1.01 Corporate information

Lancor Holdings Limited (the Company) is a public Company domiciled in India and incorporated under the provisions of the Compnies Act, 1956. It's equity share are listed in the BSE Ltd (Bombay Stock Exchange) in India. The Company is engaged in the business of real estate development and leasing of commercial properties.

1.02 Authorization of standalone financial statements

The standalone financial statements were authorized for issue in accordance with a resolution of the directors on May 14, 2018.

* Restriction in title of the property

* Investment properties has been pledged as security for borrowings, refer note no 2.18 and 2.23 for details.

Capitalised borrowing cost

The borrowing cost capitalised during the year ended 31st March 2018 was Nil; (31st March 2017: Nil and 1st April 2016 : Rs. 523.30 lakhs )

Fair value hierarchy and valuation technique

a) The fair valuation of one of the property "Menon eternity" investment property has been determined by an independent valuer, who holds a recognised and professional qualification, and has recent experience in the location & category of the investment being valued. The said property is under litigation and the matter is pending at the Honorable High court of Madras. (Refer note no. 4.02(a))

b) For other investment properties the comparable market price or selling price wherever properties have been sold during the reporting period has been considered for the determination of the fair value.

* All the investments in equity shares of subsidiaries are measured as per Ind AS 27 'Separate Financial Statements'.

** As per the deed of partnership, the Classic Farms (Chennai) Limited and Lancor Maintenance & Services Limited had guaranteed profits in the projects "The Central Park West" and "The Central Park South". Apart from the said two projects, the partners other than Lancor Holdings Limited (the Company) do not have any interest in the profits/loss of the entity.

^A During the year ended 31st March 2018; the company has capitalised borrowing cost to the extent of Rs 1693.01 lakhs (31st March 2017: Rs 1141.53 lakhs and 1st April 2016: Rs 1414.65 lakhs ) to the cost of real estate project under development inventories have been pledged as security for borrowings, refer note no 2.18 for details

Note: No amount is receivable from any directors or officers of the Company, severally or jointly with any other person, or from firms where such director is a partner or from private companies where such director is a member

* The receivables have been pledged as security for borrowings, refer note no 2.18 for details

b. Rights, preference and restrictions attached to shares Equity Shares

The company has only one class of equity shares having a par value of Rs.2 per share. Each holder of equity shares is entitled to one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend.

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

Nature and purpose of reserves Securities premium reserve

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

Revaluation Reserve is created on account of revaluation of the Investment Property.

General Reserve

The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserves.

Retained Earnings

Retained earnings are the profits, the Company has earned till date.

i. The total amount of loan sanctioned to the Company is amounting to Rs. 800 lakhs. The loan is repayable with current EMI of Rs,22.12 lakhs(with 6% increase in monthly instalments). The repayment schedule is based on monthly rental from BNP Paribas & Sun Edison in respect of Menon Eternity Building at 165, St. Mary's Road, Alwarpet, Chennai. The tenure of the loan is 55 months effective

ii. Term Loan I from Catholic Syrian Bank Limited is secured by 1) "Westminster" a commercial building, situated at No. 108/22, Dr Radhakrishnan Salai, Mylapore, Chennai 4 2nd & 8th floors of the building measuring 7,977.5 sq. ft of built-up area. 2) "Menon Eternity" a commercial building, situated at No. 165, St Mary's Road, RA Puram, Chennai 28 - 2nd, 3rd, 4th, 5th floors and a part of 10th floor measuring 93,051 sq. ft of built up area. 3) Land measuring 10.99 acres at Sriperumbudur owned by the Company.

i. The total amount of loan sanctioned to the Company is amounting to Rs. 3,450 lakhs.The tenure of the loan is 60 months effective April, 2015.

ii. The Term loan II from Catholic Syrian Bank Limited is secured by

1) "Westminster" a commercial building, situated at No. 108/22, Dr Radhakrishnan Salai, Mylapore, Chennai 4 2nd & 8th floors of the building measuring 7,977.5 sq. ft of built-up area. 2) "Menon Eternity" a commercial building, situated at No. 165, St Mary's Road, RA Puram, Chennai 28 - 2nd, 3rd, 4th, 5th floors and a part of 10th floor measuring 93,051 sq. ft of built up area. 3) Land measuring 5.98 acres at Sriperumbudur owned by the Company

i. The total amount of loan sanctioned to the Company is amounting to Rs. 3450 lakhs. The tenure of the loan is 60 months effective April, 2015.

ii. Term Loan III from Catholic Syrian Bank Limited is secured by 1) "Westminster" a commercial building, situated at No. 108/22, Dr Radhakrishnan Salai, Mylapore, Chennai 4 '- 2nd & 8th floors of the building measuring 7,977.5 sq. ft of built-up area. 2) "Menon Eternity" a commercial building, situated at No. 165, St Mary's Road, RA Puram, Chennai 28 - 2nd, 3rd, 4th, 5th floors and a part of 10th floor measuring 93,051 sq. ft of built up area. 3) Land measuring 5.98 acres at Sriperumbudur owned by Lancor Holdings Limited.

i. The total amount of loan sanctioned to the Company was amounting to Rs. 10 crore. The Loan is repaid during the year.

ii. Term loan I from City Union Bank Limited is secured by mortgage of 1) commercial property having a built up area of 6,122 sqft on the IV Floor at "CITI TOWER" building owned by the company 2) commercial building having a built up area of 5,122 sqft on II Floor at "VTN Square" building owned by the company.

i. The total amount of loan sanctioned to the Company was amounting to Rs. 1350 lakhs. The loan is repayable in 120 equal monthly installments at Rs.20.1y6 lakhs from September 2015.

ii. As on March 31, 2018

Term loan II from City Union Bank Limited is secured by mortgage of 1) commercial building having a built up area of 5,122 sqft on II Floor at "VTN Square" building owned by the company. 2) All that piece and parcel of Non residential super structures (Elcot Avenue , Lancor sports & Recreation centre) of a built up area of 20,572 sq.ft inclusive of common areas together with 9,583 sq.ft of undivided share of land out of the total extent of 1,59,423 sq.ft situated in "The Central Park South" in Sholinganallur village, Tambaram Taluk, Kancheepuram district.

As on March 31, 2017

Term loan II from City Union Bank Limited is secured by mortgage of 1) commercial building having a built up area of 5,122 sqft on II Floor at "VTN Square" building owned by the company. 2) commercial property having a built up area of 6,122 sqft on the IV floor at "CITI TOWER" building owned by the company

As on April 1, 2016

Term loan II from City Union Bank Limited is secured by mortgage 1) commercial building having a built up area of 5,122 sqft on II Floor at "VTN Square" building owned by the company. 2) commercial property having a built up area of 6,122 sqft on the IV floor at "CITI TOWER" building owned by the company. 3) commercial property having a built up area of 6,954 sqft on II & III floorat ROMA building

i. The Loan is repayable by a term of 42 months including moratorium of 12 months from the date of first disbursement.

Term loan from Axis Bank Limited is secured by Equitable mortgage of residential project "Lumina" Block D, G & H2 situated at Nellikuppam Road, Kayarambedu Village, Guduvanchery. Charge is created on the total loan amount.

i- There is a moratorium of 18 months from February, 2015 to July, 2016. Repayment of Rs. 55 lakhs is required from August, 2016 onwards up to January, 2018. EMI of Rs. 55 lakhs, is based on first tranche of Rs. 10 Crores drawn from HDFC Limited,

ii. The Term Loan-1 from HDFC Limited is secured by Town & Country, Lakeview Gardens, Ramapuram, Sriperumbudur measuring about 26.25 acres of land.

i. The total loan sanctioned to the company is amounting to Rs.3000 lakhs. The term of the loan is 36 months including moratorium of 18 months. Repayment of Rs. 170 lakhs is required from August, 2016. The last EMI payable in February, 2018 is Rs. 110 lakhs.

ii- The housing loan taken from LIC Housing Finance Limited is secured by (March 31, 2017: 15, April 1, 2016:17) apartments having a built up area of (March 31, 2017: 35,460, April 1, 2016: 41,747sq.ft) of our project, "Kiruba Cirrus" at Valasaravakkam, Chennai.

i. The total loan sanctioned to the company is amounting to Rs.2300 lakhs.The term loan is repayable in 36 months from the date of first disbursement starting from December, 2016 including moratorium period of 12 months. The monthly EMI is Rs.63.89 lakhs.

ii. The term loan from Tata Capital Housing Finance Limited is secured by (March 31, 2017: 27, April 1, 2016: 35) apartments, in The Central Park Lake Front Project located at Sholinganalur, Chennai admeasuring saleable area of (March 31, 2017: 45,500 sq. ft, April 1, 2016: 59,195 sq. ft).

i. The total loan sanctioned to the company is amounting to Rs.4700 lakhs/-.The term loan is repayable in 10 quarterly installments of Rs. 470 lakhs /- commencing from March 31, 2019 including moratorium period of 18 months.

ii. The term loan from Axis Finance Limited is secured by Unsold apartments of the projects Kiruba cirrus- 13 apartments of 31,307 Sq.ft, The Central Park Lake front -20 apartments of 34,035 Sq.ft , Townsville (A, B, C &D Blocks)- 31 apartments of 35,070 Sq. Ft, Lumina ( E, F & G Blocks)- 53 apartments of 59,847 Sq. Ft (March 31, 2017: Nil; April 1, 2016: Nil).

i. The facility is obtained for the working capital.

The facility is secured by a) All that Piece and parcel of land located at Sriperumbudur Village ,Kancheepuram district aggregating to 14.08 acres out of 22.38 acres, b) Project Altura Blocks -A, B,C,D & E Super Built-up Area aggregating to 3,56,301 Sq. Ft and UDS of 1,39,603 Sq. Ft

a) The amount sanctioned to the Company amounting to Rs. 500 lakhs.

As on March 31, 2018

Term loan II from City Union Bank Limited is secured by mortgage of 1) commercial building having a built up area of 5,122 sqft on II Floor at "VTN Square" building owned by the company. 2) All that piece and parcel of Non residential super structures (Elcot Avenue , Lancor sports & Recreation centre) of a built up area of 20,572 sq.ft inclusive of common areas together with 9,583 sq.ft of undivided share of land out of the total extent of 1,59,423 sq.ftsituated in "The Central Park South" in Sholinganallur village, Tambaram Taluk, Kancheepuram district.

As on March 31, 2017

Term loan II from City Union Bank Limited is secured by mortgage of 1) commercial building having a built up area of 5,122 sqft on II Floor at "VTN Square" building owned by the company. 2) commercial property having a built up area of 6,122 sqft on the IV floor at "CITI TOWER" building owned by the company

As on April 1, 2016

Term loan II from City Union Bank Limited is secured by mortgage of 1) commercial building having a built up area of 5,122 sqft on II Floor at "VTN Square" building owned by the company. 2) commercial property having a built up area of 6,122 sqft on the IV floor at "CITI TOWER" building owned by the company. 3) commercial property having a built up area of 6,954 sqft on II & III floorat ROMA building owned by the company

1.03 Contingent liabilities

The Company’s pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Service Tax / VAT and other

a) In the matter of the Commercial Property, “Menon Eternity” owned by the Company, the arbitrator had issued an award dated March 16, 2016, invalidating the sales

b) The Company has certain dispute with a lessee which has arisen on termination of lease agreement by the lessee within the lock in period. In terms of the lease

c) Other claims other than the details as mentioned above for leases not acknowledged as debt is Rs. 45.04 lakhs (excluding interest) where the Company has furnished a

d) In pursuance to the increased demand on premium FSI and OSR charges by the Chennai Metropolitan Development Authority (CMDA) over and above the normal FSI

e) The service tax department has raised a demand of Rs.223.27 lakhs along with interest and penalty for the period February 2009 to June 2010.The Company has paid

f) The service tax department has raised a demand of Rs. 156.10 lakhs and also a penalty of equal amount on Lancor GST Developments Limited (merged with Lancor

The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

Characteristics of defined benefit plan

The Company has a defined benefit gratuity plan in India which is unfunded. The company’s defined benefit gratuity plan is a final salary plan for employees, which.

Risks associated with defined benefit plan

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain long term obligations to make future Interest rate risk

A fall in the discount rate which is linked to the Government security rate will increase the present value of the liability requiring higher provision.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more Asset-liability Matching Risk

The plan faces the ALM risk as to the matching cash flow. Company has to manage pay-out based on pay as you go basis from own funds.

Mortality risk

Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

During the year, there were no plan amendments, curtailments and settlements.

b) Defined contribution plans

The Company operated defined benefits contribution retirement benefit plans for all qualifying employees.

The total expenses recognised in the statement of profit & loss is Rs. 24,00,063 (March 31, 2017: 27,82,414) represents the contribution payable to these plans by the

1.04 Disclosures as required by Ind AS 108 Operating segments

As permitted by the paragraph 4 of the Indian Accounting Standard (Ind AS 108), 'Operating segment', if a single financial report contains both consolidated financial

1.05 Leases

a) Operating leases (As lessee)

a) The Company has entered into commercial leases on office building. The lease has a life of one year with renewal option included in the contracts. There are no

b) The company has also entered into non-cancellable lease of residential property having a lease term up to 36 months. Rental expenses debited to the Statement of

b) Operating leases (As lessor)

a) The company has entered into leasing of residential property having a lease term up to 11 months. Rental income credited to statement of profit & loss amounting to

b) The Company has entered into commercial property leases on its constructed premises. These non-cancellable leases range for a period between three to fifteen

1.06 Capital management

The Company’s objective while managing capital is to maintain stable capital structure to support business stability and growth, ensure adherence to the covenants and The Company’s capital requirement is mainly to fund its business expansion by developing various residential and commercial projects and repayment of borrowings The Company has adhered to material externally imposed conditions relating to capital requirements and there has not been any delay or default during the period The Company monitors its capital using gearing ratio, which is net debt divided to total equity.

1.07 Financial instruments

(i) Methods & assumption that all used to estimates the fair values

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing The following methods and assumptions were used to estimate the fair values:

a) The carrying amounts of receivables and payables which are short term in nature such as trade receivables, other receivables, other bank balances, deposits, loans,

b) The fair values for long term loans given and remaining non current financial assets were calculated based on cash flows discounted using a effective interest lending

c) The fair values of long term security deposits taken and non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified

d) For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

(ii) Categories of financial instruments

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

(iii) Fair value of financial instruments measured at amortised cost

1.08 Financial risk management

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set The Company activities expose it to financial risks namely credit risk, liquidity risk and market risk. The board of directors of the Company has overall responsibility for the

a) Credit risk:

Credit risk arises from the possibility that counter party will cause financial loss to the company by failing to discharge its obligation as agreed. The Company’s exposure Real estate business

The Company’s trade receivables does not have any expected credit loss as the company does not have any possession until all dues receivables as received from the customers. During the periods presented, the Company has not made any write-offs of trade receivables.

Rental business

The Company follows a simplified approach (i.e. based on lifetime ECL) for recognition of impairment loss allowance on Trade receivables. For the purpose of measuring Trade receivables consist of mainly customer balances relating to real estate and rental business with no significant concentration of credit risk. The outstanding trade

b) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company liquidity risk management policies include to, at all times ensure sufficient liquidity to meet its liabilities when they are due, by maintaining adequate sources of financing from banks at an optimised cost. In addition, processes and policies related to such risks are overseen by senior management. The Company’s senior management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows. The Company takes into account the liquidity of the market in which they operate.

Financing arrangements

The Company has sufficient sanctioned line of credit from its bankers / financiers; commensurate to its business requirements. The Company reviews its line of credit available with bankers and lenders from time to time to ensure that at all point of time there is sufficient availability of line of credit.

The Company pays special attention to the net operating working capital invested in the business. In this regard considerable work has been performed to control and reduce collection periods for trade and other receivables, as well as to optimise accounts payable with the support of banking arrangements to mobilise funds.

c) Market risk

Market risk comprises of two types of risks. They are interest risk and other price risk i.e. equity risk.

i) Interest risk

The Company has both floating & fixed rate borrowings which are carried at amortised cost. The fixed rate borrowings are not subject to interest rate risk considering the future cash outflows will not fluctuate because of any change. The variable interest rate borrowings are subject to interest rate risk. The interest rate risk is managed by the Company by monitoring monthly cash flow which is reviewed by management to prevent loss.

ii) Equity price risk

The Company's non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages such risk within acceptable parameters set by the Board of directors.

1.09 Expenditure towards corporate social responsibility (CSR) activities

During the year the Company has contributed Rs. 34,89,022 /- (March 31, 2017: Rs. 39,34,963 /-) to a trust formed by it in the name of Lancor Foundation. Out of the contributed amount Rs. 40,00,000 has been paid as advance by Lancor Foundation towards purchase of land for the purpose of establishment of skill training centre to promote education and employment enhancing vocation skills with pursuant to the Schedule VII of the Companies Act 2013

1.10 Disclosure as per Section 186 of the Companies Act, 2013:

The operations of the Company are classified as 'infrastructure facilities' as defined under Schedule VI of the Act. Accordingly, the disclosure requirements specified in sub section 4 of Section 186 of the Act in respect of loans given or guarantee given or security provided and the related disclosures on purposes/ utilization by recipient companies, are not applicable to the Company except details of investment made during the year as per section 186(4) of the Act.

The Company has made investments in the following body corporates:

Lancor Guduvanchery Developments Limited-Nil (March 31, 2017: Nil, April 1, 2016: Nil)

Lancor Sriperumbudur Developments Limited-Nil (March 31, 2017: Nil, April 1, 2016: Nil)

Lancor Egtoor Developments Limited- 5,00,000 (March 31, 2017: 5,00,000, April 1, 2016: 5,00,000)

Lancor Maintenance & Services Limited- 1,00,000 (March 31, 2017: 1,00,000, April 1, 2016:1,00,000)

1.11 "There is an unclaimed dividend of Rs 69,940 required to be transferred to Investor Education and Protection Fund (IEPF). The Company is in process of transferring such amount to IEPF, in accordance with the provisions of section 125 of the Companies Act, 2013 and relevant rules thereunder.

1 .12 The Board of Directors at their board meeting held on May 14, 2018, have recommended a final dividend of Rs 0.20 per equity share of Rs 2/- each fully paid for the financial year 2017-18 aggregating to Rs 81 lakhs . The payment is subject to the approval of shareholders in the ensuing Annual General Meeting. The same has not been recognised as liability.

Foot notes for Ind AS adjustments

i) Property, plant and equipment

The Company has availed the exemption available under Ind AS 101 to continue the carrying value for all of its Property, Plant and Equipment's and Intangibles recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.

ii) Investment property

Under the previous GAAP, investment properties were presented as part of property, plant and equipment. Under Ind AS, investment properties are required to be separately presented on the face of the balance sheet. There is no impact on the total equity or profit as a result of this adjustment.

iii) Investment in subsidiaries

Under Ind AS, a first- time adopter can measure investments at cost determined in accordance with Ind AS 27 or at deemed cost. The deemed cost of the investment can be the fair value of the investment at the transition date or the previous IGAAP carrying amount. The Company has opted to measure its investments in subsidiary at the IGAAP carrying amount as its deemed cost on the date of transition.

iv) Investment in equity of other companies

Under the previous GAAP, long term investment were measured at cost. Under Ind AS, the company has opted to measure its investment in other equities at fair value through profit or loss. This has resulted in increase or decrease in fair value of investment with corresponding increase or decrease in provision for gain/loss on fair valuation of investment.

v) Security deposit

Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the company has fair valued these security deposits under Ind AS and the difference between the fair value and the transaction value of the security deposit has been recognised as prepaid rent.

vi) Defined benefit plans

Under previous GAAP, actuarial gains and losses were recognised in Statement of Profit and Loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability / asset which is recognised in other comprehensive income. Consequently, the tax effect of the same has also been recognised in other comprehensive income under Ind AS instead of profit or loss.

vii) Loan to subsidiary (partnership firm)

Under previous GAAP, interest free loans given to subsidiaries are accounted at their transaction value. Under Ind AS, the Company has discounted the interest free loans given to subsidiaries with corresponding increase in the investment.

viii) Loan to employees

Under previous GAAP interest free loans were given to employees, under Ind AS the Company discounted the interest free loans given to employees with corresponding increase in employee benefits.

ix) Proposed dividend

Under the previous GAAP, dividends proposed by the Board of Directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting.

x) Past Business Combination

We refer to note no. 1.26(B) in relation to past business combination, as per Ind AS, as the business combination has happened between Companies under the common control, accordingly the assets and liabilities after inter company elimination of the Company has been restated and has been given effect on transition date i.e. April 1, 2016

xi) Deferred tax

GAAP requires deferred tax accounting using income statement approach, which focuses on differences between taxable profits and accountable profits for the period. Ind AS 12 requires entities to account deferred tax using balance sheet approach which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under GAAP.

In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such difference. Deferred tax adjustments are recognised in correlation to the underlying transaction in component of equity.

xii) Other comprehensive income

Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, items of income or expense that are not recognised in statement of profit and loss are recognised as “other comprehensive income” which includes remeasurement of defined benefit plans.