MANAGEMENT DISCUSSION AND ANALYSIS 1. Global economic overview The global economy continued to expand during 2014 at a moderate and uneven pace, as the prolonged recovery process from the global financial crisis was still saddled with unfinished post-crisis adjustments. Growth rates in developing countries and economies in transition have become more divergent during 2014. The year witnessed a slowdown in global growth. Major emerging economies witnessed a slowdown in growth rates. The India's macro-economic prospects are witnessing signs of growth and strength. This has best positioned the country among emerging market economies. Consumer confidence and business sentiment has been on a rise since the general elections. There has been a significant improvement in consumer confidence with respect to future expectations. This has been one of the enabling factors for India to be among the better performing emerging market economies. With the improvement in the economic conditions, there has been flow of investments in various sectors along with M&A in India. India has become a promising and favourable investment destination for foreign companies looking to do business here. The recent initiative has been by the Prime Minister of India, 'Make in India' with the aim to give the Indian economy global recognition. This initiative is expected to increase the purchasing power of the common man, which would further boost demand, accelerate development, in making friendly investment. India's GDP is officially estimated to have grown 7.4 per cent in 2014-15 compared to 6.9 per cent in 2013-14 and 5.1 percent in 2012-13. GDP growth expected to accelerate between 8.1 and 8.5 per cent in 2015-16. The recovery in growth, although not significant, is expected to gather momentum in the coming quarters. The future expectations index improved due to an increase in positive perceptions of factors such as economic conditions, income and employment. India's economic growth is expected to improve in the forthcoming days. Recovery of industrial production is led by the infrastructure sectors namely electricity, coal and cement. 2. Real Estate Industry in India The Indian real estate sector is one of the most globally recognised sectors. In India, it is the second largest employer next to agriculture and is poised to grow at 30 per cent over the next decade. It comprises four important sectors - housing, retail, hospitality and commercial. Fast urbanization and increase in disposable income are some of the major factors that influence demand in this sector. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. It is also expected that this sector will attract more Non-Resident Indian (NRI) investments in coming years. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun. The housing sector alone contributes 5-6 per cent to the country's GDP. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs. The Indian real estate sector has recorded a significant growth in recent periods with the increased demand for office and residential spaces across the country. Real estate is now becoming attracting investment sector for private equity players. According to data released by Department of Industrial Policy and Promotion, the construction development sector in India has received foreign direct investment equity inflows to the extent of US$ 24,012.87 million in the period April 2000-December 2014. The Government of India along with the governments of the respective states has taken several initiatives to encourage the development in the sector. The Government of India has relaxed the norms to allow foreign direct investment in the construction development sector. This move should boost affordable housing projects and smart cities across the country. Bengaluru : most brferred destination Bengaluru is the IT hub of India and home to the fourth largest technology cluster in the world. With the IT boom transpiring during the turn of the millennium in Bengaluru, the city experienced an exponential growth in its real estate sector as well. As per global consultancy firm Knight Frank's Prime Asia Development Land Index, land for residential development in Bengaluru has seen a whopping 26.1% increase over the last two years (second only to Mumbai with a 35.2% increase). Products in the affordable and mid-segment category within Bengaluru have been performing well. 2-BHK (800-950 sq. ft.) and 3-BHK apartments (1,200-1,300 sq. ft.) are being offered in order to suit the client's wallet. Bengaluru is also the third-largest real estate investment hub for high networth individuals (HNIs) and tops the list in terms of investment from NRIs looking at settling down in India in the future. Further Bengaluru has become the favourable destination for global in-house centres (GIC) or captive centers for major global brands. Other factors that will influence capital apbrciation and rental potential in Bengaluru include growth of the IT industry, a greater influx of HNIs and NRIs, proposed infrastructural investments (peripheral ring road, metro rail, high speed rail link, mono rail and elevated exbrssway) and proposed SEZ and IT parks in North Bengaluru (ITIR, Aerospace, Devanhalli Business Park, Airport City). 3. Brief Organisational Background The Puravankara Group, headquartered in Bengaluru, was established in 1975 and has over 40 years of experience in property development, real estate and construction sectors in India, and one among the largest in South India that serves the needs of a discerning clientele in housing, commercial and retail spaces. The Group began operations in Mumbai and has established a considerable brsence in the real estate industry in metropolitan cities of Bengaluru, Kochi, Chennai, Coimbatore, Hyderabad, Mysore, Mangaluru, Kolkota and Overseas in Colombo and Dubai with a focus on developing residential (comprising of luxury and brmium affordable housing projects) and commercial projects. Our operations span all aspects of real estate development, from the identification and acquisition of land, to the design, planning and execution and marketing of our projects. We believe we have established a strong brand image and a successful track record in the South Indian real estate industry due to our commitment to developing high quality projects. The residential properties that we develop consist of apartment complexes, villas, townhouses, as well as brmium affordable housing projects, which we develop through our wholly-owned subsidiary Provident Housing Limited ("Provident"). Our commercial projects include retail and office brmises. A majority of our Completed Projects, Ongoing Projects and Upcoming Projects are situated in Bengaluru, Kochi, Chennai, Coimbatore, Hyderabad, Mysore, Mangalore and Kolkota. In addition, we have Land Bank in Colombo, Sri Lanka for a proposed residential project consisting of apartment complexes and independent villas and townhouses. We also have a sales and marketing office in the United Arab Emirates and Saudi Arabia. Our Promoter commenced operations in the real estate industry in Mumbai in 1975 and has 40 years of experiance in the property development, real estate and construction sectors in India. Our luxury and brmium real estate projects are branded under the "Purva" brand and our brmium affordable housing projects are branded under the "Provident" brand. We believe that our brand gives us a competitive advantage that allows us to achieve brmium sales prices and rentals. Our brand also helps us to secure land in prime locations and attract well regarded professionals and partners to collaborate with us on our projects. In addition, after the completion of a project, we continue to focus on brand management through our after-sales team to ensure brand recall among our customers and recommendations through "word of mouth". Our brmium affordable housing segment "Provident" seeks to create mid-income and mass housing projects comprising affordable apartments in response to the increasing demand for mid-income housing in India. Our projects in this segment are aimed at first time home buyers. Provident develops projects that have small to medium unit sizes of 850 sq.ft. to 1,360 sq.ft. with amenities such as swimming pools, club houses and multi-purpose halls. These projects are situated at the city centre, as well as in areas that are located at relatively greater distances from the city centre but with developed infrastructure such as connectivity through public transportation. We are able to provide these projects to our customers within a specified price range, which is more affordable than the housing we provide under the Puravankara brand, by reducing the size of our residential units and by applying innovative construction techniques and efficient designs that result in cost savings. With a large and experienced team of engineers and technicians, the Group has a unique and large in-house technologically advanced project management and construction capability. This together with a host of India's leading architects provides the organization with an experience, capability and expertise unmatched in the Indian real estate industry. Development activities range from modern designer apartments, through ultra modern and multi-functional integrated bungalow complexes, to plush and very functional commercial complexes along with the capacity to build large township with all modern amenities and other lifestyle facilities. 4. Awards and Recognitions Puravankara was honoured with many awards over the years in recognision of being established as one of the most trusted builders and developers in South India for delivering to its customers quality apartments. Few awards received during the year in recognition to our contribution to real estate and construction industry are listed below. Real estate website of the year for www. puravankara.com at the 6th Realty Plus Excellence Awards Purva Venezia received Themed project of the year at the 6th Realty Plus Excellence Awards Emerging Developer of the Year - Residential Provident Housing Ltd. for Sunworth at the 6th Realty Plus Excellence Awards Pathfinders Award for the Most Enterprising CXO - Jackbastian Kaitan Nazareth at the 6th Realty Plus Excellence Awards Young Achievers Award - Ashish Puravankara at the 6th Realty Plus Excellence Awards Franchise India Estate ET Now Awards for Affordable Housing of the Year - Provident Welworth City Franchise India Estate ET Now Awards for Affordable Housing Developer of the Year -Provident Housing Limited Franchise India Estate ET Now Awards for Male Professional of the Year - Ashish Puravankara Franchise India Estate ET Now Awards for Marketer of the Year - Provident Housing Limited Franchise India Estate ET Now Awards for Themed Project of the Year - Purva Venezia Franchise India Estate ET Now Awards for Developer of the Year - Provident Housing Limited Skoch Order-of -Merit award received for Business process improvement, Quality Improvement & Technology Deployment, for qualifying in India's Best projects for the brsentation done on Provident Sunworth Brand Achievers Award - Fastest Growing Developer of the Year. Global Real Estate Brand Awards for Marketer of the Year - Puravankara Projects Limited Paul Writer & Hindustan Times, Top 50 Hot Brands of Bengaluru Global Real Estate Brand Awards - Marketer of the year 5. Management Discussion of Risks and Concerns Risk management is a structured approach to manage uncertainty related to a threat, through a process of risk identification and management process. In business enterprise, risk management includes the methods and processes used by organizations to manage risks related to the achievement of their objectives. Risk management typically involves the following process : Identifying particular events or circumstances relevant to the organization's objectives Assessing them in terms of magnitude of impact Implementing all of the planned methods for mitigating the effect of the risks Clear assignment of responsibilities and accountability Management reporting Prioritize risk with regard to probability of its occurrence magnitude of impact Monitoring the progress of risk mitigation and control activities to ensure identified objectives are complete or in process. Monitoring should be ongoing and the concerned should provide progress reports to management on a periodic basis. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators and society at large. Our Company has appropriate and adequate internal control systems for its business process at all the levels. Management has identified certain areas of risks where the Company is susceptible. Listed below are the various events and the possible impact with action to mitigate and control such probabilities. The Company has well defined and adequate internal control systems to ensure that all the assets are safeguarded as well as are more productive. These internal controls are supplemented by periodic audits with management reports and these are reviewed and monitoried by our audit committee. We have qualified and independent audit committee consisting of our board of directors as members. The audit committee will review the adequacy and efficiency of internal control and suggests for any improvements or corrections. These internal controls ensure efficiency in operations, compliance with internal policies of the company, applicable laws and regulations, protection of resources and accurate reporting of financial transactions 7. Our People We continue to believe that our employees are key contributors to our success. The Group's endeavour to impart the best training, working environment for retaining the best talents in the industry remains unabated. Our work force consists of (i) our permanent employees (ii) consultants who are engaged by us on a contractual basis to assist in the architectural and structural design of our projects and (iii) contractors who are engaged by us on a contractual basis and who employ labourers to work at our project sites. The table below sets out the number of employees as of March 31, 2015 and 2014 respectively. 8. Opportunities and Threats The Group had been always optimistic on the future outlook of the Industry due to inherent demand and strong fundamentals of the economy. The Global economy is also showing a promise of revival which is indicated by growing Indian market, including the IT industry, the retail industry and the manufacturing industry. The Middle class economy and the Urban Population continue to grow. The population is comparatively young and thriving, especially in the range of 25 to 45 years. The aspirations for these population to own their own dwelling at a much earlier stage and higher priority given by them for acquiring such assets gives rise to the constant demand for such dwelling units. This will add to the housing demand of the nation due to age-demographic effect. However there is a marked shift from the demand for high cost life style apartments to medium cost affordable housing. The Group had recognised this trend quite early and had been one of the earlier Companies to move in the direction of providing affordable Housing projects to cater to the demand. The improved sentiments and performance of various segments of the economy has also resulted in the improvements in the demand for brmium and lifestyle apartments where the Company has already established its brand in the market in this segment. 9. Discussion on Financial Conditions and Results of Operations Income Our total income comprises of revenue from operations and other income. Revenue from operations Our revenue from operations comprises of revenue from projects and other operating revenue. Our revenue from projects rebrsented 99.18 per cent. and 99.07 per cent. of our revenue from operations in Fiscal 2015 and 2014, respectively. Our other operating revenue rebrsented 0.82 per cent. and 0.93 per cent. of our revenue from operations in Fiscal 2015 and 2014, respectively. Revenue from projects Revenue from projects comprises of sale of our residential properties and interior works. Our sale of properties rebrsented 99.72 per cent. and 99.61 per cent. of our revenue from projects in Fiscal 2015 and 2014, respectively. We also derive income from the sale of interior works, which includes designing, procuring, fabricating and installing the furniture, fixtures and other fittings in our property developments. Income from interior works rebrsented 0.28 per cent. and 0.39 per cent. respectively, of our revenue from projects in Fiscal 2015 and 2014, respectively. Other operating revenues Our other operating revenue comprise of rental income, scrap sales and others. We lease our commercial properties and derive rental income. rental income rebrsented 17.72 per cent. and 13.59 per cent ; scrap sales rebrsented 8.35 per cent and 2.31 per cent ; others rebrsented 73.93 per cent and 84.10 per cent, of our other operating revenues in Fiscal 2015 and 2014, respectively. Other income Other income rebrsents primarily professional charges in relation to sales of properties, which we collect from our customers, and other miscellaneous income. Expenses Our significant expenses include: • project expenses, which comprise of material and contract costs, land costs and decrease/ (increase) in inventory of properties under development and properties held for sale; • employee benefit expense; • finance expenses; • debrciation and amortization; and • other expenses. Project expenses Project expenses consist of material and contract costs, land costs and decrease/(increase) in inventory of properties under development and properties held for sale. Project expenses reflect the costs associated with our projects, corresponding to the percentage of completion of construction of our projects. Material and contract cost Our material and contract cost primarily consist of costs related to materials used in our construction, wages, civil work done by our contractors, fees paid to architects, plan sanction and project related levies paid to local authorities. These expenses also include expenses incurred in relation to the equipment and machinery used in the construction and design for our projects, interior works and other services that we provide which are not specifically allocated to a project. Our material and contract costs rebrsented 58.10 per cent. and 60.00 per cent. of our total expenses in Fiscal 2015 and 2014, respectively, which also included the cost allocated to the inventory in respect of unsold units in our projects. Land cost Land cost consist of the cost of acquisition of land, expenses incurred in the upkeep of land and value addition to land and the cost of acquisition of development rights. Our land costs rebrsent the cost of land pertaining to sale of undivided share of land (UDS) in qualifying projects and cost of land that are allotted for properties under development. Our land costs rebrsented 11.03 per cent. and 43.87 per cent. respectively, of our total expenses in Fiscal 2015 and 2014, respectively, which also included the cost allocated to the inventory in respect of unsold units in our projects. Decrease/(increase) in inventory of properties under development and properties held for sale Inventory of properties consists of the sum of properties under development and properties held for sale. Decrease/(increase) in inventory of properties under development and properties held for sale rebrsents the difference between the beginning and the ending balance of properties under development and properties held for sale during that year. For further details, please refer to Notes 1 and 22 of the "Financial Statements". Employee Benefit expense Employee benefit expense comprise salaries, wages, allowances and bonus paid to employees, contribution to employees' provident fund and other staff welfare expenses not recognized under either material and contract costs or under selling costs. Our employee benefit expenses rebrsented 7.65 per cent. and 8.62 per cent. respectively, of our total expenses in Fiscal 2015 and 2014 respectively. Net finance expense Our net finance expense includes our finance expense net of our interest income earned on bank deposits, interest from loans to our subsidiaries and associates, interest received from our customers; net interest charges payable by us on short-term and long-term loans and debentures. These loans include working capital loans, overdrafts, loans on purchase of certain equipments and vehicles and charges such as processing fees for loans, bank guarantees, including the cost allocated to the inventory in respect of unsold units in our projects. Our net finance expense, including the cost allocated to inventory, rebrsented 14.63 per cent. and 21.26 per cent. of our total expenses in Fiscal 2015 and 2014, respectively. Debrciation and amortization cost Debrciation and amortization cost consists of debrciation on building, plant and machinery, certain other items used in construction, office equipments, computers, furniture and fixtures, vehicles, shuttering materials and leasehold improvements. Our debrciation and amortization cost rebrsented 0.98 per cent. and 0.79 per cent. respectively, of our total expenses in Fiscal 2015 and 2014, respectively. Other expenses Our other expenses comprise primarily of expenses incurred in business promotion and the costs of advertisement and publicity of our projects. This consists of costs in relation to advertising and sales promotion, commission, brokerage and referral charges, travel and communication expenses incurred in relation to the sales and marketing of our projects. In addition, we also recognize rates and taxes, our expenditure under legal and professional charges, travelling and conveyance, security charges, remuneration to auditors, repairs and maintenance of our office brmises and losses from our foreign exchange fluctuations as other expenses. Our other expenses rebrsented 15.15 per cent. and 20.31 per cent. respectively, of our total expenses in Fiscal 2015 and 2014, respectively. Share of Profit/(loss) in Associates, net This consists of our share of profit/(loss) in associates, namely Keppel Puravankara Development Private Limited and Sobha Puravankara Aviation Private Limited. Profit Before Tax Our profit before tax rebrsents the difference between total income and total expenditure after adjusting for share of profit/(loss) in associate. Tax Expense Income taxes are accounted for in accordance with AS-22 issued by the ICAI on "Accounting for Taxes on Income". Taxes comprise current tax and deferred tax. Deferred tax assets are recognized only to the extent that there is reasonable certainty of sufficient future taxable income being available against which such deferred tax assets can be realized. Deferred tax assets are recognized on carry forward of unabsorbed debrciation and tax losses, only if there is virtual certainty that such deferred tax assets can be realized against future taxable profits. Excess/short tax of earlier years is the claim under section 80-IB of the Income Tax Act for certain eligibile projects allowed by CIT (Appeals) upon receiving favourable orders for Fiscal 2010 and 2011. In addition, a portion of the claim under Section 80-IB for a project was disallowed based on the aforesaid ITAT order. Consequently, the Company recorded a net credit in the Financial Statements in respect of the eligible claim under Section 80-IB. Unrecognized deferred tax assets of earlier years are re-assessed and recognized to the extent that it has become reasonably certain that future taxable income will be available against which such deferred tax assets can be realized. 10. Factors Affecting Results of Operations Our results of operations depend on various factors, including the following: • Condition and performance of the real estate market • Supply of land • Cost of land • Construction costs • Availability of financing for customers • Taxation • Other factors Each of these factors is discussed below: Condition and performance of the real estate market in India. Developments in the real estate sector are driven by: • Demand for more housing units in cities and towns due to movement of population from rural to urban areas, expanding middle class, increased disposable income, availability of housing finance and tax incentives; • Demand for office brmises due to growing Indian market including the IT industry, the retail industry and the manufacturing industry, with foreign companies setting up office in India. Factors affecting the real estate market in India still have a direct relation to the performance of the Company. The GDP in India has not undergone any significant change compared to the brvious fiscal years. The real estate sector in India specially the southern part of India is maintaining its absorption levels. The main growth thrust is coming due to favourable demographics, increasing purchasing power, existence of customer friendly banks & housing finance companies, professionalism in real estate and favourable reforms initiated by the government to attract global investors. Supply of land: Our operations are dependent on the availability of land for our projects. Our growth is linked to the availability of land in areas where we can develop projects that are marketable mainly to mid to higher income groups. Increased competition for land or excess supply of land may adversely affect our operations. Cost of land: The cost of acquisition of land includes the amounts paid for freehold rights and cost of registration and stamp duty. We acquire land from governmental authorities and private parties. We are typically required to enter into a deed of conveyance or a lease deed transferring title in our favour. The registration charges and stamp duty among other things are also payable by us. Construction Costs: The cost of construction includes cost of material used in our construction-these primarily comprise of cost of steel, cost of cement, cost of wood, cost of flooring materials and cost of other accessories. Availability of financing for customers: One of the major drivers behind the growth of demand for housing units is interest rates on housing loans. The hike in housing loan interest rates may increase the cost of property but will not affect buying capacity, as house buyers are more concerned over property prices rather than rising interest rates. Taxation: The other primary factor affecting our financial conditions is the tax payable by us. The provision for taxation is made on Taxes Payable Method and determined in accordance with the provisions of Income Tax Act, 1961. Taxes are measured using the tax rates and laws that have been enacted or substantively enacted as of the date of financial statements in which they are recorded. Other factors: Other factors affecting our results of operations include: • Regulations affecting the real estate industry; • Our ability to acquire suitable lands at reasonable costs; • Our ability to identify suitable projects and execute them in a timely and cost effective manner; • Competition. 11. Critical Accounting Policies Preparation of financial statements in accordance with Indian GAAP, the applicable accounting standards issued by the ICAI and the relevant provisions of the Companies Act require our management to make judgments, estimates and assumptions regarding uncertainties that affect the reported amounts of our assets and liabilities, disclosures of contingent liabilities and the reported amounts of income and expenses. These judgments, assumptions and estimates are reflected in our accounting policies, which are more fully described in the "Financial Statements". Certain of our accounting policies are particularly important to the portrayal of our financial position and results of operations and require the application of significant assumptions and estimates of our management. We refer to these accounting policies as our "critical accounting policies". Our management uses historical experience and analyses, the terms of existing contracts, historical cost convention, industry trends, information provided by our agents and information available from other outside sources, as appropriate, when forming our assumptions and estimates. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. However, this task may be imbrcise because our management makes assumptions and provides estimates on matters that are inherently uncertain. For more information on our significant accounting policies, please see "Financial Statements". While all aspects of our financial statements should be read and understood in assessing our current and expected financial condition and results, we believe that the following critical accounting policies warrant additional attention: (a) Revenue recognition of revenues from Projects Revenue from the sale of properties is recognized when significant risks and rewards of ownership have been transferred to the customer, which coincides with entering into a legally binding agreement. Revenue from sale of undivided share of land (UDS) in qualifying projects where the risks and rewards on the sale of the UDS are separable from the risks and rewards on the construction contract is recognized upon the transfer of all significant risks and rewards of ownership of such real estate, as per the terms of the contracts entered into with the buyers, which coincides with the firming of the sales contracts/agreements and a minimum level of collection of dues from the customer. Revenue from the sale of UDS on other projects where the risk and rewards on the sale of the UDS are not separable from the construction contracts and therefore do not qualify above are recognized on the percentage of completion method. Our revenue recognition policy was aligned in accordance with the "Guidance Note on Accounting for Real Estate Transactions (Revised 2012)" (the "Guidance Note"). From April 01, 2012, we have applied the principles enunciated in Accounting Standard 7 (Construction Contracts) and Accounting Standard 9 (Revenue Recognition) in accordance with the Guidance Note. The Guidance Note is applicable to all projects which were launched on or after April 01, 2012 and also to projects which have already launched but where revenue is being recognized for the first time on or after April 01, 2012. Effective 01 April 2012, in accordance with the "Guidance Note on Accounting for Real Estate Transactions (Revised 2012)" (Guidance note) all projects commencing on or after the said date or projects where revenue is recognised for the first time on or after the above date, construction revenue on such projects have been recognized on percentage of completion method provided the following thresholds have been met: (a) all critical approvals necessary for the commencement have been obtained; (b) the expenditure incurred on construction and development costs is not less than 25 per cent. of the total estimated construction and development costs; (c) at least 25 per cent. of the saleable project area is secured by agreements with buyers; and d) at least 10 per cent. of the agreements are realised at the reporting date in respect of such contracts. We have applied the percentage of completion method as revised by the Guidance Note to twelve of our real estate projects, Purva Whitehall, Purva Sunflower, Purva Skydale, Purva Westend, Purva Palmbeach, The Purva Sound of Water, Purva Gainz, Purva Summit, Provident Sunworth, Provident Skyworth, Provident Green Park and The Tree. However, the expenditure incurred on construction and development costs of Purva Westend, Purva Palmbeach and The Tree projects is less than 25 per cent. of their total construction and development costs and consequently, we have not recognized any construction revenue for these projects. We have also not recognized any revenue on the sale of Purva Primus, Purva Summit and The Tree as saleable area in these projects is not secured by 25 per cent. by agreements with buyers. For projects executed through joint development arrangements prior to April 01, 2012, which rebrsent barter transactions, whereby we give up a defined percentage of constructed area in lieu of payment for our share in the land, we account for such transactions on net basis and do not ascribe any value to the share of land acquired on such basis. Effective April 01, 2012, in accordance with the Guidance Note, developmental rights acquired through joint development arrangement are recorded on a gross basis on the estimated value of the land in respect of which, the development right is transferred in our favor. (b) Impairment of assets We assess at each Balance Sheet date whether there is any indication of an impaired asset. If any such indication exists, we estimate the recoverable amount of the asset. If such recoverable amount of the asset, or the recoverable amount of the cash generating unit to which the asset belongs, is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss account. If at the Balance Sheet date there is an indication that a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed. The asset is then reflected at the recoverable amount subject to a maximum of debrciated historical cost. (c) Inventories Inventory comprises raw materials used for our construction activity. Raw materials are valued at the lower of cost or net realizable value, with the cost being determined on a 'first in first out' basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale. (d) Accounting for taxes on income Tax expense comprises both current and deferred taxes. The current charge for income taxes is calculated in accordance with the relevant tax regulations. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are recognized on carry forward of unabsorbed debrciation and tax losses only if there is virtual certainty that such deferred tax assets can be realized against future taxable profits. Unrecognized deferred tax assets of earlier years are reassessed and recognized to the extent that availability of future taxable income, against which such deferred tax assets can be realized, has become reasonably certain. (e) Borrowing cost Borrowing costs that are attributable to the acquisition and/or construction of qualifying assets are capitalized as part of the cost of such assets, in accordance with Accounting Standard 16 "Borrowing Cost". A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to the statement of profit and loss as incurred. (f) Basis of consolidation Consolidated financial statements are brpared using uniform accounting policies across the group. Subsidiaries are all entities over which the Company has the power to control the financial and operating policies. The Company obtains and exercises control through voting rights. The consolidated Financial Statements of the group incorporate the Financial Statements of the Company as well as those entities controlled by the Company. The consolidated Financial Statements have been combined on a line- by-line basis by adding the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances/transactions and resulting unrealized profits in full. The amounts shown in respect of reserves comprise the amount of the relevant reserves as per the balance sheet of the parent company and its share in the post-acquisition increase in the relevant reserves of the consolidated entity. Associates are those entities over which the Company is able to exercise significant influence but which are neither subsidiaries nor interests in a joint venture. Investments in associates are initially recognized at cost and subsequently accounted for using the equity method. 12. Results of Operations The following table sets forth certain items derived from our audited consolidated summary Financial Statements for Fiscal 2015 and 2014 exbrssed in absolute terms and as a percentage of total revenue for the periods indicated. Amounts have been rounded to ensure percentages total to 100 per cent. as appropriate. 13. Cautionary Statement Statements and reports made in the above Management Discussion and Analysis may contain forward looking statements within the meaning of applicable security laws and regulations. These statements that address expectations or projections about the future objectives and business plans but not limited to the Company's strategy for growth, market position, expenditures and financial results, are forward-looking statements. Since these statements and reports are based on certain assumptions and expectations of future events which are subject to a number of factors and uncertainties and the actual results could materially vary from the views exbrssed herein. The Company cannot undertake that these are accurate or will be realized. All the possible care has been taken to ensure that the views and opinions exbrssed by the company contain its perceptions on the material facts of the company in the normal business operations and it is not exhaustive. |