NOTE "1" SIGNIFICANT ACCOUNTING POLICIES

a) Basis of brparation of financial statements:

The Financial statements have been brpared to comply with accounting principles generally accepted in India (Indian GAAP), the Accounting Standards notified under relevant under provisions of the Companies Act, 2013, The Financial statements are brpared on accrual basis under the historical cost convention except for certain fixed assets which are revalued. The Financial statements are brsented in Indian Rupees.

b) Use of estimates:

The brparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses for the reporting period. The difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

c) Classification of Assets and Liabilities as Current and Non - Current

All assets and liabilities are classified as current or non-current as per Company's normal operating cycle, and other criteria set out in Schedule II to the Companies Act, 2013 and accordingly, 12 months period has been considered by the Company as its normal operating cycle for the purpose of classification of assets and liabilities as current and non- current.

d) Fixed Assets:

i) Fixed Assets are stated at cost net of cenvat credit and include amounts added on revaluation, less accumulated debrciation and impairment loss, if any.

ii) Expenditure incurred on construction/erection of assets, which are incomplete as at balance sheet date, are included in Capital Work in Progress.

e) Debrciation:

i) Leasehold land is amortized over the period of lease.

ii) Debrciation on other fixed assets (excluding land and lease land in perpetuity) is provided on written down value method as per the useful life specified in schedule II to the Companies Act, 2013, in the manner state therein.

iii) In respect of certain revalued assets, (land, buildings and plant & machinery) debrciation has been calculated on the revalued figures as per the rates and in the manner specified by the valuers in their Revaluation Report. The difference between the debrciation so computed and that computed as per (i) and (ii) above has been charged to the Revaluation Reserve.

f) Impairment of Assets:

In accordance with AS 28 on "Impairment of Assets", where there is any indication of impairment of the company's assets related to cash generating units, the carrying amounts of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised in the Statement of Profit and Loss, whenever the carrying amount of such assets exceeds its recoverable amount.

g) Investments:

Long term investments are valued at cost of acquisition less diminution if any, of a permanent nature. Current Investments are stated at cost or market/fair value, whichever is lower.

h) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is an asset that necessarily takes a substantial period of time to get readyfor its intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred.

i) Revenue Recognition:

Revenue is recognized when it is earned and no significant uncertainty exists as to its realisation or collection. License fees, rental income and service charges are recognized based on contractual rights. Interest is recognized on time proportion basis. Dividend income is recognised when the right to receive the same is established.

j) Employee Benefits: -

i) Short term employee benefits are recognised as expenses at the undiscounted amounts in the Statement of Profit & Loss for the year in which the related service is rendered.

ii) Post employment and other long term employee benefits are recognised as an expense in the Statement of Profit & Loss for the year in which the employee has rendered services. The expenses are recognised at the brsent value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits (net of expected return on plan assets) are charged to the Statement of Profit & Loss.

k) Foreign Currency Transactions:

i) Transactions denominated in foreign currencies are recorded at the exchange rate brvailing at the time of the transaction. Monetary items denominated in foreign currencies at the Balance Sheet date are restated at the year-end rates. Non monetary foreign currency items are carried at cost.

ii) Exchange differences arising as a result of the subsequent settlements or on translations are recognized as income or expense in the Statement of Profit and Loss except the Exchange differences arising on long term foreign currency monetary items relating to the acquisition of the fixed assets, which are adjusted to the carrying cost of the assets.

l) Securities Issue Expenses:

Expenses in connection with the issue of securities are adjusted against the Securities Premium Account.

m) Taxes on Income:

i) Provision for income tax (current tax) is determined on the basis of the taxable income of the current year in accordance with the Income Tax Act, 1961.

ii) Deferred tax is recognised in respect of deferred tax assets (subject to the consideration of prudence) and deferred tax liabilities on timing differences, being the difference between taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years. _

n) Provisions, Contingent Liabilities and Contingent Assets: &

Provisions involving substantial degree of estimation in measurement are recognised when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the Notes to Financial Statements. Contingent Assets are neither recognised nor disclosed in the financial statements.

3. The Company has created a charge, by way of mortgage, on 17,853 square meters of its land for the loan taken by its wholly owned subsidiary, Pallazzio Hotels & Leisure Limited (PHLL) from the banks. The Company has developed a mixed use retail structure on the said land. The Company has transferred the rights of development of 2/3rd portion of 17,853 square meters of the said land to PHLL for the construction of a hotel, vide a Land Development Agreement dated 30th March 2007. The conveyance of the said portion of Land, in favour of PHLL, is pending.

4. The Investments of Rs. 57,92,70,269/- (including through wholly owned subsidiary) in the equity shares of Entertainment World Developers Limited (EWDL) and Rs. 100,00,00,000 in FCDs of Treasure world Developers Pvt. Ltd. (TWDPL), subsidiary of EWDL, which were considered as strategic and long term in nature, have been hitherto carried at cost in the Financial Statements. Interest income aggregating to Rs. 14,32,51,068 (net of TDS) was accrued on the said debentures upto 31st March 2012 and is outstanding as on 31st March, 2015. The company had exercised the put option available as per the Share & Debenture Subscription Deed for the said FCDs and EWDL has paid a part amount of Rs. 19,18,80,000 in November 2013 towards the same. Pending receipt of the balance consideration and the settlement of the matter, the amount received has not been adjusted against the investments/accrued Interest and has been shown under other current liability. The Company has been making all efforts towards settlement of the matter and for recovery of the balance dues against the above put option. There has been limited progress in the matter. The Company is exploring various options, including contractual remedies, for the recovery of its dues. However, the Company's Board has, out of abundant caution and as a prudent practice in line with the standard accounting practices, decided to provide Rs. 84,25,00,000 for the impairment of these investments, which is considered adequate at this stage The Company will continue its efforts for the recovery of the dues against the put option exercised by it and would endeavor to ascertain the realizable values of these Investments. The adequacy of the impairment provision would be reviewed annually based on the future developments.

5. Capital work in progress includes Rs. 933,834,120 (P.Y. Rs. 878,084,120) comprising mainly the cost incurred on acquiring long term tenancies on the plot of land admeasuring 7617.51 sq mtrs at High Street Phoenix. The Company is exploring various alternatives for the development of the said plot of land

6. Based on the valuation reports of the Government approved valuers, the Company had revalued its assets consisting of land including leasehold land and land leased in perpetuity, Buildings and Plants and Machinery as on 31st March 1985. Debrciation on revalued land, building and plant and machinery has been calculated as per the rates specified by the valuers, which includes an additional charge amounting to Rs. 997,921 (P.Y. Rs. 9,89,845) in comparison to debrciation provided under the Companies Act, 1956, and an equivalent amount has been withdrawn from Revaluation Reserve and credited to Statement of Profit and Loss.

7. The balances in respect of Trade Receivables & Payables, loans and advances, as appearing in the books of accounts are subject to confirmations by the respective parties and adjustments/reconciliation arising there from, if any.

8. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2015. The above information, regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of the information available with the Company. This has been relied upon by the Auditors.

9. The brvious year figures have been regrouped, reworked, rearranged and reclassified, wherever necessary and are to be read in relation to the amounts and other disclosures relating to the current year.

For A.M.Ghelani & Company  

Chartered Accountants

FRN : 103173W

Chintan A. Ghelani

Partner M. No.:104391

For Chaturvedi & Shah

Chartered Accountants

FRN : 101720W

Amit Chaturvedi

Partner

M. No.:103141  

For and on behalf of the Board of Directors

Ashokkumar Ruia Shishir Shrivastava

(Chairman & Managing Director) (Jt. Managing Director)

Atul Ruia

(t. Managing Director )

Pradumna Kanodia

(Director - Finance)

Puja Tandon

(Company Secretary)

Place : Mumbai

Date: 28th May, 2015