Key audit matter

How our audit addressed the key audit matter

1. Revenue recognition for sale of residential units

The Company applies Ind AS 115, Revenue from Contracts with Customers (Ind AS 115) for recognition of revenue from sale of residential units and revenue fromjoint development agreements. Refer note 2.2(a) (I)(i) and 25 to the standalone financial statements for accounting policy and related disclosures.

Revenue is recognised upon transfer of control of residential units to customers for an amount which reflects the consideration the Company expects to receive in exchange for those units. The point of revenue recognition is normally based on the terms as included in the intimation for the handover of unit to the customer on completion of the project, and substantial collection is received. The Company recognises the revenue at a point in time upon handover/deemed handover of the residential units.

For contracts involving sale of residential units, the Company receives the consideration in accordance with the terms of the contract in proportion of the percentage of completion of such real estate project and represents payments made by customers to secure performance obligation of the Company under the contract enforceable by customers. The assessment of such consideration received from customers involves significant judgment in determining if the contracts with customers involves any financing element.

For revenue contracts forming part of joint development arrangements that are not jointly controlled operations ('JDA'), the revenue from the development and transfer of constructed area/revenue share with corresponding land/ development rights received by the Company is measured at the fair value of the estimated construction service rendered by the Company to the landowner under JDA. Such revenue is recognised over a period of time in accordance with the requirements of Ind AS 115.

Ind AS 115 requires significant judgment in determining when 'control' of the residential units is transferred to the customer. Further, for projects executed through JDA, significant estimate is undertaken by management for determining the fair value of the estimated construction service.

Our audit procedures on revenue recognised from sale of residential units included, but were not limited to the following:

• Evaluated the appropriateness of accounting policy for revenue recognition on sale of residential units in terms of principles enunciated under Ind AS 115;

• Assessed the management evaluation of determining revenue recognition from sale of residential units at a point in time in accordance with the requirements under Ind AS 115;

• Obtained and understood the revenue recognition process, evaluated the design and performed test of controls over revenue recognition including determination of point of transfer of control and completion of performance obligations on a sample basis;

• Inspected, on a sample basis, underlying customer contracts and sale deed/ handover documents, evidencing the transfer of control of the residential units to the customer based on which revenue is recognised at a point in time, and whether the contracts with customers involved any financing element; and

• Visited certain sites during the year for selected projects to understand the nature, status and progress of the projects.

For projects executed during the year in accordance with JDAs, we have performed the following procedures on a sample basis:

• Obtained and understood the revenue recognition process and performed test of controls over revenue recognition including fair valuation of estimated construction service revenue under JDA;

• Obtained and examined the computation of the fair value of the construction service under JDA with reference to project cost estimates and mark up considered by the management;

Key audit matter

How our audit addressed the key audit matter

Revenue recognition for sale of residential units (cont’d)

Considering the significance of management judgements and estimates involved and the materiality of amounts involved, aforementioned revenue recognition is identified as a key audit matter.

• Obtained the JDAs entered into by the Company, including addendums thereto and compared the ratio of constructed area/ revenue sharing arrangement between the Company and the landowner as mentioned in the agreement to the computation statement prepared by the management; and

• Tested the computation for recognition of revenue over a period of time for revenue contracts forming part of JDA and management's assessment of stage of completion of projects and project cost estimates.

Assessed the adequacy of disclosures included in the standalone financial statements in compliance with the requirements of Ind AS 115.

2. Revenue recognition for contractual construction projects

The Company recognises revenue over a period of time in accordance with Ind AS 115, Revenue from Contracts with Customers (Ind AS 115). Refer note 2.2(a)(l)(ii) and 25 to the standalone financial statements for accounting policy and related disclosures.

The Company recognises revenue from construction contracts on the basis of stage of completion (input method) based on the proportion of contract costs incurred at reporting date, relating to the total estimated costs of the contract at completion. The recognition of revenue is therefore dependent on estimates in relation to total estimated costs of each such contract, which is subject to inherent uncertainty as it requires ascertainment of progress of the project, cost incurred till date and balance cost to be incurred to complete the project.

Significant judgments are also involved in determining when the underlying performance obligations are satisfied and also determining expected losses, when such losses become probable based on the expected total contract cost. Cost contingencies are included in these estimates to take into account specific risks of uncertainties or disputed claims against the Company, arising within each contract. These contingencies are reviewed by the Management on a regular basis

Our audit procedures on revenue recognition for

contractual construction projects included, but

were not limited to the following:

• Evaluated the appropriateness of accounting policy on revenue recognition for contractual construction projects in terms of principles enunciated under Ind AS 115;

• Evaluated the design and tested operating effectiveness of key controls around budgeting of project cost, approval of purchase orders, recording of actual cost, raising of invoices and estimating the cost to complete the project;

• Assessed management evaluation of determining revenue recognition for contractual construction projects over a period of time in accordance with the requirements of Ind AS 115;

• On a sample basis, tested costs incurred by examining underlying invoices and other applicable documents;

• For sample invoices raised during the year, verifying the underlying documents including invoices, work orders and customer acceptance;

Key audit matter

How our audit addressed the key audit matter

Revenue recognition for contractual construction projects(cont’d)

throughout the life of the contract and adjusted where appropriate.

Considering the significance of management judgements and estimates involved and the materiality of amounts involved, revenue recognition from construction contracts is identified as a key audit matter.

• Compared actual cost with budgeted cost to determine percentage of completion of the project; and

• Assessed the adequacy of disclosures included in the standalone financial statements in compliance with the requirements of Ind AS 115.

3. Assessing the recoverability of carrying value of Inventories, advances paid towards land procurement and deposits paid under joint development arrangements (JDA)

Refer note 2.2(c), 2.2(d), 2.2(o), 10, 14 and 13 to the standalone financial statements for accounting policies on inventories, advances paid towards land procurement and deposits paid under JDA (financial asset) and related financial disclosures.

As at 31 March 2023, the carrying value of the inventory comprising of Work in progress, Stock of residential units in completed projects and land stock is ? 80,259.42 million, land advances is ? 9,648.96 million and refundable deposits paid under JDA is ? 3,406.74 million, represents a significant portion of the Company's total assets.

The inventories are carried at lower of cost and net realisable value ('NRV'). The determination of the NRV involves estimates based on prevailing market conditions and taking into account the estimated future selling price, cost to complete projects and selling costs.

Advances paid by the Company to the seller/ intermediary towards outright purchase of land is recognised as land advance under other assets during the course of transferring the legal title to the Company, whereupon it is transferred to land stock under inventories. Further, deposits paid under joint development arrangements are in the nature of non-refundable/refundable deposits, for acquiring the development rights. On the launch of the project, the non-refundable amount is transferred as land cost to work-in-progress.

Our procedures in assessing the carrying value of

the inventories, land advances and deposits paid

under JDA included, but were not limited to the

following:

• Evaluated the appropriateness of accounting policies with respect to inventories, land advances and deposits paid under JDA in terms of principles enunciated under applicable accounting standards;

• Evaluated the design and tested operation of internal controls related to testing NRV/ net recoverable value with carrying amount of inventory, land advances and deposits paid under JDA;

• Inquired with management to understand key assumptions used in determination of the NRV/ net recoverable value; and

• Obtained and tested the computation/ assessment of the NRV/ net recoverable value on a sample basis.

For inventory balance:

• Compared the NRV to recent sales in the project or to the estimated selling price;

• Obtained and assessed the Company's methodology applied and assumptions used in assessing the net realisable value based on current market conditions and having regard to expected launch of the project, project development plan and expected future sales;

• Compared the estimated construction costs to complete each project with the Company's updated budgets; and

Key audit matter

How our audit addressed the key audit matter

Assessing the recoverability of carrying value of Inventories, advances paid towards land procurement and deposits paid under joint development arrangements (JDA)

The aforesaid deposits and advances are carried at the lower of the amount paid/payable and net recoverable value, which is based on the management's assessment including the expected date of commencement and completion of the project and the estimate of sale prices and construction costs of the project.

We identified the assessment towards recoverability of carrying value of inventory, land advances and deposits paid under JDA as a key audit matter due to the significance of the balance to the standalone financial statements as a whole and the involvement of estimates and judgement in the assessment.

• For land stock, on a sample basis, obtained the fair valuation reports or the published guidance values and reviewed the valuation methodology, key estimates and assumptions adopted in the valuation. Involved auditor's valuation expert, where such fair valuation reports were obtained.

For land advances/ deposits paid under JDA

• Obtained an update on the status of the land acquisition/ project progress from the management and verified the underlying documents for related developments in respect of the land acquisition to assess Company's rights over the land parcels in subject and expected recoverability of land advances / deposits paid under JDA; and

• Carried out external confirmation procedures on sample basis to obtain evidence supporting the carrying value of land advance and deposits paid under JDA.

Assessed the adequacy of disclosures included in the standalone financial statements in compliance with the applicable accounting standards.

Key audit matter

How our audit addressed the key audit matter

4. Assessment of certain transactions entered into by the Company and recoverability of balances, on which regulatory proceedings are ongoing

The Company had entered into a joint development arrangement with certain landowners in Gurugram, Haryana, in earlier years. In respect of this transaction, the Enforcement Directorate ('ED') after due investigation has filed a complaint with Adjudicating Authority, Prevention of Money Laundering ('AA-PML'), alleging certain irregularities in respect of the manner of allotment and pricing of certain plots under this project or payment of applicable fees and charges by the Company or the landowners, with respect to the terms and conditions mentioned in the development policy of Haryana Development and Regulation of Urban Areas Act (HDRUAA), 1975 and the bilateral agreement between the land owners

Our audit procedures on this matter included, but were not limited to the following:

• Obtained an understanding from the management with respect to process and controls followed by the Company for identification, monitoring of significant developments and impact analysis in relation to the litigations, including completeness thereof;

Key audit matter

How our audit addressed the key audit matter

Assessment of certain transactions entered into by the Company and recoverability of balances, on which regulatory proceedings are ongoing

and Directorate of Town and Country Planning, Haryana (DTCP) resulting in provisional attachment under the Prevention of Money Laundering Act, 2002 ('PMLA') of land parcels with value of ^2,016.05 million held by Technobuild Developers Private Limited ('TDPL') disclosed under Note 39(4). The Company has entered into a Memorandum of Understanding ('MoU') with TDPL for acquiring land parcels using advances extended by the Company, of equivalent value. As per the MoU, TDPL and its affiliates cannot transfer land parcels without prior approval of the Company and the Company has absolute rights over land parcels acquired by TDPL

and its affiliates acquired from such advance given by the Company.

As part of the inquiry process, the Company and its officers have been asked to provide contracts, documents and justification in respect of this transaction by the concerned authorities. The Company and its officers have been responding to the queries raised / documents sought from time to time. During the year, the Company is in receipt of Show Cause Notice (SCN) under the PMLA from AA-PML and the Company in consultation with its legal counsel has responded to allegations made in SCN.

The Company, based on its overall assessment and independent legal opinion obtained, believes that these transactions have been carried out in accordance with all the applicable laws and regulations and the said bilateral agreement and has not identified any adverse material impact to the standalone financial statements.

Considering the significance of the matter which involves uncertainty of outcome due to ongoing proceedings in AA-PML and significant judgements and estimates by the Company on the assessment of the legality and outcome of the above case, this is considered as a key audit matter.

Considering this matter is also fundamental to the understanding of the user of standalone financial statement, we draw attention to Note 39(4) of the standalone financial statements.

• Gaining an understanding of the ongoing regulatory proceedings through discussions with the management, and reading the underlying case related documents, communications and legal opinions to ensure consistency with the explanations provided to us. and we have also assessed the objectivity, experience, competence and independence of management's expert;

• Evaluated and challenged the Company's assessment of recoverability of the balances outstanding as at the balance sheet date, the business rationale for entering these transactions, including considering the developments on the matter subsequent to the balance sheet date;

• Engaged auditor's expert, who obtained an understanding of the current status of the litigation, reviewed independent legal opinion obtained by the management and considered relevant legal provisions and available precedents to validate the conclusions made by the management's expert;

• Communicated and discussed periodic updates on these transactions with those charged with governance, including the recoverability and management's business rationale aspects for these transactions; and

• Assessed and validated the adequacy and appropriateness of the disclosures made by the management in the standalone financial statements.

Key audit matter

How our audit addressed the key audit matter

5. Restatement in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors “(Ind AS 8)”

The accounting policies for restatement of standalone financial statements are set out in Note 2.2(u) to the standalone financial statements.

During the current year, the Company has made restatements relating to (i) capitalisation of borrowing cost (ii) accounting for Joint Development Arrangement (JDAs) [not being jointly controlled operations] (iii) accounting for significant financing element in customer contracts and various other restatements which has been explained in Note 45 of the standalone financial statements. Amongst other things, the aforesaid restatements required detailed re-computation of capitalisation of eligible borrowing costs for earlier years, detailed assessment of all ongoing JDAs entered into by the Company and required significant judgements and estimates to be made on part of the management. Further, assessment of consideration received from customers involves significant judgment in determining if the contracts with customers involves any financing element.

Considering the quantum of amounts involved, the audit efforts required to audit such restatements indepth, frequent interactions with the management and those charged with Governance, the restatement is identified as a key audit matter for the current year audit.

The above matter is also considered fundamental to the understanding of the user of standalone financial statement on account of the restatement of comparative financial information for various corrections of material prior period errors and reclassifications, which are further described in Note 45 of the standalone financial statements.

Our audit procedures on this matter included, but

were not limited to the following:

• Obtained an understanding of the management process for identification of restatement adjustments to be made in the standalone financial statements;

• Evaluated the design and tested the operating effectiveness of internal controls relevant to restatement adjustments;

• Evaluated the appropriateness of the implementation of accounting policies and ensured compliance with the requirements of the respective accounting standards and related authoritative pronouncements;

• Obtained and tested the computation/ workings involved in restatement and understood from the management, the rationale in view of the applicable accounting standards for the restatement adjustments carried out in the standalone financial statements;

• Obtained and assessed the relevant contracts/ agreements for impact assessment of restatement adjustments; and

• Ensured that all restatement adjustments have been dealt with and disclosed in the standalone financial statement in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors as well as the respective accounting standards (including division II of Schedule III), as relevant.