Notes to the financial statements for the year ended 31st March, 2015 1. SIGNIFICANT ACCOUNTING POLICIES I. NATURE OF OPERATIONS Unitech Limited (‘the Company’) was incorporated in 1971 and is a leading real estate developer in India. The Company’s main line of business is real estate development and related activities including construction and consultancy services. II. BASIS OF brPA RATION The financial statements have been brpared under historical cost convention on an accrual basis in accordance with the requirements of schedule III and accounting standards brscribed in section 133 of the Companies Act,2013 (‘the Act’) read with the Rule 7 of the Companies ( Accounts) Rules, 2014 as amended from time to time and the provisions of “the Act” to the extent notified. All assets and liabilities have been classified as current or non-current as per the operating cycle of the Company as per the guidance set out in the Schedule III to the Companies Act, 2013. III. USE OF ESTIMATES The brparation of financial statements in conformity with generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the result of operations during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. Significant estimates used by the management in the brparation of these financial statements include project revenue, project cost, saleable area, economic useful lives of fixed assets, accrual of allowance for bad and doubtful receivables, loans and advances and current and deferred taxes. Any revision to accounting estimates is recognized prospectively in accordance with applicable Accounting Standards. IV. FIXED ASSETS AND DEbrCIATION Fixed assets including capital work in progress are stated at cost (gross block) less accumulated debrciation and impairment losses, if any. Cost comprises, the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. It excludes refundable taxes. Borrowing costs relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Debrciation on fixed assets is provided based on useful lives of the assets assigned to each asset in accordance with Schedule II of the Companies Act, 2013 on straight-line method. Fixtures and lease hold improvements installed in leased buildings are amortized over the initial period of lease. As on the commencement of Schedule II of the Companies Act, 2013 on 1st April, 2014, the carrying amount of the assets outstanding as on that date: (a) has been debrciated over the remaining useful life of the assets either as per this schedule or revised rates as explained above; (b) after retaining the residual value, has been recognized/ adjusted in the retained earnings where useful life of the assets is NIL. V. INTANGIBLES AND AMORTIZATION Intangible assets are recognized when it is probable that future economic benefits that are attributable to asset will flow to the Company and the cost of the asset can be measured reliably. Intangible assets (acquired or developed in house) are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs which meet capitalization criteria, are not capitalized and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred. Cost of software is amortized over a period of 5 years, being the estimated useful life as per the management estimates VI. IMPA IRMENT OF ASSETS Management at each balance sheet date assesses using external and internal sources whether there is an indication that an asset or group of assets or a cash generating unit as the case may be impaired. Impairment occurs where the carrying value exceeds the higher of value in use rebrsented by the brsent value of future cash flows expected to arise from the continuing use of the asset and its realizable value. The impairment loss is charged off to Statement of Profit and Loss . VII. LEASE ACCOUNTING Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased asset, are capitalized at the lower of the fair value and brsent value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are recognized as borrowing costs in the Statement of Profit and Loss. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term unless there is a more systematic basis which is more rebrsentative of the time pattern of the lease expenses. VIII. INVESTMENTS Long term investments are stated at cost. However, provision for diminution is made to recognise any decline, other than temporary, in the value of long term investments. Current investments are stated at the lower of cost and fair value. IX. INVENTORIES a) The cost of inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition. Inventories are valued at cost or net realizable value, whichever is lower on the basis of first in first out method or specific identification, as the case may be. b) Finished stock of completed real estate projects, land and land development rights are valued at lower of cost or net realizable value on the basis of actual identified units. X. PROJECTS IN PROGRESS Project in progress disclosed as at reporting date in respect of real estate development and related activities includes aggregate amount of project costs and recognized profit (less recognized losses) including unbilled revenue up to the reporting date less advances received from customers. Project costs include cost of land, land development rights, construction costs, job work, allocated borrowing costs and other incidental costs that are attributable to project and such other costs as are specifically chargeable to the customer being costs incurred upto the reporting date. Project contract costs that relate to future activity on the contract are recognised as project in progress as it is probable that these costs will be recovered in future. XI. BORROWING COST Borrowing cost relating to acquisition/construction development of qualifying assets of the Company are capitalized until the time all substantial activities necessary to brpare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use/sale. Borrowing cost that are attributable to the project in progress and qualifying land advances as well as any capital work in progress are charged to respective qualifying asset. All other borrowing costs, not eligible for inventorisation/capitalization, are charged to Statement of Profit and Loss. XII. REVENUE RECOGNITION A) Real estate projects Revenue from real estate under development/sale of developed property is recognized upon transfer of all significant risks and rewards of ownership of such real estate/ property, as per the terms of the contracts entered into with buyers, which generally coincides with the firming of the sales contracts/ agreements, except for contracts where the Company still has obligations to perform substantial acts even after the transfer of all significant risks and rewards. Accordingly, revenue is recognized on the following basis:- a) Real estate projects undertaken up to 31st March, 2004. Revenue is recognized to estimate the profit @ 20% of actual receipts and installments fallen due during the year towards booking of plots/constructed properties, subject to final adjustment, on the completion of the respective project. b) Real estate projects undertaken on and after 1st April, 2004. Revenue from real estate projects is recognized on the ‘percentage of completion method’ (POC) of accounting. Revenue under the POC method is recognized on the basis of percentage of actual costs incurred including construction and development cost of projects under execution and proportionate land subject to such actual cost incurred being twenty percent or more of the total estimated cost of projects. The stage of completion under the POC method is measured on the basis of percentage that actual costs incurred on real estate projects including construction and development cost and proportionate land bears to the total estimated cost of the project. The estimates including those of technical nature in respect of the projected revenues, projected profits, projected costs, cost to completion and the foreseeable loss are reviewed periodically by the management and any effect of changes in estimates is recognized in the period such changes are determined. Revenue including variations in contract work, claims and incentive payments to the extent that it is probable is recognized by reference to the stage of completion as explained above attributed to the work completed during the year. c) Real estate projects which have commenced on or after April 1, 2012 and also to projects which have already commenced but where revenue is being recognized for the first time on or after April 1, 2012. Revenue from real estate projects is recognized when all significant risks & rewards of ownership by way of a legally enforceable agreement to sale have been transferred to the buyer & subject to the satisfaction of contractual conditions mentioned herein after which signify transferring of significant risks & rewards even though the legal title may not be transferred or the possession of the real estate may not be given to the buyer. Consequently, any act on the real estate project performed by the Company is, in substance on behalf of the buyer in the manner similar to a contractor. Accordingly, Revenue on real estate projects including variations in contract work, claims and incentive payments to the extent that it is probable is recognized on the ‘percentage of completion method’ (POC) of accounting, when:- i. The outcome of the real estate project can be estimated reliably; ii. It is probable that the economic benefits associated with the project will flow to the enterprise; iii. The project costs to complete the project and the stage of project completion at the reporting date can be measured reliably; iv. The project costs attributable to the project can be clearly identified & measured reliably so that actual project costs incurred can be compared with prior estimates. Further, the Company recognizes revenue on POC on completion of the following events:- I. All critical approvals necessary for commencement of the project have been obtained including, wherever applicable Environmental & other clearances, approval of plans, designs etc., title to land or other rights of development / construction & change in land use. II. The expenditure incurred on construction & development is not less than 25% of the construction and development costs. III. At least, 25% of the saleable project area is secured by contracts or agreements with buyers. IV. At least, 10% of the total revenue as per the agreements of sale or any other legally enforceable document are realized at the reporting date in respect of each of the contracts & it is reasonable to expect that the parties to such contracts will comply with the payment terms as defined in the contracts. When it is probable that total costs will exceed total project revenue, the expected loss is recognized as an expense immediately. B) Construction contracts a) In construction contracts, income is recognized on percentage of completion method. The stage of completion under the POC method is measured on the basis of percentage that actual costs incurred on construction contracts to the total estimated cost of the contract. b) Revenue on account of contract variations, claims and incentives are recognized/ adjusted upon settlement or when it becomes reasonably certain that such variations, claims and incentives are both measurable and recoverable/adjustable. C) Accounting of projects with Co-developer All the development expenses and sale proceeds booked during the year are transferred to the codeveloper at the year end in proportion to share of actual land pooled by each developer. D) Sale of land and Land Development Rights Revenue from sale of land and development rights is recognized upon transfer of all significant risks and rewards of ownership of such real estate/ property, as per the terms of the contracts entered into with buyers, which generally coincides with the firming of the sales contracts/ agreements. E) Sale of construction material Revenue from sale of construction material is recognized when transfer of significant risk and rewards of such material takes place. Such sale is recognized net of taxes. F) Sale of investment Net sale proceeds of the investments held in subsidiaries, joint ventures and associates developing real estate projects are included in real estate revenue and is recognized on completion of sale of such investment. G) Revenue from lease rentals and related income Lease income is recognized in the Statement of Profit and Loss on straight line basis over the lease term unless there is another systematic basis which is more rebrsentative of the time pattern of the lease. Revenue from lease rental is disclosed net of indirect taxes, if any. H) Consultancy income Consultancy income is recognized on accrual basis based on contractual terms on the performance of such services. Revenue is recognized proportionately by reference to the performance of acts defined contractually. The revenue recognized is determined on the basis of contract value, associated costs, number of acts or other suitable basis. I) Interest income Interest income is recognized only when no significant uncertainty as to measurability or collectability exists. Income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. J) Dividend income Dividend income is recognized when the right to receive the same is established. XIII. FOREIGN CURRENCY TRANSACTIONS A foreign currency transaction is recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Monetary items denominated in a foreign currency are reported using the closing rate or at the amount which is likely to be realized from, or required to disburse such items at the balance sheet date as the situation demands. Non-monetary items carried in term of historical cost denominated in foreign currency, are reported using exchange rate at the date of transaction. Exchange differences arising on the settlement of monetary items or on reporting an enterprise’s monetary items at rates different from those at which they were initially recorded during the period, or reported in brvious financial statements, are recognized as income or as expenses in the period in which they arise. Exchange differences arising on reporting of long term monetary assets at rates different from those at which they were initially reported during the period or brvious periods in so far they relate to the acquisition of debrciable capital asset is added to or deducted from the cost of assets. The financial statement of an integral operation is translated using the above principle and procedures. In translating the financial statement of a non-integral foreign operation for incorporation in its financial statement, the following principles and procedures are followed: (a) the assets and liabilities, both monetary and nonmonetary, of the non-integral foreign operation are translated at the closing rate. (b) Income and expense items of the non-integral foreign operation are translated at exchange rates at the date of the transactions. (c) All resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment. XIV. TAXES ON INCOME Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws that are enacted or substantially enacted. Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date. In situations where the Company has unabsorbed debrciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. XV. EMPLOYEE BENEFITS A. Short term employee benefits: The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees as (i) a liability (accrued expense) after deducting any amount already paid. Excess of amounts paid over liability incurred is treated as brpaid expenses; or (ii) an expense unless it is eligible to be charged to project in progress or capital work in progress or fixed asset as the case may be. B. Post-employment benefits: (i) Defined contribution plans The Company, as per detail hereunder, operates defined contribution plans pertaining to employees state insurance scheme, government administered pension fund scheme and superannuation scheme for eligible employees. The above defined contribution plans are postemployment benefit plans under which the Company pays fixed contributions into separate entities (funds) or to financial institutions or state managed benefit schemes. The Company’s contribution to defined contribution plans are recognized in the statement of profit and loss in the financial year to which they relate. (a) Employees state insurance/ pension fund scheme: The Company makes specified monthly contribution towards employees state insurance scheme and government administrated pension fund scheme (b) Superannuation insurance plan: The Company has taken group superannuation policy with Life Insurance Corporation of India for superannuation payable to the eligible employees. ii) Defined benefit obligations The cost of providing benefits i.e. gratuity and leave encashment is determined using the projected unit credit method, with actuarial valuations carried out annually as at the balance sheet date. Actuarial gains and losses are recognized immediately in the statement of profit and loss. The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan, to recognize the obligation on net basis. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested. Provident fund contributions are made to the Company’s Provident Fund Trust or Regional Provident Fund Commissioner, Delhi (South), as the case may be. Deficits, if any, based on the actuarial valuation performed on balance sheet date between the funds and estimated statutory or contractual obligation for funds contributed to the trust in this regard is recognized as additional liability. XVI. P ROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS Provisions are recognized in respect of liabilities which can be measured only by using a substantial degree of estimates when: a) the Company has a brsent obligation as a result of a past event; b) a probable outflow of resources embodying economic benefits will be required to settle the obligation; and c) the amount of the obligation can be reliably estimated. Reimbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received. Contingent liability is disclosed in the case of: a) a brsent obligation arising from a past event, when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; b) a possible obligation, that arises out of past events and the existence of which will be confirmed only by one or more uncertain future events unless the probability of outflow of resources is remote. Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized. XVII. CASH & CASH EQUIVALENTS Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less. Cash flow statement is brpared using the indirect method. XVIII. EARNING PER SHARE Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average numbers of equity shares outstanding during the period are adjusted for events of bonus issue, a share split and share warrants conversion. Diluted earnings per share is calculated by adjusting net profit or loss for the period attributable to equity shareholders and the weighted number of shares outstanding during the period for the effect of all dilutive potential equity shares. Further where the statement of profit and loss includes extraordinary items (within the meaning of AS 5, net profit and loss for the period, prior period items and changes in accounting policies), the Company discloses basic and diluted earnings per share computed on the basis of earnings excluding extraordinary items (net of tax expenses). XIX. EXTRAORDINARY ITEM Extraordinary item comprises event or transaction that is clearly distinct from the ordinary activities of the Company and is determined by the nature of the event or transaction in relation to the business ordinarily carried on by the Company. Such items are disclosed in the statement of profit and loss as a part of net profit or loss for the period in a manner that its impact on current profit or loss is perceived. 2. SEGMENT REPORTING: Segment wise revenue, results & other information The Company is primarily in the business of real estate development and related activities including construction, consultancy and rentals etc. Further most of the business conducted is within the geographical boundaries of India. In view of the above, in the opinion of the management and based on the organizational and internal reporting structure, the Company’s business activities as described above are subject to similar risks and returns. Further, since the business activities undertaken by the Company are substantiating within India, in the opinion of the management, the business environment in India is considered to have similar risks and returns. Consequently, the Company’s business activities primarily rebrsent a single business segment and the Company’s operations in India rebrsent a single geographical segment. 3. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR) I. Claims against Company not acknowledged as debt a) Liquidated damages and other claims by clients / customers : Rs. 1,241,610,299 (brvious year Rs. 275,432,912). b) Compensation for delayed possession to customers : Rs. 3,839,000,000 (brvious year Rs. 2,732,300,000) c) Income tax matter in dispute (financial year 2004-05) pending in appeal: Rs. 7,363,246 (brvious year Rs. 7,363,246), (financial year 2006-07) pending in appeal: Rs. 222,484,964 (brvious year Rs. NIL), (financial year 2011-12) pending in appeal: Rs. 824,043,190 (brvious year Rs. NIL) Income tax matter in dispute (financial year 2008-09) pending in appeal: Rs. 8,729,809,740 (brvious year Rs. 8,729,809,740). (Amount paid under protest by the Company : Rs. 237,500,000). Vide notice u/s 281B of the Income tax Act, 1961 dated 06/02/2013, 2237030 equity shares of Carnoustie Management Pvt. Ltd. having value of Rs. 3,100,545,000 and 1000000 equity shares of Shivalik Ventures Pvt. Ltd. having value of Rs. 10,000,000,000 held by the Company have been attached. Income Tax (TDS) matter in dispute (financial year 2007-08) pending in appeal: Rs. 16,219,162 (brvious year Rs. 16,219,162), (financial year 2011-12) pending in appeal: Rs. 116,196,935 (brvious year Rs. 115,954,908), (financial year 2012-13) pending in appeal: Rs. 168,599,180 (brvious year Rs. NIL). d) Sales tax matter in dispute: (financial year 2005-06) pending in appeal : Rs. 7,300,428 (brvious year Rs. 7,300,428) (Amount paid under protest by the Company : Rs. 7,300,428); (financial year 2006-07) pending in appeal : Rs. 7,930,793 (brvious year Rs. 7,930,793) (Amount paid under protest by the Company : Rs. 7,930,793); (financial year 2010-11) pending in appeal : Rs. NIL (brvious year Rs. 590,403,812) e) Service tax matter in dispute: (for the period 01/12/2005-31/07/2007): Rs. 7,260,129 (brvious year Rs. 7,260,129) II. Guarantees a) In respect of bank guarantees: Rs. 2,151,476,772 (brvious year Rs. 2,126,506,466) - It includes guarantees of Rs. 329,767,346 (brvious year Rs. 83,748,572) in respect of subsidiaries & other companies. b) The Company has given corporate guarantees of Rs. 36,755,725,099 (brvious year Rs. 33,662,030,027) for raising loans from financial institutions and banks by its subsidiaries and joint ventures. III. Commitments a) Capital commitments : Rs. 6,958,783 (brvious year Rs. 123,968,863) b) Investment in 1,000,000 equity shares of Rs. 10 each at a brmium of Rs. 9,990 per share aggregating of Rs. 10,000,000,000 has been made in joint venture Company, Shivalik Ventures Pvt. Ltd. An amount of Rs. 4,916,200,000 has been paid against the allotment of fully paid-up shares. The balance securities brmium of Rs. 5,083,800,000 will be accounted for on payment. c) The estimated amount of real estate contracts, net of advances remaining to be executed is Rs. 15,938,003,000 (Previous year Rs. 13,277,769,000) d) Other commitments : Rs. 72,331,335 (brvious year Rs. 68,960,732) e) The Company received an arbitral award dated 6th July 2012 passed by the London Court of International Arbitration (LCIA) wherein the arbitration tribunal has directed the Company to invest USD 298,382,949.34 (Previous year USD 298,382,949.34) equivalent to Rs. 18,702,285,205 (Previous year Rs. 17,830,768,286) in Kerrush Investments Ltd. (Mauritius). The High Court of Justice, Queen’s Bench Division, Commercial Court London has confirmed the said award. Based on the legal advice received by it, the Company believes that the said award is not enforceable in India on various grounds including but not limited to lack of jurisdiction by the LCIA appointed arbitral tribunal to pass the said award. Nevertheless, in case the Company is required to make the aforesaid investment into Kerrush Investments Ltd. (Mauritius), its economic interest in the SRA project in Santacruz Mumbai shall stand increased proportionately thereby creating a substantial asset for the Company with an immense development potential. f) Investment in shares of subsidiaries amounting to Rs. 33,270,600 (Previous year Rs. 33,270,600) are pledged as securities against loan taken by the company and its subsidiaries. Investment in shares of joint ventures amounting to Rs. 72,800,000 (Previous year Rs. 72,750,000) are pledged as securities against loan taken by the company and its joint venture. Investment of subsidiaries in the shares of joint ventures of the Company and its subsidiaries amounting to Rs. 147,925,460 (Previous year Rs. 780,737,810) pledged as securities against loan taken by the Company. Investment of subsidiaries in the shares of its associates amounting to Rs. 245,000 (Previous year Rs. 245,000) pledged as securities against loan taken by the Company. 4. ACCOUNTING OF PROJECTS WITH CO-DEVELOPER The Company is developing certain projects jointly with Pioneer Urban Infrastructure Limited and its other group companies. All the development expenses and sale proceeds booked during the year are transferred to the co-developer at the year end in proportion to share of actual land pooled by each developer. 5. EARNINGS IN FOREIGN CURRENCY Receipts in respect of overseas projects Rs. NIL (brvious year Rs. NIL). 6. The Company had issued the secured non-convertible debentures on private placement basis disclosed under note 9 to the financial statement to a lending financial institution and these debentures are inter alia secured by the charge on immovable properties of the Company and its subsidiaries. However, as on 31st March 2015, part of these non-convertible debentures (including interest accrued hereon) was pending for redemption for a period of more than one year from their respective due date. The lending financial institution has initiated action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) for recovery of amount pending against these debentures. The Company has been legally advised and has also obtained an opinion that default in redemption of privately placed debentures subscribed by the financial institutions which are lenders of money or default in payment of interest thereon, will not attract the provisions of Section 164(2)(b) of the Companies Act, 2013 or Section 274(1)(g) of the erstwhile Companies Act, 1956. 7. The Company had availed rupee term loan facility from a public financial institution which was inter alia secured by the land allotted to the Company’s subsidiary. However, during the financial year 2013-14, the Company received a notice under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) from the financial institution for taking notional possession of the said land provided as security, by alleging default in repayment of the said loan facility. The detail of loans and overdue amount is given in Note 52 to the financial statement. Based on the legal advice obtained by the management, the Company believes that this notice is not legally tenable in terms of the provision of SARFAESI Act and therefore, challenged the same by filing an application before the Hon’able Debt Recovery Tribunal, Lucknow (DRT). The matter is still pending before DRT for final decision. 8. During the year under review, the Company filed an application before the Hon’ble Company Law Board (CLB) under Section 74(2) of the Companies Act 2013 seeking extension of time for repayment of the deposits accepted by the Company. The CLB vide its order pronounced on 14th May 2015 granted 30 days’ time period from the date of its order for repayment of the matured deposits alongwith interest thereon. The Company is fully committed to repay all the deposits along with interest thereon, within the permissible time period and it is making all efforts to arrange the necessary resources required for this purpose. The outstanding amount pertaining to such deposits is disclosed under note 9 to the financial statement. However, the management is evaluating all the recourses available to it to seek further time for payment of the deposits. 9. The Company, in 1979, was granted certain relaxations under the Employees’ Provident Fund Scheme (PF Scheme). However, these relaxations have been withdrawn by the Regional Provident Fund Commissioner, Delhi (South) with effect from 31st October 2014 vide an order dated 1st December 2014, with a direction to transfer the entire past accumulation with the PF Trust of the Company, viz. United Technical Consultants Provident Fund, to the Office of the Employees’ Provident Fund Organisation (EPFO). As on 31st March 2015, an amount of Rs. 109.78 crores, which rebrsents the assets of the PF Trust on that date, was required to be transferred to the EPFO Office. The PF Trust has initiated the process of transferring the said amount (including investments of past accumulation in the government and other securities) to the EPFO Office and shortfall, if any, in this regard shall be met in accordance with the trust deed. 10. (a) Unitech Vizag Projects Limited (UVPL), a subsidiary of Unitech Limited, is undertaking an Integrated Vizag Knowledge City with APIIC at Vizag for which money has been advanced by the holding Company i.e. Unitech Limited. UVPL got the letter from APIIC for rescinding the development agreement against which application has been filed under section 9 of The Arbitration and Conciliation Act 1996 in The court of the Hon’ble XI Additional Chief Judge, City Civil Court at Hyderabad to stay the operation of the letter. The Company and UVPL have already invoked the arbitration clause and filed an application u/s 11 of The Arbitration and Conciliation Act 1996 in April 2014 for appointment of arbitrator before Hon’ble High Court of Hyderabad and the same is pending for adjudication. APIIC has yet to file its reply. The Company also filed an interlocutory application in continuation to pending Section 9 application before City Civil Court, Hyderabad to restrain the APIIC from creating any third party rights with regard to project or project land. After considering the circumstances and legal advice obtained by the management, the Company is confident that this will not adversely affect the Company’s investment and accordingly no provision has been considered necessary. (b) The Company was awarded a project for development of amusement cum theme park in chandigarh by Chandigarh administration. The said development agreement was unilaterally and illegally terminated by the Chandigarh administration. The Company filed a writ petition before Hon’ble High Court of Punjab & Haryana challenging the termination of development agreement. The matter was referred for arbitration and the matter is pending adjudication before the arbitration tribunal. The Company is confident that it will recover the amount invested in the project and accordingly no provision has been considered necessary. 11. Advances for purchase of land, projects pending commencement and to joint ventures and collaborators amounting to Rs. 7,242,711,244 (brvious year - Rs. 7,718,890,401) included under the head “short term loans and advances” in Note 19 have been given in the normal course of business to land owning companies, collaborators, projects or for purchase of land. Further Rs. 476,179,157 (brvious year Rs. 1,529,898,595) has been recovered / adjusted during the current financial year. The management has been putting a constructive and sincere effort to recover / adjust the said advances and has been successful in recovering / adjusting a significant amount out of the total advances, so no provision is necessary to be created for the outstanding advances as at the balance sheet date. Further, the management is confident to recover / adjust the balance outstanding amount in the foreseeable future. 12. The Company has non-current investments (long term investments) in, and loans and advances given to, some subsidiaries which have accumulated losses. These subsidiaries have incurred loss during the current and brvious year(s) and that current liabilities of these subsidiaries also exceed their current assets as at the respective balance sheet dates. Management has evaluated this matter and is of the firm view that the diminution, if any, even if it exists is only temporary and that sufficient efforts are being undertaken to revive the said subsidiaries in the foreseeable future so as to recover carrying value of the investment. Further, management believes that the loans and advances given to these companies are considered good and recoverable based on the future projects in these subsidiaries and accordingly no provision other than those already accounted for, has been considered necessary. 13. (a) The Company has certain outstanding delays as at balance sheet date with respect of long term loans from banks and term loans from financial institutions which are as follows: The amount with respect to loan from banks of principal and interest respectively for the period 1-90 days is Rs. 195,699,439 (brvious year - Rs. 187,500,000) and Rs. 44,863,343 (brvious year - Rs. 62,475,098). Further in respect of term loans from financial institutions with respect to principal and interest respectively are Rs. 610,378,395 (brvious year - Rs. 353,009,814) and Rs. 443,075,909 (brvious year - Rs. 311,307,525) for 1-90 days, Rs. 130,068,520 (brvious year - Rs. 231,250,000) and Rs. 127,266,588 (brvious year - Rs. 295,633,937) for 91-180 days, Rs. 218,550,158 (brvious year - Rs. 146,000,000) and Rs. 180,635,802 (brvious year - Rs. 21,086,430) for the period 181-364 days and for 365 days and above being Rs. 949,000,000 (brvious year - Rs. 657,000,000) and Rs. 90,842,840 (brvious year - Rs. NIL). (b) The Company has certain outstanding delays as at balance sheet date with respect of short term loans from banks & short term loans from financial institutions which are as follows: The amount with respect to loan from banks of principal and interest respectively for the period 1-90 days is Rs. NIL (brvious year - Rs. NIL) and Rs. 101,415,565 (brvious year - Rs. 83,055,107). Further in respect of term loans from financial institutions with respect to principal and interest respectively are Rs. NIL (brvious year - Rs. NIL) and Rs. 49,817,002 (brvious year - Rs. 46,758,083) for 1-90 days, Rs. NIL (brvious year - Rs. NIL) and Rs. 48,284,877 (brvious year - Rs. 46,150,578) for 91-180 days, Rs. NIL (brvious year - Rs. NIL) and Rs. 94,380,288 (brvious year - Rs. NIL) for 181-364 days and for 365 days and above being Rs. NIL (brvious year - Rs. NIL) and Rs. 47,892,576 (brvious year - Rs. NIL). 13. brVIOUS YEAR FIGURES Previous year figures have been regrouped, rearranged and reclassified wherever considered necessary. As per our report of even date For Goel Garg & Co. Chartered Accountants FRN: 000397N (S. C. Garg) Partner Membership No.: 013370 For and on behalf of the Board of Directors Ramesh Chandra Chairman DIN : 00004216 Ajay Chandra Managing Director DIN : 00004234 Sanjay Chandra Managing Director DIN : 00004484 G .R Ambwani DirectorDIN : 00216484 Sunil Keswani Deepak Jain Chief Financial Officer Company Secretary Place: Gurgaon Date: 29th May, 2015 |