 months including 8 months of moratorium from the date of first disbursement. The said term loan is scheduled for repayment in 14 quarterly instalments starting from 9th month from the date of first disbursement. The credit facility is secured by (i) mortgage of the unsold identified residential units in the residential project of the Company and (ii) charge on receivables and Escrow Account into which receivables are deposited from the sale of flats in this project of the Company. The security cover as required under the terms of the credit facility is maintained (refer note 11).
(c) In December 2021, the Company allotted 2,500 5.90% Redeemable non-convertible debentures (NCDs) (Series I) of ' 10.00 lakh each amounting to ' 25,000.00 lakh, 3,500 6.40% Redeemable non-convertible debentures (NCDs) (Series II) of ' 10.00 lakh each amounting to ' 35,000.00 lakh and 4,000 6.80% Redeemable non-convertible debentures (NCDs) (Series III) of ' 10.00 lakh each amounting to ' 40,000.00 lakh, respectively through private placement. The entire issue proceeds have been utilised in accordance with the objects of the issue. The interest is payable semi-annually. The Company has an option to redeem these NCDs prior to the scheduled redemption date on certain predetermined dates. These Debentures are secured by (i) mortgage of the unsold identified residential units (inventories) on pari passu basis in 2 projects of one of the subsidiary Company and (ii) charge on receivables and Escrow Account into which receivables are deposited on pari passu basis from the sale of flats in 2 projects of one of the subsidiary Company (iii) further, secured by way of corporate guarantee of a Subsidiary Company. The security cover as required under the terms of the issue of the said Debentures was maintained.
(d) In February 2021, the Company availed a Term Loan of ' 1,80,000.00 lakh from HDFC Limited for meeting the development and related cost of an under construction commercial project. Currently this Term Loan is on a monthly interest payment of 11.70% p.a. (9.10% p.a.) (HDFC CF-PLR minus spread), and the closing balance thereof as on March 31, 2023 is ' 1,03,410.58 lakh (' 67,316.59 lakh). The Term Loan is for a period of 144 months, from the date of first drawdown. The Term Loan is repayable in 102 Equated Monthly Instalments (EMIs) after 42 months from the date of first drawdown by the Company. The Term Loan is secured by (i) mortgage of current and future FSI to be used for the under construction commercial project and (ii) charge on the receivables therefrom. The security cover as required under the terms of the Term Loan is maintained (refer note 3).
(e) In March 2021, the company had availed an unsecured overdraft limit of ' 5,000.00 lakh from Kotak Mahindra Bank Ltd. for meeting its working capital requirement. This overdraft limit is renewed annually. The closing balance thereof as on March 31, 2023 is ' Nil (' Nil).
(f) The Company has filed quarterly returns or statements with banks which are in agreement with books of account of the Company for the borrowings which have been sanctioned on the basis of security of current assets.
The average duration of the defined benefit plan obligation at the end of the reporting period is 10 years (11 years).
36.8 Risk exposure
(i) Asset volaitilty:
The plan liabilities are calculated using the discount rate set with reference to Government securities bond yields; if plan assets underperform this yield, this will create a deficit.
(ii) Change in Government securities bond yields:
A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans' bond holdings.
36.9 The Code on Social Security,2020 ("Code") relating to employee benefits during employment and post employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
A. Based on the “management approach” as defined in Ind AS 108 Operating Segments, the Chairman and Managing Director/ Chief Financial Officer evaluate the Company's performance based on an analysis of various performance indicators by business segment. Accordingly information has been presented along these segments. The accounting principles used in the preparation of the financial statement are consistently applied in individual segment to prepare segment reporting.
B. Unallocated Corporate Assets primarily comprise of corporate investments and certain property, plant and equipment and Unallocated Corporate Liabilities primarily comprise of tax and deferred tax liabilities. Income earned on temporary investment of the same has been shown in 'Unallocable Income net of Unallocable Expenditure'.
NOTE 39. LEASES_
The lease expense for cancellable and non-cancellable operating leases was ' 15.68 lakh (' 16.25 lakh) for the year ended
March 31, 2023.
There are no future minimum lease payments under non-cancellable operating lease.
(iii) The application filed by the Company under Section 245C of the Income tax Act in an earlier year, has been concluded in April 2023 and accordingly the Company has made additional provision of ' 799.99 lakh towards tax and interest thereon in the financial statements.
(iv) The sales tax department of the government of Maharashtra has completed the Value Added Tax (VAT) assessments w.r.t. the returns filed by the Company on the sale of flats to the customers during the period beginning from June 2006 till March 2012 and determined the VAT and interest liability. For some of the years, the Company has challenged the assessment order and opted for appeal, which is pending for hearing. Vide an order of the Hon'ble Supreme Court of India, the recovery of interest amounts in such cases has been stayed. However, the Company has opted to settle and pay interest for some of the years under The Maharashtra Settlement of Arrears in Disputes Act, 2016. Part of the amount has been collected by the Company from the flat purchasers on account of such liability and the Company is reasonably confident of recovering all the outstanding amount on account of VAT from flat purchasers.
The amount of interest due and payable for the year due to delay in making payment under Micro, Small and Medium Enterprise Development Act, 2006 is ' Nil (' Nil). No interest is accrued/unpaid for the current year.
Dues to Micro, Small and Medium Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.
The management assessed that carrying amount of cash and cash equivalents, other bank balances, trade receivables, loans, investment in government securities, investment in preference shares of joint venture, other financial assets, secured and unsecured borrowings, trade payable and other financial liabilities approximate their fair values largely due to the short-term maturities of these instruments.
42.3 Transfers between Levels 1 and 2
There have been no transfers between Level 1 and Level 2 during the year.
42.4 Financial risk management
The Company has exposure to the following risks arising from financial instruments:
(i) Credit risk ;
(ii) Liq uidity risk ; and
(iii) Market risk
Risk management framework
The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Board of Directors has established the Risk Management Committee, which is responsible for developing and monitoring the Company's risk management policies. The committee reports regularly to the Board of Directors on its activities.
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 the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
(i) 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 and investments in debt securities.
42.4 Financial risk management
The carrying amount of the financial assets which represents the maximum credit exposure is as follows:
(a) Trade and other receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, credit risk with regards to trade receivable is almost negligible in case of its residential sale and lease rental business. The same is due to the fact that in case of its residential sell business it does not handover possession till entire outstanding is received. Similarly in case of lease rental business, the Company keep 3 to 12 months rental as deposit from the occupants
No impairment is observed on the carrying value of trade receivables.
(b) Cash and cash equivalents
Credit risk from balances with banks and financial institutions is managed by the Company's treasury department in accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Investment committee comprising of Mr. Venkatesh Mysore (Chairperson, Independent Director), Mr. T P. Ostwal (Independent Director) and Mr. Vikas Oberoi (Non-Independent Director) on an annual basis, and may be updated throughout the year subject to approval of the Company's Investment Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.
(ii) 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 condition, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of surplus funds, bank overdrafts, bank loans, debentures and inter-corporate loans.
The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.
(iii) Market Risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company's income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of certain commodities. Thus, our exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities. The objective of market risk management is to avoid excessive exposure in our revenues and costs.
(a) Currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when expense is denominated in a foreign currency).
The Company closely tracks and observes the movement of foreign currency with regards to INR and the forward cover rate. The Company decides to cover or keep the foreign currency exposure open based on the above.
(d) Interest Rate Risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.
(f) Commodity price risk
The Company's activities are exposed to steel and cement price risks and therefore its overall risk management program focuses on the volatile nature of the steel and cement market, thus seeking to minimize potential adverse effects on the Company's financial performance on account of such volatility.
The risk management committee regularly reviews and monitors risk management principles, policies, and risk management activities.
42.5 Capital Management
The Company's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital. The Company includes within net debt, interest and non interest bearing loans and borrowings, less cash and cash equivalents, excluding discontinued operations.
NOTE 46._
Advances to Vendors' and Security deposits comprise advances/deposits of ' 32,738.50 lakh (' 48,713.50 lakh) towards land and transferable development rights ('projects'). Having regard to the nature of business, these include amounts relating to projects that could take a substantial period of time to conclude. Management has evaluated the status of these projects and is confident of performance of obligations of the counter-parties. In view of the management, these advances are in accordance with the normal trade practice and are not in the nature of loans or advance in the nature of loans.
NOTE 47._
The Company has maintained proper books of account as prescribed under Section 128(1) of the Companies Act, 2013 (as amended). The books of accounts are maintained in electronic mode as required under Section 128 (1) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 (as amended). Back-ups of books of account and other relevant books and papers maintained in electronic mode is kept as per the policy of the Company effective August 5, 2022. The back-up of the principal accounting system is kept in a server physically located in India and is done on a daily basis. However, there were a few instances where back-ups were not completed on the same date but were subsequently taken. Further, there are a few systems whose servers are physically located outside India, though daily back-ups of the same are taken.
NOTE 48._
The Board of Directors of Oberoi Realty Limited at its board meeting held on August 9, 2022, approved the Scheme of Amalgamation of Oberoi Constructions Limited, Oberoi Mall Limited, Evenstar Hotels Private Limited and Incline Realty Private Limited (the wholly owned subsidiaries) with Oberoi Realty Limited pursuant to the provisions of Sections 230 to 232 and other applicable sections and provisions of the Companies Act, 2013. The said Scheme of Amalgamation, with an Appointed Date of April 1, 2022, is subject to the requisite approvals and sanction of the jurisdictional bench of National Company Law Tribunal ("NCLT") and subject to the approval of shareholders and/or creditors of the Company, Central Government, or such other competent authority as may be directed by the NCLT. The Company Scheme Petition filed has been admitted by the NCLT and is pending.
NOTE 49. OTHER STATUTORY INFORMATION_
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company has transacted with one struck off company, Netfix Networks (OPC) Private Limited for payment of internet charges during the year amounting to ' 0.30 lakh (' Nil) having outstanding balance of ' Nil (' Nil).
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
Previous year figures have been regrouped, re-arranged and re-classified wherever necessary to conform to current year's classification.
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