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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 532868ISIN: INE271C01023INDUSTRY: Construction & Contracting

BSE   ` 179.00   Open: 176.00   Today's Range 174.80
180.30
+1.75 (+ 0.98 %) Prev Close: 177.25 52 Week Range 141.20
265.50
Year End :2018-03 

1. CORPORATE INFORMATION

DLF Limited (‘the Company’) is primarily engaged in the business of colonisation and real estate development. The operations of the Company span all aspects of real estate development, from the identification and acquisition of land, to planning, execution, construction and marketing of projects. The Company is also engaged in the business of leasing, maintenance services and recreational activities which are related to the overall development of real estate business. The Company is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two recognised stock exchanges in India. The registered office is situated at Shopping Mall, 3rd Floor, Arjun Marg, Phase I, DLF City, Gurugram - 122002, Haryana.

The financial statements were authorised for issue in accordance with a resolution of the Board of Directors dated 21 May 2018.

2.1 Basis of preparation

The standalone financial statements (‘financial statements’) of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs (‘MCA’) under Section 133 of the Companies Act, 2013 (‘Act’) read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Act. The Company has uniformly applied the accounting policies during the periods presented, except for the changes in accounting policy for amendments to the standard that were effective for annual period beginning from on or after 1 April 2017:

- Amendments to Ind AS 7 Statement of Cash Flow: Disclosure Initiative for additional disclosure of changes in liabilities arising from financing activities on account of non-cash transactions;

- Amendment to Ind AS 102 Share-based Payment to cover:

i) Measurement of cash-settled share-based payments;

ii) Classification of share-based payments settled net of tax withholdings; iii) Accounting for a modification of a share based payment from cash-settled to equity-settled.

The financial statements have been prepared on going concern basis in accordance with accounting principles generally accepted in India. Further, the financial statements have been prepared on historical cost basis except for certain financial assets and financial liabilities, derivative financial instruments and share based payments which are measured at fair values as explained in relevant accounting policies.

In addition, the carrying values of recognised assets and liabilities designated as hedged items in cash flow hedges that would otherwise be carried at amortised cost are adjusted to record changes in the fair values attributable to the risks that are being hedged in effective hedge relationships. The financial statements are presented in Rupees in lakhs, except when otherwise indicated.

(i) Contractual obligations

Refer note 51(i) for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(ii) Capital work-in-progress

Capital work-in progress comprises expenditure for buildings, plant and machinery under course of construction and installation.

(iii) Property plant and equipment pledged as security

Refer note 18 and 23 for information on property, plant and equipment pledged as security for borrowings by the Company.

(iv) Reassessment of useful lives of assets

During the year, the Company has based on technical evaluation reassessed the remaining useful life of golf and club assets classified under building, plant and machinery. Due to this reassessment, useful lives have been reduced and accordingly, additional depreciation of Rs.2,095.26 lakhs has been charged to the statement of profit and loss account.

(v) Assets given under operation and management agreement

Out of total assets, assets amounting to Rs.18,792.78 lakhs (31 March 2017: Rs.21,063.93 lakhs) are given to DLF Golf Resorts Limited, a subsidiary company, under operation and management agreement.

(vi) Assets not held in the name of Company

Freehold land includes gross block of Rs.83.74 lakhs and net block of Rs.83.74 lakhs in respect of 9 hole golf project, wherein the legal title of the land is in the name of one of the subsidiary companies and not in the name of the Company. On the said land parcels buildings having gross block of Rs.5,968.70 lakhs and net block of Rs.5,370.38 lakhs is constructed.

(vii) Capitalised borrowing cost

No borrowing cost was capitalised.

** Capital work-in-progress comprises expenditure for building and related equipments under course of construction and installation.

@ Adjustments includes, transfer of gross block of freehold land of Rs.99.64 lakhs; building and related equipments of Rs.2,080.82 lakhs and accumulated depreciation thereon of Rs.128.63 lakhs; furniture and fixtures of Rs.125.48 lakhs and accumulated depreciation thereon of Rs.31.59 lakhs, from block of property plant and equipments to investment properties.

(i) Contractual obligations

Refer note 51(i) for disclosure of contractual commitments for the acquisition of investment properties.

(ii) Capitalised borrowing cost

The borrowing costs capitalised during the year ended 31 March 2018 was Rs.380.30 lakhs (31 March 2017: Rs.521.54 lakhs).

(iii) Investment property pledged as security

Refer note 18 and 23 for information on investment properties pledged as security by the Company.

The Company’s investment properties consist of two class of assets i.e., commercial properties and retail mall, which has been determined based on the nature, characteristics and risks of each property.

Fair value hierarchy and valuation technique

As at 31 March 2018 and 31 March 2017, the fair values of the properties are Rs.761,725.40 lakhs and Rs.730,614.78 lakhs, respectively. The fair value of investment property has been determined by external, independent property valuers, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued. A valuation model in accordance with that recommended by the international valuation standards committee had been applied. The Company obtains independent valuations for its investment properties annually and fair value measurement has been categorised as Level 3. The fair value has been arrived using discounted cash flow projections based on reliable estimates of future cash flows considering growth in rental of 3%-5%(31 March 2017: 3%-5%), long-term vacancy rate of 7.50%-9.50% (31 March 2017: 7.50%-9-50%) and discount rate of 11.50% (31 March 2017: 12%-15%).

In addition to this, the Company (“Developer”) has a land parcels which is notified Special Economic Zone (“SEZ”) and classified under investment property. The Developer has partially developed the SEZ under the co-development agreement between the Company and DLF Assets Private Limited (“DAPL” or “the Co-developer”), one of the subsidiary company and transferred completed bare shell buildings to DAPL. Remaining portion of such land is under development. As per the co-developer agreement, the underneath the buildings has been given on long-term lease to DAPL. The management has assessed that the value of such SEZ land classified under investment property, based on the prevailing circle rates, is higher than the book value. However, given the above arrangement and restriction on the sale of land in a SEZ as described under SEZ Rules 2006, the management considered carrying value aggregating to Rs.13,214.25 lakhs (31 March 2017: Rs.13,214.25 lakhs) to be a reasonable estimate of it’s fair value.

(v) Assets not held in the name of Company

Freehold land includes gross block of Rs.1,254.44 lakhs and net block of Rs.1,254.44 lakhs in respect of Magnolias club, Park Place & Amex tower projects. Wherein the legal title of the land is in the name of one of the subsidiary companies and not in the name of Company. On the said land parcels buildings having gross block of Rs.15,269.97 lakhs and net block of Rs.13,089.11 lakhs is constructed.

(vi) Leasing arrangements

Certain investment properties are leased to tenants under long-term operating leases with rental payable monthly. Refer Note no. 50 for details on further minimum lease rentals.

** All are redeemable instruments and having face value of Rs.100/- each unless otherwise stated and are measured at amortised cost.

## These are measured at amortised cost.

AA During the year, DLF Hotel Holdings Limited (DHHL) got merged with Lodhi Property Company Limited (LPCL) and accordingly, the Company’s investments in DHHL has been reflected as investment in LPCL.

AAA In previous year, Real estate undertaking of DLF Universal Limited have been merged with DLF Home Developers Limited.

~ These investments are on account of or includes the investment booked for subidiaries on account of stock options issued to employees of those subsidiaries.

@ In previous year out of total shares, 26,578,070 shares are partly paid up (face value of Rs.10/- each, paid up Rs.7/- each).

AAAA During the year, Kavicon Partners Limited got merged with DLF Real Estate Builders Limited.

$ During the year, the Company has purchased further stake in one of its subsidiary companies DLF Utilities Limited for a consideration of Rs.40,287.88 lakhs. Pursuant to this, DLF Utilities Limited have become 100% subsidiary of the Company. The management has obtained valuation carried by independent valuers and basis on expert legal opinion, is of the view that the valuation is in compliance of the Income-tax Act, 1961.The above transaction is at arm’s length and tax provision made there against are adequate.

#AII these investments (being strategic in nature) are measured at fair value through other comprehensive income (‘FVOCI’) since these are not held for trading purposes and thus disclosing their fair value fluctuation in profit and loss will not reflect the purpose of holding. No dividends have been received from such investments during the year.

$ Rounded off to.

* The asset of Rs.14,823.07 lakhs (31 March 2017: Rs.14,823.07 lakhs) recognized by the Company as ‘MAT credit entitlement’ represents that portion of MAT liability, which can be recovered and set off in subsequent years based on provisions of Section 115JAA of the Income-tax Act, 1961. The management, based on the present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets.

# Deferred tax asset is recognized on unabsorbed depreciation and carry forward of losses to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unabsorbed depreciation and carried forward tax losses can be utilised. The Company has tax losses of Rs.213,330.75 lakhs (including business loss of Rs.1,242.34 lakhs); house property loss of Rs.2,537.21 lakhs; and capital losses of Rs.2,09,551.20 lakhs that are available for offsetting for eight years against further taxable profits. Majority of these losses will expire in March 2024 and March 2025. The Company has not recognised deferred tax asset in respect of capital losses of Rs.2,09,551.20 lakhs as there is no reasonable certainty supported by convincing evidences of their recoverability in the near future. If the Company was also to recognise all unrecognised deferred tax assets, the profit would increase by Rs.47,945.32 lakhs.

# Trade receivables have been pledged as security for borrowings, refer note 18 for details. Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days. For terms and conditions relating to related party receivables, refer note 47.

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company and earn interest at the respective short-term deposit rates.

* It includes Rs.200.42 lakhs (31 March 2017: Rs. Nil) held in escrow account for a project registered under Real Estate (Regulation and Development) Act, 2016 (“RERA”). The money can be utilised for payments of the specified projects.

Note:

(i) Rs.6,845.14 lakhs (31 March 2017: Rs.6,448.30 lakhs) represents restricted deposits, as these are pledged in lieu of the on going legal cases against the Company.

(ii) The bank balances include the margin money amounting to Rs.400.00 lakhs (31 March 2017: Rs.1,476.32 lakhs) against the bank borrowings.

b) Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.2/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

During the year ended 31 March 2018, the amount of interim dividend recognized as distributions to equity shareholders is Rs.1.20 per share (31 March 2017: Rs. Nil).

During the year ended 31 March 2018, the amount of final dividend recognized as distributions to equity shareholders is Rs. Nil (31 March 2017: Rs.2/- per share).

$$ During the year, pursuant to scheme of arrangement and approval of National Company Law Tribunal, companies marked with ** got merged with Rajdhani Investments & Agencies Private Limited and accordingly, it became holding company of the Company.

d) Aggregate number of shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date

i) Shares issued under Employee Stock Option Plan (ESOP) during the financial year 2013-14 to 2017-18

The Company has issued total 4,329,534 equity shares of Rs.2/- each (during FY 2012-13 to 2016-17: 4,598,954 equity shares) during the period of five years immediately preceding 31 March 2018 on exercise of options granted under the Employee Stock Option plan (ESOP).

e) Shares reserved for issue under options

For details of shares reserved for issue under the Employee Stock Option plan (ESOP) of the Company, refer note 53.

For details of share reserved for issue on conversion of Warrants and CCDs, refer note 42.

3. NATURE AND PURPOSE OF RESERVS

Capital reserve

Capital reserve was created under the previous GAAP out of the profit earned from a specific transaction of capital nature. Capital reserve is not available for the distribution to the shareholders.

Capital redemption reserve

The same has been created in accordance with provisions of the Act for the buy back of equity shares from the market.

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve will be utilised in accordance with the provisions of the Act.

General reserve

The Company is required to create a general reserve out of the profits when the Company declares the dividend to shareholders.

Share options outstanding account

The reserve is used to recognise the fair value of the options issued to employees under the Company’s Employee Stock Option Plan. (refer note 53 for further details).

Forfeiture of shares

This reserve was created on forfeiture of shares by the Company. The reserve is not available for distribution to the shareholders.

Equity component of compulsorily convertible debentures

The Company has issued compulsorily convertible debentures(CCDs) having coupon rate of 0.01%. This being compound financial instruments and accordingly represents equity component of CCDs on split of compound financial instruments. This will be converted to equity shares within 18 months of allotment.(also refer note 42).

Debenture redemption reserve (DRR)

The Company has issued redeemable non-convertible debentures. Accordingly, the Company as per the provisions of the Companies (Share capital and Debentures) Rules, 2014, as amended, created adequate DRR out of retained earnings require the Company to create DRR out of profits of the Company available for payment of dividend. DRR is required to be created for an amount which is equal to 25% of the value of outstanding debentures. Though the DRR is required to be created over the life of debentures, the Company has upfront created DRR out of retained earnings for an amount which is higher than the minimum required.

4.1. Repayment terms and security disclosure for the outstanding long-term borrowings (excluding current maturities) as on 31 March 2018:

Non-convertible debentures:

(i) Non-convertible debentures of Rs.68,430.33 lakhs (31 March 2017: Rs.102,416.37 lakhs) are secured by way of pari passu charge on the immovable property situated at New Delhi, owned by the subsidiary company. Coupon rate of these debentures is 12.25% and the outstanding amount (excluding current maturities) is due for redemption beginning from 9 August 2019 to 11 August 2020.

(ii) Non-convertible debentures of Rs. Nil (31 March 2017: Rs.6,237.14 lakhs) are secured by way of pari passu charge on the immovable property situated at New Delhi, owned by the subsidiary company. Coupon rate of these debentures is 12.50%. The said debentures had been fully repaid subsequently in April 2018.

Foreign currency loan from banks:

(a) Foreign currency loan of Rs.124,596.67 lakhs (31 March 2017: Rs.157,556.02 lakhs) is secured by way of (i) Equitable mortgage of immovable property situated at New Delhi, owned by subsidiary company, (ii) Pledge over the shareholding of subsidiary company owning the aforesaid immovable property; and (iii) Corporate guarantee provided by the subsidiary company owning the aforesaid immovable property. The outstanding amount (excluding current maturities) is repayable in 10 quarterly installments starting from April 2019.

Rupee term loan from banks:

(a) Term loan of Rs.4,898.35 lakhs (31 March 2017: Rs.9,675.01 lakhs) is secured by way of equitable mortgage of immovable properties situated at New Delhi, owned by the Company. The outstanding amount (excluding current maturities) is repayable in 4 quarterly installments starting from June 2019.

(b) Term loan of Rs.3,327.11 lakhs (31 March 2017: Rs.14,534.70 lakhs) is secured by way of Equitable mortgage of immovable properties situated at Gurugram and Chennai, owned by the subsidiary/ group companies. Further, there is charge on receivables pertaining to the aforesaid immovable properties owned by the subsidiary companies. The outstanding amount (excluding current maturities) is repayable in 5 monthly installments starting from April 2019.

(c) Term loans of Rs.24,970.24 lakhs (31 March 2017: Rs.27,110.90 lakhs) are secured by way of equitable mortgage of immovable properties situated at New Delhi, owned by the Company. Further, there is charge on receivables pertaining to the aforesaid immovable properties owned by the Company on these loans. The outstanding amount (excluding current maturities) are repayable in 72 monthly installments starting from April 2019.

(d) Term loan of Rs.12,850.56 lakhs (31 March 2017: Rs. Nil) is secured by way of (i) equitable mortgage of immovable properties situated at Gurugram, owned by the Company/ subsidiary company, (ii) Charge on receivables pertaining to the aforesaid immovable properties owned by the Company; and (iii) Corporate guarantee provided by the subsidiary company owning the aforesaid immovable property. The outstanding amount (excluding current maturities) is repayable in 88 monthly installments starting from April 2019.

(e) Term loan of Rs. Nil (31 March 2017: Rs.5,953.94 lakhs) was secured by way of Equitable mortgage of immovable properties situated at Kolkata, owned by the Company. The said loan has been pre-paid during the year.

(f) Term loan of Rs. Nil (31 March 2017: Rs.43,241.84 lakhs) was secured by way of (i) Equitable mortgage of immovable properties situated at Kolkata, Lucknow, Mullanpur and New Delhi, owned by the Company/ subsidiary companies, (ii) Charge on receivables pertaining to the aforesaid immovable properties owned by the Company/ subsidiary companies and (iii) Corporate guarantees provided by the subsidiary companies owning the aforesaid immovable properties. The said loan has been pre-paid during the year.

(g) Term loan of Rs. Nil (31 March 2017: Rs.8,616.44 lakhs) was secured by way of (i) Equitable mortgage of immovable properties situated at Gurugram, owned by subsidiary company and (ii) Corporate guarantee provided by the subsidiary company owning the aforesaid immovable properties. The said loan has been pre-paid during the year.

Rupee term loan from others:

(a) Term loans of Rs.29,890.71 lakhs (31 March 2017: Rs.35,185.21 lakhs) are secured by way of (i) Equitable mortgage of immovable properties situated at Gurugram, owned by the Company/ subsidiary company, (ii) Negative lien on rights under the concession agreements pertaining to certain immovable properties situated at New Delhi, (iii) Charge on receivables pertaining to all the aforesaid immovable properties owned by the Company/ subsidiary company and (iv) Corporate guarantees provided by the subsidiary company owning the aforesaid immovable property. The outstanding amount (excluding current maturities) are repayable in 49 monthly installments starting from April 2019.

(b) Term loan of Rs. Nil (31 March 2017: Rs.2,500.00 lakhs) was secured by way of (i) equitable mortgage of immovable properties situated at Gurugram, owned by subsidiary company, (ii) Corporate guarantee provided by the subsidiary company owning the aforesaid immovable properties. The said loans has been pre-paid during the year.

(c) Term loan of Rs. Nil (31 March 2017: Rs.16,981.48 lakhs) was secured by way of (i) equitable mortgage of immovable properties situated at Gurugram, owned by subsidiary company, (ii) Corporate guarantee provided by the subsidiary company owning the aforesaid immovable properties. The said loan has been pre-paid subsequently in May 2018.

(d) Term loan of Rs. Nil (31 March 2017: Rs.12,475.45 lakhs) was secured by way of (i) equitable mortgage of immovable properties situated at Gurugram, Hyderabad and Chennai, owned by company/ subsidiary companies, (ii) Charge on receivables pertaining to the aforesaid immovable property at Gurugram, owned by the Company. The said loans has been pre-paid during the year.

(e) Term loan of Rs. Nil (31 March 2017: Rs.17,163.29 lakhs) was secured by way of (i) equitable mortgage of immovable properties situated at Kolkata, owned by the Company, (ii) Charge on receivables of the aforesaid immovable property owned by the Company. The said loan has been pre-paid during the year.

(f) Term loan of Rs. Nil (31 March 2017: Rs.7,411.61 lakhs) was secured by way of (i) Equitable mortgage of immovable properties situated at New Delhi, owned by the Company/ subsidiary company, (ii) Charge on receivables of the aforesaid immovable property owned by the Company/ subsidiary company and (iii) Corporate guarantee provided by the subsidiary company owning the aforesaid immovable property. The said loan has been pre-paid during the year.

(g) Term loan of Rs. Nil (31 March 2017: Rs.8,902.89 lakhs) was secured by way of (i) Equitable mortgage of immovable properties situated at Kolkata, Lucknow, Mullanpur and New Delhi, owned by the Company/ subsidiary companies, (ii) Charge on receivables pertaining to the aforesaid immovable properties owned by the Company/ subsidiary companies and (iii) Corporate guarantees provided by the subsidiary companies owning the aforesaid immovable properties. The said loan has been pre-paid during the year.

Rate of interest:

The Company’s total borrowings from banks and others have a effective weighted-average contractual rate of 8.92% (31 March 2017: 9.74%) per annum calculated using the interest rate effective as on 31 March 2018.

Loan Covenants:

Term loans contain certain debt covenants relating to net debt to tangible net worth ratio, debt-equity ratio, minimum tangible net worth and asset coverage ratio. The Company has satisfied all debt covenants prescribed in the terms of term loan.

The Company has not defaulted on any loans payable.

5.1. Security disclosure for the outstanding short-term borrowings as on 31 March 2018:

Overdraft facility from Banks:

(a) Overdraft facilities of Rs. Nil (31 March 2017: Rs.30,421.19 lakhs) are secured by way of (i) Equitable mortgage of immovable properties situated at Gurugram, owned by subsidiary company and (ii) Corporate guarantee provided by the subsidiary company owning the aforesaid immovable properties.

(b) Overdraft facility of Rs. Nil (31 March 2017: Rs.4,979.49 lakhs) are secured by way of equitable mortgage of Property situated at New Delhi, owned by the Company.

Short-term loans from Banks:

(a) Term loan of Rs.31,000.00 lakhs (31 March 2017: Rs. Nil) is secured by way of (i) Equitable mortgage of Properties situated at Gurugram, owned by subsidiary company and (ii) Corporate guarantee provided by the subsidiary company owning the aforesaid immovable properties.

(b) Term loan of Rs.35,000.00 lakhs (31 March 2017: Rs.35,000.00 lakhs) is secured by way of (i) Equitable mortgage of Properties situated at Gurugram, owned by the Company and subsidiary companies and (ii) Corporate guarantee provided by the subsidiary companies owning the aforesaid immovable properties.

(c) Term loan of Rs.19,700.00 lakhs (31 March 2017: Rs.19,700.00 lakhs) is secured by way of (i) Equitable mortgage of immovable property situated at New Delhi, owned by the Company/ subsidiary company, (ii) Charge on receivables pertaining to the aforesaid immovable property owned by subsidiary company and (iii) Corporate guarantee provided by the subsidiary company owning the aforesaid immovable property.

(d) Term loan of Rs.7,645.72 lakhs (31 March 2017: Rs.27,174.69 lakhs) is secured by way of equitable mortgage of immovable property situated at New Delhi, owned by subsidiary company.

(e) Term loan of Rs. Nil (31 March 2017: Rs.57,000.00 lakhs) was secured by way of (i) Equitable mortgage of Properties situated at Gurugram, owned by subsidiary company and (ii) Corporate guarantee provided by the subsidiary company owning the aforesaid immovable properties. The said loan has been pre-paid during the year.

(f) Term loan of Rs. Nil (31 March 2017: Rs.16,000.00 lakhs) was secured by way of (i) Equitable mortgage of immovable properties situated at Gurugram, owned by the Company/ subsidiary company, (ii) Charge on receivables pertaining to the aforesaid immovable properties owned by the Company/ subsidiary company and (iii) Corporate guarantee provided by the subsidiary companies owning the aforesaid immovable property. The said loan has been pre-paid during the year.

(g) Term loan of Rs. Nil (31 March 2017: Rs.7,500.00 lakhs) was secured by way of (i) Equitable mortgage of immovable property situated at Gurugram, owned by the Company and (ii) Charge on receivables and other current assets of the aforesaid immovable property owned by the Company. The said loan has been pre-paid during the year.

Short-term loans from others:

(a) Term loan of Rs. Nil (31 March 2017: Rs.100,000.00 lakhs) was secured by way of (i) Equitable mortgage of immovable properties situated at Gurugram, owned by the Company/ subsidiary company and (ii) Charge on receivables pertaining to the aforesaid immovable properties owned by the Company/ subsidiary company. The said loan has been pre-paid during the year.

Unsecured Loan from related parties:

(a) Unsecured loan of Rs.2,254.00 lakhs (31 March 2017: Rs.3,000.00 lakhs) is repayable as demanded by the lender.

- Trade payables are non-interest bearing and are normally settled 90-120 days terms.

- For terms and conditions with related parties, refer note 47.

* Carrying amount of these financial liabilities are reasonable approximation of their fair values.

The Company had acquired land amounting to Rs.15,299.84 lakhs under SEZ category for developing various SEZ projects and had commenced development work in the year 2008-09 and incurred Rs.12,065.86 lakhs on development activities, which was under capital work-in-progress of investment properties; however considering the slow down in real estate sector and change in economic scenario, now the Company believes that SEZ projects in those locations is not viable and will explore alternative usage. Accordingly, development cost incurred so far does not have any economic value and therefore charged to the statement of profit and loss account as an exceptional item in the current year.

During the year, the Company has paid dividend to its shareholders, which has resulted in payment of dividend distribution tax (DDT) to the Income tax authorities. The Company believes that DDT represents additional payment to Income tax authorities on behalf of the shareholders and hence DDT paid is charged to equity directly.

6. EARNINGS PER EQUITY SHARE

Earnings per Share (“EPS”) is determined based on the net profit attributable to the shareholders of the Company. Basic earnings per share is computed using the weighted-average number of shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit for the year attributable to equity shareholders (after adjusting for interest on the compulsorily convertible debentures) by the weighted-average number of equity shares outstanding during the year plus the weighted number of equity shares that would be issued on conversion of all the dilutive potential equity share into equity shares.

7. FINANCIAL INSTRUMENTS BY CATEGORY

(i) Fair values hierarchy

Financial assets and financial liabilities are measured at fair value in the financial statement and are grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: quoted prices (unadjusted) in active markets for financial instruments.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: unobservable inputs for the asset or liability.

(ii) Financial assets measured at fair value - recurring fair value measurements

(iii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

(a) the use of net asset value for mutual funds on the basis of the statement received from investee party.

(b) the use of adjusted net asset value method for certain equity investment and discounted cash flow method (income approach) for remaining equity instruments.

(c) For hedge related effectiveness review and related valuation, details are presented in note 41.

(iv) The Company has used interest rate and USD/ INR swap rate as inputs to arrive at fair value of derivative assets.

(v) The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value measurements. See (ii) above for the valuation techniques adopted.

* Sensitivity has been considered for mentioned inputs, keeping the other variables constant.

A Figures in bracket represent negative numbers.

$ In current year, Comparable transaction multiple method is adopted for valuation. In previous year, Discounted Cash Flow (“DCF”) method was adopted for valuation.

(vi) The following table presents the changes in level 3 items for the year ended 31 March 2018 and 31 March 2017:

Investments in equity shares of subsidiaries, associates and joint ventures are measured at cost as per Ind AS 27, “Separate Financial Statements” and are not required to disclose here.

* The non-convertible redeemable debentures issued by the Company are listed on stock exchange and there is no comparable instruments having the similar terms and conditions with related security being pledged and hence the carrying value of the debentures represents the best estimate of fair value.’

8. FINANCIAL RISK MANAGEMENT

The Company’s principal financial liabilities comprise of loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations. The Company’s principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations.

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. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

i) Financial instruments by category

For amortised cost instruments, carrying value represents the best estimate of fair value.

* Investment in equity shares of subsidiaries, associate and joint venture are measured at cost as per Ind AS 27, “Separate financial statements”.

** These financial assets are mandatorily measured at fair value.

ii) Risk Management objectives and polices

The Company’s activities expose it to market risk, liquidity risk and credit risk. The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

A) Credit risk

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Company’s exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls. Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits. Other financial assets measured at amortized cost includes loans to employees, security deposits and other credit risk related to other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.

a) Credit risk management

i) Credit risk rating

The Company assesses and manages 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.

A: Low credit risk

B: Moderate credit risk

C: High credit risk

The Company provides for expected credit loss based on the following:

Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions.

Assets are written-off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written-off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

b) Credit risk exposure

Provision for expected credit losses

The Company provides for expected credit loss based on 12 months and lifetime expected credit loss basis for following financial assets:

Expected credit loss for trade receivables under simplified approach

The Company’s trade receivables in respect of projects does not have any expected credit loss as registry of properties sold is generally carried out once the Company receives the entire payment. During the periods presented, the Company made Rs.2,290.92 lakhs provision towards interest received from customers. In respect of other trade receivables, the Company considers provision for lifetime expected credit loss. Given the nature of business operations, the Company’s trade receivables has low credit risk as the Company holds security deposits equivalents ranging from three to six months rentals. Further historical trends indicate any shortfall between such deposits held by the Company and amounts due from customers have been negligible.

B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities.

Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.

Maturities of financial liabilities

The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities.

C) Market Risk

a) Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of financial instruments will fluctuate because of the change in foreign currency exchange rates. The Company has international transactions and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company’s functional currency.

The Company manages its foreign currency risk by hedging transactions. The Company has hedged its cash flows related to foreign currency transactions covering the entire duration of the foreign currency loan. As at 31 March 2018, the Company hedged 100% of its foreign currency borrowings.

The Company’s exposure to foreign currency changes for unhedged transactions are not material, therefore not disclosed.

Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments.

The sensitivity of profit or loss to changes in the exchange rates arises mainly from hedged foreign currency denominated financial instruments i.e. foreign exchange forward contract, which is described below:

b) Interest rate risk

i) Liabilities

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 fixed rate borrowings are carried at amortised cost. 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.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. Keeping in view of current market scenario.

Interest rate risk exposure

The Company’s variable rate borrowing is subject to interest rate. Below is the overall exposure of the borrowing:

ii) Assets

The company’s fixed deposits, interest bearing security deposits and loans are carried at fixed rate. Therefore, the said assets 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.

c) Price risk

The Company’s exposure to price risk arises from investments held and classified as FVTPL and FVOCI. To manage the price risk arising from investments in mutual funds, the Company diversifies its portfolio of assets.

d) Legal, taxation and accounting risk

Change to any of the above laws, rules, regulations related to DLF Business could have a material impact on its financial results. Compliance with any proposed changes could also result in significant cost of DLF. Failure to fully comply with various laws, rules and regulations may expose DLF to proceedings which may materially affect its performance.

DLF is presently involved into various judicial, administrative, regulatory and litigation proceedings concerning matters arising in the ordinary course of business operations including but not limited to personal injury claims, landlord-tenant disputes, commercials disputes, tax disputes, employment disputes and other contractual disputes. Many of these proceedings seek an indeterminate amount of damages. In Situations where management believes that a loss arising from a proceeding is probable and can reasonably be estimated, DLF records the amount of the probable loss. As additional information becomes available, any potential liability related to these proceedings is assessed and the estimates are revised, if necessary.

To mitigate these risks, DLF employs in-house counsel and uses third party tax & legal experts to assist in structuring significant transactions and contracts. DLF also has systems and controls that ensure the timely delivery of financial information in order to meet contractual and regulatory requirements and has implemented disclosure controls and Internal controls over financial reporting which are tested for effectiveness on an ongoing basis.

9. CAPITAL MANAGEMENT

The purpose of the Company’s capital management is:

- Maintain an optimal capital structure to reduce the cost of capital.

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.

The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability (excluding DDT thereon) as at 31 March 2018.

During the year, the Company has declared and paid interim dividend of Rs.21,408.80 lakhs @ 60% (i.e. Rs.1.20 per equity share having par value of Rs.2/- each) to its shareholders. The Company has also received Dividend of Rs.21,307.10 lakhs from one of its subsidiary company during the year and corporate dividend tax of Rs.4337.62 lakhs has been paid by the said subsidiary company. Accordingly, the Company has taken credit of this corporate dividend tax as per Section 115O of the Income-tax Act, 1961 and has paid balance amount on account of corporate dividend tax amounting to Rs.20.71 lakhs on interim dividend.

Further, the Board of Directors at its meeting held on 21 May 2018, has recommended final dividend of Rs.14,272.54 lakhs @ 40% (i.e. Rs.0.80 per equity share having par value of Rs.2/- each). Since this final dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting, no provision has been made in these financial statements for the same.

10. CASH FLOW HEDGES

A Risk management strategy

The Company uses swaps contracts to hedge its risks associated with fluctuations in foreign currency. The risk being hedged is the risk of potential gain/ loss due to fluctuation in foreign currency rates. The use of swap contracts is covered by the Company’s overall strategy. The Company does not use swaps for speculative purposes. As per the strategy of the Company, foreign currency loans are covered by hedge, considering the risks associated with the hedging of such loans, which effectively fixes the principal liability of such loans and mitigates or eliminate the financial and market risks in India (the place of business of the Company).

Hedge ratio is the relationship between the quantity of the hedging instrument and the quantity of the hedged item. In the case, total principal payments under the transaction is hedged under the swap contracts with the equivalent amount and at the same dates. Hence the entity hedge 100% of its exposure on the transaction and is considered highly effective.

B Other hedge related disclosures

(i) The maturity profile of hedging instrument is as follows:

(ii) In the Company’s hedge relationship, source of hedge ineffectiveness are credit risk of the counterparty or of the Company and changes in timing of hedge transaction.

(iii) The amounts relating to items designated as hedging instrument are as follows:

(iv) Fair value of derivative contract:

11. WARRANTS AND COMPULSORILY CONVERTIBLE DEBENTURES

a) During the year, the Company has issued warrants and compulsorily convertible debentures (CCDs) having 0.01% coupon rate to promoter group of companies on preferential allotment basis @ Rs.217.25 per warrant and CCDs aggregating to Rs.1,125,000.00 lakhs. Against the issuance of 138,089,758 warrants, the Company has received 25% of issue price amounting to Rs.75,010.36 lakhs and the remaining amount of 75% will be received at the time of allotment of shares. In respect of issuance of 379,746,836 CCDs, the Company has received 100% amount of Rs.825,000 lakhs which will be converted to equity shares within 18 months of allotment.

b) Utilization of proceeds from preferential issue

Out of the total proceeds of Rs.900,010.36 lakhs by way of allotment of warrants and CCDs, on preferential basis Rs.794,400.00 lakhs has been utilized towards repayment of loans, working capital requirement, capital expenditure and investment in subsidiary companies. The balance amount of Rs.105,600.00 lakhs is invested in Fixed Deposit/ Mutual funds for further utilization.

12. The Company has entered into business development agreements with certain of its group entities for acquisition of sole irrevocable development rights in identified land which are acquired/ or in the final stages of being acquired by these entities.

In terms of accounting policy stated in Note 2.2(g) the amount paid to these entities pursuant to the above agreements for acquiring development rights, are classified under inventory as development rights.

13. REVENUE RELATED DISCLOSURE

Disclosure in respect of projects (except land and plots) under the Guidance Note on “Accounting for Real Estate Transactions (Guidance Note)” is as below. The Company determines project revenue based on percentage of completion method as and when all the conditions mentioned in Guidance Note are met. Further, stage of completion is determined based on actual cost incurred as compared to the total budgeted cost of the project.

14. EMPLOYEE BENEFIT OBLIGATIONS

a) Provident fund

The provident fund trust set-up by the Company is treated as a defined benefit plan since the Company has to meet the interest shortfalls, if any. In this regard, actuarial valuation as on 31 March 2018 was carried out to measure the obligation using projected unit credit method arising due to interest rate guarantee by the Company towards provident fund. In terms of said valuation, the Company has no liability towards interest rate guarantee as on 31 March 2018.

b) Gratuity plan (non-funded)

The Company has a defined benefit gratuity plan, which is unfunded. The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The weighted-average duration of the defined benefit obligation is 12.84 years (31 March 2017: 12.45 years).

Risks associated with plan provisions

The Company is exposed to number of risks in the defined benefit plans. Most significant risks pertaining to defined benefit plans and management’s estimation of the impact of these risks are as follows:

Salary growth risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.

Interest rate risk

A decrease in interest rate in future years will increase the plan liability.

Life expectancy risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.

Withdrawals Risk

Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact the plan liability.

The following tables summarise the components of net benefit expense recognised in the statement of profit or loss:

These assumptions were developed by management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year end by reference to government bonds of relevant economic markets and that have terms to maturity approximating to the terms of the related obligation. Other assumptions are based on management’s historical experience.

Sensitivities due to mortality and withdrawal are not material and hence impact of change not calculated.

As the Company does not have any plan assets, the movement of present value of defined benefit obligation and fair value of plan assets has not been presented.

Maturity Profile of Defined Benefit Obligation:

The following payments are expected contributions to the defined benefit plan in future years:

A Due to terms and conditions of SPSHA, between the Company and Investor, requiring unanimity of agreement in respect of significant matters related to the financial and operating policies of DCCDL and its subsidiaries (“DCCDL Group”), the Company considers that it does not solely control DCCDL Group and therefore investment in DCCDL Group has been accounted for as joint venture in accordance with Ind AS 28 ‘Investment in Associated and JointVentures’ and Ind AS111 ‘Joint Arrangements’. Refer note 64 fordetails.

AA During the year, pursuant to National Company Law Tribuual order these companies have been merged with Lodhi Property Company Limited. Accordingly, the transactions with the said entities during the year ended 31 March 2018 and balance outstanding thereto on that date have been disclosed as transactions with and balances outstanding to as the case may be, Lodhi Property Company Limited during the year ended as of 31 March 2018.

15. DISCLOSURES UNDER IND AS 24- RELATED PARTY TRANSACTIONS

a) Holding company

Rajdhani Investments & Agencies Private Limited (w.e.f. 12 March 2018)

b) Subsidiaries/ Joint ventures/ Associates Details are presented in Note 46.

c) Key management personnel, their relatives and Other enterprises under the control of the key management personnel and their relatives:

* A private company with unlimited liability.

** These entities have been merged with DLF Brands Limited

# Pursuant to the order passed by the Hon’ble National Company Law Tribunal, Ahmedabad Bench, these companies have been merged with Kohinoor Real Estates Company w.e.f. 7 March 2018.

## Pursuant to the order passed by the Hon’ble National Company Law Tribunal, Ahmedabad Bench, these companies have been merged with Rajdhani Investments & Agencies Private Limited w.e.f. 7 March 2018.

### Pursuant to the order passed by the Hon’ble National Company Law Tribunal, Ahmedabad Bench, the Company has been merged with Rajdhani Investments & Agencies Private Limited w.e.f. 12 March 2018.

d) The following transactions were carried out with related parties in the ordinary course of business:

* Revenue has been recognized as per the percentage of completion method [refer significant accounting policy no. 2.2(h)] on a project as a whole and not on individual basis.

Terms and conditions of transactions with related parties:

1. The transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs by cheque/ RTGS.

2. The Company has given loans to related parties which are repayable on demand. These loans are provided at interest rates of 11.50% p.a. to subsidiary companies and at interest as per agreement to joint ventures. The loans have been utilized by the related parties for business purposes.

3. The Company has taken loans from related parties which are repayable on demand. These loans carry interest @11.50% p.a. to 12.50% p.a. The loans have been utilized for meeting the working capital requirements.

4. The Company has given corporate guarantee to the bank in respect of loan taken by the subsidiaries/ associate companies and joint ventures from that bank and financial institution and vice versa.

5. The Company provides business and financial support to certain subsidiaries/ associate companies, which are in losses and is dependent on parent Company for meeting out their cash requirements.

16. INFORMATION IN RESPECT OF JOINT VENTURES

a) The Company has entered into a joint venture agreement for development of rehabilitation project in Mumbai, wherein the Company’s interest is 37.50%. Summarized financial information of the joint venture, based on its Ind AS financial statements is set-out below:

b) The Company entered into a Share Purchase and Shareholders Agreement (“SPSHA”) with Reco Diamond Private Limited (“Investor”), an affiliate of GIC Singapore, DLF Cyber City Developers Limited (“DCCDL”) and certain promoter group entities wherein the promoters group entities sold certain portion of their stake in DCCDL to the Investor at a purchase consideration of Rs.895,600.00 lakhs. Subsequent to fulfilment of all conditions precedent specified in the SPSHA, the sale and purchase of the securities and other closing actions as contemplated under the SPSHA were completed on 25 December 2017 and consequently, the Investor holds 33.34% equity stake in DCCDL and it became jointly controlled entity of the Company. Summarised financial information of the joint venture based on its standalone Ind AS financial statements is set out below:

17. OPERATING LEASES-COMPANY AS LESSOR

The Company has leased out office and mall premises under non-cancelable operating leases. These leases have terms of between 3 - 15 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. The total lease rentals recognised as income during the year is Rs.41,288.92 lakhs (31 March 2017: Rs.36,532.61 lakhs).

Future minimum rentals receivable under non-cancelable operating leases as at 31 March 2018 are as follows:

Operating leases - Company as lessee:

The Company has entered into operating leases for various office premises with lease term less than 12 months. There are no restrictions and there are no sub leases. The Company has recognized Rs.1,792.17 lakhs (31 March 2017: Rs.2,871.43 lakhs) towards minimum lease payments.

18. COMMITMENTS

i) Estimated amount of contracts remaining to be executed on capital account and not provided for: At 31 March 2018, the Company had commitments of Rs.5,042.40 lakhs (31 March 2017: Rs.304.93 lakhs) relating to completion of various projects.

ii) The Company is committed to provide business and financial support to certain subsidiaries/ associate companies, which are in losses and is dependent on parent company for meeting out their cash requirements.

iii) The Company has commitment regarding payments under development agreements with certain partnership firms amounting to Rs.31,936.16 lakhs (31 March 2017: Rs.42,452.67 lakhs), where the Company or its subsidiaries are partner and certain third-party entities with whom development agreements are in place.

iv) The Company has commitment regarding purchase of land parcels from one of its group entity related to DLF City-Phase V land of Rs.9,095.19 lakhs (31 March 2017: Rs.8,670.85 lakhs)

19. CONTINGENT LIABILITIES AND LITIGATIONS

a) Contingent liabilities

1) The Income Tax Authorities had made disallowances of SEZ profits u/s 80IAB of the Income-tax Act, 1961 during tax assessment of the Company raising demands amounting to Rs.109.00 lakhs for the assessment year 2015-16; Rs.1,056.00 lakhs for the assessment year 2014-15; Rs.6,834.00 lakhs for the assessment year 2013-14; Rs.7,308.99 lakhs for the assessment year 2011-12; Rs.7,284.99 lakhs for the assessment year 2010-11; Rs.35,523.71 lakhs for the assessment year 2009-10 and Rs.48,723.00 lakhs for assessment year 2008-09, respectively.

The Company had filed appeals before the appropriate appellate authorities against these demands for the said assessment years. In certain cases partial/ full relief has been granted by the Appellate Authorities. The Company and Income Tax Department have further preferred appeals before the higher authorities in those cases.

2) Other than matter mentioned in point no. 1 above, the Income Tax Authorities have raised demands on account of various disallowances pertaining to different assessment years. The Company is contesting these demands, which are pending at various appellate levels.

Based on the advice from independent tax experts and the development on the appeals, the management is confident that additional tax so demanded as mentioned in point 1) and 2) above will not be sustained on completion of the appellate proceedings and accordingly, pending the decision by the appellate authorities, no provision has been made in these standalone financial statements.

3) There are various disputes pending with the authorities of excise, customs, service tax, sales tax, VAT etc. The Company is contesting these demands raised by authorities and are pending at various appellate authorities.

Based on the grounds of the appeals and advice of the independent legal counsels, the management believes that there is a reasonably strong likelihood of succeeding before the various authorities. Pending the final decisions on the above matter, no adjustment has been made in these standalone financial statements.

4) There are various litigations going on against the Company primarily by Competition Commission of India and in Consumer Redressal Forum, which have been contested by the Company.

Based on the grounds of the appeals and advice of the independent legal counsels, the management believes that there is a reasonably strong likelihood of succeeding before the various authorities. Pending the final decisions on the above matter, no adjustment has been made in these standalone financial statements.

5) Interest and claims by customers/ suppliers may be payable as and when the outcome of the related matters are finally determined and hence not been included above. Management based on legal advice and historical trends, believes that no material liability will devolve on the Company in respect of these matters.

Further, as per the terms of the SPSHA, the Company has undertaken to indemnify, defend and hold harmless the Investor against all losses incurred or suffered by DCCDL arising out of following matters up to or prior to 25 December 2017 (i.e. Closing Date):

i) Income tax demands related to various matters and assessments year up to the closing date of Rs.159,037.06 lakhs;

ii) Indirect tax demands including service tax and entry tax related to various matters and financial years up to the closing date of Rs.20,916.36 lakhs;

iii) During the previous years, DLF Utilities Limited (“DUL”) had received a notice from the Dakshin Haryana Bijli Vitran Nigam (“DHBVN”) wherein it had claimed cross subsidy surcharge of? 3,328.00 lakhs on electricity being supplied by DUL to other companies for the period from 1 April 2011 to 30 September 2012 and had questioned the legality of such electricity supply. DUL filed an appeal to Haryana Electricity Regulatory Commission (“HERC”), wherein HERC vide order dated 11 August 2011 held that the supply of electricity by DUL was legal, however, DUL was liable to pay cross subsidy surcharge. Aggrieved by the said order, DUL filed an appeal before Appellate Tribunal of Electricity (“APTEL”) against the levy of cross subsidy surcharge. APTEL held that the supply of electricity for commercial establishments from the main receiving panel was not in accordance with law and must be discontinued. Further, APTEL also held that the Company was liable to pay the cross subsidy surcharge and accordingly, a demand of Rs.3,328.00 lakhs was received by DUL from DHBVN against the same. Aggrieved by the order of APTEL, DUL filed an appeal before the Hon’ble Supreme Court of India who has stayed the execution of the said order and asked DUL to deposit an amount of Rs.284.36 lakhs to DHBVN which has been duly deposited.

Based on the advice of the independent legal counsel, the management believes that there is a reasonably strong likelihood of succeeding before the Hon’ble Supreme Court of India and accordingly no adjustment is required to be made in the financial statements at this stage.

iv) The land parcel admeasuring 19.5 acres was acquired by the Company from Government of Haryana (‘GoH’) in August 2006 for development of Cyber City Project, which was earlier acquired by GoH from Gram Panchayat, Nathupur on February 2004 through proceedings of compulsory acquisition. DCCDL had constructed certain portions of its two IT/ IT SEZ buildings of the Cyber City Project as well as entered into third party rights vide lease/ sale of office space in the said buildings. Subsequently, the Hon’ble High Court of Punjab and Haryana, pursuant to a public interest litigation, vide order dated 1 October 2010, quashed the land acquisition proceedings and Conveyance Deed by GoH and directed the GoH to refund the amount, which was earlier paid by the Company and also directed the Company to remove any construction on the said land. Against the said order, the Company filed a Special Leave Petition in November 2010 before the Hon’ble Supreme Court of India, who vide order dated 3 January 2012, stayed the order of the High Court and the matter is pending for disposal before the Hon’ble Supreme Court of India.

Based on the advice of the independent legal counsel, the management believes that there is strong likelihood of succeeding before the Hon’ble Supreme Court of India.

v) The Company along with its subsidiaries had acquired a land parcel admeasuring approximately 30 acres and 7 acres, respectively from EIH Limited (‘EIH’) for development of IT/ ITES project at Silokhera, Gurugram, which EIH acquired from GoH. The Company constructed 2 IT/ ITES SEZ Buildings on the said land, which was sold to one of the subsidiary companies of the DCCDL. The Company is constructing another block of buildings on the DCCDL’s behalf. The Net Block and Capital Work-in-Progress against Silokhera project appearing in DCCDL’s books as at 31 March 2018 amounts to Rs.164,250.05 lakhs (gross block of Rs.187,490.98 lakhs) and Rs.89,122.37 lakhs, respectively.

Subsequently, the Hon’ble High Court of Punjab and Haryana, pursuant to a public interest litigation and vide its order dated 3 February 2011 directed the GoH to carry out the acquisition proceedings again from the notification stage under the Land Acquisition Act, 1894 and directed the Company and its subsidiary to remove all constructions made on the said land. The Company filed a Special Leave Petition before the Hon’ble Supreme Court of India and the Hon’ble Supreme Court of India vide order dated 20 September 2011 stayed the order of the Hon’ble High Court and the matter is currently pending before the Hon’ble Supreme Court of India and the next date of hearing is yet to be notified by the registry.

Based on the advice of the independent legal counsel, the management believes that there is a strong likelihood of succeeding before the Hon’ble Supreme Court of India. Pending the final decision on the above matter, no further adjustment has been made in these financial statements.

b) Certain other matters pending in litigation with Courts/ Appellate Authorities

a) The Competition Commission of India (CCI) on a complaint filed by the Belaire/ Park Place owners Association had passed orders dated 12 August 2011 and 29 August 2011 wherein the CCI had imposed a penalty of Rs.63,000.00 lakhs on DLF Limited (“DLF” or “the Company”) or restraining DLF from formulating and imposing allegedly unfair conditions with buyers in Gurugram and further ordered to suitably modify the alleged unfair conditions on its buyers.

The said orders of CCI were challenged by DLF on several grounds by filing appeals before the Competition Appellate Tribunal (COMPAT). The COMPAT, pending hearing and till final orders had granted stay on demand of penalty of Rs.63,000.00 lakhs imposed by CCI.

COMPAT vide its order dated 19 May 2014 accepted the arguments of DLF that since the agreements were entered into prior to coming into force of Section 4 of the Competition Act, the clauses of the agreements entered in 2006-07 could not be looked into for establishing contravention of Section 4 of the Competition Act, however COMPAT held that the Company is a dominant player in Gurugram being the relevant market and has abused its dominant position in relation to certain actions which is violative of Section 4 of the Competition Act and has accordingly upheld the penalty imposed by CCI.

COMPAT further held that CCI could not have directed modifications of the Agreement as the power to modify the agreement under Section 27 is only in relation to Section 3 and cannot be applied for any action in contravention of Section 4 of the Competition Act, 2002.

The Company has filed an Appeal in the Hon’ble Supreme Court of India against the order dated 19 May 2014 passed by the COMPAT. The Hon’ble Supreme Court of India vide order dated 27 August 2014 admitted the Appeal and directed the Company to deposit penalty of Rs.63,000.00 lakhs in the Court.

In compliance of the order, the Company has deposited Rs.63,000.00 lakhs with the Hon’ble Supreme Court of India.

The appeals have been listed for arguments before the Hon’ble Supreme Court of India.

Based on the advice of the independent legal counsels, the management believes that there is a reasonably strong likelihood of succeeding before the Hon’ble Supreme Court of India. Pending the final decisions on the above matter, no adjustment has been made in these standalone financial statements.

b) During the year ended 31 March 2011, the Company received judgments from the Hon’ble High Court of Punjab and Haryana cancelling the sale deeds of land relating to IT SEZ Project in Gurugram. The Company filed Special Leave petitions (SLPs) challenging the orders in the Hon’ble Supreme Court of India.

The Hon’ble Supreme Court of India has admitted the matters and stayed the operation of the impugned judgments till further orders.

Based on the advice of the independent legal counsels, the management believes that there is a reasonably strong likelihood of succeeding before the Hon’ble Supreme Court of India. Pending the final decisions on the above matter, no adjustment has been made in these standalone financial statements.

c) (i) Securities and Exchange Board of India (SEBI) had issued a Show Cause Notice (SCN) dated 25 June 2013 under Section 11(1), 11(4), 11A and 11B of the SEBI Act, 1992 (“the SEBI Act”) read with clause 17.1 of the SEBI (Disclosure & Investor Protection) Guidelines, 2000 (“DIP Guidelines”) and Regulation 111 of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR Regulations”) and levelled certain allegations in the same.

The Company filed its reply with SEBI, placed written submissions and participated in the hearings conducted by the Hon’ble Whole Time Member, in which it replied to each allegation levelled in the said Show Cause Notice (SCN).

The Hon’ble Whole Time member however rejected the reply filed by the Company and vide its order dated 10 October 2014 restrained the Company and six others from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities, directly or indirectly, in any manner, whatsoever, for a period of three years.

The Company has filed an appeal against the said order before Securities Appellate Tribunal (SAT). SAT vide majority order dated 13 March 2015 allowed all the appeals and the impugned order passed by SEBI has been quashed and set aside.

SEBI has filed a statutory appeal under Section 15Z of SEBI Act before the Hon’ble Supreme Court of India.

On 24 April 2015, the Hon’ble Supreme Court of India admitted the appeal (‘Appeal’) filed by SEBI and issued notice on interim application. No stay has been granted by the Hon’ble Supreme Court of India in favour of SEBI.

SEBI had filed an application stating that proposed sale of the Compulsorily Convertible Preference Shares (‘CCPS’) in DLF Cyber City Developers Limited, one of the unlisted subsidiary of the Company, by the promoters, to third party Institutional Investors should not be allowed during the pendency of the appeal and have sought stay from the Hon’ble Supreme Court of India on the proposed transactions. The Hon’ble Supreme Court of India did not pass any order and has kept the application to be heard along with the Appeal.

(ii) SEBI also issued a SCN dated 28 August 2013 under Sections 15HA and 15HB of the SEBI Act, 1992 and under Rule 4 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by adjudicating officer) Rules, 1995 (“Adjudication Rules”), hearing on which has been completed and the Company has filed its written synopsis/ submissions.

By way of orders dated 26 February 2015, the adjudicating officer of SEBI imposed penalties upon the Company, some of its Directors, officer under Section 15HA and under Section 15HB of the SEBI Act, 1992.

The Company, its Directors, officer have filed appeal before SAT impugning the order dated 26 February 2015 passed by an Adjudicating Officer of SEBI. The Appeal is listed before SAT and in its order dated 15 April 2015, SEBI has undertaken not to enforce the orders dated 26 February 2015 during pendency of the appeal. The appeals have been listed for hearing before SAT.

The appeals were listed for hearing before SAT on 25 April 2018. The SAT vide its order passed on 25 April 2018 held that in view of SAT’s majority decision dated 13 March 2015, the Adjudication Officer’s decision dated 26 February 2015 cannot be sustained.

Accordingly, the Hon’ble SAT disposed of the appeals, along with Intervention Application. According to the judgement, the said appeals, shall stand automatically revived once Hon’ble Supreme Court of India disposes of the Civil Appeals filed by SEBI against SAT’s judgement dated 13 March 2018.

d) The petitions were filed before the Hon’ble Punjab & Haryana High Court challenging the action of the Haryana Government to acquire the land belonging to Gram Panchayat of village Wazirabad, District Gurugram for public purpose and thereafter selling the same to the Company, seeking directions from the court for quashing of the acquisition proceedings under Sections 4 & 6 dated 8 August 2003 and 20 January 2004.

The petitioners therein also sought quashing of the award dated 19 January 2006 and the regular letter of allotment (RLA) dated 9 February 2010 issued in favour of the Company for 350.715 acres of land.

The Hon’ble Punjab & Haryana High Court, vide its final order dated 3 September 2014, while upholding the acquisition of land has however disapproved the allotment in favour of the Company. The Hon’ble High Court passed an order to keep the RLA dated 9 February 2010 issued in favour of the Company in abeyance and further directed the Haryana State Industrial and Infrastructure Development Corporation (‘HSIIDC’) to initiate fresh allotment process for higher returns in respect of the land in question with an option to State to revive the RLA in case no better bid is quoted by the public at large.

The Company has filed a Special Leave Petition before the Hon’ble Supreme Court of India challenging the judgment dated 3 September 2014 passed by the Hon’ble Punjab & Haryana High Court. The Hon’ble Supreme Court of India issued notice to the respondents and directed status quo to be maintained by the parties.

Based on the advice of the independent legal counsels, the management believes that there is a reasonably strong likelihood of succeeding before the Hon’ble Supreme Court of India. Pending the final decisions on the above matter, no adjustment has been made in these standalone financial statements.

e) DLF has filed a Special Leave Petition (SLP) against the order dated 2 December 2016 passed by the Hon’ble Punjab & Haryana High Court in Writ Petition No.12210 of 2013 challenging the findings and directions passed by the Hon’ble High Court requiring DLF to allocate additional land measuring 10.6 acres for DLF Park Place complex. DLF has taken the ground that after having rejected the contentions of the Association on the claim of extra land based on FAR and PPA norms, the Hon’ble High Court could not have passed the order for allocation of additional land based on the representations made in the Brochure. DLF has further raised the ground that the Hon’ble High Court has given a complete go by to the terms and conditions of the binding agreement where it was specifically provided the area of Park Place as 12.67 acres granted leave in the Special Leave Petition.

Against the same order, DLF Park Place Residents Welfare Association has also filed an SLP before the Hon’ble Supreme Court on the grounds that the High Court has misinterpreted the statutory provisions of the applicable law to hold that GH Park Place is not a separate and independent Group Housing Complex but is part of DLF Phase-V constructed over 476.42 acres having 15 Group Housing Complexes. In accordance with the FAR ratio of 1: 1.75, the association was entitled to additional land of 46.20 acres on the total constructed area which has not been considered by the Hon’ble High Court.

These SLPs were listed before Supreme Court on 17 April 2017 and 9 May 2017, respectively. The Court after hearing, granted leave in the SLPs.

Based on the advice of the independent legal counsels, the management believes that there is reasonably strong likelihood of succeeding before the Hon’ble Supreme Court of India. Pending the final decisions on the above matter, no adjustments has been made in these financial statements.

Employee Stock Option Scheme, 2006 (ESOP):

During the year ended 31 March 2007, the Company had announced an Employee Stock Option Scheme (the “Scheme”) for all eligible employees of the Company, its subsidiaries, joint ventures and associates. Under the Scheme, 17,000,000 equity shares have been earmarked to be granted and the same will vest as follows:

Pursuant to the above Scheme, the employee will have the option to exercise the right within three years from the date of vesting of shares at Rs.2/- per share, being its exercise price.

Options are granted under the plan for the consideration of Rs.2/- per share and carry no dividend or voting rights. When exercisable, each option is convertible into one equity share. For the options which were vested before 31 March 2015, using the Ind AS transition exemption (as explained in the significant accounting policies no. 5(o) the expense related to options is arrived at using intrinsic value of the shares on the date of grant. For options which were vested after 31 March 2015, the expense related to options is arrived at using fair value of the options on the date of grant.

Share options outstanding at the end of the year (tranche wise) have the following exercise prices:

a) Under the Employee Shadow Option Scheme (the ‘scheme’), employees are entitled to get cash compensation based on the average market price of equity share upon exercise of shadow option on a future date. As per the scheme, Shadow options will vest as follows:

* For tranche I and II, 50% options have already been vested in the financial year ended 31 March 2010 and remaining 50% vested in financial year ended 31 March 2012. For tranche III & IV, 50% options vested in the financial year ended 31 March 2011 and remaining 50% vested in financial year ended 31 March 2012. For tranche V, the options vested in financial year ended 31 March 2012. For tranche VII, 33.33% vested in financial year ended 31 March 2014 and 33.33% vested in 31 March 2015 and remaining 50% vested in financial year ended 31 March 2016. For tranche VIII, 33.34% vested in financial year ended 31 March 2017. For tranche VI, the entire options vested in current financial year. For tranche VIII, all the remaining options have forfeited during the current financial year. Hence no option is outstanding to be vested as at the end of the year.

The Company is primarily engaged in the business of colonization and real estate development, which as per Ind AS - 108 on ‘Operating Segments’ is considered to be the only reportable business segment. The Company is operating in India which is considered as a single geographical segment.

20. The company had entered into an operation and management agreement with DLF Golf Resorts Limited (“DGRL”), a wholly-owned subsidiary of the Company. As per the agreement, DGRL transfers 97% revenue generated and expenses incurred during the year to the Company and the remaining 3% shall be retained by DGRL for operation and management services provided to the Company. Accordingly, revenues of Rs.7,503.67 lakhs and expenses of Rs.7,686.97 lakhs (including Rs.5,576.30 lakhs transfer from DGRL) pertaining to golf course operations, has been recognized in the financial statements.

21. The investments made in related parties are long-term and strategic in nature. Further, loans, guarantees and securities given are for meeting business and working capital requirements.

22. STANDARS ISSUED BUT NOT YET EFECTIVE

The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard:

a) Ind AS 115 Revenue from Contracts with Customers

Ind AS 115 was notified on 28 March 2018 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under Ind AS. This new standard requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions of the Company. Ind AS 115 is effective for the Company in the first quarter of fiscal 2019 using either one of two methods: (i) retrospectively to each prior reporting period presented in accordance with Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors, with the option to elect certain practical expedients as defined within Ind AS 115 (the full retrospective method); or (ii) retrospectively with the cumulative effect of initially applying Ind AS 115 recognized at the date of initial application (1 April 2018) and providing certain additional disclosures as defined in Ind AS 115 (the modified retrospective method).

The Company continues to evaluate the available transition methods and its contractual arrangements. The ultimate impact on revenue resulting from the application of Ind AS 115 will be subject to assessments that are dependent on many variables, including, but not limited to, the terms of the contractual arrangements and the mix of business. The Company’s considerations also include, but are not limited to, the comparability of its financial statements and the comparability within its industry from application of the new standard to its contractual arrangements. The Company has established an implementation team to implement Ind AS 115 related to the recognition of revenue from contracts with customers and it continues to evaluate the changes to accounting systems and processes and additional disclosure requirements that may be necessary.

Upon adoption, the Company expects there to be a change in the manner that revenue is recognized in respect of construction project contracts from the current practice of recognizing such revenue as the services are performed. The Company also expects a change in the manner that it recognizes certain incremental and fulfilment costs from expensing them as incurred to deferring and recognizing them over the contractual period. A reliable estimate of the quantitative impact of Ind AS 115 on the financial statements will be concluded once the implementation project has been completed.

b) Amendments to Ind AS 112 Disclosure of Interests in Other Entities

The amendments clarify that the disclosure requirements in Ind AS 112, other than those in paragraphs B10-B16, apply to an entity’s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal group that is classified) as held for sale.

As at 31 March 2018, the Company does not have any investments classified as held for sale and accordingly, these amendments are unlikely to affect the Company’s financial statements.

c) Amendments to Ind AS 12 Recognition of Deferred Tax Assets for Unrealised Losses

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

The Company is required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. The Company will disclose the fact if this relief is applied.

These amendments are effective for annual periods beginning on or after 1 April 2018. Since Company’s current practice is in line with the clarifications issued, the Company does not expect any material effect on its financial statements. However, final impact will be concluded once the assessment of these changes in finalised.

d) Transfers of Investment Property - Amendments to Ind AS 40

The amendments clarify when an entity should transfer property, including property under construction or development into or out of investment property. The amendments state that a change in use occurs when the property meets or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management’s intentions for the use of a property does not provide evidence of a change in use.

Entities should apply the amendments prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of property held at that date and if applicable, reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance with Ind AS 8 is only permitted if it is possible without the use of hindsight.

The amendments are effective for annual periods beginning on or after 1 April 2018. The Company will apply amendments when they become effective. However, since Company’s current practice is in line with the clarifications issued, the Company does not expect any material effect on its financial statements.

e) Ind AS 28 Investments in Associates and Joint Ventures - Clarification that measuring investees at fair value through profit or loss is an investment-by-investment choice

The amendments clarify that:

- An entity that is a venture capital organisation, or other qualifying entity, may elect, at initial recognition on an investment-by-investment basis, to measure its investments in associates and joint ventures at fair value through profit or loss.

- If an entity, that is not itself an investment entity, has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries. This election is made separately for each investment entity associate or joint venture, at the later of the date on which: (a) the investment entity associate or joint venture is initially recognised; (b) the associate or joint venture becomes an investment entity; and (c) the investment entity associate or joint venture first becomes a parent.

The amendments will be applied retrospectively and are effective from 1 April 2018. These amendments does not have any material impact on the Company’s financial statements.

f) Appendix B to Ind AS 21 Foreign Currency Transactions and Advance Consideration

The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration.

Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognised on or after:

(i) The beginning of the reporting period in which the entity first applies the Appendix, or

(ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix.

The Appendix is effective for annual periods beginning on or after 1 April 2018. However, since the Company’s current practice is in line with the Interpretation, the Company does not expect any material effect on its financial statements.

23. The figures for the corresponding previous year have been regrouped/ reclassified, wherever considered necessary, to make them comparable with current year classification.