i) The Company has obtained "Right of Use" (ROU) of 87,500 sq.ft. of Commissariate Road Property from WLM Logistics Parks Private Limited (WLMPL) as a consideration against various advances under business settlement. The value of the ROU amounting to Rs. 10,311 Lakhs has been disclosed under property, plant & equipment during the previous year.
ii) With the available information, the Company is not in a position to determine the period for "Right to Use" (ROU). Accordingly no amortisation has been done during the year.
i) The Projets Plaza and Soho are in the process of exiting as per SARFAESI notice received from the lender. Accordingly, the fair value of land Rs. 12,998 lakhs accounted for during the transition of IndAS has been provided for the handover of the Land to the Landowner on expected cancellation of the Joint Development Agreement. However, the development cost of Rs. 8,835 Lakhs incurred by the Company relating to those projects has been provided during the previous year.
ii) During the previous year the Company has transferred the accumulated Cost of Rs. 3,177 lakhs for Chelsea project from CWIP to Inventory on account of exit of the project via Deed of Settlement with the Landowners and recognition as residential project. Accordingly, provision created on such amount of Rs. 3,177/- lakhs is written back during the previous year.
(i) The Company had invested Rs 8300 Lakhs in Non-cumulative redeemable preference shares (NCRPS) carrying non-cumulative dividend of 9% p.a. of face value of Rs 10/- each . The preference shares carry discretionary dividend in accordance with the terms of issue. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. Each NCRPS holder is entitled to one vote per share only on resolutions placed before the Company which directly affects the rights attached to NCRPS. These shares may be redeemed, in whole or in part, at the option of the company at any time subject to satisfaction of certain conditions, at the stipulated redemption amount and if not redeemed earlier, these shares will be redeemed on or before 11th December 2032.
(iii) In an earlier year, the Company has transferred the investment in an AOP - Whitefield Housing Enterprises amounting to Rs. 1,008 lakhs to Inventory based on the management's expectation to sell the underlying asset in this investment in the ordinary course of business. During the current year, the Company converted inventory back into investment and settled on the basis of a Memorandum of Understanding with parties to the AOP alongwithh other dues and classified as Advance against property under note 10.
(iv) Marathalli Ventures Pvt. Ltd., (formerly known as NUDPL Ventures Private Limited) and Northroof Ventures Pvt. Ltd., (formerly known as NHDPL South Private Limited) both are 100% subsidiaries of the Satchmo Holdings Ltd (formerly known as NEL Holdings South Limited / the Company) have availed credit facilities aggregating Rs 18,500 Lakhs and Rs 31,500 Lakhs respectively, from YES Bank Ltd. As a security for the credit facilities availed, the parent company has furnished in favour of the bank an unconditional and irrevocable guarantees, guaranteeing the due and prompt repayment of the amount outstanding under the facilities and executed a Deed of Corporate Guarantee (the guarantee) dated 29.02.2016 and 03.10.2015 respectively.
On defaults in repayment of principal amounts and interest along with other charges in respect of facilities availed by them, the bank under the circumstances has invoked the guarantees furnished by the parent company and call upon the demand of outstanding amount of Rs 19,490 Lakhs and Rs 33,793 Lakhs respectively together with interest and other charges vide demand notice reference no. YBL/CFUIBBANGALORE/2019-20/May/Nitesh/4 dated 10.06.2019 and YBL/CFUIBBANGALORE/2019-20/April/Nitesh/2 dated 12.04.2019 respectively.
During the earlier years, The Company in the process of discussion for settlement of liability as demanded by the bank and has accounted the demand as "Financial Guarantee Obligation" in the books of account, by considering the provision amount as expenses under the head "Exceptional Items" based on the credit worthiness of the subsidiaries as on the balance sheet date.
(v) During the year, The Company has divested 100% of its holding in Lob Facilities Management Private Limited (formerly known as Lob Property Management Private Limited). Consequent to said divestment Lob Facilities Management Private Limited (formerly known as Lob Property Management Private Limited) ceases to be the subsidiary of the Company as on 30th November 2023.
(i) includes payable to landowner for land under Joint Development Agreement (JDA) amounting Rs 1,456 Lakhs (PY - Rs. 8,056 lakhs) which is payable to land owners and disclosed in note no 17 under the head "Liability under joint development arrangement".
(ii) The Company has impaired the inventory amount of Hunter Valley project as the said project is under exit mode.
(iii) The Company has engaged in the business of purchase and sale of shares as per change in the object clause of the memorandum of association of the Company from previous year onwards.
i) Advances for land though unsecured, are considered good as the advances have been given based on arrangements / memorandum of understanding executed by the Company and the Company / seller / intermediary is in the course of obtaining clear and marketable title, free from all encumbrances, including for certain properties under litigation.
ii) The Company has granted unsecured loans and advances of Rs. 1,045 lakhs (PY 390 lakhs) to its subsidiaries in the ordinary course of business for the furtherance of the business objectives of the Group as a whole. Such advances given to its subsidiaries are part of business policies and are not prejudicial to the interest of the Company.
As the subsidiary in the instant case, the said advance of Rs. 1045 lakhs has been provided in the books as indicated above.
iii) Amount paid by the company to the land owners for the land towards joint development of the property is recognised as deposit since it is refundable after completion of the project.
The continuous loss and liquidity constraints of the company lead to non-payment of principal and non-servicing of interest, (i) resulting all the borrowing accounts are falling under the classification of Non Performing Assets (NPA) by the Banks / Financial Institutions:
a) During the previous year, YES Bank, pursuant to the execution of Assignment Agreement, have absolutely, assigned and transferred, unto and in favour of J C Flower Asset Reconstruction Private Limited (JCF ARC), the loans and all the amounts due and monies stipulated in or payable under the financing documents by the company to YES Bank together with all underlying security interests (including pledges, undertakings and/or guarantees thereto) and rights, title and interests in relation to the same.
b) HDFC bank has called upon the loan and issued notice under SARFAESI Act for recovery of their loan against the related projects.
c) The Company has accepted onetime settlement proposal (OTS) dated 14th April 2023 ,as given by 1st Lender (JCF) for an amount of Rs. 8,500 lakhs. Company has already paid Rs. 1,500 lacs out of the said amount of 8,500 lakhs in this year. As per the OTS, the amount is to be settled within 180 days from the date of OTS. Company has also received OTS from 2nd Lender (HDFC) dated 6th June 2023 for an amount of Rs. 4,590 lakhs and Company has already paid Rs. 3,079 lakhs against the said OTS by the end of the year. Company has received Revocation letter from first lender in November 2023 and is in process of negotiation for extension of OTS. Post receipt of onetime settlement proposal (OTS) from the two lenders, Company has reclassified the loans payable at the OTS and the balance outstanding along with accrued interest for an aggregate amount of Rs. 48,233 lakhs as Disputed Liability as the bank has released its charge on such projects but the lender has not provided any confirmation to the effect.
The borrowings from bank and financial institution have been allocated to projects covered in the sanction letter based on cash ii) flows related to the said projects.
Further, post exit of projects and on receipt of NOC from bank and financial institution for clearance of charge, net amount outstanding as per books is transferred to disputed liability under note 14 which would be pending till the overall settlement of loan balance with bank and financial institution. Details of the same is given below.
17 (i) The Company had entered into the Joint Development Agreement (JDA) with land owners for development of the properties at its own cost of development and for the consideration of the land of the land owner, the company shares the residential flats or revenue from the commercial property as per jointly agreed terms and conditions of the agreement. The land acquired by the company from the land owner was initialy recorded in the books of account at the estimated cost of construction for the share of the property to be handed over to land owner on completion of the construction / development of the property.
The Company has a defined benefit gratuity plan (unfunded) as at March 31, 2024 and as at March 31, 2023. The Company's defined benefit gratuity plan is a final salary plan.
a) a) Gratuity - (Unfunded)
As at March 31, 2024 the Gratuity plan of the company is unfunded. The company is only making book provision for the entire Gratuity liability on the valuation and follows"pay as you go" system to meet the liabilities as and when they fall due. Therefore, the scheme fully unfunded, and no assets are maintained by the company and asset values are taken as zero; there is a liquidity risk in that thay may run out of cash.
b) Cost of Long term benefit by way of accumulated compensated absence arising during the service period of employees is calculated based on cost of service and the pattern of leave availment. The present value of obligation towards availment under such long term benefit is determined based on the actuarial valuation carried on by an Independent Actuary using projected limit credit method as at the close of accounting period. The Company is providing liability as per actuarial valuation in its books of account as the plan is not funded.
The following tables summarise the components of net benefit expense recognised in the statement of profit or loss and the funded status and amounts recognised in the balance sheet for the respective plans:
vii. The defined benefit obligations have the undermentioned risk exposures-
Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.
Salary Inflation risk : Higher than expected increases in salary will increase the defined benefit obligation.
Demographic risk : This is the risk of volatility of results due to unexpected nature of decrements that include mortality attrition, disability and retirement. The effects of this decrement on the DBO depend upon the combination salary increase, discount rate, and vesting criteria and therefore not very straight forward. It is important not to overstate withdrawal rate because the cost of retirement benefit of a short caring employees will be less compared to long service employees.
33 Earnings per share ['EPS']
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity Shares.
37 Financial risk management objectives and policies
The Company's principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the acquisition and Company's real estate operations. The Company's principal financial assets include Trade Receivable, cash and cash equivalents that derive directly from its operations and refundable deposits which is given on aquiition of land to land owners.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. The Company's senior management is supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company's senior management that the Company's financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
i. Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings. The sensitivity analyses in the following sections relate to the position as at 31 March 2024 and 31 March 2023. The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt.
The analyses exclude the impact of movement in market variables on: the carrying values of gratuity and other post retirement obligations; and provisions.
The following assumptions have been made in calculating the sensitivity analysis:
1. The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2024 and 31 March 2023.
ii. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long-term debt obligations with floating interest rates.
iii. Credit risk
Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.
Financial Instrument and Cash Deposit
Credit risk from balances with banks and financial institutions is managed by the Company's treasury department in accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties and loans are given only within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company's Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Company's Finance Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through a counterparty's potential failure to make payments.The Company's maximum exposure to credit risk for the components of the statement of financial position at 31 March 2024 and 31 March 2023 is the carrying amounts.
39 Capital management
For the purpose of the Company's capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company's capital management is to maintain strong credit rating and healthy capital ratios in order to support its business and maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company's policy is to keep the gearing ratio minimal. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.
In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings.
The company has defaulted in repayment of dues to debenture holders and banks/financial institutions which includes overdue Principal and interest as on Balance Sheet date. [Refer Note no 13]
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2024 and March 31, 2023.
40 Recent Pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
41
As per para 4 of Indian Accounting Standard (Ind AS) 108 - Operating Segments, if a financial report contains both the consolidated financial statements of a parent that is within the scope of this Ind AS as well as the parent's separate financial statements, segment information is required only in the consolidated financial statements. Hence segment information as required under Ind AS 108 - Operating Segments is given in the Consolidated Ind AS financial statements of the Company.
42 For three residential projects (British Colombia, Hunter Valley, Chelsea) launched in prior to the effective date of RERA Act. Pending approval of sanction plan and certificate of commencement as well as prevalent adverse market condition of real estate business, the company has not registered the said projects under RERA Act. The Company has exited from British Columbia and Chelsea projects and is in the process of exiting Hunter Valley project.
43 Sale of projects
During the Year 2023-24
During the year, The Company has exited British Columbia project and has cleared the loan in relation to the project.
During the Year 2022-23
During the year, The Company has exited Chelsea project and has cleared the loan in relation to the project. The company had earlier intended to convert this project from residential to commercial and accordingly classified as Capital WIP of Rs. 37 crores. As said conversion did not happen till the time of exit, the company has relcassified the CWIP as inventory and transferred to the Landowners via memorandum of settlement during the year.
44 Going Concern
These financial statements have been prepared on a going concern basis notwithstanding accumulated losses as at the balance sheet date and a negative net current assets situation. As per the managment with these exits of residential projects and the debt coming down, the company is hopeful of revival in the coming years.
These financial statements therefore do not include any adjustments relating to recoverability and classification of asset amounts or to classification of liabilities that may be necessary if the Company is unable to continue as a going concern.
45 Prior year comparatives
The figures of the previous year have been regrouped / reclassified, where necessary, to conform with the current year's classification.
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