Lok Housing to restate accounts
Business Standard, February 20, 2009, Page 4
BS Reporter / Mumbai
In a first of its kind development, Mumbai-based Lok Housing and Construction is planning to restate its accounts for the past three financial years as the revenue it booked hasn’t materialised after investors and buyers backed out of its projects.
The plight of the Bombay Stock Exchange-listed company may befall on other real estate players, with analysts claiming that many more companies could follow suit by restating accounts.
The developer will write off Rs 225.01 crore worth of profit and Rs 282.14 crore of sales it recognised in its books in the previous financial years, according to the notes on the accounts. The profit to be written off will be marginally lower than that declared by the company.
"Due to the financial meltdown and severe economic recession, some of the parties with whom the company had entered into agreement to sell have failed to meet their commitments and considering the overall interest of the company, the agreement for sale entered into in the past financial years and in respect of which revenues already recognised have been mutually terminated/ cancelled," the company said in a statement to the exchanges recently.
Lok Housing had reported a profit of Rs 112.85 crore in FY08, Rs 91.67 crore in FY07 and Rs 21.86 crore in FY06. The company reported losses prior to these periods. The company would seek shareholder’s approval in May for the restatement of accounts, a company official said. It has already got the court's approval for the same.
As a common practice among developers, Lok Housing recognised sales and profit thereon at the time of entering into such agreements. Lok Housing Chairman and Managing Director Lalit C Gandhi refused to comment on the matter, saying it is sub judice. A source said both the end-users and investors failed to pay money for some of their projects. The company is expected to write off the amounts in one or two quarters.
"Considering the overall interest of the company, the agreement for sale entered into in the past financial years and in respect of which revenues already recognised have been mutually terminated/ cancelled," the company release added.
Analysts said other developers could also come out with such disclosures, given the slowdown and credit crunch faced by home buyers.
Business Standard, February 20, 2009, Page 4
BS Reporter / Mumbai
In a first of its kind development, Mumbai-based Lok Housing and Construction is planning to restate its accounts for the past three financial years as the revenue it booked hasn’t materialised after investors and buyers backed out of its projects.
The plight of the Bombay Stock Exchange-listed company may befall on other real estate players, with analysts claiming that many more companies could follow suit by restating accounts.
The developer will write off Rs 225.01 crore worth of profit and Rs 282.14 crore of sales it recognised in its books in the previous financial years, according to the notes on the accounts. The profit to be written off will be marginally lower than that declared by the company.
"Due to the financial meltdown and severe economic recession, some of the parties with whom the company had entered into agreement to sell have failed to meet their commitments and considering the overall interest of the company, the agreement for sale entered into in the past financial years and in respect of which revenues already recognised have been mutually terminated/ cancelled," the company said in a statement to the exchanges recently.
Lok Housing had reported a profit of Rs 112.85 crore in FY08, Rs 91.67 crore in FY07 and Rs 21.86 crore in FY06. The company reported losses prior to these periods. The company would seek shareholder’s approval in May for the restatement of accounts, a company official said. It has already got the court's approval for the same.
As a common practice among developers, Lok Housing recognised sales and profit thereon at the time of entering into such agreements. Lok Housing Chairman and Managing Director Lalit C Gandhi refused to comment on the matter, saying it is sub judice. A source said both the end-users and investors failed to pay money for some of their projects. The company is expected to write off the amounts in one or two quarters.
"Considering the overall interest of the company, the agreement for sale entered into in the past financial years and in respect of which revenues already recognised have been mutually terminated/ cancelled," the company release added.
Analysts said other developers could also come out with such disclosures, given the slowdown and credit crunch faced by home buyers.
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