From Published Accounts

Accounting and disclosure regarding Ind AS 115 by companies in Real
Estate sector for the quarter ended 30^th June 2018

Compilers’ Note: Ind AS 115 ‘Revenue from contracts with Customers’ is effective 1^st
April 2018 and replaces Ind AS 11 ‘Construction Contracts’ and Ind AS
‘Revenue’. Ind AS 115 follows a 5-step approach for recognition of revenue and
is likely to have a major impact on companies in various sectors on recognition
of revenue and disclosures. Given below are the disclosures in unaudited
results of Q1 2018-19 by companies in the real estate sector where the impact
of Ind AS 115 is likely to be material.

Oberoi Realty Ltd

From Notes
to Unaudited Consolidated Financial Results

Ind AS 115 ‘Revenue from Contracts with
Customers’, is a new accounting standard effective from April 1, 2018, which
replaces existing revenue recognition requirements. In accordance with the new
standard, and basis the Company’s contracts with customers, its performance
obligations are satisfied over time. The Company has opted to apply the
modified retrospective approach, and in respect of the contracts not complete
as of April 1, 2018 (being the transition date), has made adjustments to
retained earnings, recognising revenue of Rs 49,324 lakh, only to the extent of
costs incurred, as the relevant projects were in early stages of development.
Consequently, there is no impact on retained earnings as at the transition
date.

While recognising revenue, the cost of land
has been allocated in proportion to the construction cost incurred as compared
to the accounting treatment hitherto of recognising revenue in proportion to
the actual cost incurred (including land cost).

Consequently, in respect of the quarter
ended June 30, 2018, revenue is lower by Rs 1,12,820 lakh, operating cost is
lower by Rs 95,113 lakh, tax expense is lower by Rs 5,156 lakh and profit after
tax lower by Rs 12,551 lakh. The basic and diluted EPS for the period is Rs.
9.04 per share, instead of Rs 12.71 per share.

Under modified retrospective approach, the
comparatives for the previous period figures are not required to be restated
and hence are not comparable.

Mahindra
Lifespace Developers Ltd

From Notes
to consolidated Unaudited Financial Results

The consolidated financial results of the
Company have been prepared in accordance with the Indian Accounting Standards
(Ind AS) as prescribed u/s. 133 of the Companies Act, 2013 read with the relevant
rules issued thereunder and the other accounting principles generally accepted
in India.

a)  The Ministry of Corporate Affairs vide
notification dated 28^th March 2018 has made Ind AS 115 “Revenue
from Contracts with Customers” (Ind AS 115) w.e.f. 1st April, 2018. The
Company has applied the modified retrospective approach as per para C3(b) of
Ind AS 115 to contracts that were not completed as on 1^st April 2018
and the cumulative effect of applying this standard is recognised at the date
of initial application i.e. 1^st April, 2018 in accordance with para
C7 of Ind AS 115 as an adjustment to the opening balance of Retained Earnings,
only to contracts that were not completed as at 1^st April, 2018. The
transitional adjustment of Rs. 13,534 lakh (net of deferred tax) has been
adjusted against opening retained earnings based on the requirements of the Ind
AS 115 pertaining to recognition of revenue based on satisfaction of
performance obligation (at a point in time);

b)  Due to the application of Ind AS 115 for the
quarter ended June 30, 2018 Revenue from Operations is higher by Rs. 6,458
lakh, cost of sales is higher by Rs. 4,351 lakh, Profit before Share of Profit
of Joint Ventures is higher by Rs. 2,107 lakh, Share of Profit of Joint
Ventures is higher by Rs.151 lakh, Profit before Tax is higher by Rs. 2,260
lakh, Tax expense is higher by Rs. 593 lakh and Profit after tax is higher by
Rs. 1,666 lakh. The Basic and Diluted EPS for the quarter ended June 30, 2018
is Rs.5.20 per share and Rs.5.19 per share respectively instead of Rs.1.98 per
share.

These changes are
due to recognition of revenue based on satisfaction of performance obligation
(at a point in time), as opposed to the previously permitted percentage of
completion method. Accordingly, the comparatives have not been restated and
hence not comparable with previous period figures.

Larsen & Toubro Ltd

From Notes
to Standalone Unaudited Financial Results

The Company has aligned its policy of
revenue recognition with Ind AS 115 ‘Revenue from Contracts with
Customers” which is effective from April 1, 2018. Accordingly, revenue in
realty business is recognised on delivery of units to customers as against
recognition based on percentage completion method hitherto in accordance with
the guidance note issued by ICAI.

Further, the provision for expected credit
loss on contract assets is made on the same basis as financial assets in
accordance with Ind AS 109. The cumulative effect of initial application of Ind
AS 115 upto March 31, 2018 has been adjusted in opening retained earnings as
permitted by the standard. Similar impact on the financial results for the
quarter ended June 30, 2018 is not material.

Prestige Estates Projects Ltd

From Notes
to Consolidated Unaudited Financial Results

Ind AS 115 Revenue from Contracts with
Customers, mandatory for reporting periods beginning on or after April 1, 2018,
replaces existing revenue recognition requirements. The application of Ind AS
115 has impacted the Group’s accounting for recognition of revenue from real
estate projects.

The Group has applied the modified
retrospective approach to contracts that were not completed as of April 1, 2013
and has given impact of Ind AS 115 application by debit to retained earnings as
at the said date by Rs.10.119 million (net of tax). Accordingly, the
comparatives have not been restated and hence not comparable with previous
period figures. Due to the application of Ind AS 115 for the period ended June
30, 2018, revenue from operations is lower by Rs. 1,726 million and Net profit
after tax (before non-controlling interests) is higher by Rs 23 million,
vis-à-vis the amounts, if replaced standards were applicable. The basic and
diluted EPS for the period is Rs 3.18 instead of Rs. 3.14 per share.

Sobha Ltd

From Notes
to Consolidated Unaudited Financial Results

(5) Ind AS 115 Revenue from contracts with
customers has been notified by Ministry of Corporate Affairs (MCA) on 28 March,
2018 and as effective from accounting period beginning on as after 1 April,
2018, replaces existing revenue recognition standard. The application of Ind AS
115 has impacted the Group’s accounting for recognition of revenue from real
estate residential projects. There has been no significant impact on the
contractual and manufacturing business of the group.

The Group has applied the modified
retrospective approach to its real estate residential contracts that were not
completed as of 1 April, 2018 and has given impact of adoption of Ind AS 115 by
debiting retained as act the said date by Rs 
7,570 million (net of tax). 
Accordingly, the comparatives have not been restated and hence the
current period figures are not comparable to the previous period figures. 

Due to the application of Ind AS 115 in the
current period, revenue from operations is lower by Rs 2,029 million and net
profit after tax is lower by Rs  171
million, then what it would have been if the replaced standards were
applicable. Similarly, the basic and diluted EPS for the period is Rs  5.55 instead of Rs  7.34 per share.

Godrej Properties Ltd

From Notes
to Consolidated Unaudited Financial Results

3. 
Ind AS 115 – Revenue from Contracts with Customers has been notified by
Ministry of Corporate Affairs (MCA) on March 28, 2018 and is effective from
accounting period beginning on or after April 01, 2018.  The Company has applied full retrospective
approach in adopting the new standard (for all the contracts other than
completed contracts) and accordingly restated the previous period numbers as
per point in time (Project Completion Method) of revenue recognition.

The following table summarises the impact
(net of taxes) of adopting Ind AS 115 on the Group’s Financial Results:

The following table summarises the impact,
net of taxes, of transition to Ind AS 115 on net worth as at
March 31, 2018:

DLF Ltd

From Notes
to Consolidated Unaudited Financial Results

6. Ind AS 115 Revenue from Contracts with
Customers, mandatory for reporting periods beginning on or after April 1, 2018,
replaces existing revenue recognition requirements.  The application of Ind AS 115 has impacted the
Group’s accounting for recognition of revenue from real estate projects.

The Group along with its partnership firms,
joint ventures and associates have applied the modified retrospective approach
to contracts that were not completed as of April 1, 2018 and has given impact
of Ind AS 115 application by debit to retained earnings as at the said date by
Rs  5,382.82 crore (net of tax)
pertaining to recognition of revenue based on satisfaction of performance
obligations at a point in time. 
Accordingly, the figures for the comparative previous periods have not
been restated and hence the current period figures are not comparable with
previous period figures. Due to the application of Ind AS 115 for the period
ended June 30, 2018, revenue from operations is higher by Rs 188.88 crore and
net profit after tax is higher by Rs 111.34 crore, than what it would have
been, if replaced standards were applicable. Similarly, the basic EPS for the
current period is higher by Rs  0.63 per
share and diluted EPS for the period is higher by Rs  0.51 per share.

NBCC (India) Ltd

From Notes
to Consolidated Unaudited Financial Results

The Company has aligned its policy of
revenue recognition with lnd AS 115 “Revenue from Contracts with
Customers” which is effective from April 1, 2018. Consequent upon the
withdrawal of Guidance Note on Accounting for Real Estate Transactions (for
entities to whom lnd AS is applicable), issued in May 2016 in Real Estate
Segment and restructuring of performance obligations in PMC segment, the net
cumulative impact of initial application of lnd AS 115 upto March 31, 2018
aggregating to~ 49886.20 lakh has been appropriated against the retained
earnings as at the initial adoption date, as permitted by the standard. Profit
for the quarter ending June 30, 2018 would have been lower by~ 1940.87 lakh if
the company would have recognised the revenue based upon lnd AS 11 and lnd AS
18. The comparative information is not restated in the financial results.