Puravankara Ltd:Annual Report 2023-24 Analysis

Puravankara Ltd. - A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

Puravankara Ltd. was founded in 1975 by Ravi Puravankara.

Headquarters Location and Global Presence:

The company’s headquarters are located in Bangalore, India. While the company primarily focuses on the Indian real estate market, they have a presence and brand recognition in the Middle East (Dubai).

Company Vision and Mission:

• Vision: To be a leading and respected real estate developer, known for innovation, quality, and customer satisfaction.
• Mission: To provide homes and commercial spaces that enhance the lives of our customers, delivered with integrity and excellence.

Key Milestones in Their Growth Journey:

• 1975: Foundation of Puravankara Ltd.
• 1986: First residential project completion.
• 2007: Initial Public Offering (IPO).
• Expansion into commercial real estate and affordable housing segment with Provident Housing.
• Strategic partnerships and land acquisitions across key Indian cities.

Stock Exchange Listing Details and Market Capitalization:

Puravankara Ltd. is listed on the Bombay Stock Exchange (BSE: 532891) and the National Stock Exchange (NSE: PURVA). Market capitalization fluctuates based on market conditions. Please refer to current stock market data for the most up-to-date information.

Recent Financial Performance Highlights:

Please consult the company’s latest annual reports, quarterly reports, and investor presentations for accurate and updated financial performance data. These documents provide details on revenue, profit margins, debt levels, and key performance indicators.

Management Team and Leadership Structure:

• Ravi Puravankara: Founder & Chairman
• Ashish Puravankara: Managing Director
• Other key members include the CFO, Executive Directors responsible for various functions like sales, marketing, operations, and project development.

Any Notable Awards or Recognitions:

Puravankara Ltd. has received awards for its project designs, construction quality, sustainability practices, and customer service. Details of these awards can be found on the company’s website and in press releases.

Their Products #

Complete Product Portfolio with Categories:

• Luxury Residential: High-end apartments, villas, and penthouses under the Puravankara brand.
• Affordable Housing: Value-for-money homes primarily under the Provident Housing brand.
• Commercial Real Estate: Office spaces, retail spaces, and mixed-use developments.

Flagship or Signature Product Lines:

• Purva Riviera: Example of a high-end luxury residential project.
• Provident Housing: Focuses on providing affordable housing options.

Key Technological Innovations or Patents:

Puravankara has incorporated precast construction technology in some projects.

Quality Certifications and Standards:

Puravankara strives to adhere to relevant construction quality standards and obtains necessary certifications for its projects. Details regarding specific certifications are available on the project level.

Any Unique Selling Propositions or Technological Advantages:

• Focus on design and innovation to provide unique living experiences.
• Precast construction technology for faster project delivery.
• Integrated township developments offering a complete lifestyle.

Recent Product Launches or R&D Initiatives:

Puravankara continues to launch new residential and commercial projects in key Indian cities. The company invests in research and development to incorporate innovative features and sustainable practices in its projects.

Primary Customers #

Target Industries and Sectors:

• Residential: Primarily targets individual homebuyers across various income segments.
• Commercial: Targets businesses seeking office spaces, retailers, and organizations looking for commercial properties.

Geographic Markets (Domestic vs. International):

Primarily focused on the Indian real estate market, with key markets including Bangalore, Chennai, Mumbai, Pune, Hyderabad, and Kochi. Also, has some operations in Dubai.

Major Client Segments (Agricultural, Industrial, Residential, etc.):

Primarily residential and commercial clients.

Distribution Network and Sales Channels:

• Direct sales teams
• Channel partners and real estate agents
• Online marketing and sales platforms
• Property exhibitions and events

Major Competitors #

Direct Competitors in India and Globally:

• Godrej Properties
• DLF
• Prestige Estates Projects
• Oberoi Realty
• Sobha Ltd.

Competitive Advantages and Disadvantages:

• Advantages: Established brand reputation, diversified product portfolio (luxury and affordable), focus on innovation and design.
• Disadvantages: Subject to real estate market cycles, competition from larger players, potential delays in project execution.

How they Differentiate from Competitors:

• Emphasis on design, innovation, and customer experience.
• Dual brand strategy targeting both luxury and affordable segments.

Market Positioning Strategy:

Puravankara positions itself as a premium real estate developer offering a range of residential and commercial properties with a focus on quality, design, and customer satisfaction. Provident Housing is positioned as a brand that provides value-for-money homes.

Future Outlook #

Expansion Plans or Growth Strategy:

• Focus on expanding presence in key Indian cities.
• Strategic land acquisitions to fuel future growth.
• Exploring opportunities in new segments such as plotted developments.

Upcoming Products or Innovations:

Continued focus on incorporating sustainable features, smart home technology, and innovative design elements in upcoming projects.

Sustainability Initiatives or ESG Commitments:

Puravankara is increasingly focusing on sustainability and ESG (Environmental, Social, and Governance) initiatives. This includes incorporating green building practices, energy efficiency measures, and waste management systems in its projects. Details regarding their specific ESG goals and initiatives can be found in their annual reports and sustainability reports.

Industry Trends Affecting Their Business:

• Increasing demand for affordable housing.
• Growing focus on sustainability and green building practices.
• Technological advancements in construction and property management.
• Government policies and regulations related to real estate.

Long-Term Vision and Strategic Goals:

Puravankara’s long-term vision is to be a leading and respected real estate developer, known for innovation, quality, and customer satisfaction. Strategic goals include expanding market share, enhancing profitability, and creating sustainable value for stakeholders.

Puravankara Limited - Financial Analysis Report (FY23-24) #

Comprehensive Financial Performance (3-Year Trend Analysis) #

Analysis:

FY23-24 marked a significant operational upswing for Puravankara, with record sales value and volume, alongside robust customer collections. This indicates strong market demand and effective sales strategies. While realisation per square foot saw a modest increase, the substantial growth in volume drove overall revenue. The significant increase in net operating surplus highlights improved execution and inventory monetization. However, the net profit declined despite higher revenues, suggesting potential pressures from increased operating costs, higher finance costs prior to capitalization, or other unitemized expenses impacting the bottom line disproportionately. The company also achieved a significant reduction in debt per sq. ft of under-construction area. The current cost of debt stands at 11.59%. ICRA reaffirmed an ‘A-’ Stable credit rating.

Business Segment Performance #

Puravankara operates through distinct brands:

• Purva (Luxury Residences): Represents 48% of the 14.04 msft launch pipeline (approx. 6.74 msft). Land assets for Puravankara brand stand at 31.82 msft, with 17.16 msft in ongoing projects and 35.41 msft completed.
• Provident (Premium Mid-Segment Housing): Represents 52% of the 14.04 msft launch pipeline (approx. 7.30 msft). Land assets for Provident brand stand at 4.32 msft, with 14.51 msft in ongoing projects and 14.99 msft completed.
• Purva Land (Plotted Developments): Represents a smaller portion of the launch pipeline, 0.09 msft.
• Starworth Infrastructure and Construction Limited (SICL): Tech-driven EPC solutions. FY24 Turnover: ₹431.87 Cr, Profit After Tax (PAT): ₹(4.50) Cr. Contribution to consolidated PAT: (6.99%).
• Commercial Real Estate: Developing approx. 3 msft.

Segment-wise Financials (Subsidiaries - FY23-24) #

• Provident Housing Limited: Turnover ₹466.35 Cr, PAT ₹29.55 Cr (70.36% contribution to consolidated PAT).
• Starworth Infrastructure & Construction Limited: Turnover ₹431.87 Cr, PAT ₹(4.50) Cr (-6.99% contribution).
• T-Hills Private Limited: Turnover ₹317.17 Cr, PAT ₹68.48 Cr (163.04% contribution).

Analysis:

Provident and Purva brands form the core of the residential development launch strategy. T-Hills Private Limited and Provident Housing were significant profit contributors in FY24, while Starworth posted a loss. The focus on plotted development via Purva Land caters to a specific investment and aspirational second-home market. The company has a diversified portfolio targeting various homebuyer segments.

Major Strategic Initiatives and Progress #

• Nationwide Expansion:
  • Strong presence in South India (Bengaluru, Hyderabad, Chennai).
  • Expanded to West India (Mumbai, Pune, Goa). Acquired land in Thane and residential redevelopment rights for two housing societies in Mumbai.
  • Exploring Northern regions (Noida, Gurgaon) to achieve pan-India developer status.
• Capital Management & Funding:
  • HDFC Capital infused capital into Provident Housing for development.

Detailed Analysis #

Financial Analysis Report: Puravankara Limited (FY24) #

Company: Puravankara Limited Stock Codes: BSE: 532891, NSE: PURVA Financial Year End: March 31, 2024

Comparative Analysis of Financial Position (Consolidated) #

FY22 data is not fully available. The analysis below focuses on FY24 and FY23.

Note: Slight discrepancy in Total Equity & Liabilities vs Total Assets due to rounding in source or minor unlisted items. Using sum of liabilities and equity from the table for consistency in this section.

Key Observations: #

• Asset Growth: Total assets grew by 16.62%, driven by a significant increase in inventories (19.09%) and other non-current assets (40.30%). This indicates expansion in project development and potentially land bank.
• Equity Reduction: Total equity decreased slightly by 5.21%, primarily due to a reduction in Other Equity. This could be due to dividend distributions or other adjustments.
• Liability Increase: Total liabilities rose by 17.39%. Both non-current (27.38%) and current liabilities (22.63%) increased, suggesting increased borrowings and operational liabilities to fund growth.

Significant Changes in Major Line Items (Consolidated, >10% YoY) #

Business Performance Analysis of Puravankara Limited (FY23-24) #

Financial Performance #

• Revenue: Consolidated total revenue surged by 61% YoY to ₹2,260 crore from ₹1,236 crore in FY22-23.
• Sales: Sales value (bookings) reached a record ₹5,914 crore, a 90% YoY increase from ₹3,107 crore.
• Customer Collections: Improved by 60% to ₹3,609 crore from ₹2,258 crore.
• Sales Realisation: Sales realisation per square foot (psf) saw a modest increase of 2% YoY to ₹7,916.
• EBITDA: EBITDA margin stood at 24%, with an absolute EBITDA of ₹531 crore.
• Net Profit: ₹42 crore (compared to ₹66.52 crore in FY22-23 on a consolidated basis, and ₹114.24 crore standalone in FY22-23).
• Net Operating Surplus: A significant 598% increase to ₹513 crore from ₹74 crore in FY22-23.
• Standalone Performance: Standalone revenue was ₹1,105.71 crore (up from ₹625.04 crore), with a profit after tax of ₹78.46 crore (down from ₹114.24 crore).

Market Position and Expansion #

• Geographic Focus: Strong position in South India (Bengaluru, Hyderabad, Chennai). Actively expanding in West India (Mumbai, Pune, Goa).
• Planned Expansion: Planning entry into the National Capital Region (NCR), including Noida and Gurgaon.
• Mumbai Redevelopment: Foray into the Mumbai redevelopment market, with two housing society redevelopment rights acquired, projecting a potential Gross Development Value (GDV) of ₹1,500 crore.
• Land Acquisition: 12.75-acre land parcel in Thane was acquired, expected to add ₹7,500 crore in GDV.
• Land Acquisition Target: Targets acquiring 10 million square feet (msft) of land in FY24-25 across key markets.
• Market Capitalization: Approximately ₹4,973-₹4,974 crore on BSE and NSE respectively as of March 31, 2024.

Product and Project Performance #

• Brand Portfolio: Operates under three main brands: Purva (luxury), Provident (premium mid-segment), and Purva Land (plotted developments).
• New Project Launches (FY23-24): 16 new projects spanning 10.76 msft were launched.
• Sales Volume Increase (FY23-24): Increased by 84% YoY to 7.36 msft from 4.00 msft.
• Project Launch Pipeline (FY24-25): 14.04 msft, with Puravankara brand accounting for 6.69 msft (48%) and Provident for 7.26 msft (52%), and Purva Land for 0.09 msft.
• Total Assets (as of March 31, 2024): 67.81 msft (31.67 msft ongoing projects, 36.14 msft land assets).
• Completed Projects: 50.40 msft. In FY23-24, 9 projects (7.32 msft) received Occupancy Certificates, of which 94% (5.92 msft) were sold.
• Brand-wise Ongoing Projects: Puravankara 17.16 msft, Provident 14.51 msft.
• Brand-wise Completed Projects: Puravankara 35.41 msft, Provident 14.99 msft.

Geographic Focus and Market Penetration #

• Primary Markets: South India (Bengaluru, Chennai, Hyderabad).
• Expansion Focus: West India (Mumbai, Pune, Goa), highlighted by land acquisition in Thane and redevelopment projects in Mumbai.
• Planned Entry: NCR (Noida and Gurgaon).
• Project Launch Pipeline: 14.04 msft spread across Bengaluru, Chennai, Hyderabad, Kochi, Mumbai, Pune, and Goa.

Capital Allocation and Investment #

• Total Land Assets: 36.14 msft.
• Land Acquisition Target: Aims to acquire an additional 10 msft of land.
• HDFC Capital Investment: ₹1,150 crore investment from HDFC Capital into Provident Housing Limited for the development of 6.2 msft of residential projects.
• QIP Approval: Board approval for a ₹1,000 crore Qualified Institutional Placement (QIP).
• Strategic Project Pipeline (FY24-25): Launching 6.69 msft under Puravankara, 7.26 msft under Provident, and 0.09 msft under Purva Land.

Operational Efficiency #

• Debt Reduction: Debt per sq. ft. of under-construction area reduced by approximately 58% over the last six years, from ₹2,077 in Q4 FY19 to ₹874 in Q4 FY24.
• Cost of Debt: Current cost of debt is 11.59%.
• Debt Repayment: ₹410 crore of debt was repaid to IFC and ASK in FY23-24.
• Customer Collections: 60% increase.
• Net Operating Surplus Growth: 598% highlights quick inventory monetization and execution speed.
• Project Completion: 9 projects received OCs in FY23-24.
• Credit Rating: Reaffirmed at ‘A-’ Stable by ICRA.

Growth Strategies and Outlook #

• Overall Strategy: Expanding operational footprint across India, leveraging sector tailwinds and internal strengths.
• Key Strategies:
  1. Aggressive business development with a focus on land acquisition (36.14 msft current land assets, targeting 10 msft new acquisition).
  2. Accelerated project execution and timely delivery.
  3. Expansion into new geographies (NCR) and deepening presence in existing high-potential markets (Mumbai, Pune).
  4. Strategic focus on redevelopment projects in Mumbai.
  5. Capitalizing on funding through HDFC Capital partnership and planned QIP.
  6. Strengthening differentiated brand offerings across luxury, mid-segment, and plotted developments.
  7. Maintaining prudent financial management, including debt reduction and improving cash flows.

Risk Factors and Challenges #

• Market Price Fluctuation: Sales and rental realisations are subject to market conditions.
• Sales Volume Risk: Dependent on project design, approvals, market conditions, and customer trust.
• Execution Risk: Relies on labor availability, material prices, regulatory clearances, utilities, and absence of contingencies like litigation.
• Land/Development Rights Cost and Availability: Significant project cost, particularly in markets like Mumbai.
• Financing Costs: Substantial capital outflow for land acquisition; high interest rates can impact operations.
• System Risks: Adequacy of internal controls and IT infrastructure.
• Sustainability Risks: Environmental, social, and governance (ESG) factors

Financial Risk Analysis of Puravankara Limited (FY23-24) #

Overall Risk Environment #

Puravankara Limited operates in a dynamic real estate sector influenced by macroeconomic conditions, regulatory changes, and evolving market demands. The company’s financial performance in FY23-24 shows strong top-line growth but a decline in net profitability, alongside increased scrutiny from auditors on specific financial reporting and compliance areas. Key risks revolve around project execution, market volatility, financing, regulatory compliance, and the recoverability of significant asset balances. The company has a stated risk management framework involving board-level committees and a dual top-down/bottom-up approach.

Strategic Risks #

Strategic risks relate to the company’s long-term objectives, market positioning, and adaptability to industry shifts.

Strategic Analysis: Puravankara Limited #

Long-Term Strategic Goals #

Puravankara Limited is pursuing a long-term strategy centered on nationwide expansion, aiming to solidify its position as a national real estate leader. Key strategic goals include:

• Geographic Expansion: Actively expanding beyond its strong presence in South and West India into northern regions, specifically targeting Noida, Gurgaon, and the National Capital Region (NCR). A significant foray into the Mumbai market focuses on redevelopment projects.
• Land Bank Replenishment and Acquisition: A target to acquire 10 million sq. ft. (msft) of land across key markets to fuel future development.
• Sustainable Development: A vision to craft sustainable living spaces, with a commitment to all new projects from FY24 achieving a minimum IGBC Silver certification and targeting USGBC Gold for commercial projects.
• Brand Diversification and Strengthening: Leveraging its three distinct brands – Purva (luxury), Provident (premium mid-segment), and Purva Land (plotted developments) – to cater to diverse homebuyer needs.
• Operational Excellence and Financial Prudence: Focusing on timely execution, efficient working capital management, and debt reduction.

Progress (FY23-24) #

• Achieved highest-ever sales value of ₹5,914 crore (90% YoY increase).
• Total revenue increased by 61% YoY to ₹2,260 crore.
• Customer collections grew by 60% to ₹3,609 crore.
• Launched 10.76 msft of new projects.
• Acquired redevelopment rights for two housing societies in Mumbai (potential GDV ₹1,500 crore).
• Acquired a 12.75-acre land parcel in Thane (potential GDV ₹7,500 crore).
• Reduced debt by ₹410 crore (to IFC and ASK).
• Net operating surplus increased by 598% to ₹513 crore.
• Received Occupancy Certificates (OC) for nine projects.
• Maintained an ‘A-’ Stable credit rating from ICRA.

Competitive Advantages and Market Positioning #

Puravankara Limited possesses several competitive advantages:

• Strong Brand Portfolio: Three distinct brands (Purva, Provident, Purva Land) catering to a wide spectrum of homebuyers.
• Substantial Land Assets: Total assets of 67.81 msft, including 36.14 msft in land assets.
• Proven Execution Track Record: 50.40 msft of completed projects as of March 31, 2024, with 7.32 msft completed in FY24 (94% sold).
• Financial Strength: Improved customer collections, significant reduction in debt per sq. ft. of under-construction area, and a strong net operating surplus.
• Customer-Centric Approach: Guided by “The You Philosophy,” emphasizing transparency, quality, and enriching experiences.
• Experienced Leadership: Strong senior leadership with strategic, geography-wise segregation of duties.
• Commitment to Sustainability: Focus on green building certifications and ESG principles.

Market Positioning #

The company is positioned as a premier, Bengaluru-based real estate developer with a growing national footprint. It is expanding aggressively into western India (Mumbai, Pune) and has plans for the NCR, aiming for pan-India developer status. Its diversified offerings allow it to compete across multiple market segments.

Innovation Initiatives and R&D Effectiveness #

Innovation at Puravankara is focused on:

• Sustainable Construction and Design:
  • Commitment to IGBC certifications.
  • Integration of sustainable design principles.
  • Planned provision of 20% EV charging points in every project.
  • Use of energy-efficient materials and systems.
• Technology-Driven Solutions:
  • Subsidiary Starworth Infrastructure and Construction Limited (SICL) focuses on tech-driven EPC solutions.
  • Propmart offers tech-enabled real estate services.
  • Digital launch of projects and online booking capabilities.
  • Enhanced IT security and ePayment/eCollection integration.
• ESG Research & Development: A dedicated R&D team for ESG initiatives.

Effectiveness #

The achievement of pre-certifications and the clear targets for green buildings demonstrate progress in sustainable innovation. Digital project launches and the operationalization of tech-enabled services indicate effectiveness in leveraging technology. The establishment of an ESG R&D team suggests a structured approach to future environmental and social innovations.

M&A Strategy and Execution #

Puravankara’s growth strategy incorporates inorganic expansion through:

• Land Acquisition: Actively acquiring land parcels in key existing and new markets. The target is to acquire 10 msft of land.
  • Execution: Acquired a 12.75-acre land parcel in Thane with a potential GDV of ₹7,500 crore.
• Redevelopment Projects: Strategic pivot towards redevelopment projects, particularly in high-value markets like Mumbai.
  • Execution: Acquired residential redevelopment rights for two housing societies in Mumbai, with a potential GDV of ₹1,500 crore.
• Joint Development Agreements (JDAs): Pursuing opportunities in Pune and other markets through outright and joint development agreements.

The M&A activities are aligned with the company’s goal of nationwide expansion and tapping into new growth avenues like urban redevelopment.

ESG Framework #

Environmental Metrics and Targets #

Green Buildings #

• IGBC Gold pre-certification achieved for Purva Zentech & Purva Meraki.
• Commitment: All new projects from FY24 to be certified green buildings (minimum IGBC Silver).
• Target: USGBC Gold for commercial project Purva Aerocity.
• Over six projects earmarked for IGBC certifications during the reporting period (FY23-24).

Energy Efficiency & Emissions #

• Initiatives to reduce Scope 1 and 2 emissions are ongoing.
• Measures: Energy-efficient LED fixtures, timer-based lighting, copper wound transformers, BIS-certified star-rated equipment, energy-efficient pumps/motors, BMS-enabled energy metering.
• Adherence to ASHRAE standards for commercial projects.
• Target: 100% common area lighting through renewable energy in upcoming projects.
• DG sets use ultra-pure low sulphur-content diesel; chimneys meet Pollution Control Board specifications.

Electric Vehicle (EV) Infrastructure #

• Target: Provide at least 20% EV charging points in every project.

Water Conservation #

• 100% utilization of treated water in all residential projects (flushing, landscaping) and commercial projects (flushing, gardening, HVAC).
• 100% design compliance with regulations for terrace and surface rainwater utilization.
• Million Wells for Bengaluru campaign: Restored over a dozen heritage and recharge wells. One well supplies 2 lakh litres daily; three rainwater harvesting systems retain 741 kilolitres annually.
• Low-flow water fixtures and water metering implemented.

Waste Management (Headquarters) #

• Systematic collection, segregation, storage, and disposal of plastic, paper, and food waste through authorized vendors.
• Paperless policy at HQ.
• Construction waste: Concrete debris recycled for backfilling/hardscaping; metal waste reused for barricades.

Biodiversity & Green Cover #

• Tree Plantation: 15,000 native species planted (Miyawaki method) in FY24; 40,000 planned for FY25.
• Maintenance of 7 medians and 1 park (Rest House Park with 400+ air-purifying plants).
• Design focus: Maximizing green cover, diverse vegetation, local hardy shrubs, pollinator gardens, balcony gardens.

Social Responsibility Programs #

Education #

• Khel Khel Mein Program (with Wockhardt Foundation): 393 children benefited across 7 centers in Bengaluru, Mumbai & Pune; focuses on values, English, science, math for underprivileged children.
• Vidyasaarathi Scholarship (with Protean eGov & TISS): Financial aid to 27 graduate students (BE, B-Tech, BSc, B-Com, BCA, BBA) from MES College Goa in FY23-24 (families with < ₹5 lakhs annual income).
• Support to Govt Schools: 2 schools renovated in FY23-24; kits (geometry boxes, notebooks) provided. Essential amenities (fan, table, chairs) provided to a school for visually challenged children.
• Swami Vivekananda Cultural Youth Centre - Viveka Smaraka, Mysuru: Contribution to youth center impacting ~25,000 students annually (vocational skills, life skills).
• Project PARAM - Janaseva Trust, Bengaluru: Contribution for developing science, culture, and convention centers.

Environmental CSR (Community Focused) #

• Research with Anna University, Chennai: Developing a ward-level water-sensitive plan for Chennai.
• Median and Park Maintenance: Maintained 7 medians and 1 public park in Bengaluru for 10+ years (PPP model with BBMP).
• Tree Plantation: 15,000 native saplings planted in FY24, 40,000 in FY25 in rural Bengaluru.
• Million Wells for Bengaluru: Restoration of heritage and recharge wells.

Employee Welfare & Development #

• Talent Management: L&D programs (sales, technical, PoSH, leadership, product, quality) covering 38% of the workforce. Robust performance review system.
• Occupational Health and Safety (OHS): Zero fatalities and work-related injuries reported.
  • Worker Trainings: 8,834
  • Toolbox Talks Conducted: 57,578
  • Contractual Workforce covered under OHS Systems: 16,162 (participating), 5,128 (inducted).
• Employee Benefits: Medical & accident insurance, subsidized meals, long service awards, wedding gifts.
• Diversity & Inclusion: Women diversity at 27% (up 3% from FY23).

Audit and Regulatory Analysis of Puravankara Limited FY23-24 #

1. Auditor’s Opinion and Qualifications #

Standalone Financial Statements (SFS) #

• Opinion: Unmodified opinion issued by S.R. Batliboi & Associates LLP.
• Emphasis of Matter:
  1. Note 38(v): Ongoing legal proceedings related to property and income tax. No provision made based on legal opinions.
  2. Note 40(v): Related party transactions without prior shareholder approval per SEBI LODR. Pending regularization.
• Key Audit Matters (KAMs):
  1. Recognition of Revenue from Contracts with Customers (Ind AS 115).
  2. Recoverability of inventory and land advances/deposits.
  3. Recoverability of investments and loans in subsidiaries, associates, and joint ventures.
• Other Matter: Reliance on reports of other auditors for financial statements of 4 partnership entities.
• CARO, 2020 Observations (Standalone):
  • Clause (ii)(b): Quarterly returns/statements for working capital limits exceeding Rs. 5 crores not filed.
  • Clause (ix)(a): Loans (Rs. 205.42 crores) repayable on demand; no demand made. No default on other borrowings.
  • Clause (ix)(e): Funds (SBI term loan) used to meet obligations of subsidiary (Melmont Constructions Private Limited).
  • Clause (xvi): Audit trail (edit log) feature not enabled for certain changes.
  • Clause (v) of Auditor’s Report: Interim dividend amount not transferred to separate bank account within specified timeline.

Consolidated Financial Statements (CFS) #

• Opinion: Unmodified opinion issued.
• Emphasis of Matter:
  1. Note 37(b)(iii): Similar ongoing legal proceedings as in SFS.
  2. Note 39(v): Similar related party transaction issues as in SFS.
• Key Audit Matters (KAMs): Similar to SFS, focusing on revenue recognition, recoverability of inventory/land advances, and recoverability of investments/loans in associates/JVs at the Group level.
• Other Matter:
  1. Reliance on reports of other auditors for 28 subsidiaries, 3 associates, and 1 joint venture.
  2. Inclusion of unaudited financial statements for 1 subsidiary (considered not material to the Group).
• CARO, 2020 (Consolidated): No qualifications or adverse remarks in CARO reports of companies included in CFS, but audit trail and dividend transfer issues persist at the consolidated level.

2. Key Accounting Policies #

• Revenue Recognition (Ind AS 115): Real estate revenue recognized when control is transferred. JDAs recognized over time using the input method.
• Inventories: Valued at the lower of cost and Net Realizable Value (NRV).
• Borrowing Costs: Capitalized as part of qualifying assets.
• Leases (Ind AS 116): Right-of-use (ROU) assets and lease liabilities are recognized, except for short-term and low-value leases.
• Impairment: Financial assets assessed for Expected Credit Losses (ECL). Non-financial assets tested for impairment if indicators exist.