1.24 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when the Company has a present (legal or constructive) obligation as a result of past event, it is probable that the Company will be required to settle the present obligation, and reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of the management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a current pre-tax rate. The increase in the provision due to passage of time is recognised as interest expense.
Contingent liabilities are stated separately by way of a note. Contingent liabilities are disclosed when the Company has a possible obligation arising from past events, unless the probability of outflow of resources is remote or a present obligation arising from past events where no reliable estimate is possible and it is not probable that the cash outflow will be required to settle the obligation. Contingent assets are neither recognized nor disclosed except when inflow of economic benefits are probable.
1.25 Cash and Cash Equivalents
For the purpose of presentation in statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with bank and financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and bank overdraft having positive balances. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
1.26 Cash Flow Statements
Cash flow statement are reported using the Indirect method, whereby net profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and item of income or expense associated with investing or financing cash flows.
1.27 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the ChiefOperating Decision Maker(CODM).The operating segments have been identified on the basis ofnature of products/service.The CODM is responsible forallocating resources and assessingtheperformance ofthe operating segments of the Company.
Fair value hierarchy and valuation technique
Considering valuation has not been carried out for the commercial properties having written down value of Rs. 2,991.63 lakhs (Gross cost Rs. 3,729.62 lakhs) by a registered valuer, no value has been disclosed. This includes commercial properties having written down value of Rs. 2.908.35 lakhs (Gross Cost Rs. 3.626.02 lakhs) for which fair value could not be measured as the said property is under dispute. Refer Note 4.02 (a)
*Capital advance paid for purchase of property held as security for borrowings from banks (refer note no. 2.20)
# Borrowing costs capitalised for the year ended March 31, 2024 for Rs.16.54 lakhs (March 31,2023 - Rs. 23.53 lakhs) Refer Note no. 4.13 for details
APursuant to the Order of the Presiding Officer, DRT-II, Delhi, setting aside of the Sale Certificate issued in favour of the Company, in respect of the 1st Floor Office Space at VTN Square, T Nagar, Chennai, the Company has filed an appeal before the DRAT, Delhi, which has been transferred to DRAT, Mumbai. The DRAT, Mumbai has set-aside the order of the Presiding Officer. Thus, the Sale Certificate issued in favour of the Company has been confimed, which has resulted in the company becoming the absolute owner of the said Office Space.
b. Rights, preference and restrictions attached to shares Equity Shares
The company has only one class of equity shares having a par value of Rs.2 per share. Each holder of equity shares is entitled to one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the 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.
General Reserve
The Company had transferred a portion of the net profit of the Company before declaring dividend to the general reserve pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve before declaration of dividend is not required under the Companies Act, 2013
Retained Earnings
Retained earnings are the net profits , the Company has earned till date and is net of amount transferred to other reserves such as general reserves, etc., amount distributed as dividend and adjustments in terms of Ind AS 101.
i. The total loan sanctioned to the company is amounting to Rs. 7,000.00 lakhs. The term loan is repayable in 18 installments of Rs. 350.00 lakhs, 2 installments of Rs. 250.00 lakhs and last installment of Rs. 200.00 lakhs commencing after moratorium period of 21 months from the date of disbursement. As per revised rescheduled letter dt December 20, 2021, the terms of repayment has been revised and repayment starts from September 01,2023.
ii. The term loan from LIC Housing Finance Limited is secured by: (a) Equitable Mortgage of the project land of 3.575 acres located in Model school road, off OMR, Sholingnallur including construction thereon and excluding land and saleable area already conveyed; (b) Assignment / Hypothecation of receivables from the project "TCP Altura"; (c) Personal Guarantee of Promoter, Mr R.V. Shekhar
i. The Company has offered amounting to Rs. 6,000.00 lakhs through 6,000 Non - Convertible Debenture of Rs. 1,00,000/- each @ 16% Interest per annum cash coupon, compounded monthly and payable quarterly by Private Placement to Sundaram Alternative Opp Series - High Yield Secured Debt Fund II. The Debentures is redeemable in 12 equal Quarterly installments post the Principal Moratorium period of 12 months from the date of allotment of the debentures.
ii. The Company has additionally offered amounting to Rs. 2,000.00 lakhs through 2,000 Non - Convertible Debenture of Rs. 1,00,000/- each during June 2023 and Rs. 1,500 lakhs through 1,500 Non - Convertible Debenture of Rs. 1,00,000/- each during January 2024 @ 16% Interest per annum cash coupon, compounded monthly and payable quarterly by Private Placement to Sundaram Alternative Opp Series - High Yield Secured Debt Fund II. The Debentures is redeemable in 12 equal Quarterly installments post the Principal Moratorium period of 12 months from the date of allotment of the debentures.
a. The loan is secured by:
Exclusively first charge by way of mortgage of the following projects:
1) Project Infinys having land of 1.49 acres
2) Approved plots measuring 3,00,000 Sq.Ft in Harmonia Projects
3) 32 acres of free hold katcha land in Sriperumbadur
4) 1,239 sq.ft of undivided share of land and 2,570 sqf.t of super built up area pertaining to apartment no.
302 in Homeleigh Project
c) Borrowings secured against current assets
The company has borrowings from banks / financial institutions on the basis of security of current assets. As per the sanction letter or renewal of sanction letter, the company is required to submit the quarterly returns or statement of current asset. Such statement or return is submitted with the banks / Financial Institutions, which are in agreement with the books of accounts.
The Company's pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Income Tax / Service Tax / VAT and other government authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where Provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.
a) In the matter of the Commercial Property, "Menon Eternity" owned by the Company, the arbitrator had issued an award dated March 16, 2016, invalidating the sales deeds registered in favour of the Company having carrying value of Rs.2,908.35 Lakhs. The single bench of the Hon'ble High court of Madras by its judgement delivered on December 23, 2016, set aside the Award of the Arbitrator, with regard to the invalidation of the Sale deeds and confirmed the title in favour of the Company. Subsequently, the land owners had gone on appeal before the division bench in the Hon'ble High Court of Madras and also the company had filed cross objections on certain matters. The said appeal was decided by the Hon'ble High Court of Madras by restoring the award of the Arbitrator. The Company has approached the Hon'ble Supreme Court of India by filing a special leave petition and the court proceedings are in progress. As on the reporting date, the matter is listed for hearing in the month of August 2024.
b) In view of the premature termination of the lease by one of the Lessees in the Menon Eternity Building, a dispute had arisen between the Company and the said lessee. Therefore, the Company had forfeited the Rental Deposit. The lessee had demanded a refund of the rental deposit of Rs. 218.36 lakhs along with interest and damages. A suit has been filed by the Lessee before the Hon'ble High Court of Madras. The said suit was decreed in favour of the Lessee, by payment of an amount of Rs. 424.15 Lakhs along with interest. The Company has filed an appeal before the Division Bench of the Hon'ble High Court of Madras and the same is pending.
c) In pursuance to the increased demand on premium FSI and OSR charges by the Chennai Metropolitan Development Authority (CMDA) over and above the normal FSI charges paid by the Company as per the guideline value prevailing at the time of filing the application with respect to one of the project, the Company has filed a writ petition before the Hon'ble High Court of Madras. As per the interim direction of the Hon'ble court the differential amount of Rs. 74.84 lakhs has been furnished by way of a bank guarrantee renewed periodically. The
said writ petition has been disposed off as prayed by the Company. The CMDA has filed an appeal against the order and is pending before the division bench of the Hon'ble High Court of Madras. In view of the management the increased demand is based on the revision in the gudieline value which was not prevailing at the time of approval, accordingly the claims are not acknowledged as debt.
d) The service tax department has raised a demand of Rs. 156.10 lakhs towards penalty on Lancor GST Developements Limited (merged with Lancor Holdings Limited with an appointed date, April 1,2013) for wrong availment of Cenvat Credit. The erstwhile holding Company of Lancor GST Developements Limited has undertaken to reimburse to the Company to the extent of Rs. 39.03 lakhs in the event the Company is made liable to pay the demand. The matter is pending before the Appellate Tribunal. The Company has been advised that these proceedings are not likely to result into any liability as the Company had reversed it without utilising the same.
e) The service tax department has raised a demand of Rs. 223.70 lakhs along with interest and penalty for the period February 2009 to June 2010. The Company has paid the demanded amount except for interest and penalty and it has filed an appeal before the Customs Excise and Service Tax Appellate Tribunal dated May 10, 2012 stating that amount received from the customers are not chargeable to service tax prior to July 1,2010 under various grounds. The Company had received the order of the Customs Excise, Service Tax Appellate Tribunal dated October 11, 2018 based on which refund order dated June 07, 2019 was issued by the department, and the Company received a refund amount of Rs. 182.01 lakhs. Against the Order of the CESTAT and the Refund Order, The Commissioner of Service tax, Chennai has preferred an appeal before the Civil Appellate Jurisdiction of Supreme Court of India and the matter is pending.
f) The Company approached the Honourable High Court of Madras to seek protection from the cancellation of the Joint Development Agreement (JDAs) and Power of Attorney (POAs) by the landowners in respect of the development of "Town & Country" and 'Harmonia" projects at Sriperumbudur . In July 2022, the Honourable High Court of Madras has passed an order to stay the cancellation of Joint Development Agreement (JDAs) and Powers of Attorney (POAs) and the Court has also ordered stay of the construction until the Arbitration proceedings are completed. The Arbitration Proceedings are underway.
The Company has a defined benefit gratuity plan in India which is unfunded. The company's defined benefit gratuity plan is a final salary plan for employees. Gratuity is paid from company as and when it becomes due and is paid as per company scheme for Gratuity.
Gratuity is a defined benefit plan and entity is exposed to the Following Risks:
Interest rate risk
A fall in the discount rate which is linked to the Government security rate will increase the present value of the liability requiring higher provision.
Salary risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan's liability.
Asset-liability Matching Risk
The plan faces the ALM risk as to the matching cash flow. Company has to manage pay-out based on pay as you go basis from own funds.
Mortality risk
Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
During the year, there were no plan amendments, curtailments and settlements.
Defined contribution plans
The Company operated defined benefits contribution retirement benefit plans for all qualifying employees.
The total expenses recognised in the statement of profit & loss is Rs. 22.77 lakhs (March 31, 2023: Rs. 21.90 lakhs) represents the contribution payable to these plans by the Company at the rates specified in the rules of the plan.
4.05 Disclosures as required by Ind AS 108 Operating segments
As the Company's business activity falls within a single business segment in terms of Ind AS 108 on "Operating Segments", the financial statement are reflective of information required by Ind AS 108.
4.06 Leases
I) Company as Lessee
The lease payments in relation to short term leases having lease term less than 12 months amounting to Rs. 46.67 lakhs (March 31,2023: Rs. 6.70 lakhs) accounted under the statement of Profit and loss. (Refer note 3.08)
II) Company as Lessor
The Company had entered into commercial property leases on its constructed premises. Rental income credited to statement of profit & loss is Rs.2.86 lakhs (March 31,2023: 2.26 lakhs).
The Company's objective while managing capital is to maintain stable capital structure to support business stability and growth, ensure adherence to the covenants and restrictions imposed by lenders and / or relevant laws and regulations, and maintain an optimal and efficient capital structure so as to reduce the cost of capital that would enable to maximise the return to stakeholders.
(i) Methods & assumption used to estimates the fair values
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
a) The carrying amounts of receivables and payables which are short term in nature such as trade receivables including unbilled revenue, cash and cash equivalents, Bank Balances other than cash and cash equivalents, other Current Financial Assets (like Security Deposits, interest accrued, loan to employees), Deposits with Banks, trade payables, short term borrowings from Banks and Financial Institutions, Other Financial Liabilities (like Interest accrued Security & Rental Deposits, Refund due to Customers, and other payables) are considered to be the same as their fair values.
b) The fair values for long term loans given to various parties, and remaining non current financial assets (like Security Deposits, Earnest Money paid to Landowners) were calculated based on cash flows discounted using a effective interest lending rate. This is classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs.
c) The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs.
d) For financial assets and financial liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
(ii) Categories of financial instruments
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments
by valuation technique:
Level 1: unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: directly or indirectly observable market inputs, other than Level 1 inputs; and
Level 3: inputs which are not based on observable market data
The Company's financial risk management is an integral part of how to plan and execute its business strategies. The Company's financial risk management policy is set by the Board of Directors.
The Company activities expose it to financial risks namely credit risk, liquidity risk and market risk. The board of directors of the Company has overall responsibility for the establishment and oversight of the Company's risk management. The below mentioned notes explains various sources of risk Company is exposed to & the manner in which it manages such risk and its impact on the financial statements.
a) Credit Risk:
Credit risk arises from the possibility that counter party will cause financial loss to the Company by failing to discharge its obligation as agreed. The Company's exposure to credit risk arises mainly from the trade receivables including unbilled revenue, loans provided to various parties, earnest money deposit paid to land owners and other deposits including balances and deposits with the banks.
The Company is exposed to credit risk with respect to contract entered into with the customers for sale of residential units. The Contract with customer includes milestone payment to be made by the customer. The possession of the property is handed over to the customers only on collection of entire payment. Similarly, the handing over of the property to the landowners where Company enters into agreement for joint development are also made only on collection of earnest money deposit given earlier. Accordingly, the Company does not expect any expected credit loss. During the financial year, the Company has not made any write-offs of trade receivables.
The trade receivables on account of maintenance income are typically un-secured and derived from services provided to large number of independent customers. As the customer base is distributed economically there is no concentration of credit risk. The credit period provided by the Company to its end use customers generally ranges from 0 to 7 days.
The Company follows a simplified approach (i.e based on lifetime ECL) for recognition of impairment loss allowance on Trade receivables. For the purpose of measuring the lifetime ECL allowance for trade receivables, the Company uses a provision matrix which comprise a very large number of small balances grouped into homogenous groups and assessed for impairment collectively. Individual trade receivables are written off when management deems them not recoverable. Based on the industry practices and business environment in which the Company operates, management considers that the trade receivables are in default if the payment are more than 12 months past due.
Trade receivables consist of mainly customer balances relating to real estate and its allied activities with no significant concentration of credit risk. The outstanding trade receivables are regularly monitored, and appropriate action is taken for collection of overdue receivables.
b) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company liquidity risk management policies include to, at all times ensure sufficient liquidity to meet its liabilities when they are due, by maintaining adequate sources of financing from banks at an optimised cost. In addition, processes and policies related to such risks are overseen by senior management. The Company's senior management monitors the Company's net liquidity position through rolling forecasts on the basis of expected cash flows. The Company takes into account the liquidity of the market in which they operate.
Maturities of Financial Liabilities
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
Financing arrangements
The Company has sufficient sanctioned line of credit from its bankers / financiers; commensurate to its business requirements. The Company reviews its line of credit available with bankers and lenders from time to time to ensure that at all point of time there is sufficient availability of line of credit.
The Company pays special attention to the net operating working capital invested in the business. In this regard considerable work has been performed to control and reduce collection periods for trade receivables, as well as to optimise accounts payable with the support of banking arrangements to mobilise funds.
c) 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. Companies exposure in relation to market risk is primarily in relation to Interest rate risk.
Interest Risk
The Company has both floating & fixed rate borrowings which are carried at amortised cost. The fixed rate borrowings are not subject to interest rate risk considering the future cash outflows will not fluctuate because of any change. The variable interest rate borrowings are subject to interest rate risk. The interest rate risk is managed by the Company by monitoring monthly cash flow which is reviewed by management to prevent loss.
4.20 Disclosure in relation to utilisation of borrowed funds
(a) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(b) No funds have been received by the company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
4.21 The provisions of the Companies Act, 2013 and rules made thereunder requires that the Company uses only such accounting software for maintaining its books of account which has a feature of recording audit trail for each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled or tampered with effect from April 1,2023. During the current year i.e., upto March 31,2024, the accounting software for maintaining its Books of Accounts does not have the feature of Audit trail (edit log) facility. However, the Company is in the process of implementing an accounting software where the said accounting software will address the compliance with respect to accounting software having feature of recording the audit trail (edit log) facility.
4.22 The additional regulatory information detailed in clause 6L, of general instructions give in Part 1 of division II of Schedule III to the Companies Act are furnished to the extent applicable to the Company
As per our report of even date attached
For G.M. Kapadia & Co. For and on behalf of Board of Directors
Chartered Accountants
Firms Registration No: 104767W
Satya Ranjan Dhall R V Shekar S. Sridharan
Partner Managing Director Director
Membership No. 214046 DIN: 00259129 DIN: 01773791
J.M. Chandrasekar K Prakash Kaushani Chatterjee
Chief Executive Officer Chief Financial Officer Company Secretary
Place: Chennai Place: Chennai Place: Chennai Place: Chennai
Date: 23rd May, 2024 Date: 23rd May, 2024 Date: 23rd May, 2024 Date: 23rd May, 2024
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