39. GOING CONCERN
The Company has incurred losses in the current and previous years. The Company has huge challenges in meeting its operational obligations, current liabilities including outstanding dues to the statutory authorities, Bank Loans and Public Deposits. The Board of Directors of the Company, as appointed by the Union of India with the approval of Hon'ble Supreme Court, is in the process of estimating the contractual liabilities and the final outcome of contingent liabilities from the realizable value of available assets at the contracted value in the current form, which is an on-going activity.
In compliance of the directions of the Hon'ble Supreme Court as contained in its order dated 20th January 2020, the newly appointed Board of Directors has already stated its position in the Resolution Framework submitted in the Hon'ble Supreme Court on 15.07.2020, followed by updated versions submitted before the Hon'ble Supreme Court on 05.02.2021 and 08.08.2022, vide which the Hon'ble Supreme Court has been requested to grant certain concessions and reliefs so that the Company is able to fulfill its obligations towards the construction and completion of in-complete projects and meet other liabilities. The reasons for opting against the winding up of the Company or its reference under IBC have also been explained in the application filed with the Resolution Framework. Pending a final decision of the Hon'ble Supreme Court, the Financial Statements have, accordingly, been drawn on an on-going basis.
(b) Valuation techniques used to determine Fair value
The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date..
Note 40(ii) Financial Risk Management
The Company's financial risk management is an integral part of how to plan and execute its business strategies. The Company is exposed to market risk, credit risk and liquidity risk. The company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.
The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include loans, trade and other receivables and cash and cash equivalents that are derived directly from its operations
The Company's activities are exposed to market risk, credit risk and liquidity risk.
(I) Market risk
"Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks.
(a) Interest rate risk
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. In order to optimize the Company's position with regard to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of the fixed rate and floating rate financial instruments in its total portfolio.
(b) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company has no foreign currency loans in current year end and previous year . Therefore no sensitivity is provided.
(c) Price Risk
The company exposure to equity securities price risk arises from the investments held by company and classified in the balance sheet at fair value through profit and loss.
II. Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The company's credit risk exposure towards its counterparties are continuously monitored . Credit exposure of any party is controlled , reviewed and approved by the appointed company official in this regard.
The average credit period is 30 days.
III. Liquidity Risk
Liquidity risk is defined as the risk that company will not be able to settle or meet its obligation on time or at a reasonable price. The Company's objective is to at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company's management is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. Management monitors the company's net liquidity position through rolling, forecast on the basis of expected cash flows.
Note 40 (iii) Capital Management (A) Risk Management
The Company manages its capital to ensure that the company will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.
The Company's risk management committee reviews the capital structure of the Company on a semi-annual basis. As part of this review, the committee considers the cost of capital and the risks associated with each class of capital. The Company monitors capital on the basis of following gearing ratio, which is net debt divided by total capital plus debt
45. SEGMENT REPORTING:
The Company is primarily in the business of Real Estate Development and related activities, including construction, consultancy and rentals, among others. Further, most of the business conducted is within the geographical boundaries of India.
In view of the above, in the opinion of the Management and based on the organizational and internal reporting structure, the Company's business activities as described above are subject to risks and returns. Further, since the business activities undertaken by the Company are subsisting within India, in the opinion of the Management, the business environment in India is considered to have similar risks and returns. Consequently, the Company's business activities primarily represent a single business segment and the Company's operations in India represent a single geographical segment.
46. RELATED PARTY DISCLOSURES
(i) Names of Unitech's wholly-owned subsidiaries (172 Indian subsidiaries 30 foreign subsidiaries = 202) and other than wholly-owned subsidiaries (14 Indian subsidiaries 2 foreign subsidiaries = 16) which are "Related Parties" vis-a-vis Unitech Limited in terms of clause 76 of section 2 of the Companies Act, 2013, are as mentioned herein below, meaning thereby that in all 186 Indian subsidiaries and 32 foreign subsidiaries are Related Party entities:
48. LEASED ASSETS:
i) Operating lease taken:
Operating lease obligations: The Company has taken buildings and office equipments on operating lease basis. The lease rentals are payable by the Company on a monthly/ quarterly basis as per terms of the Lease Agreements. Future minimum lease rentals payable as at 31st March, 2023 as per the lease agreements are tabulated as under:
Interest expense on lease liability as per IND AS 116 recognized in the statement of Profit & Loss was Rs. 33.70 Lakhs (Previous Year Rs. 12.93 Lakhs), depreciation on "Right To Use Asset" was Rs 137.14 Lakhs (Previous Year Rs. 143.79 Lakhs) and expenses relating to short-term lease was Rs. 26.35 Lakhs (Previous Year Rs. 24.67 Lakhs).
The Company had total cash outflows for lease during the year under audit was Rs. 165.85 lakhs (Previous Year Rs. 171.94 lakhs). The effective interest rate for lease liabilities is 12% per annum (Previous Year 12% per annum).
The Company has several lease contracts that include extension and termination options. These options are negotiated by the Management to provide flexibility in managing and aligning with the Company's business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.
The Company has leased out office and Mall premises under non-cancellable operating leases. These leases have terms of between 03 to 10 years. All leases include a clause to enable upward revision of the rental charge on a periodical basis according to prevailing market conditions. Lease income recognized in the statement of profit and loss is Rs. 1,247.78 Lakhs (previous year Rs. 1,214.91 Lakhs)
50. Contingent liabilities and commitments (to the extent not provided for)
The Management has already submitted the Resolution Framework before the Hon'ble Supreme Court wherein the Company has sought various reliefs on account of penalties, interest liabilities etc. due to be paid to Statutory Authorities, Banks, Financial Institutions, Fixed Deposit Holders etc. Since a view on various reliefs claimed in the Resolution Framework is yet to be taken by the Hon'ble Supreme Court, it is not feasible at this stage to assess the overall impact of its contingent liabilities.
(i) Interest on delayed payment by customers and expenditure on account of compensation/ penalty for project delays accounted for at the time of acceptance/ settlement with the customers due to uncertainties with regard to determination of amount receivable/ payable have not been considered. The amount of contract revenue may decrease as a result of penalties arising from delays caused by the contractor in the completion of the contract, where such penalties are reasonably certain.
Legal challenges have been filed against the Company at various judicial forums including various Consumer Forums and Courts (besides those pending in the Hon'ble Supreme Court) by homebuyers, Fixed Deposit Holders and others. Ascertaining the liability on this account that may devolve on the Company is presently indeterminate.
The Hon'ble Supreme Court had vide its Order dated 08.09.2017 appointed an Amicus Curiae with directions to create a web portal where the homebuyers could indicate their option of (i) refund of money they have paid to the Company/ Companies in the Group for purchasing Residential Units, or (ii) Possession of House. The Hon'ble Supreme Court also started the process of giving Refunds out of the amounts deposited by the Company with the Court's Registry and has ordered to issue partial refunds to those customers who have obtained a decree for refund from any judicial forum.
Faced with a large number of IAs filed in the Supreme Court by different stakeholders and upon going through the report of Forensic Auditors, the Hon'ble Supreme Court directed the Union of India vide its order dated 18.12.2019 to propose appointment of an independent Board of Directors for Unitech Limited. The proposal submitted by the Ministry of Corporate Affairs was approved by the Hon'ble Supreme Court vide its order dated 20th January 2020, with simultaneous supersession of the erstwhile management. The Ministry of Corporate Affairs, accordingly, issued appointment orders of the CMD on 21.01.2020, six other Directors on 22.01.2020 and one Director on 03.02.2020, thereby constituting a new Board of Directors of the Company. Complying with the directions contained in the said order of the Hon'ble Supreme Court, the newly appointed Board of Directors has submitted the Resolution Framework, addressing the matters of homebuyers, Fixed Deposit Holders and other stakeholders. The homebuyers, Fixed Deposit Holders and others, as directed by the Hon'ble Supreme Court, have made their comments/ suggestions on the Resolution Framework submitted by the Company on the web portal maintained by the learned Amicus Curiae, appointed by the Hon'ble Supreme Court in this regard. At present, the Resolution Framework is under the consideration of the Hon'ble Supreme Court. The final quantum of liabilities of these cases can be ascertained only upon the final decision by the Hon'ble Supreme Court. The amount involved for delayed penalties for the properties for which customers have already been offered possession is already accounted for in the books of account. Legal challenges have been filed by homebuyers and others against the Company at various judicial forums and it is estimated that the total value of such claims would be Rs. 42,859.79 Lakhs, which the Company does not acknowledge as debts.
The Company has many residential and commercial projects in the state of Haryana. The Company has already accounted for the principal outstanding amount of EDC, IDC and License Fee. However, claims of delayed interest and penal interest amounting to Rs. 51,503.05 Lakhs, as claimed by the respective authorities, have not been considered in the Standalone Financial Statements. The Company has also filed an IA before the Supreme Court qua the demands of Government of Haryana. The Company is hopeful that the demands for interest and penal interest may be waived off at the time of decision on the said IA and the Resolution Framework.
The Company has many residential and commercial projects in the state of Uttar Pradesh in Noida and Greater Noida region. The demands on account of time extension fees, farmers' compensation, interest and penal interest have not been considered in the Standalone Financial Statement. The Company believes that these are exorbitant demands and has accordingly filed an IA in the Supreme Court challenging the demands raised by Noida and is hopeful that such exorbitant demands are not likely to stand the scrutiny of law and may be substantially waived of in the course of decision on the said IA and the Resolution Framework.
(v) Regional Provident Commissioner has raised a claim of Rs. 2,671.96 Lakhs (previous year Rs. 2,671.96 Lakhs) u/s 7 Q and 14B of EPF & MP Act. The Company has challenged the demand and the matter is pending before the Hon'ble Delhi High Court. The Company has also challenged the demand of Rs. 913.74 Lakhs before the Hon'ble Tribunal for the period May 2016 to March 2017 raised by EPFO under section 7A of EPF & MP Act, 1952 vide their order dated 23.01.2019.
(vi) An amount of Provident Fund dues as on 31.03.2023 aggregating to Rs. 2,929.85 Lakhs (previous year Rs. 2,946.03 Lakhs) pertaining to Provident Fund and Pension Scheme is pending for deposit for the period from May 2015 to February 2019. The Hon'ble Supreme Court has allowed the ex-employees to withdraw their Provident Fund amount out of the funds lying in the Supreme Court Registry. The final reconciliation of amount disbursed to the ex-employees and amount payable for Provident Fund and interest thereon, as mentioned above, shall be made once the final reconciliation of the funds disbursed through the Supreme Court Registry is made. The Company intends to deposit the due liability on account of Provident Fund in due course of time, subject to reconciliation of accounts, availability of funds, waiver of penalty, interest except the amount which is payable to the accounts of the ex-employees and outcome of the IA which is shortly being filed in the Hon'ble Supreme Court.
(viii) Commitments
(a) Capital Commitments - Nil (previous Year - Nil)
(b) Investment in 1,000,000 equity shares of Rs. 10/- each at a premium of Rs. 9,990/- per share aggregating Rs. 1,00,000.00 Lakhs has been made in joint venture Company, Shivalik Ventures Pvt. Ltd. An amount of Rs. 49,162.00 Lakhs has been paid against the allotment of fully paid-up shares. The balance securities premium of Rs. 50,838.00 Lakhs will be accounted for as and when payment will be made.
(c) Investment in shares of subsidiaries amounting to Rs. 1,559.75 Lakhs (Previous year Rs. 1,559.75 Lakhs) is pledged as securities against loans taken by the Company and subsidiary. Investment in shares of Joint Ventures (including unreleased pledged shares) amounting to Rs. 51.75 Lakhs (Previous year Rs. 51.75 Lakhs) are pledged as securities against loan taken by the Company and its Joint Venture. Investment of subsidiaries in the shares of its associates amounting to Rs. 2.45 Lakh (Previous year Rs. 2.45 Lakhs) is pledged as securities against loan taken by the Company.
51. Accounting of projects with co-developer
The Company is developing certain projects jointly with Pioneer Urban Land & Infrastructure Limited and its other Group companies. All the development expenses and sale proceeds booked during the year under audit are transferred to the co-developer at the year-end as per the agreement with the co-developers.
52. Payables (due to Micro, Small and Medium scale Enterprises)
The Company is in the process of collating and identifying the Suppliers registered under MSME and, therefore, the Company is not in a position to specify the amounts including interest due to the Suppliers registered under MSME.
53. The Annual General Meeting (AGM) for the year ended 31st March, 2022 was due to be held latest by 30th September, 2022. The new management did not have access to complete records of various transactions of the Company. It caused delay in the finalization of accounts and convening of Annual General Meeting which was held on 30th March 2023. The new Management has inherited several legacies under various provisions of law, including non-compliances related to non-holding of Annual General Meeting of Unitech Limited on or before the due dates. Ever since the new Management took control of Unitech Group as whole, it has been endeavoring to make the Group fully compliant in accordance with the provisions of the Companies Act, 2013 and rules made thereunder and other laws applicable.
The Company has scheduled its Annual General Meeting for the FY 2022-23 on 29th September 2023, which is well within the prescribed time-lines.
The Management had taken up the issue of seeking exemptions and waiver of penalties from MCA as well as SEBI vide its letters dated 11.06.2020, 29.07.2020 and 27.08.2020 and had also sought the intervention of Secretary MCA to take up the matter with SEBI. The Secretary MCA also took up the matter with Chairman SEBI vide his letter dated 05.08.2020. SEBI responded vide its letter dated 09.09.2020 informing that the BSE and NSE had examined the issue in view of moratorium granted by the Hon'ble Supreme Court and the notice for suspension of trading of securities had been withdrawn. Finding that there was no positive response on waiver of penalties, the Management filed an IA No. 81660 of 2021 and 81663 of 2021 on 16.07.2021 in the Supreme Court seeking requisite reliefs, which is still pending. The above defaults on the part of the Company were also placed before the Hon'ble Supreme Court in the Action Taken Report-III filed on 28.03.2022.
54. There have been delays in the payment of dues of non-convertible debentures, term loans & working capital loans (including principal, interest and/or other charges as the case may be) to the lenders of the Company who have taken/ initiated action against the Company, and the total of such outstanding amounts to Rs. 7,95,499.75 Lakhs as on 31.03.2023 (Previous Year Rs. 5,97,532.88 Lakhs). Some of the lenders have initiated action under the SARFAESI Act to take over the respective properties provided as security to the lenders. The Company has challenged the action of the lenders before the Debt Recovery Tribunals (DRTs). The matter has also been captured in the Resolution Framework, as submitted to the Hon'ble Supreme Court.
55. The Hon'ble Supreme Court, vide its order dated 20th January 2020, has, inter alia, issued directions that the Board of Directors of Unitech Limited, as existing on that date, be superseded with immediate effect in order to facilitate the taking over of management
by the new Board of Directors constituted in terms of the proposal submitted by Government of India. In these Financial Statements, references have been made hereunder to the Resolution Framework (RF) for Unitech Group, which has been prepared and approved by the Board of Directors in their meeting held on 17.06.2020, followed by updations of the RF approved by the Board of Directors in their subsequent meetings held on 10.09.2020 and 28.10.2020 and 27.04.2022.
The updated Resolution Framework has been placed before the Hon'ble Supreme Court on 05.02.2021 and 08.08.2022 respectively. The RF contains various proposals like determining admitted liabilities & claims, proposing non-payment of penalty, interest, default interest or damages to creditors, stakeholders, homebuyers, landowners, leaseholders or any Authority, detailing the Resolution Framework for Company's projects, detailing the Resolution Framework for non-project assets etc. The RF seeks various reliefs and concessions, like, (a) Homebuyers' Credit Lines, (b) Immunity for the Board, their appointed Key Management Personnel, employees, advisors and consultants for any action taken by them in good faith, (c) Grant of benefits to the Company, its subsidiaries and joint ventures and Project Entities of protections similar to section 32A of the Insolvency and Bankruptcy Code, 2016, (d) Priority Finance and other borrowings for implementation of the Framework, and (e) Tax related reliefs and concessions. Besides, the RF also seeks some specific directions like imposition of moratorium, consolidation of Unitech Group, temporary exemption from compliances under RERA, amongst others. As the RF is still pending consideration of the Hon'ble Supreme Court, the impact of the proposed reliefs, concessions etc. has not been considered in the Books of Accounts.
56. A Forensic Audit of the Company was conducted as per directions of the Hon'ble Supreme Court, and the report on Forensic Audit was submitted in a sealed cover to the Hon'ble Supreme Court. The report on the Forensic Audit is not available with the Company or its Board of Directors.
57. Pursuant to section 74 (2) of the Companies Act, 2013, the Company had filed an application before the National Company Law Tribunal (NCLT) for seeking, inter-alia, re-scheduling of repayment of the outstanding Public Deposits, including interest thereon as is considered reasonable, in March 2015. The Hon'ble NCLT dismissed the said application. The appeal against the said order was also dismissed by the Hon'ble NCLAT vide its order dated 31st January, 2017.
Subsequent to the new Board of Directors taking over the management, a Resolution Framework has been submitted to the Hon'ble Supreme Court by the Company for addressing the issues of homebuyers, Fixed Deposit Holders and others. This issue has duly been recognized in Chapter 8 of the Resolution Framework and the Company shall take action as per the directions of the Hon'ble Court in this behalf.
Some Depositors filed intervention applications (IAs) before the Hon'ble Supreme Court. Considering their applications, the Hon'ble Supreme Court directed the Amicus Curiae to create a web-portal where the Depositors could provide their requisite information. Accordingly, in compliance of the ibid directions, the Ld. Amicus Curiae created a web-portal for the purpose.
Hon'ble Supreme Court vide its order dated 12th December, 2019, allowed part refunds to FD Holders who were senior citizens, aged 60 years and above. Ten per cent of the amount deposited with the Registry at that time i.e. Rs. 17.4 crore was allocated for the purpose. Having regard to the huge number of FD Holders, who had registered themselves on the web-portal, the Hon'ble Court allocated a further sum of Rs. 30 Crore for distribution amongst them. The additional amount of Rs. 30 Crore was also to be disbursed to FD Holders of the age group of 60 years and above, in terms of the earlier direction/s. Out of the allocated sum of Rs. 47.40 Crore, an amount of Rs. 31.23 Crore has been disbursed till 31.03.2023 as per the report of Ld. Amicus Curiae. Further, we have received Rs. 13.19 Crores from Supreme Court Registry on ground of medical exigency, out of which Rs. 10.98 Crores has been disbursed till 31.03.2023. The new Management neither processes any case nor is it authorized to do so till the Hon'ble Supreme Court takes a final decision in this matter.
The matter being sub-judice, the Company has, therefore, not provided for the interest payable on Public Deposits since 1st April, 2017, which works out to Rs. 41,795.45 Lakhs upto year ended 31st March, 2023.
58. The Company was awarded a project for development of amusement-cum-theme Park in Chandigarh by the UT Administration of Chandigarh. The Chandigarh Administration unilaterally and illegally terminated the said Development Agreement. The Company filed a Writ Petition before the Hon'ble High Court of Punjab & Haryana challenging the termination of Development Agreement. The matter was finally referred for Arbitration and the Company received an Arbitral Award dated 29th June 2021 passed by the Arbitral Tribunal. The Company has also filed the objection petition before the Sessions Court in Chandigarh in respect of the Arbitral Award qua nonpayment of interest. Further, the Company has a good case and, accordingly, no provision has been considered necessary.
59. The Company has non-current investments (long term investments/ loans/ advances) in some subsidiaries (including advance for purchase of shares for proposed subsidiaries) which have accumulated losses. Some of these subsidiaries have incurred loss during the current and previous year(s) and the current liabilities of these subsidiaries also exceed their current assets as at the respective Balance Sheet dates. Management has evaluated this matter and keeping the overall financial position of the Company in view, where it is expected to have substantial erosion in the value of assets held by the subsidiaries, the provision for diminution of such investment, and loans and advances to the subsidiaries has been made by the Company in the Standalone Financial Statements.
60. Advances amounting to Rs. 31,290.98 Lakhs (net of provision for doubtful advances) (previous year ended 31st March, 2022 - Rs. 31,287.37 Lakhs (net of provision for doubtful advances) are outstanding in respect of advances for purchase of land, projects pending commencement, joint ventures and collaborators which, as represented by the management, have been given in the normal course of business to land-owning companies, collaborators, projects and for purchase of land. An amount of Rs. 30,000.00 Lakhs has been provided for doubtful advances during the preceding years. The new Management has already initiated the recovery proceedings qua the outstanding amounts.
61. The Company had received a notice dated 18th November 2015 for 'cancellation of lease deed' from Greater Noida Industrial Development Authority ("GNIDA"). As per the Notice, GNIDA cancelled the lease deed in respect of Residential/ Group Housing Plots on account of non-implementation of the project and non-payment of various dues amounting to Rs. 105,483.26 Lakhs. The Company had contractually entered into agreements with 352 homebuyers and had also received advances from such buyers amounting to Rs. 6,682.10 Lakhs (net of repayment). No contract revenue has been recognized on this project.
GNIDA, in the meanwhile, deposited an amount of Rs. 7,436.35 Lakhs (Rs. 6,682.10 Lakhs and interest @ 6% on the principal amount of Rs. 6,682.10 Lakhs), in terms of the Order of the Hon'ble Supreme Court dated 18.09.2018 with the Registry of the Hon'ble Supreme Court on behalf of the Company, out of the monies paid by the Company. This amount stands refunded to about 352 homebuyers on the directions of the Hon'ble Supreme Court.
The matter in respect of the land is still pending before the Hon'ble High Court of Allahabad for final disposal. The Company has, subsequently, shown the amount of Rs. 18,339.80 Lakhs as recoverable from GNIDA in its books of accounts. Further, the Company is also carrying other construction costs amounting to Rs. 80,650.70 Lakhs in respect of the projects to come up on the said parcel of land.
Further, the Management is also in the process of filing a comprehensive IA before the Hon'ble Supreme Court qua GNIDA demands from Unitech, including seeking appropriate directions on the instant issue.
62. The Company has accounted for its investment in its wholly-owned material subsidiary, M/s Unitech Power Transmission Limited (UPTL), as non-current assets held for sale. The Company is carrying the said investment at cost. Cost of investment as on 31st March, 2023 is Rs. 4,226.26 lakhs. The Board of Directors of Unitech Limited in its meeting held on 14.02.2023 decided to appoint M/s E&Y as the Transaction Advisor for the sale/ divestment of UPTL on as-is-where-is basis, for which exclusivity period of 09 months was approved.
Subsequent thereto, the notice of divestment was uploaded on e-Tendering portal of Unitech Limited on 06.04.2023, inviting Expressions of Interest (EoIs) from interested parties alongside individual mailers to 37 potential investors on or before 19.04.2023. A total of 10 parties submitted their EOIs by the Due date, with whom NDAs were signed. Another notice was uploaded on the Unitech website and e-tendering portal on 26.04.2023 inviting non-binding offers up to 01.05.2023. Four non-binding offers were received, which were opened on 02.05.2023, for amounts of Rs. 65 Crore (Jakson Limited). Rs. 25.00 Crore (M/s JSC OGCC), Rs. 20.00 Crore (Shilpa Steel) and Rs. 10.00 Crore (Shree Metals). The highest bidder thereafter submitted his Binding offer on 27.07.2023. The highest bidder subsequently revised his offer to Rs. 67.00 Crore. The binding Term Sheet submitted by the highest bidder was considered by the Board of Directors by circulation of an agenda on 11.08.2023. The said binding term sheet has been approved by the Board of Directors of Unitech Limited on 14.08.2023. After the decision of the Board, the transaction advisor has been requested to submit the final version of the binding term sheet.
A fair valuation report as per the provisions prescribed under section 56 of Income Tax Act, 1961, read with Rule 11UA of Income Tax Rules, 1962, has been obtained from a registered Merchant Banker. However, the statutory auditor has asked for getting the fair valuation report from an IBBI registered valuer as required under the provision of Indian Accounting Standard 105 - "Non-current assets held for sale and discontinued operations".
The Company has a property of Property situated at Plot no 14, Echelon Institutional Area, Sector-32, Gurgaon, Haryana, which has been rented to independent parties on operating lease. Carrying value of Land is X271.61 Lakhs and Building is X 889.27 Lakhs and total for the property is X 1,160.88 Lakhs as at 31 March 2023. Fair value of the property is X 11,871.72 Lakhs. The valuation is performed by Mr. Varun Sharma, an independent Chartered Engineer & Govt. Regd. valuer on the basis of market value approach.
64. A new Section 115BAA was inserted in Income Tax, Act, 1961, by Government of India on 20th September, 2019 vide Taxation Laws (Amendment) Ordinance, 2019, which provides an option to the Companies for paying income tax at reduced rates in accordance with the provisions/ conditions defined in the said section. The Company has decided to continue with the existing tax structure for the year ended March 31, 2023.
On 30th March, 2019, MCA has issued amendment regarding the income tax uncertainty over Income Tax treatment. As per the Company's assessment, there are no material income tax uncertainties over income tax during the current financial year.
The Company has not created any kind of deferred tax assets on account of lack of reasonable certainty of having taxable profits and in foreseeable future against which such tax assets can be adjusted.
65. As regards trade payables, which primarily relate to the unpaid bills of Contractors and Vendors, and which prima facie may not be payable to the extent shown in the books, the management is in the process of ascertaining the genuineness of all the operational liabilities, which are being carried forward as a legacy from the erstwhile management in the accounts. The exact liability towards trade payables can be ascertained only after the process of invitation and settlement of claims, as provided in the Resolution Framework, is taken up and completed.
Further, as regards trade receivables, which primarily relate to the part/ full amount receivable from customers and other receivables/ advances, the Management has already started a recovery process by sending recovery notices for the advances and has also established the process of recovering the dues from the customers, which is pending due to stoppage of projects.
Consequent to voluminous transactions with large number of parties, the management is in the process of preparing of ageing schedule for receivables and payables, from the available data in multiple software for different periods. As regards all other opening balances which are outstanding for a long period of time and which are also being carried forward as a legacy balance, the Company is in the process of collecting the supporting documents to take an appropriate decision in the matter. Though some progress has been made in this behalf, the process of compiling banks statements/ bank balance confirmations from all the concerned banks of the Company is likely to take some time as some of the banks are not cooperating. The Company has various statutory liabilities outstanding since long and the same are unpaid due to the pendency of matters before various Adjudicating Authorities and liquidity constraints with the Company.
66. The Internal Auditor appointed by the Company had resigned on 14th February, 2020 without conducting/ submitting any Internal Audit Report. The Management is in the process of appointing a new Internal Auditor for the Company as a replacement.
The Chief Financial Officer of the Company resigned from the Company on 30th June, 2021. As per sub section 4 of section 203 of the Companies Act, 2013, the Company is required to fill the vacancy within a period of six months from the date of such vacancy. The Company has been trying to fill-up the position of Chief Financial Officer (CFO) for which some candidates have also been interviewed but the Company is unable to meet their financial expectations. Further, the Company has also requested the ICAI to suggest suitable candidates for the position of CFO. It is looking for candidates with experience in the real estate industry.
67. The erstwhile management had invested in Telangana State through a Collaboration Agreement with M/s Dandamundi Estate and Mr. D.A. Kumar and deposited an amount of Rs. 48,131.00 Lakhs (out of which an amount of Rs. 600.00 Lakhs got adjusted on account of some dues of M/s Dandamundi Estate). The Company had also obtained bank loans to the tune of Rs. 33,500.00 Lakhs against security of these lands, legal titles of which were never transferred in the name of the Company. However, the Company had already settled the said loan account and nothing remains outstanding against the same. The new Management has filed an Intervention Application before Hon'ble Supreme Court for the recovery of the amounts deposited with M/s Dandamundi Estate and Mr. D.A. Kumar along with interest @ 18% p.a. and the Company has not created any provision against the said deposit in the Books of Accounts on account of the matter being sub-judice.
Notwithstanding the IA pending before the Hon'ble Supreme Court, the management has held meetings at the level of Board's Directors and Justice A.M. Sapre with Mr. D.A. Kumar and visited the land sites twice on 24.06.2022 and 02.01.2023.
It was agreed in the last meeting held at the level of Justice Sapre and the Chief Secretary, Telangana that the District Administration would complete the site survey and identify the areas, which have been encroached. It was also inter-alia directed by the Chief Secretary that no further sale deeds may be allow to be executed on the land parcels owned by Unitech Limited and its collaborator.
On follow-up with the District Collector of Medchal Malkajgiri, Hyderabad, it has been learnt that a Surveyor has been appointed to complete the process of site demarcation, which is expected to be completed in about next two months' time.
68. The Company had a branch office in Libya, whose Financial Statements/ information reflect total assets of Rs. 1,328.47 Lakhs (Previous year - Rs. 1,328.47 Lakhs) as on 31st March, 2023 and total revenues of Rs. NIL (Previous year - NIL) for the year ended on that date, as considered in the Standalone Financial Statements as described above. The Company has also made provision against all assets of Rs. 1,328.47 Lakhs (Previous year - Rs. 1,328.47 Lakhs). The Financial Statements/ information of this Branch have not been audited by the Branch Auditor due to the adverse political situation prevailing in Libya.
69. As per Books of Account, an amount of Rs. 311,91.85 lakhs stands deposited with the Hon'ble Supreme Court Registry as at 31st March, 2023, which is based on the information flow from the Registry till 22.11.2022. The Company received a detailed statement of accounts from the Supreme Court's Registry in the month of November, 2022. After reconciliation of the accounts, entries pertaining to (a) interest income of Rs. 4,980.00 lakhs upto 22.11.2022, (b) disbursement of Rs. 2,734.11 lakhs, out of 4,000 lakhs deposited in the Supreme Court's Registry by M/s Pioneer Urban Land & Infrastructure Limited, and (c) disbursement of Rs. 2,183.45 lakhs to homebuyers, FD holders and other stakeholders, have been duly entered in the books of accounts for the period ending 31.03.2023.
70. The Company has income from maintenance charges amounting to Rs. 3,531.58 Lakhs during the year ended 31st March, 2023 (Previous Year Rs. 3,032.80 Lakhs). The requisite MSAs of all the concerned projects have already been shared with the statutory auditors.
As far as the mapping of monies received from the residents (with customer codes) towards maintenance charges are concerned, it is clarified that a mixed bag of arrangements, which has been continuing since long. This observation relates to a total of ten projects comprising 06 Residential and 04 JV Commercial projects. This comprises of (i) where the RWAs are collecting the money and spending from out of a joint account, (ii) where the RWA are collecting and spending on their own, and (iii) Where Unitech and its JV are collecting the Maintenance Charges and spending the same. The main problem is that the RWAs have not maintained the customer-wise accounts with their customer codes. This has been taken up with the concerned RWAs for reconciliation thereof.
71. The Company had received an Arbitral Award dated 6th July, 2012 passed by the London Court of International Arbitration (LCIA) wherein the Arbitration Tribunal has directed the Company to purchase the investment of Cruz City 1 (a Company owned by Lehman Bros.) in Kerrush Investment Ltd. (Mauritius) at the overall value of USD 298,382,949.34 (Previous year USD 298,382,949.34) in Kerrush Investments Ltd (Mauritius). The High Court of Justice, Queen's Bench Division, Commercial Court London had confirmed the said Award.
Further, consequent to the order passed by the Hon'ble Delhi High Court in the instant case, the Company is required to make the aforesaid investment into Kerrush Investments Ltd. (Mauritius). The decree of the aforesaid amount against the Company is pending for execution. However, the Management is exploring the possibilities of filing an Intervention Application in the Hon'ble Supreme Court on this subject.
72. Except in the cases of the following two subsidiary companies, the Immovable properties and Investment properties held by all other subsidiary companies are included in their respective Books of Accounts whereas, the following properties/ investment properties owned by (i) Sankoo Builders Private Limited, and (ii) Broomfield Developers Private Limited have been accounted for in the Books of Accounts of Holding Company i.e. Unitech Limited:
75. The Company was allotted 350 acres of land in Nadergul village, Saroornagar Mandal, RR District, Hyderabad (Andhra Pradesh) by Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC) vide Letter of Award dated 28th November 2007. In terms of the Letter of Award, the entire purchase consideration of Rs. 16,500.00 Lakhs including EMD have already been paid to APIIC and a Development Agreement dated 19th August 2008 was signed with APIIC to develop the said land through Unitech Hyderabad Township Ltd., a wholly-owned subsidiary of the Company.
The Company came to know that the Hon'ble Supreme Court, vide its order 9th October 2015, had quashed the acquisition of the aforesaid land by the Government of Andhra Pradesh from the landowners and transfer of the same to Telangana State Industrial Infrastructure Corporation (TSIIC) (erstwhile APIIC). The Company accordingly approached the Hon'ble High Court of Hyderabad for the refund of the principal amount and the due interest thereon. The Hon'ble High Court of Hyderabad awarded a total sum of Rs. 66,055.00 Lakhs to the Company. TSIIC challenged the said order of the Hon'ble High Court by way of a writ petition before the Division Bench, which was allowed partially and the period for calculating the interest was changed from September 2007 to October 2015. Aggrieved by this order of the Hon'ble High Court of Hyderabad, reducing the period of interest payable, Unitech preferred an SLP with a request to restore the original order of the Hon'ble High Court of Hyderabad.
The Hon'ble Supreme Court vide order dated 17.02.2021 allowed the appeal filed by the Company, in part, setting aside the directions of the Division Bench of High Court which confined the liability to pay interest only with effect from 14th October, 2015. Accordingly, the Company received a refund of Rs. 165 Crore together with simple interest @ SBI-PLR rate commencing from the respective dates of payment through the Registry of the Hon'ble Supreme Court during the year.
76. In compliance of its earlier judgment dated 02.12.2021, the Hon'ble Supreme Court vide its subsequent Order dated 05.03.2022 further directed M/s Priadarshini Foundations Private Limited to reconvey the land admeasuring 30.71 acres to Unitech Limited within three weeks. The refund of Rs 25 crores shall take place simultaneously with reconveyance of the land or, in any event, within a period of one week from the date of reconveyance.
The said reconveyance has been duly executed on 03.08.2023 and the complete land holding of 30.71 acres has duly been transferred in favour of M/s Dhaulagiri Builders Private Limited and M/s Amaro Developers Private Limited.
77. The Enforcement Directorate, New Delhi vide F. No.: ECIR/04/DLZO-II/2018 dated 06.06.2018 is currently investigating the affairs of promoters of Unitech Limited. Vide the ongoing investigations, the ED has provisionally attached various assets of the erstwhile Management including 40% equity holding of M/s Unitech Hotels Private Limited wherein Unitech Limited holds the balance 60% equity.
M/s Unitech Hotels Private Limited is involved in developing a 13,005 sq.mt. hotel at Plot No. A-2, Sector -38 A, Noida. The value of the provisional attachment of 40% equity held by M/s Ranchero Services Limited is valued at USD 8 Million.
78. Additional Regulatory Information:
(i) The Company under the control of new Management does not have any benami property where any proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder but, however, litigation under Benami Transactions (Prohibition) Act, 1988 has been initiated against the erstwhile promoters/ Management.
(ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year under audit.
(iii) The Company does not have any charge or satisfaction, which is yet to be registered with the Registrar of Companies beyond the statutory period.
(iv) Unitech Limited, in order to develop a Commercial Complex at Sector 26, Gurgaon under the name and style of "Global Gateway", obtained a loan of Rs. 33.14 Crore in the year 2012 from Bank of Maharashtra, New Delhi. An amount of Rs. 26.35 Crore has already been paid towards the principal dues. The Bank had created encumbrance over a commercial land parcel admeasuring 2.443 acre situated at Naurangpur, Gurgaon held by the Company.
As on 31.03.2023, the total principal loan outstanding is Rs. 6.79 Crores. Bank of Maharashtra has categorized the Company in the list of Wilful Defaulters for an outstanding amount of Rs. 7.50 Crores during the year.
(v) During the year ending 31st March 2023, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other source or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. Also, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vi) Company does not have any such transaction which is not recorded in the Books of Accounts that has been surrendered or disclosed as income in the Tax Assessments under the Income Tax Act, 1961, such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(vii) The Company has complied with the number of layers prescribed under Clause (87) of Section 2 of the Companies Act, 2013, read with the Companies (Restriction on number of Layers) Rules, 2017, from the date of their implementation in terms of Indian subsidiaries, however, the Management is still in the process of evaluation of the compliance in respect of foreign subsidiaries.
As regards the status of third parties comprising of transactions in the nature of receivables, payables and shares held by struck off Companies, Unitech Limited is in process of ascertaining the status regarding outstanding balances.
79. The Financial Statements were approved for issue by the Board of Directors in their meeting held on 29th August, 2023..
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