The following discussion of our financial condition and results of operations should be read in conjunction with the section entitled "Financial Statements" on page 268.
This Red Herring Prospectus may include forward-looking statements that involve risks and uncertainties, and our actual financial performance may materially vary from the conditions contemplated in such forward-looking statements as a result of various factors, including those described below and elsewhere in this Red Herring Prospectus. For further information, please see the section entitled "Forward-Looking Statements" on page 20. Also please see the sections entitled "Risk Factors" and
"- Significant Factors Affecting our Results of Operations and Financial Condition" on pages 30 and 427, respectively, for a discussion of certain factors that may affect our business, financial condition or results of operations.
Our Companys Fiscal commences on April 1 and ends on March 31 of the immediately subsequent year, and references to a particular Fiscal are to the 12 months ended March 31 of that particular year. Unless otherwise indicated or the context otherwise requires, the financial information for Fiscal 2021, 2022 and 2023, included herein is derived from the Restated Consolidated Financial Information, included in this Red Herring Prospectus. For further information, please see the section entitled "Financial Statements" on page 268.
Unless the context otherwise requires, in this section, references to "we", "us", or "our" refers to SignatureGlobal (India) Limited on a consolidated basis and references to "the Company" or "our Company" refers to SignatureGlobal (India) Limited on a standalone basis.
Unless otherwise indicated, industry and market data used in this section has been derived from industry publications, in particular, the report titled "Real Estate Industry Report for Signature Global" dated August 25, 2023 (the "Anarock Report") prepared and issued by Anarock Property Consultants Private Limited appointed on December 31, 2021, and the Anarock Report has been commissioned by and paid for by our Company. A copy of the Anarock Report is available on the website of our Company at www.signatureglobal.in/investors.php. The data included herein includes excerpts from the Anarock Report and may have been re-ordered by us for the purposes of presentation. There are no parts, data or information (which may be material for the proposed Offer), that has been left out or changed in any manner. Unless otherwise indicated, financial, operational, industry and other related information derived from the Anarock Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For more information, please see the section entitled "Risk Factors Certain sections of this Red Herring Prospectus contain information from the Anarock Report which we have commissioned and purchased and any reliance on such information for making an investment decision in the Offer is subject to inherent risks" on page 57. Also please see the section entitled, "Certain Conventions, Use of Financial Information and
Market Data and Currency of Presentation Industry and Market Data" on page 17.
Overview
We are the largest real estate development company in the National Capital Region of Delhi ("Delhi NCR") in the affordable and lower mid segment housing in terms of units supplied (in the below 8 million price category) between 2020 and the three months ended March 31, 2023, with a market share of 19%. (Source: Anarock Report)
We commenced operations in 2014 through our Subsidiary, Signature Builders Private Limited, with the launch of our Solera project on 6.13 acres of land in Gurugram, Haryana. We have grown our operations over the years and in less than a decade, and as of March 31, 2023, we had sold 27,965 residential and commercial units, all within the Delhi NCR region, with an aggregate Saleable Area of 18.90 million square feet. Our Sales (net of cancellation) have grown at a compounded annual growth rate
("CAGR") of 42.46%, from 16,902.74 million in Fiscal 2021 to 34,305.84 million in Fiscal 2023. As of March 31, 2023, we have sold 25,089 residential units with an average selling price of 3.60 million per unit.
We have strategically focused on the Affordable Housing ("AH") segment (below 4 million price category) and the Middle Income Housing ("MH") segment (between 4 million to 2.5 million pricate category) through GoI and state government policies. The state government of Haryana under its various policies allows development of AH and MH. For example, we have been extensively involved in developing projects specifically the Affordable Housing Policy, 2013 notified by the Town and Country Planning Department, Government of Haryana ("AHP") and the Affordable Plotted Housing Policy or the Deen Dayal Jan Awas Yojana ("DDJAY - APHP"). Each of the policies is focused on affordable and mid segment housing. The AHP aims to encourage planning and completion of group housing projects under which apartments of a pre-defined size are to be made available at pre-defined rates and completed within a targeted time-frame to ensure increased supply of affordable housing, while the DDJAY - APHP is intended to encourage the development of high density plotted colonies in the state of Haryana
(Source: Anarock Report).
In addition, going forward we will also develop some of our Forthcoming Projects under the Haryana Group Housing Policy
(" HGHP") and New Integrated Licensing Policy ("NILP"), combining them with the provisions of Transit Oriented
Development Policy and ("TODP") and Transfer of Development Rights Policy ("TDRP"), which we believe will enable us to achieve higher FAR, hence higher developable area as well as higher density to target the MH segment. The TODP aims to encourage development around metro corridors for which extra FAR and higher density has been allowed. (Source: Anarock Report) The TDRP provides industry participants with FAR in lieu of land which goes into public use, and such FAR can be loaded by developers on to their projects along with an increased density. (Source: Anarock Report) Hence, with the utilisation of such policies, we believe we will be able to strategically target the MH segment.
Most of our Completed Projects, Ongoing Projects and Forthcoming Projects are located in Gurugram and Sohna in Haryana, with 88.61% of our Saleable Area located in this region as of March 31, 2023, and almost all of our projects have been, or are being, undertaken under the AHP or the DDJAY - APHP. In terms of sales in Gurugram, we had a market share of 31% in the affordable and lower mid segment, and a market share of 24% in all budget categories, in the period from 2020 to the three months ended March 31, 2023. (Source: Anarock Report)
The AHP permits for greater density, which is the number of persons per acre, that enables us to build smaller unit sizes leading to improved saleability. In addition, lower regulatory costs with waiver of license fee and infrastructural development charges for developers coupled with higher floor area ratio ("FAR") for residential development and commercial development are some of the other benefits available under the AHP. Under the DDJAY - APHP as well, higher density, smaller plot sizes and higher FAR compared to that for a residential plotted colony enable us to offer units at competitive prices allowing us to expand our operations. In our experience, these benefits have made it viable for us to offer projects at affordable prices at premium locations while remaining profitable.
As of March 31, 2023, we were the largest real estate developer under the AHP in the Gurugram and Sohna region, with a market share of 18% in terms of total supply of units in the period from 2020 to the three months ended March 31, 2023. (Source: Anarock Report) We were also the largest real estate developer under the DDJAY APHP in the Gurugram and Sohna region, with a market share of 42% of the total supply of units under DDJAY APHP floors in the period from 2020 to the three months ended March 31, 2023. (Source: Anarock Report)
We provide "value homes" with attractive designs and amenities. We proactively seek to enhance the value of our projects by creating a better living environment through the provision of comprehensive community facilities and by engaging renowned architects. Our projects under the AHP, typically priced below 3.00 million per unit, includes amenities such as recreational areas, gardens, open spaces and community halls. Our projects under the DDJAY - APHP, typically priced between 4.00 million and 12.00 million per unit, provide facilities including gymnasiums, recreational spaces, entertainment centres, swimming pools and sporting facilities. All our AHP and DDJAY - APHP projects have a retail component within them which are intended to offer further convenience to residents, and these components have the effect of increasing the value of our projects owing to the absence of price ceilings. All our projects are located in the well-developed Delhi NCR region, with connectivity to other parts of Delhi NCR. In addition to the Gurugram area, we have also launched certain projects across key markets in Haryana such as Karnal, under the DDJAY APHP policy. We also have one Ongoing Project being developed by our Subsidiary, Sternal Buildcon Private Limited, outside the AHP and DDJAY -APHP policies, namely Infinity Mall, which is located close to our Ongoing Projects under the DDJAY APHP in Sohna and which we expect will serve our customers in the region.
Further, we believe that the SignatureGlobal brand is well-established in Gurugram, Haryana and the wider Delhi NCR region for affordable and mid segment housing projects. In our experience, the combination of our brand recognition, quality product offerings and competitive pricing has enabled us to sell a substantial portion of our inventory soon after the launch of our projects. Between Fiscal 2021 and Fiscal 2023, of the seven projects that we launched under the AHP (applications for which are open for a limited subscription period), six projects witnessed an oversubscription at launch. For the 5,388 units launched by us under the AHP between Fiscal 2021 and Fiscal 2022, we received 15,750 applications, amounting to an average oversubscription of 2.95 times the units on offer. Since we commenced operations, we have offered 17,673 units under the AHP, for which we have received 50,886 applications at launch, amounting to an oversubscription of 2.88 times the units on offer. Our project The Millennia IV, launched in January 2022, witnessed complete subscription of the 814 units on offer within 24 hours of launch while Imperial, launched in March 2022, witnessed subscription of all 1,141 units on offer within 12 hours of launch. The Millennia IV and Imperial also witnessed an oversubscription of 2.19 times and 3.15 times the units on offer, respectively. For projects that we have launched under the DDJAY APHP in the Gurugram and Sohna region, we were able to sell 58.84% of the inventory within six months and for those projects that have completed a year since launch, 84.40% of the inventory has been sold within 12 months from launch.
As of March 31, 2023, we had completed an aggregate Developable Area of 7.64 million square feet in our Completed Projects and an additional 1.37 million square feet in our Ongoing Projects, comprising 11,427 residential units and 932 commercial units, for which we have received occupation certificates. We have sold 25,089 residential units, amounting to 88.81% of the total number of residential units launched in our Completed and Ongoing Projects as of March 31, 2023. In addition, brief details regarding our Completed, Ongoing and Forthcoming Projects, as of March 31, 2023, have been set out below:
| Category | Number of projects | Land (in acres) | Saleable Area (in square feet) | Developable Area (in square |
| Completed Projects | 12 | 94.68 | 6,149,320 | 7,640,059 |
| Ongoing Projects(1) | 29 | 216.57 | 17,208,636 | 21,384,724 |
| Forthcoming Projects | 19 | 379.07 | 21,291,641(2) | 24,506,650 |
(1) As of March 31, 2023, our Ongoing Projects have additionally received occupation certificates for 1,369,903 square feet of Saleable Area and 1,374,075 square feet of Developable Area that consists of residential units. (2) For our Forthcoming Projects, this is the estimated Saleable Area and estimated Developable Area
As of March 31, 2023, our Corporate Promoter, Sarvpriya Securities Private Limited, has also completed an aggregate Developable Area of 820,242 square feet and an aggregate Saleable Area of 597,610 square feet, in two projects.
Some of our key Completed Projects include Synera, Serenas and Sunrise, each located in Gurugram, Sohna and Karnal, respectively, in Haryana. Certain of our notable Ongoing Projects include City 37D and Prime, both of which are located in Gurugram, Haryana.
We have adopted an integrated real estate development model, with in-house capabilities and resources to execute projects from inception to completion which enables us to offer our projects at competitive prices. Among our core strengths is our ability to efficiently turnaround projects on land that we tie-up and we have typically launched projects within a period of 18 months from the date of acquisition of the land. Our high asset turnover has enabled us to generate positive cash flows in a relatively short period of time to support further developments. Our standardized business processes, technical specifications and layout plans have resulted in low design costs and faster replication resulting in shortening our development cycle and construction time. To reduce construction time significantly, we also deploy aluminium formwork technology in our projects, which also reduces costs. These factors have also resulted in us delivering projects ahead of their scheduled completion. For example, we completed our project, Solera within 3 years and 9 months, which is almost three months in advance of the period mandated for completion. The Department of Town and Country Planning, Government along with the Haryana Real Estate Regulatory Authority recognized the development of our projects at the Urban Development Conclave. For further information, please see the section entitled "History and Certain Corporate Matters" on page 216.
We have an extensive distribution network focussed on the customer segments we target, with 593 channel partners and an in-house team of 41 employees engaged in direct sales and 100 employees for indirect sales, as of March 31, 2023, that has helped us to achieve the current scale of our offerings. We have also been effectively leveraging technology for the sale of our inventory. Our AHP projects are sold exclusively through digital channels, as mandated by the Directorate of Town and Country Planning,
Haryana ("DTCP") and since January 2022, our entire project inventory under our AHP projects is being exclusively sold online, including on the government website. Since 2014, prior to the mandate by the DTCP, we had been selling our inventory through our website www.signatureglobal.in. Our technology initiatives as part of our customer interaction and sales channels have led to increased customer penetration and conversion, as well as operating and cost efficiencies.
As part of our development activities, we are focused on sustainable development and inculcate green concepts and techniques as part of our projects such as sustainable water management facilities and low flow fixtures that result in water saving, solid waste management and use of solar panels. The International Finance Corporation created the Excellence in Design for Greater Efficiencies ("EDGE") to respond to the need for a measurable and credible solution to prove the business case for building green projects and unlock financial investment. As of March 31, 2023, all of our projects launched after Fiscal 2021 are either EDGE or IGBC certified or we are under process to apply for EDGE certification. Our efforts towards sustainability have been recognized through various awards and recognitions including the SignatureGlobal group being conferred the 8th IGBC Green
Champion Award under the category of ‘Developer Leading the Green Affordable Housing Movement in India. For further information, please see the section entitled "History and Certain Corporate Matters" on page 216.
We incorporate technology in all major aspects of our operations. Our customer relationship management system from Salesforce, broker portal, human resources, social media channels, customer mobile application, financials and management information systems and in-house sales are all integrated over a common platform. We have implemented an advanced enterprise resource planning platform, SAP, that has further strengthened our internal processes. We have also implemented an automated sales booking system and tools for pre and post-sales management which have resulted in increased lead generation.
We are led by our Chairman and Whole-time Director, Pradeep Kumar Aggarwal who has over eight years of experience in the real estate business. Lalit Kumar Aggarwal, our Vice Chairman and Whole-time Director, has more than seven years of experience in the real estate business and is responsible for the construction, marketing and human resources aspects of our business. Ravi Aggarwal, our Managing Director, has over nine years of experience and is responsible for the overall business development of our Company. Devender Aggarwal, our Joint Managing Director and Whole-time Director, has over eleven years of experience and plays a key role in formulation and implementation of our Companys forward plans. Our senior management team includes experienced professionals with relevant functional expertise across different verticals in the real estate industry and have been instrumental in our growth and implementing our business strategies.
Although our business operations were impacted during the first wave of the COVID-19 pandemic in April 2020 due to government-mandated lockdowns and migration of labour, our operations were not impacted by subsequent waves due to effective labour management and cost rationalization measures. For further information, please see the section entitled
"Managements Discussion and Analysis of Financial Condition and Results of Operations Impact of COVID-19" on page 431.
The following table sets forth certain performance indicators of our operations for the periods indicated:
| Particulars | As of and for the years ended March 31, |
CAGR(11) (Fiscal 2021 to Fiscal 2023) | ||
| 2021 | 2022 | 2023 | ||
| Sales(1)(10) ( million) | 16,902.74 | 25,900.38 | 34,305.84 | 42.46% |
| Sales (million square feet) | 4.25 | 5.46 | 4.35 | 1.17% |
| Sales (number of units) | 6,069 | 7,001 | 4,512 | (13.78)% |
| Revenue from operations ( million) | 820.57 | 9,012.98 | 15,535.70 | 335.12% |
| Gross Collections(2)(10) ( million) | 7,790.95 | 12,821.48 | 19,200.27 | 56.99% |
| Completed area (occupation certificate received)(3) (million square feet) | 0.09 | 3.03 | 4.10 | 567.50% |
| Operating Surplus before Land advance/ acquisition(4) ( million) | 2,488.56 | 4,701.43 | 6,912.15 | 66.66% |
| Adjusted Gross Profit(5) ( million) | 96.90 | 1,278.32 | 4,078.58 | 548.77% |
| Adjusted Gross Profit Margin(6) (%) | 26.30% | 14.78% | 26.78% | - |
| Adjusted EBITDA(7) ( million) | (582.85) | 273.82 | 2,155.64 | - |
| Adjusted EBITDA Margin(8) (%) | (71.03%) | 3.04% | 13.88% | - |
| Net Debt(9) | 5,573.24 | 5,173.43 | 10,938.92 | 40.10% |
Notes:
(1) Sales for any period refers to the value of residential and commercial units sold during a period where the booking amount has been received (net of any cancellations). (2) Gross Collections (net of cancellations) include collections towards residential and commercial units, other charges. Gross Collections do not include any indirect taxes. (3) Completed area refers to Developable Area where occupation certificate has been received. (4) Operating Surplus Before Land advance/ acquisition refers to net collections less construction spends less employee benefits expenses less admin and other overheads less taxes (5) Adjusted Gross Profit is calculated as revenue from real estate operations (comprises revenue from sale of real estate properties, forfeiture income/cancellation charges, compensation received on compulsory acquisition of land and other operating income related to real estate business) less cost of sales relating to real estate operations (i.e. cost of sales as reduced by finance cost written off through cost of sales and cost of sales relating to contracting business). (6) Adjusted Gross Profit Margin is calculated as Adjusted Gross Profit divided by revenue from real estate operations (comprises revenue from sale of real estate properties, forfeiture income/cancellation charges, compensation received on compulsory acquisition of land and other operating income related to real estate business). (7) Adjusted EBITDA refers to earnings before interest, taxes, depreciation, amortisation ("EBITDA"), plus finance cost written off through cost of sales, adjustment of gain/loss on fair valuation of derivative instruments and impairment of goodwill. (8) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by revenue from operations. (9) Net Debt is calculated as short term Borrowing plus long term borrowing plus book overdraft less CCDs less cash and cash equivalents less margin money deposit less bank balances other than cash and cash equivalents. (10) Total sales and collections for the year ended March 31, 2022, includes sales amounting to 2,903.00 million and collections amounting to 140.05 million related to our project Imperial and sales amounting to 140.94 million and collections amounting to 6.81 million related to our project The Millennia IV. Such projects are under the AHP and were launched/sold prior to March 31, 2022. The collections pertaining to these projects was collected in the Director of Town and Country Planning, Haryana bank account as per the AHP as at March 31, 2022, and the Company received such amount subsequently, post allotment of units as per the process established by the Department of Town and Country Planning, Haryana..
(11) Compounded Annual Growth Rate (as a %): (end year value/ base Year Value) ^ (1/Number of years between base year and end year) 1, where
^ denotes ‘raised to.
Our Saleable Area, comprising our Completed Projects and Ongoing Projects, has witnessed an increase from 5.17 million square feet in Fiscal 2018, to 23.36 million square feet in Fiscal 2023. Further, as of March 31, 2023, our Corporate Promoter, Sarvpriya Securities Private Limited, has also completed an aggregate Developable Area of 820,242 square feet and an aggregate Saleable Area of 597,610 square feet, in two projects.
Significant Factors Affecting Our Results of Operations and Financial Condition
Regulatory framework
The real estate sector in India is highly regulated. Our operations, the acquisition of land development rights and land, in certain instances, and the implementation of our projects require us to obtain regulatory approvals and licenses and require us to comply with the land acquisition and conversion rules and regulations of a variety of regulatory authorities. We are also subject to local and municipal laws relating to real estate development activities and the relevant development control regulations. These require
427 approvals for construction and development of real estate projects including approvals for the ratio of built-up area to land area, plans for road access, community facilities, open spaces, water supply, sewage disposal systems, electricity supply, environmental suitability, zoning regulations and size of the project. Any delay or failure in getting any of these approvals for our Ongoing Projects and Forthcoming Projects may affect our business and result of operations.
We have strategically focused on GoI and state government policies supporting affordable housing and in particular the AHP and the DDJAY - APHP. As of March 31, 2023, we were the largest real estate developer under the AHP in the Gurugram and Sohna region, with a market share of 18% in terms of total supply of units in the period from 2020 to the three months ended March 31, 2023. (Source: Anarock Report) We were also the largest real estate developer under the DDJAY APHP in the Gurugram and Sohna region, with a market share of 42% of the total supply of units under DDJAY APHP floors in the period from 2020 to the three months ended March 31, 2023. (Source: Anarock Report) These policies, and others under which we may undertake development in future, contain certain stipulations and restrictions. The AHP permits for greater density, which is the number of persons per acre, that enables us to build smaller unit sizes leading to improved saleability. In addition, lower regulatory costs with waiver of license fee and infrastructural development charges for developers coupled with higher FAR for residential and commercial development are benefits available under the AHP. However, while the AHP has fast sales, the sale price of residential units has a ceiling, resulting in moderate margins. This is offset to some extent by the commercial sales under the AHP projects, as 8% of the FAR of the net planned area can be developed as commercial units under the AHP, which do not have a price ceiling. Similarly, the price of residential carpet area under the AHP, which is our Saleable Area, has increased from the initial price of 4,000 per square foot to 4,200 per square foot to a new price 5,000 per square foot and the price of balcony areas has increased from the initial price of 500 per square foot to 1,000 per square foot to a new price of 1,200 per square foot, with a cap of 100,000 per unit increased to 120,000 per unit
Under the DDJAY-APHP, higher density, smaller plot sizes and higher FAR compared to that for a residential plotted colony enable us to offer units at competitive prices allowing us to expand our operations. We are able to increase prices DDJAY AHP in the absence of price ceilings on residential development. For further information, please see the sections entitled "Industry Overview Support to Affordable Housing Policy by Haryana Government" and "Key Regulations and Policies" on pages 141 and 209, respectively. Accordingly, the number of projects we are able to complete under a particular scheme instead of the other may affect profitability. For instance, 86.89%, 33.22% and 56.20% of our Sales recognized in Fiscal 2021, 2022 and 2023 and, respectively are from projects launched under the AHP, which is moderate-margin but typically fast-selling, while there are 66.78%, 13.11% and 43.80% Sales recognized in our projects under the DDJAY APHP (such launches having started only in 2019), which is a high-margin product owing to the absence of price ceilings. The DDJAY APHP has been launched by the government in 2018, and our projects under this policy have not met revenue recognition criteria yet. Even within the AHP and DDJAY - APHP, commercial sales drive profitability of the projects overall. For instance, in one of our AHP projects where revenue has been recognized for both commercial and residential sales, commercial sales (which are regulatorily limited) contributed 64.53% to Gross Margins whereas residential sales contributed 24.97% of Gross Margin under such projects. Set forth are the revenue from operations and gross margins we have derived from our commercial and residential sales in each of the following periods:
| Particulars | Fiscal 2021 | Fiscal 2022 | Fiscal 2023 | ||||||
| Revenue from real estate operations( 1) ( million) | Adjusted Gross Profit(2) ( million) | Adjusted Gross Profit Margin (%)(3) | Revenue from real estate operations(1 ) ( million) | Adjusted Gross Profit(2) ( million) | Adjusted Gross Profit Margin (%)(3) | Revenue from real estate operations(1) ( million) | Adjusted Gross Profit(2) ( million) | Adjusted Gross Profit Margin (%)(3) | |
| Residential | 328.02 | 66.77 | 20.36 | 8,268.48 | 1,021.67 | 12.36 | 14,533.88 | 3,628.60 | 24.97 |
| Commercial | 40.47 | 30.13 | 74.44 | 380.10 | 256.65 | 67.52 | 697.30 | 449.98 | 64.53 |
| Total | 368.49 | 96.90 | 26.30 | 8,648.58 | 1,278.32 | 14.78 | 15,231.18 | 4078.58 | 26.78 |
(1) Revenue from real estate operations includes revenue from sale of real estate properties, Forfeiture income/cancellation charges, Compensation received on compulsory acquisition of land and other operating income related to Real estate business. (2) Adjusted Gross Profit is calculated as revenue from real estate operations (revenue from sale of real estate properties, forfeiture income/cancellation charges, compensation received on compulsory acquisition of land and other operating income related to real estate business) less cost of sales relating to real estate operations (i.e. cost of sales as reduced by finance cost written off through cost of sales and cost of sales relating to contracting business). (3) Adjusted Gross Profit Margin is calculated as Adjusted Gross Profit, divided by revenue from real estate operations.
Amendments to policies, such as a reduction in the permissible commercial development, or reduction in price ceilings for residential units under the AHP, may impact our profitability and results of operations. Our profitability may also be affected by any price controls that may be imposed under the DDJAY - APHP.
For example, the Haryana government has recently amended the DDJAY-APHP pursuant to which the applicability of the DDJAY-AHP was discontinued for the final development plan of Gurugram Manesar Urban Complex and Faridabad. As per the directions dated April 20, 2023 ("Directions"), license applications received before December 8, 2022 that were pending before the relevant authority and in which no letter of intent was granted under DDJAY-APHP for Gurugram and Faridabad were to be returned along with the scrutiny fee and license fee paid by an applicant. Pursuant to the Directions, we received refunds for two of our five Forthcoming Projects under DDJAY-APHP, namely, City 37D Extension and City 81 Extension with an estimated residential Saleable Area, estimated commercial Saleable Area and estimated Developable Area of 348,092 square feet, 13,437 square feet and 465,583 square feet, respectively, as of March 31, 2023. While we have made representations to the authorities to reconsider and withdraw the Directions, we cannot assure that such representation will be considered favourably. As on the date of this Red Herring Prospectus, we have not received any response from the relevant authorities. Whilst the applicability of the DDJAY-APHP has been discontinued from the final development plan of Gurugram and Faridabad, however, as on the date of this Red Herring Prospectus, the policy continues to remain applicable for Sohna and other parts of Haryana.
In addition, going forward we will also develop some of our Forthcoming Projects under the HGHP and NILP, combining them with the provisions of TODP and TDRP, which we believe will enable us to achieve higher FAR, hence higher developable area as well as higher density to target the MH segment. The TODP aims to encourage development around metro corridors for which extra FAR and higher density has been allowed. (Source: Anarock Report) The TDRP provides industry participants with FAR in lieu of land which goes into public use, and such FAR can be loaded by developers on to their projects along with an increased density. (Source: Anarock Report) Hence, with the utilisation of such policies, we believe we will be able to strategically target the MH segment.
In addition, with the introduction of RERA we will have to comply with specific legislations enacted by state governments in the NCR, where our Ongoing Projects, Forthcoming Projects are, or future projects may be located. RERA requires the mandatory registration of real estate projects and developers are not permitted to issue advertisements or accept advances unless real estate projects are registered. RERA also imposes restrictions on use of funds received from customers prior to project completion and taking customer approval for major changes in sanction plan. Our results of operation may, therefore, be impacted on account of the significant resources and management time we expend to ensure compliance with the RERA and other regulatory requirements. In addition, some of our affordable income housing real estate projects qualify for tax benefits. The continuation of these benefits cannot be assured and if they are disputed or terminated, there could be a material effect on our results of operations. The GST regime which took effect from July 1, 2017, and any new rules or regulations thereunder may also have a material effect on our results of operations.
Further, our Ongoing Projects are also subject to orders from courts and tribunals and in particular the National Green Tribunal
("NGT"). The NGT has, recent times imposed a number of restrictions on real estate developers and construction activities to curb pollution levels in the months of December and January in north India. These measures could result in a delay in completion of our projects, which could affect our profitability and results of operations.
Ability to increase our Sales and margins, and revenue recognition of our projects
We derive our revenues from sale of real estate development. In Fiscal 2021, 2022 and 2023, our Sales have been growing at a
CAGR of 42.46% between Fiscal 2021 and 2023, and were 16,902.74 million, 25,900.38 million and 34,305.84 million, respectively, in Fiscal 2021, 2022 and 2023.
The volume of Sales depends on various factors including our ability to design projects that will meet customer preferences and market trends, to timely market our projects, the willingness of customers to pay for the projects or enter into sale agreements well in advance of receiving possession of the projects and general market conditions. We market and sell our projects in phases from the date of launch of the project after receiving requisite approvals, which is typically after acquisition of the land or land development rights and during the process of planning and designing the project, up until the time we complete our project.
On March 28, 2018, the MCA notified Ind AS 115, Revenue from Contracts with Customers, applicable from April 1, 2018. Ind AS 115 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. Under Ind AS 115, the revenue from real estate projects is recognised only at a point in time upon our Company satisfying its performance obligation and the customer obtaining control of the underlying asset as compared to earlier percentage of completion method as per the Guidance Note on Accounting for Real Estate Transactions. Accordingly, revenue recognition for our projects occurs following the receipt of occupancy certificate and after a certain threshold of collections have been completed. In Fiscal 2021, 2022 and 2023, while our Sales were 16,902.74 million, 25,900.38 million and 34,305.84 million, respectively, our revenue from operations were 820.57 million, 9,012.98 million and 15,535.70 million, respectively in similar periods.
Further, our revenue and costs may fluctuate from period to period due to a combination of other factors beyond our control, including completion of the project or receipt of approvals on completion from relevant authorities in a particular period, volatility in expenses such as costs to acquire land or development rights and construction costs. Further, our revenues are also dependent on the nature of projects we undertake. Such fluctuations may be significant in a shorter period within a relevant fiscal owing to a decrease in revenues recognized as per Ind AS 115 and an increase in the cost of revenues, both of which may impact our profitability. Our offerings have been focussed on the affordable and mid segments in Delhi NCR. Our project construction also typically extends over a period of three to five years. We have a dedicated team that focuses on identification of land by selecting an appropriate and strategic area, which we believe suits our sector and business purposes. Detailed studies are then conducted based on market data on possible sites while selecting a particular location for development within that area. The team sources information from interactions with local brokers, landowners, customer calls and other databases available for micro-markets. This is followed by conceptualizing the type and scale of property development to be undertaken on that particular land.
We cannot predict with certainty when our projects will be completed and sold as our project timetables are occasionally disrupted by and subject to unforeseen circumstances at different stages of planning and execution. For instance, our business operations were impacted during the first wave of the COVID-19 pandemic in April 2020 due to government-mandated lockdowns and migration of labour. Further, please see the section entitled, " Impact of COVID-19" on page 431. Incidents such as this may lead to large fluctuation in financial result for any financial period depending on work completed in that period and possessions given during that period. Therefore, as a result of the factors mentioned above and the nature of our business and operations, we may have certain projects that contribute significantly to our revenue in a particular period on account of completion of the said projects, including obtaining the necessary approvals from relevant authorities for the same.
Further, in terms of the applicable provisions of Ind AS, we are required to conduct fair valuation of our commitments with financial institutions, irrespective of whether these costs crystallize. Accordingly, while such unrealised losses have been accounted for, these may differ from the actual pay-outs upon redemption.
Finance costs and availability of financing on favourable terms
We fund our property development activities through a combination of medium and long-term debt and internal accruals. Accordingly, our ability to obtain financing, as well as the cost of such financing, affects our business. Though we believe we are able to obtain funding at competitive interest rates, cost of financing is material for us. Our total outstanding borrowings (including current and non-current borrowings) were 17,097.49 million as of March 31, 2023, and our finance costs (including interest capitalized) were 1,861.35 million, 2,200.55 million and 2,625.75 million in Fiscal 2021, 2022 and 2023, respectively.
Among the major factors that drive the growth of demand for housing units is rising disposable income and availability of housing loans at affordable interest rates. Changes in interest rates also affect the ability and willingness of our prospective real estate customers to obtain financing for their purchase of our developments. For instance, as a result of the COVID-19 pandemic and its effect on the economy, the Reserve Bank of India has successively reduced the benchmark repo rate to revive economic activity. The RBI has reduced the repo rate and had previously mandated all scheduled commercial banks to link all new floating interest rates on personal or retail loans (including housing loans) to the external benchmarks, in order to ease transmission of rate cuts. Accordingly, as a result of reductions in repo rates, housing mortgage rates have correspondingly reduced, driving affordability of home ownership. Accordingly, cost of borrowing for customers will also correspondingly increase. The interest rate at which our real estate customers may borrow funds for the purchase of our properties affects the affordability and purchasing power of, and hence the market demand for, our residential real estate developments. Our Net Debt as of March 31,
2021, 2022 and 2023, was 5,573.24 million, 5,173.43 million and 10,938.92 million, respectively.
Further, we execute various projects through our Subsidiaries, and have invested 1,561.68 million as on March 31, 2023, in the share capital of our Subsidiaries. While these Subsidiaries are exclusively engaged in development of real estate projects, as per the applicable accounting standards, the finance cost in relation to the investments made by our Company in the share capital of our Subsidiaries are charged to our profit and loss accounts in the standalone and consolidated financial statements, affecting the record of profits accrued by our Company.
Cost and availability of land and acquisition of development rights
Our operations and growth are dependent on the availability of land at appropriate locations for our developments, the terms of sharing of revenues, profits or Saleable Areas for our collaboration agreements, and, in some cases, the cost of acquisition of land.
The effective cost of development rights in the case of collaboration agreements and the cost of acquisition of freehold or leasehold land are significant factors for real estate developers, including us. We typically develop our projects through two main development models including (i) where land is owned for developments; and (ii) collaboration agreements with landowners, where collaboration agreements require lower upfront capital expenditure compared to direct acquisition of land parcels. We enter into collaboration agreements instead of acquiring freehold or leasehold interests in land. However, on occasion we acquire the land we intend to develop. Entering into collaboration agreements eliminates the large upfront costs of acquiring land and also reduces our financing costs. Typically, such agreements require us to make certain payments to the collaboration partner prior to the commencement of the project and we obtain the right to construct and develop the property from the owner of land in exchange for the land-owner either sharing a pre-determined portion of developed property or revenues from such development. For such developments, we generally incur all of the construction and development costs. The fair value of the probable obligations towards landowners are immediately accounted for as project costs on the date of launch under inventory and the corresponding amounts are accrued as liability towards payment to the land collaborators, in the form of trade payables. As of March 31, 2023, 23.07% of the Saleable Area of our Ongoing Projects and 44.40% of the estimated Saleable Area of our Forthcoming Projects, respectively, were based on the collaboration model. Subsequent to March 31, 2023, we have also entered into collaboration agreements for 5.44 acres of land and have also entered into a term sheet for a collaboration agreement for 4.26 acres of land in Gurugram, Haryana.
Additionally, any government regulations, policies or other developments that restrict the acquisition of land or increase competition for land will affect our operations. The cost of acquiring land, which includes the amounts paid for freehold rights, leasehold rights, the cost of registration and stamp duty, represents a substantial part of our project cost, and may sometimes determine whether we acquire certain parcels of land. Delays in acquiring clean title, conversion of land for development purposes and other requisite approvals may delay the project development schedule and associated costs and affect our operations. Land used in a specific project is assigned to such project and is included in the cost of construction and development of such project. Such costs of land, together with costs of construction and development, are expensed for projects as and when the project is completed or receipt of approvals on completion from relevant authorities or intimation to the customer of the completion of the project.
Impact of COVID-19
The COVID-19 pandemic has had, significant repercussions across local, national and global economies and financial markets. The global impact of the COVID-19 pandemic has evolved over time and public health officials and governmental authorities responded by taking measures, such as prohibiting people from assembling in large numbers, instituting quarantines, restricting travel, issuing "stay-at-home" orders and restricting the types of businesses that may continue to operate, among many others.
Initially, the COVID-19 pandemic resulted in construction delays at our project sites due to several factors such as lockdowns enforced by the government agencies, work-stoppage orders, disruptions in the supply of materials and shortage of labour. The pandemic also resulted in a mass migration of contract labour involved in construction activities during such period. We undertook various measures to ensure continuity of construction at certain project sites, including transit camps for construction workers where clean food, water and shelter was available.
While we have made a detailed assessment of our liquidity position and believe that there is no material impact foreseeable on our revenues and operating cash flows, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration. The eventual outcome of the impact of the COVID-19 pandemic on our business may be different from that estimated.
To the extent, the COVID-19 pandemic adversely affects us, it may also significantly increase the effect of the below mentioned factors affecting our results of operations. Please see the section entitled "Risk Factors - The COVID-19 pandemic adversely affects our business, financial condition, results of operations, cash flows, liquidity and performance, and it may reduce the demand for our projects in future." on page 33.
Presentation of Financial Information
Our restated consolidated statement of assets and liabilities as at March 31, 2021, March 31, 2022 and March 31, 2023, and the restated consolidated statement of profit and loss (including other comprehensive income), the restated consolidated statement of changes in equity, the restated consolidated cash flow statement for the years ended March 31, 2021, March 31, 2022 and March 31, 2023, and the summary statement of significant accounting policies and other explanatory information, collectively referred to as "Restated Consolidated Financial Information".
The Restated Consolidated Financial Information have been compiled by the management basis the audited consolidated Ind AS financial statements as at and for the year ended March 31, 2023, March 31, 2022 and March 31, 2021 prepared in accordance with the Ind AS, as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other recognised accounting practices and policies generally accepted in India including the requirements of the Companies Act.
Critical Estimates and Judgments
The preparation of the Restated Consolidated Financial Information requires the use of accounting estimates which, by definition, will seldom equal the actual results. The below is an overview of the areas that involve a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different that those originally assessed:
Impairment of non-financial assets
The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Impairment of financial assets
We estimate the recoverable amount of trade receivables and other financial assets where collection of the full amount is expected to be no longer probable. For individually significant amounts, this estimation is performed on an individual basis considering the length of time past due, financial condition of the counter-party, impending legal disputes, if any and other relevant factors.
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of our future taxable income against which the deferred tax assets can be utilized.
Provisions
At each balance sheet date basis the management judgment, changes in facts and legal aspects, we assess the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.
Contingencies
In the normal course of business, contingent liabilities may arise from litigation, taxation and other claims against us. A tax provision is recognised when we have a present obligation as a result of a past event and it is probable that we will be required to settle that obligation. Where it is our managements assessment that the outcome cannot be reliably quantified or is uncertain, the claims are disclosed as contingent liabilities, unless the likelihood of an adverse outcome is remote. Such liabilities are disclosed in the notes but are not provided for in the financial statements. When considering the classification of a legal or tax case as probable, possible or remote there is judgement involved. This pertains to the application of the legislation, which in certain cases is based upon managements interpretation of country-specific tax law, in particular India, and the likelihood of settlement. We use in-house and external legal professionals to inform our decision. Although there can be no assurance regarding the final outcome of the legal proceedings, we do not expect them to have a materially adverse impact on our financial position or profitability.
Leases
We evaluate if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. We use significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. We determine the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if we are reasonably certain about exercising that option; and periods covered by an option to terminate the lease if we are reasonably certain that we will not exercise that option. In assessing whether we are reasonably certain of exercising an option to extend a lease, or not to exercise an option to terminate a lease, we consider all relevant facts and circumstances that create an economic incentive for us to exercise the option to extend the lease, or not to exercise the option to terminate the lease. We revise the lease term if there is a change in the non-cancellable period of a lease.
Revenue and inventories
The estimates around total budgeted cost i.e., outcomes of underlying construction and service contracts, which further require estimates to be made for changes in work scopes, claims (compensation, rebates, etc.), the cost of meeting other contractual obligations to the customers and other payments to the extent they are probable, and they are capable of being reliably measured. For the purpose of making these estimates, we use the available contractual and historical information and also its expectations of future costs. The estimates of the saleable area are also reviewed periodically and the effect of any changes in such estimates is recognised in the period such changes are determined.
Accounting for revenue and land cost for projects executed through joint development arrangements
For projects executed through joint development arrangements, we have evaluated that landowner are engaged in the same line of business as us.
The revenue from the development and transfer of constructed area/ revenue sharing arrangement and the corresponding land/ development rights received under joint development arrangement is measured at the fair value of the estimated consideration payable to the landowner and the same is accounted on launch of the project. The fair value is estimated with reference to the terms of the joint development arrangement. Such assessment is carried out at the launch of the real estate project and is reassessed at each reporting period. Our management is of the view that the fair value method and estimates are reflective of the current market condition.
Useful lives of depreciable/amortisable assets
We review estimates of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utilisation of assets.
Fair value measurement
We apply valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.
Fair valuation of investment property
Investment property is stated at cost. However, as per Ind AS 40, there is a requirement to disclose fair value as at the balance sheet date. We have engaged independent valuation specialists to determine the fair value of our investment property as at reporting date. The determination of the fair value of investment properties requires the use of estimates such as future cash flows from the assets (such as lettings, future revenue streams, capital values of fixtures and fittings, any environmental matters and the overall repair and condition of the property) and discount rates applicable to those assets. In addition, development risks (such as construction and letting risk) are also taken into consideration when determining the fair value of the properties under construction. Further, the independent valuation specialist also carried out purchase price allocation assigned value to the building and plant and machinery included in the investment property on the basis of estimates of construction cost and depreciation using useful life and age of the assets. The remaining value was allocated to freehold land. These estimates are based on local market conditions existing at the balance sheet date.
Defined benefit obligation ("DBO")
Our managements estimate of the DBO is based on a number of underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Significant Accounting Policies
The financial statements have been prepared using the significant accounting policies and measurement basis summarised below. These were used throughout all periods presented in the financial statements, except where the Company and its
Subsidiaries (the "Group") has applied certain accounting policies and exemptions upon transition to Ind AS.
Revenue recognition
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods and services before transferring them to the customers.
Revenue from sale of properties and developed plots
Revenue from sale of properties is recognized when the performance obligations are essentially complete and credit risks have been significantly eliminated. The performance obligations are considered to be complete when control over the property has been transferred to the buyer, i.e., offer for possession (possession request letter) of properties have been issued to the customers and substantial sales consideration is received from the customers.
The terms of the contract and its customary business practices are considered to determine the transaction price. The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring property to a customer, excluding amounts collected on behalf of third parties (for example, indirect taxes). The consideration promised in a contract with a customer may include fixed consideration, variable consideration (if reversal is less likely in future), or both.
For each performance obligation identified, the Group determines at contract inception whether it satisfies the performance obligation over time or satisfies the performance obligation at a point in time. If an entity does not satisfy a performance obligation over time, the performance obligation is satisfied at a point in time. A receivable is recognised by the Group when the control is transferred as this is the case of point in time recognition where consideration is unconditional because only the passage of time is required.
When either party to a contract has performed, an entity shall present the contract in the balance sheet as a contract asset or a contract liability, depending on the relationship between the entitys performance and the customers payment. The costs estimates are reviewed periodically and effect of any change in such estimate is recognized in the period such changes are determined. However, when the total estimated cost exceeds total expected revenues from the contracts, the loss is recognized immediately.
Construction projects
Construction projects where the Group is acting as contractor, revenue is recognised in accordance with the terms of the construction agreements. Under such contracts, assets created does not have an alternative use and the Group has an enforceable right to payment. The estimated project cost includes construction cost, development and construction material and overheads of such project.
The Group uses cost based input method for measuring progress for performance obligation satisfied over time. Under this method, the Group recognises revenue in proportion to the actual project cost incurred as against the total estimated project cost. The management reviews and revises its measure of progress periodically and are considered as change in estimates and accordingly, the effect of such changes in estimates is recognised prospectively in the period in which such changes are determined. However, when the total project cost is estimated to exceed total revenues from the project, the loss is recognized immediately. As the outcome of the contracts cannot be measured reliably during the early stages of the project, contract revenue is recognised only to the extent of costs incurred in the statement of profit and loss.
Sale of traded goods
Revenue from sale of goods is recognized when the control of goods is transferred to the buyer as per the terms of the contract, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods. Control of goods refers to the ability to direct the use of and obtain substantially all of the remaining benefits from goods. The Group collects goods and services tax (GST) on behalf of the government and, therefore, they are excluded from revenue.
Royalty income and business support service income
Such income is recognized on an accrual basis in accordance with the terms of the relevant agreements.
Interest on delayed payments, forfeiture income, transfer fees and holding charges
Revenue is recognised as and when extent certainty of payments/realisation is established in relation to such income.
Dividend income
Dividend income is recognized when the Groups right to receive dividend is established by the reporting date.
Commission income
Commission income is recognized on accrual basis in accordance with the terms of the agreement.
Scrap sale
Scrap sales are recognised when control of scrap goods are transferred i.e. on dispatch of goods and are accounted for net of returns and rebates.
Cost of sales in respect of properties and developed plots
Cost of constructed properties includes cost of land (including development rights), estimated internal development costs, external development charges, other related government charges, borrowing costs, overheads construction costs and development/construction materials, which is charged to the Statement of Profit and Loss proportionate to the revenue recognised as per accounting policy on revenue from sale of properties and developed plots.
Historical cost basis
The consolidated financial statements have been prepared on historical cost basis except for certain financial assets and financial liabilities which are measured at fair value as explained in relevant accounting policies.
Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per operating cycle and other criteria set-out in the Act. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities, as the case may be.
Property, plant and equipment ("PPE")
Recognition, measurement and de-recognition
PPE are stated at cost; net of tax or duty credits availed, less accumulated depreciation and impairment losses, if any. Cost includes original cost of acquisition, including incidental expenses related to such acquisition and installation.
Subsequent expenditure related to an item of PPE is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing PPE, including day-today repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Gains or losses arising from de-recognition of PPE are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is de-recognised.
Subsequent measurement (depreciation and useful lives)
Depreciation on PPE is provided on the written down value method, computed on the basis of useful life prescribed in Schedule
II to the Act ("Schedule II").
Considering the applicability of Schedule II as mentioned above, in respect of certain class of assets the Management has assessed the useful lives (as mentioned in the table below) lower than as prescribed in the Schedule II, based on the technical assessment.
| Assets category | Useful life estimated by the management based on technical assessment (years) | Useful Life as per Schedule II (years) |
| Plant and machinery other than Mivon | 15 years | 15 years |
| Plant and machinery Mivon | 8 years | |
| Office equipment | 5 years | 5 years |
| Computers | 3-6 years | 3-6 years |
| Furniture and fixture | 10 years | 10 years |
| Vehicle | 8 years | 8 years |
Leasehold improvements are amortized on over the period of lease.
Investment property
Recognition and initial measurement
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at their cost of acquisition. The cost comprises purchase price, borrowing cost, if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group. All other repair and maintenance costs are recognised in Statement of Profit or Loss as incurred.
Considering the applicability of Schedule II as mentioned above, in respect of certain class of assets the Management has assessed the remaining useful lives (as mentioned in the table below) lower than as prescribed in the Schedule II, based on the assessment of useful life of assets purchased.
| Assets category | Useful life estimated by the management based on technical assessment (years) | Useful Life as per Schedule II (years) |
| Land | Not applicable | Not applicable |
| Building | 60 years | 60 years |
| Plant and machinery | 15 years | 15 years |
Subsequent measurement (depreciation and useful lives)
Investment properties are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Depreciation on investment properties is provided on the straight-line method, computed on the basis of useful lives prescribed in Schedule II to the Act.
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year.
De-recognition
Investment properties are de-recognised either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in Statement of Profit and Loss in the period of de-recognition.
Intangible assets
Intangible assets comprise softwares including accounting software, related licences and implementation cost of accounting software. Intangible assets are stated at cost of acquisition less impairment (if any) and include all attributable costs of bringing intangible assets to its working condition for its indented use. These are amortised over the estimated useful economic life, which are as follows:
| Particulars | Life |
| Computer softwares | 2-5 years |
| Brands/trademarks | 4 years |
Intangible asset is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the statement of profit and loss when the asset is derecognised.
Capital work-in-progress
Property plant and equipment under construction and cost of assets not ready for use before the year-end, are classified as capital work in progress.
Intangible assets under development
Intangible assets under development represent expenditure incurred during development phase in respect of intangible asset under development and are carried at amortized cost. Cost includes computer softwares cost and its related acquisition expenses.
Impairment of non-financial assets
Goodwill
Goodwill is tested for impairment on annual basis. If on testing, any impairment exists, the carrying amount of goodwill is reduced to the extent of any impairment loss and such loss is recognized in the statement of profit and loss.
Other assets
At each balance sheet date, the Group assesses whether there is an indication that an asset may be impaired. If any such indication exists, the Group estimates 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 and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost and impairment loss is accordingly reversed in the Statement of Profit and Loss.
Leases
Group as a lessee Right of use assets and lease liabilities
A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.
Classification of leases
The Group enters into leasing arrangements for various assets. The assessment of the lease is based on several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessees option to extend/purchase etc.
Recognition and initial measurement of right of use assets
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease (if any), and any lease payments made in advance of the lease commencement date (net of any incentives received).
Subsequent measurement of right of use assets
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.
Lease liabilities
At lease commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Groups incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed payments) and variable payments based on an index or rate. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is re-measured, the corresponding adjustment is reflected in the right-of-use asset.
The Group has elected to account for short-term leases using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these short-term leases are recognised as an expense in statement of profit and loss on a straight-line basis over the lease term. Further, the Group has also elected to apply another practical expedient whereby it has assessed all the rent concessions occurring as a direct consequence of the COVID-19 pandemic, basis the following conditions prescribed under the standard: (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before September 30, 2022; and (iii) there is no substantive change to other terms and conditions of the lease.
If all the rent concessions meet the above conditions, then, the related rent concession has been recognised in statement of profit and loss.
Group as a lessor
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straight-line basis over the lease-term.
Financial instruments
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value.
The classification depends on the Groups business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in the statement of profit and loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
Non-derivative financial assets
Subsequent measurement
Financial assets carried at amortised cost a financial asset is measured at amortised cost if both the following conditions are met: (i) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows; and (ii) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
Investments in other equity instruments Investments in equity instruments which are held for trading are classified as at fair value through profit or loss. For all other equity instruments, the Group makes an irrevocable choice upon initial recognition, on an instrument by instrument basis, to classify the same either as at fair value through other comprehensive income or fair value through profit or loss. Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. However, the Group transfers the cumulative gain or loss within equity. Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
Investments in mutual funds Investments in mutual funds are measured at fair value through profit and loss.
De-recognition of financial assets
A financial asset is de-recognised when the contractual rights to receive cash flows from the asset have expired or the Group has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, the measurement of financial liabilities depends on their classification, as described below:
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.
Derivative Contracts
Derivatives embedded in all host contract (except asset) are separated only if the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.
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Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets and the impairment methodology depends on whether there has been a significant increase in credit risk.
Trade receivables
In respect of trade receivables, the Group applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets
In respect of its other financial assets, the Group assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Group measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Group uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Group compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Group assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
Inventories
Inventories comprises of following: (i) Projects in progress includes cost of land/development cost of land, internal development costs, external development charges, construction costs, development/construction materials, overheads, borrowing costs and other directly attributable expenses and is valued at cost or net realisable value ("NRV"), whichever is lower; (ii) Stock at site valued at cost or NRV, whichever is lower. Cost is determined on the basis of FIFO method. Cost includes purchase cost and expenses to bring it to current locations; (iii) Traded goods are valued at lower of cost or NRV. Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on a weighted average basis; (iv) Land received under collaboration arrangements is measured at fair value of consideration and is recognised as inventory at the time of the launch of the project. The non-refundable security deposit paid by the Company under the collaboration arrangements is classified as security deposit and presented in the balance sheet under the heading other current assets. These deposits are reclassified to inventory once letter of intent for granting license on said land is received from the authorities and at the time of the launch of the project, such deposit is adjusted with fair value of the consideration.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Borrowing costs
Borrowing costs directly attributable to the acquisition and/or construction/production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are charged to the statement of profit and loss as incurred. Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Foreign currency transaction and balances
Functional and presentation currency
The consolidated financial statements are presented in Indian Rupee which is also the functional and presentation currency of the Holding Company.
Transactions and balances
Foreign currency transactions are recorded in the functional currency, by applying the exchange rate between the functional currency and the foreign currency at the date of the transaction. Foreign currency monetary items outstanding at the balance sheet date are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transactions.
Exchange differences arising on settlement of monetary items, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.
Retirement and other employee benefits
Provident fund
The Group makes contributions to statutory provident fund in accordance with the Employees Provident Fund and
Miscellaneous Provisions Act, 1952, which is a defined contribution plan. The Groups contributions paid/payable under the scheme is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
Gratuity
Gratuity is a post-employment benefit and is in the nature of a defined benefit plan. The liability recognised in the balance sheet in respect of gratuity is the present value of the defined benefit obligation at the balance sheet date, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is determined by actuarial valuation as on the balance sheet date, using the projected unit credit method.
Actuarial gains/losses resulting from re-measurements of the liability are included in other comprehensive income in the period in which they occur and are not reclassified to profit or loss in subsequent periods.
Compensated absences
Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are credited or charged to the statement of profit and loss in the year in which such gains or losses are determined.
Other short-term benefits
Expense in respect of other short-term benefits is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.
Initial public offer related transaction costs
The expenses pertaining to initial public offer ("IPO") includes expenses pertaining to fresh issue of equity shares and offer for sale by selling shareholders and has been accounted for as follows: (i) incremental costs that are directly attributable to issuing new shares has been deferred until successful consummation of IPO upon which it shall be deducted from equity; (ii) incremental costs that are not directly attributable to issuing new shares or offer for sale by selling shareholders, has been recorded as an expense in the statement of profit and loss as and when incurred; and (iii) costs that relate to fresh issue of equity shares and offer for sale by selling shareholders has been allocated between those functions on a rational and consistent basis as per agreed terms.
Brokerage
The brokerage cost incurred for obtaining the contract with customer is recognized as an asset as "Prepaid Expenses" under
"Other current assets" and expensed off in the statement of profit and loss when the corresponding revenue for the contract is recognized and is presented under the head "Other Expenses".
Provisions, contingent assets and contingent liabilities
Provisions are recognized only when there is a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of obligation can be made at the reporting date. Provisions are discounted to their present values, where the time value of money is material, using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
When the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by future events not wholly within the control of the Group; or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
Income taxes
Tax expense comprises current and deferred tax. Current and deferred tax is recognised in statement of profit and loss except to the extent that it relates to items recognised directly in equity or other comprehensive income.
The current income-tax charge is calculated on the basis of the tax laws enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided in full, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Minimum Alternate Tax ("MAT") paid in a year is charged to the statement of profit and loss as current tax for the year. The deferred tax asset is recognised for MAT credit available only to the extent that it is probable that the respective entity will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the entity recognizes MAT credit as an asset, it is created by way of credit to the statement of profit and loss and shown as part of deferred tax asset. The Group reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
Recent accounting pronouncement
Amendment to Ind AS 16, Property, Plant and Equipment
The Ministry of Corporate Affairs ("MCA") vide notification dated March 23, 2022, has issued an amendment to Ind AS 16 which specifies that an entity shall deduct from the cost of an item of property, plant and equipment any proceeds received from selling items produced while the entity is preparing the asset for its intended use (for example, the proceeds from selling samples produced when testing a machine to see if it is functioning properly). The Group is evaluating the requirement of the said amendment and its impact on these consolidated financial statements.
Amendments to Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets
The MCA vide notification dated March 23, 2022, has issued an amendment to Ind AS 37 which specifies that the cost of fulfilling a contract comprises: the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts. The Group is evaluating the requirement of the said amendment and its impact on these consolidated financial statements.
Amendments to Ind AS 103, Business Combinations
The MCA vide notification dated March 23, 2022, has issued an amendment to Ind AS 103 and has added a new exception in the standard for liabilities and contingent liabilities. The Group is evaluating the requirement of the said amendment and its impact on these consolidated financial statements.
Amendments to Ind AS 109, Financial Instruments
The MCA vide notification dated March 23, 2022, has issued an amendment to Ind AS 109 which clarifies the fees an entity should include when it applies the ‘10% test in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the others behalf. The Group is evaluating the requirement of the said amendment and its impact on these consolidated financial statements.
Non-GAAP Measures
EBITDA , Compounded Annual Growth Rate ("CAGR"), Adjusted Gross Profit, Adjusted Gross Profit Margin (%), Adjusted
EBITDA, Adjusted EBITDA Margin (%), capital employed and assets turnover ratio, (collectively, "Non-GAAP Measures"), presented in this Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, Indian GAAP, IFRS, US GAAP or any other GAAP. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS, US GAAP or any other GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the years/ period or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, IFRS, US GAAP or any other GAAP. In addition, these Non-GAAP Measures are not standardised terms, hence a direct comparison of these Non-GAAP Measures between companies may not be possible. Other companies may calculate these Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although such Non-GAAP
Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that they are useful to an investor in evaluating us as they are widely used measures to evaluate a companys operating performance.
Reconciliation from GAAP to Non-GAAP
Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to (Loss) After Tax
The table below reconciles (loss) after tax to EBITDA and Adjusted EBITDA. EBITDA is calculated as loss after tax plus tax expense, finance cost, depreciation and amortization expenses while Adjusted EBITDA Margin is the percentage of Adjusted EBITDA divided by revenue from operations.
| Particulars | Fiscal | ||
| 2021 | 2022 | 2023 | |
| ( million) | |||
| Profit/ (Loss) after tax (A) | (862.78) | (1,155.00) | (637.15) |
| Tax Expense (B) | (111.83) | (209.17) | 69.65 |
| Profit/ (Loss) before tax (C=A+B) | (974.61) | (1,364.17) | (567.50) |
| Add: Finance costs (D) | 708.82 | 691.25 | 729.24 |
| Add: Depreciation and amortisation expense (E) | 118.09 | 207.26 | 221.84 |
| Earnings before interest, taxes, depreciation and amortisation expenses (EBITDA) (F= C+D+E) | (147.70) | (465.66) | 383.58 |
| Add: Impairment of Goodwill (G) | - | - | 263.85 |
| Add: Finance cost written off through cost of sales (H) | 54.81 | 597.59 | 1,175.91 |
| Add/Less: Gain/ loss on fair valuation/extinguishment of derivative instruments(I) | (489.96) | 141.89 | 332.30 |
| Adjusted EBITDA (J = F+G+H+I) # | (582.85) | 273.82 | 2,155.64 |
| Revenue from operations (K) | 820.57 | 9,012.98 | 15,535.70 |
| Adjusted EBITDA Margin (Adjusted | |||
| EBITDA as a percentage of revenue from operations) (L = J/K) (%)# | (71.03) | 3.04 | 13.88 |
# Adjusted EBITDA includes adjustment for finance cost written off through cost of revenue, which is a Non-GAAP measure. Accordingly, excluding this adjustment, Adjusted EBITDA would have been (637.66) million, (323.77) million, and 979.73 million for Fiscal 2021, 2022 and 2023, respectively and Adjusted EBITDA Margin would have been (77.71%), (3.59%), and 6.31% for Fiscal 2021, 2022 and 2023, respectively.
Reconciliation of Adjusted Gross Profit and Adjusted Gross Profit Margin
The table below reconciles the revenue and cost of revenue schedule to Adjusted Gross Profit and Adjusted Gross Profit Margin.
| Particulars | Fiscal | ||
| 2021 | 2022 | 2023 | |
| Revenue from real estate operations | |||
| Revenue from sale of real estate properties | 312.98 | 8,509.98 | 15,190.02 |
| Forfeiture income/cancellation charges/other services charges | 55.51 | 137.63 | 41.16 |
| Compensation received on compulsory acquisition of land | - | 0.97 | - |
| Total (A) | 368.49 | 8,648.58 | 15,231.18 |
| Total cost of revenue | 663.76 | 8,198.69 | 12,551.42 |
| Less: Cost of sales - contracting business | (337.36) | (230.84) | (222.91) |
| Less: Finance cost written off through cost of revenue | (54.81) | (597.59) | (1,175.91) |
| Total (B) | 271.59 | 7,370.26 | 11,152.60 |
| Adjusted Gross Profit (C = A-B)# | 96.90 | 1,278.32 | 4,078.58 |
| Adjusted Gross Profit Margin (Adjusted | |||
| Gross Profit/Revenue from real estate operation as computed above) (D = C/A)# | 26.30% | 14.78% | 26.78% |
Adjusted Gross Profit includes adjustment for finance cost written off through cost of revenue, which is a Non-GAAP measure. Accordingly, excluding this adjustment, Adjusted Gross Profit would have been 42.09 million, 680.73 million, and 2,902.67 million for Fiscal 2021, 2022 and 2023, respectively and Adjusted Gross Profit Margin would have been 11.42%, 7.87%, and 19.06% for Fiscal 2021, 2022 and 2023, respectively.
Reconciliation of Compounded Annual Growth Rate ("CAGR")
The table below reconciles the revenue from operations, sales (net of cancellations), gross collections and adjusted gross profit to CAGR of revenue from operations, CAGR of Sales - net of cancellations, CAGR of gross collections and CAGR of adjusted gross profit, respectively.
| Particulars | Fiscal | CAGR | ||
| 2021 | 2022 | 2023 | ||
| ( million) | (%) | |||
| C | B | A | D=((A/C)^(1/2)-1)) | |
| Revenue from operations | 820.57 | 9,012.98 | 15,535.70 | 335.12% |
| Sales (1) | 16,902.74 | 25,900.38 | 34,305.84 | 42.46% |
| Gross Collections (2) | 7,790.95 | 12,821.48 | 19,200.27 | 56.99% |
| Adjusted Gross Profit (3) | 96.90 | 1,278.32 | 4,078.58 | 548.77% |
(1) Sales for any period refers to the value of residential and commercial units sold during a period where the booking amount has been received (net of any cancellations). (2) Gross Collections (net of cancellations) include collections towards residential and commercial units, other charges. Gross Collections do not include any indirect taxes. (3) Adjusted Gross Profit is calculated as revenue from real estate operations (comprises revenue from sale of real estate properties, forfeiture income/cancellation charges, compensation received on compulsory acquisition of land and other operating income related to real estate business)
Calculation of Capital Employed
The table below reconciles the total assets to Capital Employed and Sales/Capital Employed, respectively.
| Particulars | Fiscal | ||
| 2021 | 2022 | 2023 | |
| ( million) | |||
| Total Assets (A) | 37,623.66 | 44,308.51 | 59,991.28 |
| Less: Current liabilities (B) | (30,009.32) | (38,734.96) | (46,226.32) |
| Add : Current Borrowings (C ) | 3,355.35 | 3,782.15 | 4,109.56 |
| Capital Employed (D=A-B+C) | 10,969.69 | 9,355.70 | 17,874.52 |
| Sales (E ) (1) | 16,902.74 | 25,900.38 | 34,305.84 |
| Asset turnover ratio = Sales/Capital | 1.54 | 2.77 | 1.92 |
| Employed (F=E/D) |
(1) Sales for any period refers to the value of residential and commercial units sold during a period where the booking amount has been received (net of any cancellations).
Principal Components of Income and Expenditure
Set forth below are the principal components of income and expenditure from our continuing operations
Total Income
Our total income primarily comprises: (i) revenue from operations; and (ii) other income.
Revenue from Operations
Revenue from operations primarily comprises (i) operating revenue which includes: (a) revenue from sale of real estate properties; (b) contract receipts on account of real estate construction activity; (c) sale of traded goods; and (d) interest income from non-banking financial business from one of the Subsidiaries; and (ii) other operating revenue which primarily includes: (a) forfeiture income / cancellation charges on account of customer bookings; (b) business support services income; (c) scrap sale; and (d) sale of land under compulsory acquisition that occurred in Fiscal 2022.
Other Income
Other income primarily includes (i) interest income on (a) bank deposits, (b) delay in payment by customers, (c) loans, and (d) income tax refunds; (ii) dividend income; (iii) commission income; (iv) profit on sale of property, plant and equipment (net); (v) provision written back; (vi) gain on foreign exchange fluctuation (net); (vii) gain on remeasurement of financial liability and extinguishment of financial liability (net); (viii) gain on termination of lease contracts; and (ix) rent concession.
Expenses
Our expenses comprise (i) cost of revenue; (ii) employee benefits expense; (iii) finance costs; (iv) depreciation and amortization expense; (v) impairment losses; (vi) loss/(gain) of fair value of financial instrument; and (vii) other expenses.
Cost of Revenue
Cost of revenue primarily comprises (i) real estate project construction expenses and expenses towards real estate construction activities; and (ii) change in inventory of real estate projects.
Employee Benefits Expense
Employee benefits expense primarily comprises (i) salaries, wages and bonus; (ii) contribution to provident and other funds; and (iii) staff welfare expenses less amount transferred to projects in progress.
Finance Costs
Finance costs primarily comprises (i) interest expense; (ii) interest on lease liabilities; (iii) other borrowing costs which includes expenses incurred for issuance of non-convertible debentures and other borrowings, which includes upfront premium, processing charges, fund procurement expenses and other related expenses; less amount transferred to projects in progress.
Depreciation and Amortization Expense
Depreciation and amortisation expense comprises (i) depreciation on property, plant and equipment; (ii) depreciation on right to use assets and (iii) amortisation of intangible assets; less amount transferred to projects in progress.
Impairment Losses
Impairment losses include (i) allowance for expected credit losses non-banking financial company; and (ii) allowance for expected credit losses others.
Impairment of goodwill on consolidation
Impairment of goodwill compries goodwill on consolidation of subsidiary companies.
Loss/(gain) of fair value of derivative instrument
Loss/(gain) of fair value of derivative instrument includes loss/gain on fair valuation of CCDs.
Other Expenses
Other expenses include, amongst others (i) advertisement, publicity and promotion; (ii) commission and brokerage; (iii) rates and taxes; (iv) provision for impairment; (v) donation and charity; (vi) rent; (vii) legal and professional fees; (viii) repair and maintenance; (ix) software charges; (x) travelling and conveyance and (xi) customer incentive charges.
Results of Operations
The following table sets forth certain information with respect to our results of operations on a consolidated basis for Fiscal 2021, 2022 and 2023:
| Particulars | Fiscal | |||||
| 2021 | 2022 | 2023 | ||||
| Percentage of Total | Percentage of Total | Percentage of Total | ||||
| ( million) | Income (%) | ( million) | Income (%) | ( million) | Income (%) | |
| Revenue | ||||||
| Revenue from operations | 820.57 | 53.04 | 9,012.98 | 95.92 | 15,535.70 | 97.96 |
| Other income | 236.66 | 15.30 | 383.02 | 4.08 | 323.08 | 2.04 |
| Gain on fair value of derivative instruments | 489.96 | 31.67 | - | - | - | - |
| Total income | 1,547.19 | 100.00 | 9,396.00 | 100.00 | 15,858.78 | 100.00 |
| Expenses | ||||||
| Cost of revenue | 663.76 | 42.90 | 8,198.69 | 87.26 | 12,551.42 | 79.14 |
| Purchase of stock in trade | 4.35 | 0.28 | 2.30 | 0.02 | 8.66 | 0.05 |
| Employee benefits expense | 431.57 | 27.89 | 640.45 | 6.82 | 884.85 | 5.58 |
| Finance costs | 708.82 | 45.81 | 691.25 | 7.36 | 729.24 | 4.60 |
| Depreciation and amortization expense | 118.09 | 7.63 | 207.26 | 2.21 | 221.84 | 1.40 |
| Loss on fair value of valuation/extinguishment of derivative instruments | - | - | 141.89 | 1.51 | 332.30 | 2.10 |
| Impairment losses on financial assets | 11.78 | 0.76 | 12.54 | 0.13 | 0.39 | 0.00 |
| Impairment of goodwill on consolidation | - | - | - | - | 263.85 | 1.66 |
| Other expenses | 528.18 | 34.14 | 865.79 | 9.21 | 1,433.73 | 9.04 |
| Total expenses | 2,466.55 | 159.42 | 10,760.17 | 114.52 | 16,426.28 | 103.58 |
| Loss before tax and share of loss in associate | (919.36) | (59.42) | (1,364.17) | (14.52) | (567.50) | (3.58) |
| Share of (loss)/profit in associate | (0.32) | (0.02) | - | - | - | - |
| (Loss) before tax and exceptional items | (919.68) | (59.44) | (1,364.17) | (14.52) | (567.50) | (3.58) |
| Exceptional items | 54.93 | 3.55 | - | - | - | - |
| (Loss) before tax | (974.61) | (62.99) | (1,364.17) | (14.52) | (567.50) | (3.58) |
| Tax expense | ||||||
| Current tax | 79.66 | 5.15 | 1.65 | 0.02 | 148. 42 | 0.94 |
| Current tax - earlier year | (1.64) | (0.11) | (16.31) | (0.17) | 0.48 | (0.00) |
| Deferred tax credit | (189.85) | (12.27) | (194.51) | (2.07) | (79.25) | (0.50) |
| Total tax expense/ (credit) | (111.83) | (7.23) | (209.17) | (2.23) | 69.65 | 0.44 |
| (Loss) after tax | (862.78) | (55.76) | (1,155.00) | (12.29) | (637.15) | (4.02) |
Other comprehensive income
| Particulars | Fiscal | |||||
| 2021 | 2022 | 2023 | ||||
| Percentage of Total | Percentage of Total | Percentage of Total | ||||
| ( million) | Income (%) | ( million) | Income (%) | ( million) | Income (%) | |
| Items that will not be reclassified to statement of profit and loss | ||||||
| Change in fair value of equity investments | (415.95) | (26.88) | 89.94 | 0.96 | 6.64 | 0.04 |
| Income tax effect | 135.72 | 8.77 | (12.27) | (0.13) | (1.10) | (0.01) |
| Re-measurement (loss)/ gain on defined benefit plans | 3.40 | 0.22 | (10.11) | (0.11) | 0.06 | 0.00 |
| Income tax effect | (1.01) | (0.07) | 2.99 | 0.03 | 0.10 | 0.00 |
| Other comprehensive income for the period/year | (277.84) | (17.96) | 70.55 | 0.75 | 5.70 | 0.04 |
| Total comprehensive loss for | (1,140.62) | (73.72) | (1,084.45) | (11.54) | (631.45) | (3.98) |
| the year | ||||||
Fiscal 2023 Compared to Fiscal 2022
Total Income
Total income increased by 68.78% from 9,396.00 million in Fiscal 2022 to 15,858.78 million in Fiscal 2023 primarily due to an increase in revenue from operations.
Revenue from Operations
Revenue from operations increased by 72.37% from 9,012.98 million in Fiscal 2022 to 15,535.70 million in Fiscal 2023 mainly attributable to increase in revenue recognized in real estate projects as per Ind AS 115.
Revenue from sale of real estate properties
Revenue from sale of real estate properties increased from 8,509.98 million in Fiscal 2022 to 15190.02 million in Fiscal
2023 primarily due to revenue recognized in multiple real estate projects where occupancy certificate was received, whereas in Fiscal 2022 revenue was recognized in respect of certain real estate projects as per Ind AS 115.
Other Operating Revenue
Other operating revenue decreased by to 81.13 million in Fiscal 2023 compared to 182.77 million in Fiscal 2022 primarily on account of an decrease in (i) scrap sale by 16.61% to 26.96 million in Fiscal 2023 compared to 32.33 million in Fiscal 2022, and (ii) forfeiture income / cancellation charges / other service changes to 41.16 million in Fiscal 2023 compared to
137.63 million in Fiscal 2022 on account of possession and allied revenue from real estate projects.
Other Income
Other income decreased by 15.65% to 323.08 million in Fiscal 2023 compared to 383.02 million in Fiscal 2022, mainly on account of a decrease in gain on extinguishment of financial liability to nil in Fiscal 2023 compared to 131.39 million in Fiscal 2022 and decrease in provision no longer required written back to 8.95 million in Fiscal 2023 compared to 53.46 million in Fiscal 2022. This was partially offset by increase in interest income on bank deposits from 63.01 million in Fiscal 2022 to 143.82 million in Fiscal 2023 and interest income on delay in payment by customers from 78.01 million in Fiscal 2022 to 118.81 million in Fiscal 2023.
Expenses
Total expenses increased by 52.66% from 10,760.17 million in Fiscal 2022 to 16,426.28 million in Fiscal 2023, primarily due to increase in cost of revenue, employee benefits expense, finance costs. depreciation and amortization expense, impairment of goodwill and other expenses.
Cost of Revenue
Cost of revenue increased from 8,198.69 million in Fiscal 2022 to 12,551.42 million in Fiscal 2023, primarily due to cost recognition in proportion to increase in the revenue from real estate projects recognized during the year under Ind AS 115.
Employee Benefits Expenses
Employee benefits expenses charged to profit and loss account increased by 38.16% from 640.45 million in Fiscal 2022 to 884.85 million in Fiscal 2023 to net of allocation to project costs of 180.07 million in Fiscal 2023 in comparison to 146.78 million in Fiscal 2022. The amount of 180.07 million in Fiscal 2023 and 146.78 million in Fiscal 2022 were directly related to the construction of projects, and were accordingly transferred to project costs, and the rest has been charged to the profit and loss account. The total employee benefits expense has increased by 35.27% from 787.23 million in Fiscal 2022 to 1,064.92 million in Fiscal 2023, mainly due to an increase in salaries, wages and bonus by 33.90% from 754.86 million in Fiscal 2022 to 1,010.72 million in Fiscal 2023 on account of increase in employee count, salary increments corresponding to increase in business operations and consequent increase in contribution to provident and other funds by 21.90% from 10.23 million in Fiscal 2022 to 12.47 million in Fiscal 2023. Staff welfare expenses increased by 88.48% from 22.14 million in Fiscal 2022 to 41.73 million in Fiscal 2023, which is consequential to increase in employee count.
Finance Costs
Finance costs charged to profit and loss account increased by 5.50% from 691.25 million in Fiscal 2022 to 729.24 million in Fiscal 2023 due to higher allocation to project costs of 1,896.51 million in Fiscal 2023 compared to 1,509.30 million in Fiscal 2022. There was an increase in the interest expense on borrowings by 26.33% from 2,021.04 million in Fiscal 2022 to 2,553.13 million in Fiscal 2023 which was offset by a decrease in other borrowing costs to 49.96 million in Fiscal 2023 compared to 158.07 million in Fiscal 2022, on account of fresh borrowing made during the year.
Depreciation and Amortization Expense
Depreciation and amortization expense charged to profit and loss account increased by 7.03% from 207.26 million in Fiscal 2022 to 221.84 million in Fiscal 2023 net of allocation to project costs of 53.16 million in Fiscal 2023 in comparison to 64.91 million in Fiscal 2022. The total depreciation and amortization expense has increased marginally from 272.17 million in Fiscal 2022 to 275.00 million in Fiscal 2023 primarily due to (i) increase in depreciation on property, plant and equipment from 244.42 million in Fiscal 2022 to 244.81 million in Fiscal 2023, and (ii) an increase in depreciation on right of use assets from 21.06 million in Fiscal 2022 to 22.91 million in Fiscal 2023, on account of new leases executed during the year.
Loss on Fair Value of Valuation/extinguishment of Derivative Instruments
Loss on fair value change increased significantly from loss of 141.89 million in Fiscal 2022 to loss of 332.30 million in Fiscal 2023 primarily on account of fair valuation of CCDs in accordance with applicable provisions under Ind As.
Impairment Losses
Impairment losses on financial assets decreased significantly to 0.39 million in Fiscal 2023 compared to 12.54 million in Fiscal 2022 on account of a decrease allowance for expected credit loss toward non-banking financial company and others.
Other Expenses
Other expenses increased by 65.60% from 865.79 million in Fiscal 2022 to 1,433.73 million in Fiscal 2023, primarily on account of (i) increase in advertisement and publicity expenses by 10.17% from 334.80 million in Fiscal 2022 to 368.86 million in Fiscal 2023, on account of increase in business operations, (ii) increase in rates taxes from 60.48 million in Fiscal
2022 to 137.33 million in Fiscal 2023 on account of reversal of GST input credit on Completed Projects, (iii) increase in customer incentive charges from nil in Fiscal 2022 to 37.32 million in Fiscal 2023 account of amount paid/payable to customers on Completed Projects, (iv) increase in software implementation and services charges from 21.62 million in Fiscal 2022 to 54.52 million in Fiscal 2023 on account increase software implementation in our operations, and (v) commission and brokerage from 129.90 million in Fiscal 2022 to 465.36 million in Fiscal 2023 on account of brokerage recognized in proportion to increase in the revenue from real estate projects recognized during the year under Ind AS 115.
Loss before Tax
For the reasons discussed above, loss before tax and share of loss in associate was 567.50 million in Fiscal 2023 compared to loss before tax of 1,364.17 million in Fiscal 2022.
Tax Expense
Current tax - for the year increased from 1.65 million in Fiscal 2022 to 148.42 million in Fiscal 2023 while current tax - for earlier year increased from (16.31) million in Fiscal 2022 to 0.48 million in Fiscal 2023. Deferred tax credit increased from (194.51) million in Fiscal 2022 to (79.25) million in Fiscal 2023.As a result, total tax expense amounted to 69.65 million in Fiscal 2023 compared to total tax credit of 209.17 million in Fiscal 2022.
Loss after Tax
Our loss after tax was 637.15 million in Fiscal 2023 compared to a loss after tax of 1,155.00 million in Fiscal 2022.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
Adjusted EBITDA was 2,155.64 million in Fiscal 2023 compared to 237.82 million in Fiscal 2022, while Adjusted EBITDA Margin was 13.88% in Fiscal 2023 compared to 3.04% in Fiscal 2022. Our Adjusted EBITDA accounts for overheads that are inherent in our business, such as employee benefits expenses of 884.85 million, advertisement and publicity expenses of 368.86 million, commission and brokerage expenses of 465.36 million, among others, in Fiscal 2023.For reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin, please see the section entitled " Non GAAP Measures Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to (Loss) After Tax" on page 441.
Fiscal 2022 Compared to Fiscal 2021
Total Income
Total income increased by 507.30% from 1,547.19 million in Fiscal 2021 to 9,396.00 million in Fiscal 2022 primarily due to an increase in revenue from operations.
Revenue from Operations
Revenue from operations increased from 820.57 million in Fiscal 2021 to 9,012.98 million in Fiscal 2022 mainly attributable to increase in revenue recognized in real estate projects as per Ind AS 115.
Revenue from sale of real estate properties
Revenue from sale of real estate properties increased from 312.98 million in Fiscal 2021 to 8,509.98 million in Fiscal 2022 primarily due to revenue recognized in multiple real estate projects where occupancy certificate was received, whereas in Fiscal 2021 revenue was recognized only in respect of certain projects as per Ind AS 115.
Other Operating Revenue
Other operating revenue increased by 126.99% from 80.52 million in Fiscal 2021 to 182.77 million in Fiscal 2022 primarily on account of an increase in (i) scrap sale by 126.40% from 14.28 million in Fiscal 2021 to 32.33 million in Fiscal 2022 on account of increased construction activities during the year, and (ii) other operating income which increased from 55.51 million in Fiscal 2021 to 137.63 million in Fiscal 2022 on account of possession and allied revenue from real estate projects.
Other Income
Other income increased from by 61.84% from 236.66 million in Fiscal 2021 to 383.02 million in Fiscal 2022, mainly on account of gain on extinguishment of financial liability from nil in Fiscal 2021 to 131.39 million in Fiscal 2022 on account of extinguishment of certain financial liabilities and unclaimed liabilities and excess provision written back from 0.61 million in Fiscal 2021 to 53.46 million in Fiscal 2022. Interest income on bank deposits increased by 26.78% from 49.70 million in Fiscal 2021 to 63.01 million in Fiscal 2022 on account of increase in fixed deposits and interest income on delay in payment by customers increased by 150.92% from 31.09 million in Fiscal 2021 to 78.01 million in Fiscal 2022.
Expenses
Total expenses increased by 336.24% from 2,466.55 million in Fiscal 2021 to 10,760.17 million in Fiscal 2022, primarily due to increase in cost of sales, employee benefits expense, finance cost depreciation and amortization expense, impairment losses on financial assets and other expenses.
Cost of Revenue
Cost of revenue increased by from 663.76 million in Fiscal 2021 to 8,198.69 million in Fiscal 2022, primarily due to cost recognition in proportion to increase in the revenue from real estate projects recognized during the year under Ind AS 115.
Employee Benefits Expenses
Employee benefits expenses charged to profit and loss account increased by 48.40% from 431.57 million in Fiscal 2021 to 640.45 million in Fiscal 2022 net of allocation to project costs of 146.78 million in Fiscal 2022 in comparison to 94.13 million in Fiscal 2021. The amount of 146.78 million in Fiscal 2022 and 94.13 million in Fiscal 2021 were directly related to the construction of projects, and were accordingly transferred to project costs, and the rest has been charged to the profit and loss account. The total employee benefits expense has increased by 49.75% from 525.70 million in Fiscal 2021 to 787.23 million in Fiscal 2022, mainly due to an increase in salaries, wages and bonus by 49.89% from 503.62 million in Fiscal 2021 to 754.86 million in Fiscal 2022 on account of increase in employee count, salary increments corresponding to increase in business operations and consequent increase in contribution to provident and other funds by 33.38% from 7.67 million in Fiscal 2021 to 10.23 million in Fiscal 2022. Staff welfare expenses increased by 53.64% from 14.41 million in Fiscal 2021 to 22.14 million in Fiscal 2022, which is consequential to increase in employee count.
Finance Costs
Finance costs charged to profit and loss account has decreased by 2.48% from 708.82 million in Fiscal 2021 to 691.25 million in Fiscal 2022 due to higher allocation to project costs of 1,509.30 million in Fiscal 2022 compared to 1,152.53 million in Fiscal 2021. There was an increase in the interest expense by 15.41% from 1,751.19 million in Fiscal 2021 to 2,021.04 million in Fiscal 2022 on account of cost of CCDs, and an increase in other borrowing costs by 73.40% from 91.16 million in Fiscal 2021 to 158.07 million in Fiscal 2022, on account of fresh borrowings made during the year.
Depreciation and Amortization Expense
Depreciation and amortization expense charged to profit and loss account has increased by 75.51% from 118.09 million in Fiscal 2021 to 207.26 million in Fiscal 2022 net of allocation to project costs of 64.91 million in Fiscal 2022 in comparison to 62.02 million in Fiscal 2021. The total depreciation and amortization expense has increased by 51.12% from 180.11 million in Fiscal 2021 to 272.17 million in Fiscal 2022 primarily due to (i) increase in depreciation on property, plant and equipment by 51.17% from 161.68 million in Fiscal 2021 to 244.42 million in Fiscal 2022, on account of addition made to capital assets, and (ii) an increase in depreciation on right of use assets by 33.97% from 15.72 million in Fiscal 2021 to
21.06 million in Fiscal 2022, on account of new leases executed during the year.
Loss on Fair Value of Valuation/Extinguishment of Derivative Instruments
Loss on fair value change increased significantly from gain of 489.96 million in Fiscal 2021 to loss of 141.89 million in
Fiscal 2022 primarily on account of fair valuation of CCDs in accordance with applicable provisions under Ind AS.
Impairment Losses
Impairment losses on financial assets increased from 11.78 million in Fiscal 2021 to 12.54 million in Fiscal 2022 on account of allowance for expected credit loss toward non-banking financial company and others.
Other Expenses
Other expenses increased by 63.92% from 528.18 million in Fiscal 2021 to 865.79 million in Fiscal 2022, primarily on account of (i) increase in advertisement and publicity expenses by 103.70% from 164.36 million in Fiscal 2021 to 334.80 million in Fiscal 2022, on account of increase in business operations, (ii) increase in legal and professional fees by 53.16% from
60.50 million in Fiscal 2021 to 92.66 million in Fiscal 2022 on account of increased development projects, (iii) increase in software charges from nil in Fiscal 2021 to 21.62 million in Fiscal 2022 on account of new software implementation, (iv) increase in provision for impairment by 880.65% from 4.96 million in Fiscal 2021 to 48.64 million in Fiscal 2022 on account of business operations, (v) increase in membership and subscription by 371.30% from 1.15 million in Fiscal 2021 to 5.42 million in Fiscal 2022 on account of business operations, and (vi) and increase in travelling and conveyance by 84.77% from 6.50 million in Fiscal 2021 to 12.01 million in Fiscal 2022 on account of business operations. Of these, income tax refund, dividend income, commission income, profit on sale of property, plant and equipment (net), provision no longer required, written back, gain on foreign exchange fluctuation (net), gain on remeasurement of financial liability, gain on extinguishment of financial liability (net), gain on termination of lease contracts, rent concession and miscellaneous income, are all non-recurring.
Loss before Tax
For the reasons discussed above, loss before tax and share of loss/ profit in associate was 1,364.17 million in Fiscal 2022 compared to loss before tax of 919.36 million in Fiscal 2021.
Tax Expense
Current tax - for the year decreased from 79.66 million in Fiscal 2021 to 1.65 million in Fiscal 2022 while current tax - for earlier year decreased from (1.64) million in Fiscal 2021 to (16.31) million in Fiscal 2022. Deferred tax credit decreased from (189.85) million in Fiscal 2021 to (194.51) million in Fiscal 2022. As a result, total income tax credit amounted to
209.17 million in Fiscal 2022 compared to 111.83 million in Fiscal 2021.
Loss after Tax
Our loss after tax was 1,155.00 million in Fiscal 2022 compared to a loss after tax of 862.78 million in Fiscal 2021.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
Adjusted EBITDA was 273.82 million in Fiscal 2022 compared to (582.85) million in Fiscal 2021, while Adjusted EBITDA Margin was 3.04% in Fiscal 2022 compared to (71.03)% in Fiscal 2021. Our Adjusted EBITDA accounts for overheads that are inherent in our business, such as employee benefits expenses of 640.45 million, advertisement and publicity expenses of 334.80 million, commission and brokerage expenses of 129.90 million, among others, in Fiscal 2022. For reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin, please see the section entitled " Non GAAP Measures Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to (Loss) After Tax" on page 441.
Liquidity And Capital Resources
We have historically financed the expansion of our business and operations through internal accruals for organic as well as inorganic expansion.
Cash Flows
The following table sets forth certain information relating to our cash flows in the periods indicated:
| Particulars | Fiscal | ||
| 2021 | 2022 | 2023 | |
| ( million) | |||
| Net cash inflow/(outflow) from operating activities | 364.38 | 2,052.44 | (2,781.76) |
| Net cash (outflow)/ inflow from investing activities | (262.40) | 537.76 | 76.27 |
| Net cash (outflow)/inflow from financing activities | 965.30 | (2,685.32) | 6,734.09 |
Operating Activities
Fiscal 2023
In Fiscal 2023, net cash used in operating activities was 2,781.76 million. Loss before tax was 567.50 million and adjustments primarily consisted of (i) gain on re-measurement of financial liability of 12.42 million, (ii) provision no longer required, written back of 8.95 million, (iii) interest income of 157.30 million and (iv) profit on sale of property, plant and equipment (net) of 14.50 million. This was partially offset by (i) finance costs of 729.24 million, (ii) depreciation and amortization expense of 221.83 million, (iii) loss on foreign exchange fluctuations of 15.71 million, (iv) impairment of goodwill of 263.85 million, and (v) loss on fair value of valuation/extinguishment of derivative instruments of 332.30 million.
Operating profit before working capital changes was 807.54 million in Fiscal 2023. The main changes in working capital included increase in (i) trade receivables of 241.28 million, (ii) other financial assets of 343.60 million, (iii) other current assets of 1,443.53 million, (iv) inventories of 6,907.95 million and increase in (i) trade payables of 587.69 million, (ii) other liabilities of 4,126.67 million, (iii) other financial liabilities of 746.58 million, (iv) provisions of 51.86 million. Income tax paid amounted to 162.63 million.
Fiscal 2022
In Fiscal 2022, net cash inflow from operating activities was 2,052.44 million. Loss before tax was 1,364.17 million and adjustments primarily consisted of (i) gain on re-measurement of financial liability of 12.21 million, (ii) loss on fair value of valuation/extinguishment of derivative instruments of 131.39 million, (iii) provision no longer required, written back of 53.46 million, and (iv) interest income of 86.06 million. This was partially offset by (i) loss on fair valuation of derivative instruments of 141.89 million, (ii) finance costs of 691.25 million, and (iii) depreciation and amortization expense of 207.26 million.
Operating loss before working capital changes was 553.42 million in Fiscal 2022. The main changes in working capital included decrease in (i) trade receivables of 93.73 million, (ii) other non-current assets of 172.65 million, and increase in (i) trade payables of 1,265.00 million, (ii) other current liabilities of 3,795.94 million, (iii) other financial liabilities of 517.60 million, (iv) provisions of 51.54 million, (v) other financial assets of 239.70 million, (vi) other current assets of 1,434.65 million, and (vii) inventories of 1,584.68 million. The cash generated from operations in Fiscal 2022 amounted to 2,084.01 million. Income tax paid amounted to 31.57 million.
Fiscal 2021
In Fiscal 2021, net cash inflow from operating activities was 364.38 million. Loss before tax was 974.61 million and adjustments primarily consisted of (i) interest income of 177.73 million, and (ii) gain on fair value of valuation/extinguishment of derivative instruments of 489.96 million, and (iii) provision no longer required, written back of 0.61 million. This was partially offset by (i) finance costs of 708.82 million, (ii) depreciation and amortization expense of 118.09 million, and (iii) exceptional items of 54.93 million.
Operating loss before working capital changes was 765.56 million in Fiscal 2021. The main changes in working capital included decrease in (i) trade receivable of 144.32 million, (ii) other financial assets of 138.38 million, and (iii) trade payables of 373.65 million; and increase in (i) other current assets of 572.87 million, (ii) inventories of 4,973.90 million, (iii) other current liabilities of 6,385.95 million, (iv) other financial liabilities of 321.31 million, (v) other non-current assets of 23.03 million, and (vi) provisions of 11.41 million. Cash generated from operations in Fiscal 2021 amounted to 292.36 million. Income tax refund (net of tax paid) amounted to 72.02 million.
Investing Activities
Fiscal 2023
Net cash inflow in investing activities was 76.27 million in Fiscal 2023, primarily on account of (i) loan recovered during the period of 381.42 million, (ii) interest received of 136.67 million, (iii) proceeds from sale of investments of 59.82 million, (iv) movement in short term deposit (net) of 100.64 million; and proceeds from long term deposit of 501.68 million. This was marginally offset by (i) loan extended during the year of 732.50 million, (ii) payment towards investment or purchase of investment of 2.71 million, (iii) investment in long term bank deposits of 211.59 million; and (iv) purchase of property, plant and equipment, capital work in progress, intangible assets, investment property and capital creditors and advances (net) of 189.37 million.
Fiscal 2022
Net cash inflow in investing activities was 537.76 million in Fiscal 2022, primarily on account of (i) loan recovered during the period of 1,628.08 million, (ii) interest received of 90.17 million, (iii) proceeds from sale of investments of 715.52 million, and (iv)movement in short term deposit (net) of 258.23 million; and proceeds from long term deposit of 293.32 million. This was marginally offset by (i) loan extended during the year of 526.90 million, (ii) payment towards investment or purchase of investment of 529.13 million, and (iii) investment in long term bank deposits of 506.46 million; and (iv) purchase of property, plant and equipment, capital work in progress, intangible assets, investment property and capital creditors and advances (net) of 893.91 million.
Fiscal 2021
Net cash outflow in investing activities was 262.40 million in Fiscal 2021, primarily on account of (i) loan extended during the year of 354.50 million, (ii) payment towards investment or purchase of investment of 27.64 million, (iii) Purchase of property, plant and equipment, capital work in progress, intangible assets, investment property and capital creditors and advances (net) of 528.22 million, and (iv) movement in short term deposit (net) of 409.80 million; and investment in long term bank deposits of 304.16 million. This was marginally offset by (i) loan recovered during the period of 959.94 million, (ii) interest received of 172.60 million, (iii) proceeds from long term deposit of 109.78 million; and (iv) proceeds from sale of investments of 106.39 million.
Fiscal 2023
Net cash inflow in financing activities was 6,734.09 million in Fiscal 2023, primarily on account of (i) proceeds from long term borrowings of 14,555.39 million, (ii) net proceeds of short term borrowings of 106.20 million. This was significantly offset by (i) repayment of long term borrowings of 5,534.88 million and (ii) finance costs paid of 2,353.24 million.
Fiscal 2022
Net cash outflow in financing activities was 2,685.32 million in Fiscal 2022, primarily on account of (i) repayment of long term borrowings of 3,393.94 million, (ii) net repayment of short term borrowings of 769.58 million, and (iii) finance costs paid of 2,473.81 million. This was significantly offset by proceeds from long term borrowings of 3,986.09 million.
Fiscal 2021
Net cash inflow in financing activities was 965.30 million in Fiscal 2021, primarily on account of long term borrowings of
4,713.37 million. This was partially offset by (i) repayment of long term borrowings of 1,196.54 million, (ii) net repayment of short term borrowings 1,382.81 million, and (iii) finance costs paid of 1,141.08 million.
Indebtedness
As of March 31, 2023, our total borrowings, including interest accrued (without impact of effective interest rate adjustments) were 17,510.80 million.
The following table sets forth certain information relating to our outstanding indebtedness as of March 31, 2023, and our repayment obligations in the periods indicated:
| Particulars | As of March 31, 2023 |
||||
| Total | Less Than 1 Year | 1 2 Years | 2 3 Years | More than 3 Years | |
| ( million) | |||||
| Current Borrowings | |||||
| Secured | 269.87 | 269.87 | - | - | - |
| Unsecured | 571.97 | 571.97 | - | - | - |
| Total Current Borrowings (A) | 841.84 | 841.84 | - | - | - |
| Non-current Borrowings | |||||
| Secured | 16,547.45 | 3,354.11 | 5,159.25 | 4,423.02 | 3,611.07 |
| Unsecured | - | - | - | - | - |
| Total Non-current Borrowings (B) | 16,547.45 | 3,354.11 | 5,159.25 | 4,423.02 | 3,611.07 |
| Total (A+B) | 17,389.29 | 4,195.95 | 5,159.25 | 4,423.02 | 3611.07 |
| Add: Interest accrued but not due on borrowings | 121.51 | 121.51 | - | - | - |
| (including debentures) ( C ) | |||||
| Grand Total (A+B+C) | 17,510.80 | 4,317.46 | 5,159.25 | 4,423.02 | 3,611.07 |
Contingent Liabilities and Off-Balance Sheet Arrangements
As of March 31, 2023, our contingent liabilities that have not been accounted for in the Restated Consolidated Financial Information were as follows:
| Particulars | ( million) |
| Contingent liabilities (under litigation) | |
| Demand for income tax | |
| - Assessment Year 2014-2015 | 1.04 |
| - Assessment Year 2015-2016 | 4.38 |
| - Assessment Year 2016-2017 | 13.28 |
| - Assessment Year 2016-2017 | 111.88 |
| - Assessment Year 2018-2019 | 0.23 |
| - Assessment Year 2019-2020 | 1.21 |
| - Assessment Year 2015-2016 and Assessment Year 2016-2017 | 61.15 |
| - Assessment Year 2013-2014 and Assessment Year 2015-2016 | 2.33 |
| Demand for Tax Deducted at Source | |
| - Assessment Year 2016-2017 | 0.67 |
| - Assessment Year 2017-2018 | 2.72 |
| - Assessment Year 2018-2019 | 0.02 |
| - Assessment Year 2020-2021 | 0.36 |
| Demand due to deficiency in stamp duty amount | 3.01 |
| Total | 202.28 |
Notes:
There are certain litigations involving customers and some farmers. The management carried out an estimation of the financial impact of such litigations and the management believes that no material liability will devolve on the group in respect of such litigations.
For further information on our contingent liabilities, please see the section entitled "Financial Statements - Restated
Except as disclosed in the Restated Consolidated Financial Information or elsewhere in this Red Herring Prospectus, there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors.
Contractual Obligations and Commitments
The following table sets forth certain information relating to future payments due under known contractual commitments as of March 31, 2023, aggregated by type of contractual obligation:
| Particulars | March 31, 2023 ( million) |
| Commitments | |
| Capital commitments | 40.38 |
| Other commitments & contingencies | - |
| Total | 40.38 |
For further information on our capital and other commitments, please see the section entitled "Financial Statements - Restated Consolidated Financial Information Note 42- Capital and other commitments" on page 360.
Capital Expenditures
In Fiscal 2021, 2022 and 2023, our payment towards purchase of property, plant and equipment, intangible assets, investment property and capital creditors and advances (net) was 528.22 million, 893.91 million and 189.37 million, respectively. The following table sets forth our property, plant and equipment and capital creditors for the periods indicated:
| Particulars | Fiscal 2021 | Fiscal 2022 | Fiscal 2023 |
| ( million) | |||
| Purchase of property, plant and equipment, investment property and capital creditors (net) | 528.22 | 893.91 | 189.37 |
| Total | 528.22 | 893.91 | 189.37 |
For further information, please see the section entitled "Financial Statements" on page.
Related Party Transactions
We enter into various transactions with related parties in the ordinary course of business. These transactions principally include short term employee benefits, post-employment benefits, director sitting fees, business support services, rent and maintenance expenses, rent and repair recovery, facility maintenance expenses, business promotion, reimbursement of expenses to/ from, sell of traded goods, recovery of testing charges, interest expenses/ income, branding fee, purchase of traded goods/inventory, project management expenses, legal and professional charges, rental income, commission and brokerage expense, donation corporate social responsibility, expenses paid on behalf of purchase of construction material and contract receipts.
Related parties with whom transactions have taken place during the period / year include our key management personnel, relatives of key management personnel, entities under significant influence of key management personnel, associate companies, entities in which our key management personnel and their relatives are trustees.
In Fiscal 2021, 2022 and 2023, the aggregate amount of such related party transactions was 669.09 million, 521.16 million and 570.75 million, respectively. The percentage of the aggregate value such related party transactions to our revenue from operations in Fiscal 2021, 2022 and 2023, was 81.54%, 5.78% and 3.67%, respectively. For further information on our related party transactions, please see the section entitled "Financial Statements Notes to Restated Consolidated Financial Information
Note 43 Related party disclosures" on page 362.
Changes in Accounting Policies
There have been no changes in our accounting policies during Fiscals 2021, 2022 and 2023.
Quantitative and Qualitative Disclosures about Market Risk
Our principal financial liabilities comprise of trade payables, borrowings, lease liabilities and other financial liabilities. These financial liabilities are directly derived from its operations. Our principal financial assets include loans, other bank balances, other financial assets, trade receivables and cash and cash equivalents.
We are exposed to credit risk, liquidity risk and market risk. Our senior management oversees the management of these risks. Our senior management ensures that our financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with our policies and risk objectives.
Credit Risk
Credit risk is the risk of financial loss to our Company if a customer or counterparty to a financial asset fails to meet its contractual obligations. Our exposure to credit risk is influenced mainly by the individual characteristics of each financial asset. The carrying amounts of financial assets represent the maximum credit risk exposure. We monitor our exposure to credit risk on an ongoing basis. We assess and manage credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets. We assign the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets being low credit risk; moderate credit risk; and high credit risk.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Our approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.
Market Risk
Interest rate risk
Liabilities
Our focus is to minimise interest rate cash flow risk exposures on financing and interest rates are driven by loan documents signed with lenders.
Assets
Our fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
For further information, please see the section entitled "Financial Statements - Restated Consolidated Financial Information Note 41(C)-Financial risk management-Market risk" on page 358.
Unusual or Infrequent Events or Transactions
Except as described in this Red Herring Prospectus, to our knowledge, there have been no unusual or infrequent events or transactions that have in the past or may in the future affect our business operations or future financial performance.
Significant Economic Changes that Materially Affect or are Likely to Affect Income from Continuing Operations
Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect income from continuing operations identified above in the sections entitled "Managements Discussion and Analysis of Financial Condition and Results of Operations Significant Factors Affecting our Results of Operations and Financial Condition" and the uncertainties described in "Risk Factors" on pages 427 and 30, respectively.
Known Trends or Uncertainties
Our business has been subject, and we expect it to continue to be subject, to significant economic changes arising from the trends identified above in the sections entitled "Managements Discussion and Analysis of Financial Condition and Results of
Operations Significant Factors Affecting our Results of Operations and Financial Condition" and the uncertainties described in "Risk Factors" on pages 427 and 30, respectively. To our knowledge, except as discussed in this Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.
Future Relationship Between Cost and Income
Other than as described in the sections entitled "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 30, 174 and 424, respectively, to our knowledge there are no known factors that may adversely affect our business prospects, results of operations and financial condition.
New Products or Business Segments
Except as set out in this Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new business segments.
Competitive Conditions
We operate in a competitive environment. Please see the section entitled "Risk Factors", "Industry Overview", "Our Business" and on pages 30, 132 and 174, respectively, for further details on competitive conditions that we face across our various business segments.
Segment Reporting
We are principally engaged in only one segment, ‘real estate and allied activities whereas we have three segments as per Ind AS 108 (i) Real Estate; (ii) NBFC; and (iii) Others. We have operations only within India. Accordingly, the segment revenue, segment results, total carrying amount of segment assets and segment liability, total cost incurred to acquire segment assets and total amount of charge for depreciation during the period, is as reflected in the Restated Consolidated Financial Information.
For further information, please see the section entitled "Financial Statements - Restated Consolidated Financial Information Note 55-Segment information" on page 413.
Significant Dependence on Single or Few Customers or Suppliers
Given the nature of our business operations, we do not believe our business is dependent on any single or a few customers or suppliers.
Seasonality/ Cyclicality of Business
Our sales depend on the launches of projects, and we do not believe that our business is seasonal. For further information, please see the sections entitled "Industry Overview" and "Our Business" on pages 132 and 174, respectively.
Significant Developments after March 31, 2023, that May Affect our Future Results of Operations
There have been no significant developments after March 31, 2023, that may affect our (i) tradability or profitability; (ii) value of assets; or (iii) our ability to pay our liabilities, except as disclosed below:
Recent Developments
Due to no new projects being launched during the quarter ended June 30 2023, the corresponding sales of units during the quarter ended June 30, 2023, may be lower than our sales in the quarter ended March 31, 2023. However, we expect our gross collections in the quarter ended June 30, 2023 to be higher than gross collections in the quarter ended March 31, 2023.
Further, we had not received any occupancy certificates for our real estate projects during the quarter ended June 30, 2023, compared with the quarter ended March 31, 2023. Accordingly, revenue recognition from our projects as per Ind-AS 115 is likely to be lower in the quarter ended June 30, 2023, than revenue recognition from our projects in the quarter ended March 31, 2023.
Though our revenue recognition from projects may be lower as per Ind-AS 115, however, owing to better product mix in revenue recognition, we expect to incur lower loss after tax in the quarter and three months ended June 30, 2023 compared with the loss after tax experienced in the quarter ended March 31, 2023. For further details, please refer to the section entitled "Risk Factors It is difficult to predict our future performance, or compare our historical performance between periods, as our revenue fluctuates significantly from period to period" on page 40.
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