NOTES FORMING PART OF ANNUAL ACCOUNTS

1. The company has paid Minimum Alternate Tax u/s 115JB of a sum of Rs.5,00,64,362/- (P.Y.Rs.5,58,91,197/-) which has been charged off as expense. The same is available for set off against the normal tax liability as may arise in future within the time specified there under.

2. Following amounts awarded to the company in arbitration proceedings are not accounted as income in the books of the company:

(a) The Company’s claim against the land owners for specific performance under a Joint Development Agreement was decided in favour of the company. As per the award the company is entitled to receive the refundable deposits paid by the company together with damages and reimbursement of expenses of Rs.1.14 Lakhs. However as the said award is challenged by the land owners and the litigation is still pending in the court, the amounts so receivable towards the reimbursement of expenses and damages are not reflected in the books of account. The damages not accounted for the year is Rs. 0.48 Million (P.Y. Rs.0.48 Million) and cumulative amount as up to the date of balance sheet is Rs.8.76 Millions (P.Y.8.28 Millions). The same will be accounted in the year of realization.

(b) As per the award in favour of the company, the company is entitled to receive, as at the date of balance sheet, a sum of Rs.60,07,415/- (P.Y.Rs. 58,09,047/-) which is not reflected in the books of the company to the extent of Rs.42,03,084/- (P.Y.Rs. 39,94,716/-) being the income, in view of challenge of the award in a court of law. The income so not accounted as relating to the current year is Rs.2,08,368 (P.Y.2,08,368).The same will be accounted in the year of realization.

3. The Company has not been regular in remittance of certain statutory dues during the year and the amount due on that account for a period exceeding six months as at 31st March, 2015 is Rs. Nil (P.Y.Rs.Nil).

4. Previous figures have been rearranged and regrouped so as to make them comparable with current figures .

5. SIGNIFICANT ACCOUNTING POLICIES :

A. RECOGNITION OF INCOME:

a. Value of Contract completed is accounted as sales/income on raising of invoices on the basis of value of works completed as certified by the architects.

b. In the case of sales of Apartments under construction by the company of its own:

i. Value of sales of undivided share of title and interest in the land are accounted on execution of the agreement to sell.

ii. The values receivable towards the construction of the apartments under the construction agreement are accounted on the basis of the proportionate value determined and invoiced on the basis of certificate of the value of the works completed.

iii. The proportionate cost of construction apportioned to the apartments not yet sold as at the year-end are reckoned as work in progress at cost.

c. In case of sale of Apartments under construction by the company under joint development agreements:

i. Value of sale of company’s share of undivided share of title and interest in land in cases where the agreement to sell is executed and the values receivables towards the construction of the Apartments under the construction agreements are accounted on the basis of the proportionate sale value realizable on total sale of company’s share in the built up area in the same ratio as the total cost incurred would bear to the total estimated cost of construction of the project.

ii. The proportionate cost of the units in respect of which the agreement to sell is not yet executed are reckoned as work in progress at cost.

d. In respect of Sale of Railway Sleeper:

i. Sales are accounted at tendered price on dispatch of Railways Sleepers.

ii. The balance of the escalation will be accounted on availability of the latest applicable rates and as and when the company makes claims.

iii. Central Excise Duty recovered on sale of Railway Sleepers is recognized as income only to the extent of the modvat benefit entitled to be retained by the company in terms of the contract subsisting with the Indian Railways.

e. All other Sales revenues are accounted on accrual basis.

f. All incomes, to the extent they are ascertained, are accounted on accrual basis.

g. In comes which are not ascertained and quantum whereof can not be determined are accounted in the year in which the same are ascertained and determined or received, whichever is earlier.

B. EXPENDITURE RECOGNITION:

1. Purchases are accounted at cost on accrual basis excluding modvat credit, if any, available thereon.

2. Liabilities in respect of all expenditure are accounted on accrual basis.

3. The liability in respect of any other expenditure which are not easily ascertainable are accounted in the year in which such liabilities are either ascertained or actually paid whichever is earlier.

4. The liability in respect of levies payable in respect of the escalation in price on sale of Railway Sleepers are accounted as and when the quantum of the escalation in price is finally determined by the Railways.

5. Liability in respect of gratuity and leave encashment payable to employee’s on retirement is estimated and provided for in the accounts on the basis of the liability on the company as at the last day of the accounting period.

C. INVENTORY VALUATION:

a. Work-in-progress of Housing projects are valued at cost as stated in 41 (A) (b)(iii) and 41 (A) (c)(ii) supra.

b. Land & repurchased flats held in stock are valued at cost.

c. Raw Materials of Railway Sleeper Project are valued at cost excluding central excise duty; and

d. Finished products and works in progress at railway sleeper project are valued at cost or net realizable value whichever is lower excluding central excise duty.

D. DEbrCIATION:

1. Up to financial year ended 31.3.2014 the debrciation on fixed assets is provided on Straight Line Method at the rates Specified in the specified in schedule XIV to the Companies Act, 1956.

2. For financial year 2014-2015 the debrciation on fixed assets is provided on estimated useful life as specified in schedule II to the Companies Act, 2013..

As per our report attached

For RAO & VENKATESULU

Chartered Accountant

V.PADMANABHAN

Partner

Membership N o.3181

FR No.003108S

S.A.KABEER Chairman & Managing Director

S.A.RASHEED Joint Managing Director

SURAJ KUMAR SAHU Company Secretary

SHAIK MOHAMMED OSMAN Chief Financial Officer

Place: BENGALURU

Date: 30th May, 2015