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Announcement

Thursday 21 June, 2012

RNS Number : 8268F

Ishaan Real Estate PLC

21 June 2012

Ishaan Real Estate plc

The Directors of Ishaan Real Estate plc ("Ishaan") announce the Company's audited results for the year ended 31 March 2012.

Overview for the year ended 31 March 2012

Net Asset Value	31 Mar 12	30 Sep 11	31 Mar 11	% Change over Sep 11	% Change over Mar 11
Adjusted NAV per share (pence) ^{(1) (2)}	80.9	87.4	95.4	-7.4%	-15.2%
Reported NAV per share (pence) ^{(1) (2)}	69.0	70.5	75.9	-2.1%	-9.1%

· Portfolio value down c.3.6 per cent to £604 million from £627 million at 31 March 2011.

· Underlying decline in portfolio value of 3.2 per cent, after adjusting for construction expenditure capitalised during the year, reflecting increased project costs caused by high level of inflation and rupee depreciation.

· Net additions of c.728,000 sq. ft. (including c.432,000 sq. ft. previously under option) made to the aggregate area let or under terms agreed, since the interim results on 9 December 2011.

· c.80 per cent (c.8.8 million sq. ft.) of lettable area constructed or under construction is let or under terms agreed.

· As at 31 March 2012, revenue is being received on c.5.7 million sq. ft. of the portfolio, with an equivalent annualised rental income of c.£30 million.

· Financing of c.INR 36.8 billion (c.£450 million) in place, including debt facilities of c.INR 30.2 billion (c.£369 million) secured by Indian SPVs to fund c.INR 36.7 billion (c.£448 million) cost of areas constructed or under construction.

· With the Reserve Bank of India reducing the policy rates (repo rates) by 50 bps since March 2012, to address the domestic economic slowdown, borrowing costs of the Indian SPVs are expected to reduce from the current c.13-14 per cent.

· Cash of £10.1 million (31 March 2011: £13.6 million).

Ian Henderson, Chairman of Ishaan, commented:

Ishaan continued to progress the development of its portfolio assets and achieved satisfactory lettings at the projects, despite the challenges posed by the domestic and global economic environment and weak commercial real estate markets. Around 8.8 million sq. ft. of the portfolio is now let or under terms agreed with c.5.7 million sq. ft. yielding rental income, and we expect an additional c.1 million sq. ft. to yield rental income by March 2013.

Although we have achieved steady operational performance, continued depreciation of the Indian Rupee and persistent increases in construction costs caused by high cost inflation have impacted the valuation. Improvement in rentals at several projects has helped to partially offset these effects, although the overall valuation remains disappointing.

While the Board reiterates its confidence in the long term fundamentals of India and in its ability to develop the high quality assets in the portfolio successfully, in response, inter-alia, to a share price trading at a significant discount to Adjusted Net Asset Value, the Board is actively considering options available to realise cash for shareholders in the near term. The Board is principally focused on the disposal of assets within the Company's portfolio, including any opportunity to dispose all or parts of the portfolio as a block to enable realisation of cash. The Board remains committed to the realisation of value from the portfolio and the return of cash to shareholders, although conditions in the investment market for Indian real estate remain challenging thereby providing limited assurance on the timeline for cash to be returned to shareholders."

⁽¹⁾ Reported NAV per share is not considered the best method of evaluating performance as it excludes valuation surpluses attributable to development properties intended for sale and includes the impact of deferred tax liability on valuation surpluses. Adjusted NAV per share at 31 March 2012 and at 31 March 2011 includes all investments at current valuations in proportion to the Group's shareholdings and a provision for a potential income tax liability in respect of the Vivarea project, but excludes the impact of the deferred tax provision arising on valuation surpluses, on the net assets of the Company and is considered by the Board to be a more appropriate method of evaluating the performance of the Company than Reported NAV per share.

⁽²⁾ Exchange rate used for the purpose of this statement is 1GBP = 81.80 INR, the Reserve Bank of India reference rate at 30 March 2012. Exchange rate at 31 March 2011 was 1GBP = 71.93 INR and at 30 September2011 was 1GBP = 76.52 INR.

Contacts:

College Hill

Mike Davies
Direct : +44 207 457 2020
Email: mike.davies@collegehill.com

Deutsche Bank AG London (NOMAD)

Ben Lawrence

Tel: +44 20 7545 8000

Email: ben.lawrence@db.com

Chairman's Statement

I am pleased to report the Company's results for the year ended 31 March 2012.

Results for the year ended 31 March 2012

The Company made a loss before tax for the year of £1.2 million (£4.9 million loss for the year ended 31 March 2011), arising from the cost of investment advisory fees and our share of post-tax losses of associates partially offset by the write-back of investments in the Company's portfolio and reversal of accrued investment adviser performance fees.

Valuation

The 100 per cent. interests in the properties in the portfolio have been valued by Cushman & Wakefield (India) Pvt. Limited ('Cushman & Wakefield') at a total of INR 49.4 billion at 31 March 2012. This represents an increase of c.9.7 per cent. against a valuation of INR 45.1 billion reported at 31 March 2011. If construction expenditure of INR 6.0 billion capitalised during the year, which broadly reflects physical progress in construction, is adjusted for, the portfolio's value showed a decline of c.3.2 per cent over the year. The decline in the underlying value of the portfolio has been mainly on account of increased costs at most of the projects in the portfolio due to high level of inflation and depreciation of the rupee.

After conversion to pound Sterling, the 100 per cent interests in the properties in the portfolio were valued at £604 million at 31 March 2012, with Ishaan's 40 per cent interest valued at £242 million, compared to £251 million at 31 March 2011, a decline of c.3.6 per cent (a decline of c.14.9 per cent. after adjusting for construction expenditure capitalised during the year). This decrease in pound Sterling valuation in part reflects a decline in the underlying portfolio value in rupee terms and a c.11.7 per cent decrease in value on account of exchange translation loss (the exchange rate moved from INR 71.93 on 31 March 2011 to INR 81.80 on 30 March 2012).

Compared with the value of £247 million at 30 September 2011, Ishaan's 40 per cent interest in the properties in the portfolio shows a decline of c.8.6 per cent, after adjusting for construction expenditure capitalised during the period, which reflects a c.6.3 per cent decrease in the value on account of exchange translation loss (the exchange rate moved from INR 76.52 on 30 September 2011 to INR 81.80 on 30 March 2012).

Net Asset Value

Reported net asset value per share was 69.0p at 31 March 2012 against 75.9p at 31 March 2011. Reported net asset value per share is calculated based on the Group's reported net assets at year end divided by the number of shares in issue and excludes valuation surpluses attributable to development properties intended for sale.

Adjusted net asset value per share was 80.9p at 31 March 2012, a decrease of c.7.4per cent against 87.4p at 30 September 2011 and a decrease of c.15.2per cent against 95.4p at 31 March 2011. The fall in adjusted net asset value per share reflects the decline in the underlying value of the portfolio and the exchange translation loss.

Adjusted NAV per share is considered by the Board to be a more appropriate method of evaluating the performance of the Company than Reported NAV per share. Adjusted NAV per share includes all investments at current valuations in proportion to the Group's shareholdings in each project and a provision for a potential income tax liability on the Vivarea project and excludes deferred tax provisions arising on valuation surpluses for all investment properties.

The Board considers it appropriate to exclude deferred tax provisions arising on valuation surpluses for all investment properties in determining Adjusted NAV per share as the Group's exit from its investment in the Indian SPVs holding the Company's projects is not expected to entail the sale of development properties, which should trigger the crystallisation of the deferred tax provision.

Recently there has been an amendment to the Indian Income Tax law due to which gains on divestment outside India by overseas sellers of shares in Indian companies would be liable to payment of Income Tax in India on such gains. Further, acquirers of such shares should withhold Indian Income Tax from the consideration payable to such overseas sellers. Given the uncertainty of mode of divestment, value to be realized, and the quantum of resulting taxable gains, the Board considers it to be premature to include any provision in respect of such Income Tax, if any, in determining the Adjusted NAV per share.

Project Progress

Since the interim results announcement on 9 December 2011, construction has been completed on c.1.5 million sq. ft. With this, total area constructed in the portfolio is c.7.6 million sq. ft. with a further c.4.3 million sq. ft. currently under construction.

As announced in the Trading Update on 21 March 2012, Maharashtra Industrial Development Corporation (MIDC) has been successful in a dispute with a third party on an area of land adjacent to the existing Mindspace, Airoli, Navi Mumbai project land. Consequently, this portion has been handed over to Serene Properties Private Limited (Serene), the SPV developing this project, thereby increasing the development area at the project by c.140,000 sq. ft. The total planned development at this project is now c.4,585,000 sq. ft.

Details of the area constructed or under construction:

Project	Area constructed (sq. ft.) (a)	Area under construction (sq. ft.) (b)	Area constructed and under construction (sq. ft.) (c = a + b)	Area for future development (sq. ft.) (d)	Total planned development (sq. ft.) (e = c + d)
Mindspace, Airoli, Navi Mumbai	2,847,000	1,382,000	4,229,000	356,000	4,585,000
Mindspace, Pocharam	380,000	-	380,000	1,690,000	2,070,000
Mindspace, Madhapur (SEZ)	1,107,000	1,714,000	2,821,000	1,995,000	4,816,000
Mindspace, Madhapur (non-SEZ)	1,714,000	-	1,714,000	-	1,714,000
Mindspace, Juinagar, Navi Mumbai	-	-	-	2,250,000	2,250,000
Inorbit, Hyderabad	780,000	-	780,000	322,000	1,102,000
Inorbit, Pune	546,000	-	546,000	98,000	644,000
Commerzone, Bangalore **	271,000	175,000	446,000	65,000	511,000
Total lettable area	7,645,000	3,271,000	10,916,000	6,776,000	17,692,000
Commerzone, Bangalore ***	-	360,000	360,000	-	360,000
Vivarea, Mumbai	-	620,000	620,000	240,000	860,000
Total planned development	7,645,000	4,251,000	11,896,000	7,016,000	18,912,000

Areas reported above are chargeable / saleable areas.

Minor revision has been carried out to the area constructed or under construction at some of the above projects to reflect the actual developed area of the completed buildings or buildings nearing completion.

**Area under construction comprises commercial space and future development comprises multiplex space.

*** Area under construction comprises hotel development.

Demand for commercial space at the projects in the portfolio has been stable. Mindspace, Airoli, Navi Mumbai and Mindspace, Madhapur, SEZ have seen moderate increase in rentals. Residential real estate activity in Mumbai has remained weak on account of continued cautiousness shown by the consumer and a slowdown in the receipt of development approvals during most of the previous year due to the planned amendments to the development regulations, which were announced in January 2012.

Since the interim results announcement on 9 December 2011, net additions of c.728,000 sq. ft. (including c.432,000 sq. ft. previously under option) have been made to area let or under terms agreed across the following projects in the portfolio:

· c.424,000 sq. ft. at Mindspace, Airoli, Navi Mumbai

· c.147,000 sq. ft. at Mindspace, Madhapur, Hyderabad SEZ and Non SEZ

· c.136,000 sq. ft. at Mindspace, Pocharam, Hyderabad

· c.21,000 sq. ft. at Inorbit, Hyderabad, Pune and Bangalore

This amounts to a net addition of c.158,000 sq. ft. to area let or under terms agreed since the last trading update on 21 March 2012.

With this, the total area let or under terms agreed in the portfolio has increased to c.8.8 million sq. ft., representing c.80 per cent. of the lettable area constructed or under construction and c.49 per cent. of the aggregate lettable area of the portfolio.

At 31 March 2012, revenue is being received on c.5.7 million sq. ft. of the portfolio. Annualised rent from this area is estimated at c.£30 million (being used primarily to repay principal and interest on borrowings), and a further c.1 million sq. ft. is expected to become income producing during the financial year 2012-13.

Updated levels of letting activity in the Company's portfolio:

Project	Area let (sq. ft.) (a)	Terms agreed (sq. ft.) (b)	Aggregate area (Area let and Terms Agreed) (sq. ft.) (c)= (a+b)	Lettable area constructed or under construction (sq. ft.) (d)	% of lettable area constructed or under construction (c)/(d)	Area yielding rent as at 31 March 2012 (sq. ft.)
Mindspace, Airoli, Navi Mumbai	1,598,000	1,722,000	3,320,000	4,229,000	78%	2,242,000
Mindspace, Pocharam	26,000	136,000	162,000	380,000	43%	26,000
Mindspace, Madhapur (SEZ)	1,281,000	974,000	2,255,000	2,821,000	80%	691,000
Mindspace, Madhapur (non-SEZ)	1,659,000	2,000	1,661,000	1,714,000	97%	1,661,000
Inorbit, Hyderabad	691,000	-	691,000	780,000	*89%	654,000
Inorbit, Pune	489,000	6,000	495,000	546,000	*91%	470,000
Commerzone, Bangalore	142,000	27,000	169,000	446,000	*62%	-
Total	5,886,000	2,867,000	8,753,000	10,916,000	80%	5,744,000

* % of the retail space at each of these projects

In addition to the above area let or with terms agreed, c.774,000 sq. ft. is under option / ROFRs. These options / ROFRs are due to be exercised over the next 1-2 years.

Project	Area under option / ROFR (sq. ft.)
Mindspace, Airoli, Navi Mumbai	285,000
Mindspace, Madhapur (SEZ)	273,000
Mindspace, Pocharam, Hyderabad	216,000
Total	774,000

Since the interim results on 9 December 2011, c.50,000 sq. ft. (including c.15,000 sq. ft. pre-sold since the year-end) has been pre-sold at Vivarea, Mumbai. As a result, an aggregate of c.545,000 sq. ft. has been pre-sold at this project, representing c.88 per cent. of the saleable residential area currently under construction. Part occupation certificate has been received for Phase I of the development. Building interiors and finishes work is in progress at the three residential towers.

In respect of the residential project Vivarea, Mumbai, under the modified policy of the government authorities, upon constructing and handing over a Public Parking Lot (for general public use) to the government authorities, the project would become entitled to additional Floor Space Index (FSI) for development. Genext Hardware & Parks Pvt. Ltd. (the SPV developing the residential project Vivarea), is under negotiations with the land owner for availment of the additional FSI. Subject to the outcome of such negotiations and consequent documentation and receiving the requisite approvals from the government authorities, additional area would be developed and available for sale in the said residential project Vivarea which is likely to have a positive impact on Ishaan's net asset value per share up to 1 pence.

As announced in the Trading Update on 21 March 2012, continued high levels of inflation over most of the previous year and depreciation of the rupee together with the increase in planned development area has resulted in an increase in the estimated construction cost at Mindspace, Airoli, Navi Mumbai. At Vivarea, Mumbai, high inflation and rupee depreciation, as well as changes to the development regulations, have contributed to an increase in the estimated statutory and other costs of the project.

Since the Trading Update, a review of estimated costs at the other projects in the portfolio has been completed. High inflation and an increase in building development fees has caused the estimated cost at Mindspace, Madhapur, SEZ and the commercial space at Inorbit Hyderabad to increase. In aggregate, the total estimated cost of the projects in the portfolio has been revised from c.INR 55.9 billion to c.INR 59.5 billion.

As stated in the interim results on 9 December 2011, with a view to maintaining a harmonious relationship with APIIC and the Government of Andhra Pradesh and in the interests of the projects involved, the JV Company (i.e. K Raheja IT Park Pvt Ltd, the entity set-up to develop IT Parks in Hyderabad) has offered to restore APIIC's stake in the JV Company to 11% for a nominal consideration. This also required Intime and Sundew (investee companies of Ishaan), which were demerged from the JV Company, to offer to APIIC restoration of APIIC's stake in these companies to 11%. The restoration of APIIC's stake in these companies will be effected through a transfer of shares owned in Intime and Sundew by K Raheja Corp Group and an issue of new shares to APIIC by Intime and Sundew. The issue of new shares will result in the dilution of Ishaan's equity interest in Intime and Sundew from 40% to 38.98%. K Raheja Corp Group will continue to hold a majority stake in the companies even after dilution by the transfer of shares and issue of new shares. Confirmation from APIIC of its acceptance of the above proposals is awaited.

Cost & Financing

The Indian SPVs remain well funded to meet the development requirements of the area currently under construction. Against the estimated cost of c.INR 36.7 billion (c.£448 million) for the area currently under development (excluding Vivarea, which will be self-funded), the SPVs have secured funding of c.INR 36.8 billion (c.£450 million) comprising:

· shareholders equity of c.INR 4.2 billion (c.£52 million),

· debt facilities of c.INR 30.2 billion (c.£369 million) and

· security deposits received/receivable on the lettable area constructed or currently under construction of c.INR 2.4 billion (c.£29 million).

Of this estimated project cost of c.INR 36.7 billion (c.£448 million), c.INR 30.1 billion (c.£368 million) has been incurred up to 31 March 2012. The Indian SPVs had drawndown debt of c.INR 23.3 billion (c.£285 million) at 31 March 2012. Unutilised facilities stand at c.INR 6.9 billion (c.£84 million). In addition, c.88 per cent. of the saleable residential area under construction at Vivarea is pre-sold, which will fund the cost of construction of this project.

Debt facilities of c.INR 30.2 billion (c.£369 million) include long term amortizing loans of c.INR 21.7 billion (c.£265 million). The balance of the debt facililities of c.INR 8.5 billion (c.£104 million) is other construction debt. All borrowings are at variable interest rates.

Debt Profile:

	INR bn	GBP mn
Long term amortizing loans (tenure around 9-10 years)	21.7	265
Other construction debt (Only INR 0.39 billion payable upto March 13)	8.5	104
TOTAL	30.2	369

Having secured funding for the area currently under development, the Company is confident of meeting its future development requirements through further debt financing.

The Reserve Bank of India has in the past few months taken monetary policy measures to ease the liquidity situation and address the concerns of slowdown in economic activity. Consequently, the Reserve Bank has reduced the policy rates (repo rates) by 50 bps since March 2012 and the Cash Reserve Ratio by 75 bps. This is expected to reduce the borrowing costs of the Indian SPVs from the current c.13-14 per cent. Banks however continue to remain cautious in lending to the real estate sector.

Dividend

In accordance with the dividend policy set out in the IPO document, which stated that it was not anticipated that dividends would be paid in the foreseeable future while projects remain in a highly capital intensive stage, the Board is not declaring a dividend for the year ended 31 March 2012. The Board will consider payment of dividends when it becomes commercially prudent to do so.

Outlook

GDP growth in the financial year 2011-12 slowed significantly to 6.5 per cent from 8.4 per cent in the previous year. Growth in the Index of Industrial Production (IIP) decelerated to 2.8 per cent in financial year 2011-12 from 8.2 per cent in the previous year.

On 17 April 2012, the Reserve Bank of India (RBI) for the first time in the past three years cut policy rates (repo rates) by 50 bps to 8 per cent driven by the deceleration in economic growth and moderation in inflation. Future monetary policy stance of the Reserve Bank of India shall depend on the domestic growth and level of inflation.

Uncertain global and domestic market conditions have kept the demand for commercial real estate muted as companies have slowed down their expansion plans. Improvement in commercial real estate demand will be largely dependent on the improvement in global and domestic economic activity. Residential real estate activity moderated in FY12, though some micro-markets witnessed robust absorption and launches. In Mumbai, residential volumes continue to remain weak. Also, changes to the development regulations delayed the receipt of development approvals thereby affecting the residential real estate activity in the city. Demand for high quality retail real estate has been stable across most markets.

In response, inter-alia, to a share price that has persistently traded at a significant discount to the adjusted net asset value and poor liquidity in the Company's shares, the Board is actively considering options available to realise cash for shareholders in the near term. The Board is principally focused on the disposal of assets within the Company's portfolio, including any opportunity to dispose all or parts of the portfolio as a block to enable realisation of cash.

While there has continued to be progress made on developments currently under construction, conditions in the investment market for Indian real estate remain challenging and provide limited assurance on the achievable timeline for disposal of these assets and return of cash to shareholders. The Company, however, remains confident of the sustained progress with the development of the high quality assets in the portfolio.

Ian Henderson

Chairman

Our Portfolio

Ishaan's portfolio comprises nine projects across commercial, residential, hospitality and retail markets located primarily in or around the Indian cities of Mumbai, Hyderabad, Bangalore and Pune. The nine projects in the portfolio have an aggregate planned area of c.18.9 million sq. ft.

Projects	Type	SPV	Area mn sq. ft. **	Estimated completion
Mindspace, Airoli, Navi Mumbai	IT SEZ	Serene	4.59	Q3 2014
Mindspace, Pocharam, Hyderabad	IT SEZ	Serene	2.07	On hold
Mindspace, Madhapur, Hyderabad (SEZ)	IT SEZ / IT Park	Sundew	4.82	Q3 2015
Mindspace, Madhapur, Hyderabad (Non-SEZ)	IT Park	Intime	1.71	Completed
Inorbit, Hyderabad	Primarily Retail	Trion
- Mall			0.78	Completed
- Commercial			0.32	On Hold
Inorbit, Pune	Primarily Retail	Trion
- Mall			0.55	Completed
- Commercial			0.09	On Hold
Vivarea, Mumbai	Residential	Genext
- Residential^- Phase 1			0.62	Q1 2013
-Residential - Tower 4			0.24	Q3 2015
Commerzone, Bangalore	Mixed Use	Magna
- Hotel			0.36	Q3 2012
- Retail^			0.34	Completed
- Commercial			0.17	Q3 2013
Mindspace, Juinagar, Navi Mumbai	IT SEZ	Newfound	2.25	On Hold
		TOTAL	18.91

^ Includes Multiplex which is currently on hold.

** Areas reported above are chargeable / saleable areas.

Project details:

Mindspace, Airoli, Navi Mumbai

This IT SEZ project is located in a satellite city of Mumbai, approximately 35 kilometres from central Mumbai. It benefits from well-planned modern infrastructure, good connectivity and a large pool of educated manpower. The project is strategically located to become the commercial hub of the rapidly growing city of Navi Mumbai with close proximity to residential areas and is situated opposite Airoli Railway station and easily accessible from catchment areas like Vashi, Panvel, Chembur and Vikhroli. With the increasing presence of IT/ITES companies, Airoli has become one of a number of rapidly growing destinations in Navi Mumbai.

The project involves development of c.4.59 million sq. ft. The development area at the project has increased by c.140,000 sq. ft. with MIDC winning a dispute with a third party on an area of land adjacent to the existing Mindspace, Airoli, Navi Mumbai project land and consequently handing over this portion of land to Serene Properties Private Limited (Serene), the SPV developing this project. As a result of this increase in area, the completion schedule of this project has been extended by a year to September 2014.

Seven buildings with aggregate area of c.2.8 million sq. ft. are operational. Construction work is ongoing on another four buildings with area of c.1.4 million sq. ft.

Since the announcement of interim results on 9 December 2011, terms have been agreed with multinational and IT/ITES companies for a net area of c.424,000 sq. ft. (including c.345,000 sq. ft. previously under option). As a result, the total area let or terms agreed at this project is c.3.3 million sq. ft., representing c.78 per cent of the area currently under development. As at 31 March 2012 rent has commenced from c.2.2 million sq. ft. In addition, c.285,000 sq. ft. is under option / ROFR at this project.

	Area sq. ft.
Area let	1,598,000
Terms agreed	1,722,000
Aggregate area let / terms agreed (a)	3,320,000
Area constructed or under construction (b)	4,229,000
Letting as a % of area constructed or under construction (a/b)	78%
Area under option /ROFR	285,000
Area generating rent as at 31 March 2012	2,242,000
Area for future development	356,000
Tenants include	Capgemini, Wipro, IBM, Syntel, L&T Infotech

Mindspace, Pocharam, Hyderabad

This IT SEZ is located in an upcoming nucleus of development with infrastructure well-suited to IT/ITES industries. With an existing residential catchment area and a number of colleges and universities in the vicinity, this SEZ is expected to lead to the geographical diversification of development to East Hyderabad in the medium term. Pocharam is easily accessible by road and further transport infrastructure is being planned in this area. The proposed metro rail is expected to run close by and the proposed Hyderabad outer ring road is planned to pass 2 kilometres from the project. The new international airport will be easily accessible via the outer ring road.

The project entails development of c.2.07 million sq. ft. IT SEZ. One building has been constructed and has been partially occupied by tenants. Super structure work is partly completed on another building. Since the interim results announced on 9 December 2011, terms have been agreed for additional c.136,000 sq. ft. As a result, total area let or terms agreed at this project now stands at c.162,000 sq. ft. In addition, c.216,000 sq. ft. is under option/ ROFR.

	Area sq. ft.
Area let	26,000
Terms agreed	136,000
Aggregate area let / terms agreed (a)	162,000
Area under construction (b)	380,000
Letting as a % of area under construction (a/b)	43%
Area under option /ROFR	216,000
Area generating rent as at 31 March 2012	26,000
Area for future development	1,690,000
Tenants include	Genpact, Inventurus

Mindspace, Madhapur, Hyderabad (SEZ Development)

This IT SEZ is located in the hub of the technology industry's development in Hyderabad, one of the largest cities in India. Equipped with excellent telecom infrastructure, well developed civic infrastructure and huge potential for trained manpower, Hyderabad has become an attractive choice for global IT/ITES companies. The project involves the development of an IT SEZ next to the existing Mindspace development. The project is well connected by road and transportation networks and is strategically located.

This project totals approximately c.4.8 million sq. ft. of planned development. Construction is completed on two of the buildings aggregating c.1.1 million sq. ft., finishes and exterior work in progress on third building of area c.0.9 million sq. ft.; and one other building with an area of c.0.8 million sq. ft. is currently under construction.

Since the interim results announcement on 9 December 2011, a net addition of c.150,000 sq. ft. has been made to area let or terms agreed. The aggregate area let or terms agreed at this project is now c.2.3 million sq. ft. representing c.80 per cent of the area constructed or currently under construction. As at 31 March 2012 rent has commenced from an area of c.691,000 sq. ft. In addition, c.273,000 sq. ft. is under option at this project.

	Area sq. ft.
Area let	1,281,000
Terms agreed	974,000
Aggregate area let / terms agreed (a)	2,255,000
Area constructed or under construction (b)	2,821,000
Letting as a % of area constructed or under construction (a/b)	80%
Area under option /ROFR	273,000
Area generating rent as at 31 March 2012	691,000
Area for future development	1,995,000
Tenants include	JP Morgan, Facebook, United Health Group

Mindspace, Madhapur, Hyderabad (Non-SEZ Development)

This IT Park (Non-SEZ) is located within the existing Mindspace development. The completed development of c.1.7 million sq. ft. comprises three office buildings which are complete and operational. The area let or terms agreed at this project is c.1,661,000 sq. ft. representing c.97 per cent of the project area. As at 31 March 2012, the entire area let is generating rent.

	Area sq. ft.
Area let	1,659,000
Terms agreed	2,000
Aggregate area let / terms agreed (a)	1,661,000
Project area (b)	1,714,000
Letting as a % of project area (a/b)	97%
Area generating rent as at 31 March 2012	1,661,000
Tenants include	Bank of America, Novartis, Amazon, HSBC

Inorbit, Madhapur, Hyderabad

The project is primarily a retail development adjacent to the existing Mindspace development in Madhapur, Hyderabad. Designed by the world's largest retail design firm "Callison", USA, it is a part of the IT city, situated approximately 15-20 kilometres from the city centre.

The project consists of the development of a c.780,000 sq. ft. shopping centre (launched in October 2009). Aggregate area let and terms agreed at this project is c.691,000 sq. ft. representing c.89 per cent of the retail space. Approximately 85 per cent of the retail space is currently trading.

	Area sq. ft.
Aggregate retail area let (a)	691,000
Retail area (b)	780,000
Letting as a % of retail area (a/b)	89%
Area generating rent as at 31 March 2012	654,000
Area for future development (Commercial space)	322,000
Tenants include	Hypercity, Shoppers Stop, Lifestyle, Marks & Spencer

Inorbit, Pune

The city's well-developed infrastructure, expressway connection to Mumbai (located just two hours away), and large industrial areas situated in the vicinity, make Pune an attractive location for a range of companies including IT, ITES, BPO companies. This mixed use development consists of a c.546,000 sq. ft. shopping centre which was opened in March 2011 and c.98,000 sq. ft. commercial space, currently on hold.

The area let and terms agreed at this project is c. 495,000 sq. ft. representing c.91 per cent. of the retail space. Over 85 per cent of the retail space is trading.

	Area sq. ft.
Area let	489,000
Terms agreed	6,000
Aggregate retail area let / terms agreed (a)	495,000
Retail area (b)	546,000
Letting as a % of retail area (a/b)	91%
Area generating rent as at 31 March 2012	470,000
Area for future development (Commercial space)	98,000
Tenants include	Spar, Shoppers Stop, Lifestyle

Vivarea, Mumbai

The project is located in Mahalaxmi, Central Mumbai. The buildings under construction will overlook Mahalaxmi Race Course and the sea. This premium residential development of approximately 0.86 million sq. ft. comprises four residential towers.

A part Occupation Certificate has been received for Phase I of the development. Building interior and finishes work is in progress at the three residential towers and is estimated to be complete by Q1 2013 as against Q3 2012 announced previously. Work on fourth tower will commence when certain approvals are received.

Since the interim results announcement on 9 December 2011, c.50,000 sq. ft. (including c.15,000 sq. ft. pre-sold since the year-end) of residential space has been pre-sold at Vivarea. With this, a total of c.545,000 sq. ft. has been pre-sold at this project, representing c.88per cent of the residential space currently available for sale, at prices higher than those estimated at the time of IPO.

Commerzone Bangalore

This project is located in Whitefield, Bangalore, known as the Silicon Valley of India. Bangalore is one of the fastest growing cities of India and a key location for the IT industry.

The project is designed by Smallwood, Reynolds, Stewart & Stewart, and involves the development of a hotel, retail, serviced apartments and an IT Park with an aggregate planned development of c.0.9 million sq. ft. Work on the retail component of the project has been completed and the mall is expected to be launched shortly.

Since the interim results announced on 9 December 2011, terms have been agreed for an additional c.23,000 sq. ft. of retail space. As a result, aggregate area let or terms agreed at this project stands at c.169,000 sq. ft. of retail space, representing c.62 per cent of the retail space of this project.

	Area sq. ft.
Area let	142,000
Terms agreed	27,000
Aggregate area let / terms agreed (Retail) (a)	169,000
Area under construction
- Retail (b)	271,000
- Hotel	360,000
- IT	175,000
Letting as a % of retail area under construction (a/b)	62%
Area for future development *	65,000

* comprises multiplex space.

Mindspace, Juinagar, Navi Mumbai

This IT SEZ is located in an area undergoing significant regeneration, and is close to existing and planned transport systems, the city centre of Navi Mumbai and large residential areas. The project is also in close proximity to the proposed Navi Mumbai International airport.

The project is a c.2.25 million sq. ft. SEZ development. Foundation work has been completed on three buildings. Further construction is on hold. Construction will commence when the Company is confident of the potential demand.

Report of the Directors

The Directors hereby submit their annual report together with the audited financial statements of Ishaan Real Estate Plc (the "Company") and the financial statements of the Company and its subsidiaries (together the "Group") for the financial year ended 31 March 2012.

The Company

The Company was incorporated in the Isle of Man and its principal activity is that of a holding company. It is the ultimate parent company of the Group, comprising the Company and the subsidiaries listed in note 12. The Company was established to acquire interests in foreign direct investment eligible Indian real estate development projects, with a focus on IT park development and Special Economic Zones located in southern and western India. The Company will also invest in other real estate asset types including, but not limited to commercial, hospitality, retail and residential development projects.

Business Review and Future Developments

A review of the business is presented in the Chairman's Statement on pages 4 to 9. Consideration is also given in the Chairman's Statement to the future developments of the Company.

Results and Dividends

The results and financial position of the Group and the Company at the year-end are set out on pages 22 to 26 of the financial statements. The Group made a loss for the year after taxation amounting to £1.230 million (2011: loss of £4.936 million) and this amount has been taken to reserves.

The Directors do not intend to pay dividends unless the Group has generated profits and such profits have been remitted to and realised by the Company. The Directors do not therefore intend to declare a dividend at this time.

Directors

The Directors who held office during the year and up to the date of this Report were:

Names	Date appointed
Ian James Henderson (Chairman)	31-Oct-06
Rajendra Prabhakar Chitale	31-Oct-06
Neel Chandru Raheja	31-Oct-06
Timothy Graham Walker	31-Oct-06
Vittorio Radice	31-Oct-06
Stephen John Roland Vernon	01-Aug-07
Anne Elizabeth Couper Woods	28-Oct-10

At each annual general meeting one third of the Directors for the time being (or, if their number is not a multiple of three, the number nearest to but not greater than one third) shall retire from office by rotation. The retiring Directors shall be eligible for re-election. No Director shall be required to retire and no person shall be incapable of being appointed or re-appointed a Director by reason of having attained the age of seventy or any other age.

Details of Interests

Neel Raheja is a shareholder and director of various K. Raheja Corp entities. These include Trion Properties Private Limited, Serene Properties Private Limited, Genext Hardware and Parks Private Limited, Sundew Properties Private Limited, Intime Properties Private Limited and Newfound Properties and Leasing Private Limited ("the Indian Investment Vehicles") which have issued shares to the Mauritian Subsidiaries and K Raheja Corporate Services Private Limited which is contracted to provide services to the Indian Investment Vehicles.

The amount charged to the Indian Investment Vehicles by K Raheja Corporate Services Private Limited during the year towards project services and royalty was £2.325 million (2011: £2.881 million) and other amounts paid to other K Raheja Corp entities were £1.832 million (2011: £0.037 million).

The amount received by the Indian Investment Vehicles from K Raheja Corp entities towards income from lease rentals and other recoveries was £3.966 million (2011: Nil).

As at 31 March 2012, the amounts of loan receivable by associate companies from K Raheja Corp entities totalled £76.110 million (2011: £90.585 million). The loans were interest bearing and as at 31 March 2012 interest owing totalled £7.857 million (2011: £9.916 million). In addition, the associate companies had loan balances owing to K Raheja Corp entities as at 31 March 2012 of £37.292 million (2011: £36.446 million) and interest payable in relation to these loans totalled £2.751 million (2011: £3.355 million).

The amount paid to K Raheja Corp Private Limited during the year was £3.133 million (2011: £8.513 million) towards deferred consideration for transfer of development rights for a project developed by one of the Indian Investment Vehicles.

Neel Raheja indirectly co-owns the Investment Adviser - Neerav Investment Advisory Services (Dubai) Limited. As at 31 March 2012, Neerav Investment Advisory Services (Cyprus) Private Limited, the parent company of the investment adviser, held 7,493,811 shares of the Company (2011: 6,643,811 shares).

In the previous year, Chitale & Associates, in which Rajendra Chitale is a Partner, received fees of GBP 13,319 for providing professional services to the Company.

Options have been granted for nil consideration over Ordinary Shares of £0.01 each as follows:-

Name	No of Ordinary Shares under Option	Grant date	Exercise Period	Exercise Price
Ian Henderson	300,000	20/11/2006	7 years from 20/11/09	£1
Vittorio Radice	90,000	20/11/2006	7 years from 20/11/09	£1

In addition, the following Directors, on each anniversary date of their effective date of appointment, are entitled to share options over the number of ordinary shares calculated in accordance with the formula stated in their letters of appointment. The value of the share options to be granted is stated against their names below:-

Name	Value of options GBP	Effective date of appointment
Ian Henderson*	40,000	7 November 2006
Vittorio Radice	30,000	7 November 2006
Stephen Vernon	30,000	1 August 2007

*From 7 November 2009, Ian Henderson had opted to receive 60% of his annual remuneration of £100,000 in cash and the balance 40% in share options, instead of the earlier 100% in share options.

Ian Henderson, Vittorio Radice and Stephen Vernon are entitled to the grant of share options for the financial year ended 31 March 2012. The value of the share options has been provided for in the financial statements. The grants of options to the Directors are as follows:

	31 March 2012		31 March 2011
Name	No. of ordinary shares	Average price per share (pence)	No. of ordinary shares	Average price per share (pence)

Ian Henderson	70,633	56.63	64,381	62.13
Vittorio Radice	52,975	56.63	48,285	62.13
Stephen Vernon	48,804	61.47	53,629	55.94

The Board at its meetings held on 13 March 2012 and 28 March 2012 approved the grant of share options for the year 2011. Shares were issued to Stephen Vernon and Ian Henderson on 13 March 2012 and 31 March 2012 respectively. Shares to Vittorio Radice were issued on 23 May 2012.

Details of the terms attaching to the share options are set out in note 23.

The interests of the Directors in the share capital of the Company as at 31 March 2012 are set out below:-

Name		No. of Ordinary Shares
Ian Henderson		821,288
Vittorio Radice*		447,180
Tim Walker		125,000
Stephen Vernon		506,688

*Excludes 52,975 shares under annual share options, which were allotted on 23 May 2012.

In addition to the above, Neel Raheja indirectly co-owns Neerav Investment Advisory Services (Cyprus) Private Limited, the parent company of the investment adviser, which held 7,493,811 shares of the Company (2011: 6,643,811 shares).

The mid market price of each ordinary share as at 31 March 2012 was £0.4125 (2011: £0.5838) and the range during the year was £0.3850 to £0.5950 (2011: £0.5838 to £0.700).

Save as disclosed above, none of the Directors had any interest during the year in any material contract for the provision of services which was significant to the business of the Company.

Substantial Shareholdings

As at 30 April 2012, the Board had been notified, or was otherwise aware of, the following shareholdings exceeding 3% and over of the issued share capital:

Name	No. of Ordinary Shares	% of Issued Share Capital
Lone Pine Capital	56,632,342	38.84
QVT Financial	13,985,309	9.59
Franklin Templeton Investments	13,888,231	9.53
J.P. Morgan (Suisse) S.A	12,196,150	8.36
Morgan Stanley Inv Mgmt (UK)	8,722,951	5.98
Neerav Investment Advisory Services (Cyprus) Private Limited	7,493,811	5.14
Credit Suisse Private Banking	5,373,000	3.69
Lombard Odier Darier Hentsch	4,854,621	3.33

Independent Auditors

KPMG Audit LLC have expressed their willingness to continue in office in accordance with Section 12 (2) of the IOM Companies Act, 1982.

Corporate Governance

Whilst the combined code issued by the Financial Reporting Council does not apply to AIM companies, the Directors consider corporate governance to be an important area and accordingly have provided the disclosure below to outline how the governance of the Group is conducted.

Board of Directors

The Company has an experienced Board which currently comprises a non-executive Chairman and six other non-executive Directors.

The Board meets regularly and is provided with relevant information on financial, business and corporate matters prior to meetings. The Directors are responsible for the determination and implementation of the Group's investment strategy and have overall responsibility for the Group's activities, including the review of the Group's investment activities and performance.

Audit Committee

The Audit Committee reports to the Board. The Audit Committee has primary responsibility for the integrity of the financial statements and related matters, the performance of the external auditors and audit process, assessing the effectiveness of the internal control environment, compliance with the applicable legal and regulatory requirements and any matters where there is a conflict of interest with the Investment Adviser. The Audit Committee makes recommendations to the Board. Where necessary the Audit Committee will obtain specialist advice from either its auditors or other advisors.

The terms of reference of the Audit Committee covers the following:

· The composition of the Committee, quorum and frequency of meetings.

· Reporting responsibility of the Committee to the Board and its authority.

· Duties in relation to financial reporting, including related compliance with statutory and Stock Exchange requirements and other announcements.

· Duties in relation to the external auditors and

· Duties in relation to internal controls, conflict of interest and compliance to legal and statutory requirements.

Remuneration and Nomination Committees

The Company does not intend to establish Remuneration and Nomination Committees as such committees would not be appropriate given the nature of the Company's operations. The Board will review annually the remuneration of the Directors and agree the level of non-executive fees. Consideration will be given by the Board to future succession plans for Board members as well as consideration as to whether the Board has the skills required to effectively manage the Company. The Company will take all reasonable steps to ensure compliance by the Directors and any employees with the provisions of the AIM Rules relating to dealings in securities of the Company and has adopted a share dealing code for this purpose.

Investment Committee

The Company has an Investment Committee consisting of the Directors of the Company's intermediate holding company, I Holding Company (Mauritius) Ltd, which will review any recommendations for acquisitions or divestments received from the Investment Adviser.

Internal Control

The Audit Committee undertakes the review of the internal controls of the Company, which includes assessing the effectiveness of the audit and internal control environment. Where necessary the Audit Committee obtains specialist advice from either its auditors or other advisers. On 1 December 2006 Morefield Financial Consultants Limited were appointed as consultants to provide the Company with non-binding advice and services on financial issues, such as accounting procedures, management accounts, cash flow in relation to the Company's property portfolio and to perform such other similar services. In addition Simcocks Trust Limited were appointed to provide administration, registrar and accounting services to the Company, such services being controlled by their own internal procedures.

There are inherent limitations in any system of internal control and such a system can provide only reasonable, but not absolute, assurances against material misstatement or loss. The Company does not have its own internal audit function but places reliance on compliance and other control functions of its service providers.

By Order of the Board

Ian Henderson

Chairman Date: 20 June 2012

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year, which meet the requirements of Isle of Man company law. In addition, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards.

The financial statements are required by law to give a true and fair view of the state of affairs of the Group and the Parent Company and of the profit or loss for that period.

In preparing these financial statements, the Directors are required to:

● select suitable accounting policies and then apply them consistently;

● make judgments and estimates that are reasonable and prudent;

● state whether they have been prepared in accordance with International Financial Reporting Standards; and

● prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and to enable them to ensure that its financial statements comply with the Companies Acts 1931 to 2004. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation governing the preparation and dissemination of financial statements may differ from one jurisdiction to another.

Report of the Independent Auditors, KPMG Audit LLC, to the members of Ishaan Real Estate Plc

We have audited the financial statements of Ishaan Real Estate plc for the year ended 31 March 2012 which comprise the Group and Parent Company Statements of Comprehensive Income, the Group and Parent Company Statements of Financial Position, the Group and Parent Company Statements of Cash Flows and the Group and Parent Company Statements of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs).

This report is made solely to the Company's members, as a body, in accordance with section 15 of the Companies Act 1982. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and Auditor

As explained more fully in the Directors' Responsibilities Statement set out on page 20, the Directors are responsible for the preparation of financial statements that give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.

Opinion on the financial statements

In our opinion the financial statements:

· give a true and fair view of the state of the Group's and Parent Company's affairs as at 31 March 2012 and of the Group's and Parent Company's loss for the year then ended;

· have been properly prepared in accordance with IFRSs; and

· have been properly prepared in accordance with the provisions of the Companies Acts 1931 to 2004.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Acts 1931 to 2004 requires us to report to you if, in our opinion:

· proper book of account have not been kept by the Parent Company and proper returns adequate for our audit have not been received from branches not visited by us; or

· The Parent Company's statement of financial position and statement of comprehensive income are not in agreement with the books of account and returns; or

· Certain disclosures of directors' remuneration specified by law are not made; or

· We have not received all the information and explanations we require for our audit.

KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas, Isle of Man IM99 1HN Date: 20 June 2012

Statements of Comprehensive Income

For the year ended 31 March 2012

		Group	Company	Group	Company
		2012	2012	2011	2011
	Notes	£000's	£000's	£000's	£000's

Administrative expenses	8	(3,637)	(733)	(3,976)	(873)
Share of post tax (losses) / profit of associates	11	(847)	-	2,459	-
Write-back / (write-down) of investments in associates net of investment adviser performance fees	10	3,138	-	(3,526)	-
Write-down of investments in subsidiaries	12	-	(9,320)	-	(8,043)
Group operating loss from continuing operations		(1,346)	(10,053)	(5,043)	(8,916)
Net finance income	5	116	116	107	107
Loss from continuing operations before tax		(1,230)	(9,937)	(4,936)	(8,809)
Taxation	6	-	-	-	-
Loss for the year from continuing operations		(1,230)	(9,937)	(4,936)	(8,809)

Other comprehensive income
Translation reserve - associates		(8,856)	-	(4,304)	-
Other comprehensive (loss) / income for the year		(8,856)	-	(4,304)	-


Total comprehensive loss for the year attributable to equity holders of parent		(10,086)	(9,937)	(9,240)	(8,809)

Basic and diluted loss per share attributable to equity holders of the parent for the year (expressed as pence per share)

Basic loss per share	17	(0.84)		(3.39)

Diluted loss per share	17	(0.84)		(3.39)

The attached notes 1 to 24 form an integral part of these financial statements.

Statements of Financial Position

As at 31 March 2012

		Group	Company	Group	Company
		2012	2012	2011	2011
ASSETS	Notes	£000's	£000's	£000's	£000's

Non-current assets
Investments in associates	11	92,555	-	100,727	-
Investments in subsidiaries	12	-	77,446	-	86,766
Amounts due from subsidiaries	13	-	14,942	-	12,002
		92,555	92,388	100,727	98,768
Current assets
Trade and other receivables	14	95	84	129	117
Cash and short term deposits	15	10,139	10,077	13,595	13,471
		10,234	10,161	13,724	13,588

TOTAL ASSETS		102,789	102,549	114,451	112,356

EQUITY AND LIABILITIES

Equity attributable to shareholders of the parent company
Share capital	16	1,458	1,458	1,457	1,457
Share capital redemption reserve	16	622	622	622	622
Foreign currency translation reserve		(6,068)	-	2,788	-
Retained profits		104,568	100,349	105,699	110,187
Total equity		100,580	102,429	110,566	112,266

Current liabilities
Trade and other payables	18	805	120	874	90

Non-current liabilities
Financial liabilities	19	1,404	-	3,011	-

TOTAL EQUITY AND LIABILITIES		102,789	102,549	114,451	112,356

Approved by the Board of Directors on 20 June 2012

and signed on its behalf by:

Ian Henderson Tim Walker

Director Director

The attached notes 1 to 24 form an integral part of these financial statements.

Statements of Cash Flows

For the year ended 31 March 2012

	Group		Company	Group	Company
	2012		2012	2011	2011
	£000's		£000's	£000's	£000's
OPERATING ACTIVITIES
Loss before tax from continuing operations	(1,230)		(9,937)	(4,936)	(8,809)
Adjustments for:
Interest income	(116)		(116)	(107)	(107)
Share of post tax losses / (profits) of associates	847		-	(2,459)	-
Grant of Directors' annual share options	100		100	100	100
(Write-back) / write-down of investments in associates net of investment adviser performance fee/ subsidiaries	(3,138)		9,320	3,526	8,043
Operating loss before working capital changes	(3,537)		(633)	(3,876)	(773)

Decrease / (increase) in trade and other receivables		34	33	(16)	(15)
(Decrease) / increase in trade and other payables		(69)	30	739	(21)
Net cash flows from operating activities	(3,572)		(570)	(3,153)	(809)

INVESTING ACTIVITIES
Interest received	116		116	107	107
Increase in amounts due from subsidiaries	-		(2,940)	-	(2,356)
Net cash flows generated from / (used in) investing activities	116		(2,824)	107	(2,249)


Net movements in cash and cash equivalents	(3,456)		(3,394)	(3,046)	(3,058)
Cash and cash equivalents at the beginning of the year	13,595		13,471	16,641	16,529
Cash and cash equivalents at 31 March	10,139		10,077	13,595	13,471

Represented by:
Cash and short term deposits	10,139		10,077	13,595	13,471
	10,139		10,077	13,595	13,471

The attached notes 1 to 24 form an integral part of these financial statements

Statements of Changes in Equity

For the year ended 31 March 2012

	Share capital	Share Capital Redemption Reserve	Retained earnings / (losses)	Foreign currency translation reserve	Total equity
GROUP	£000's	£000's	£000's	£000's	£000's
Balance at 1 April 2010	1,455	622	110,537	7,092	119,706
Total comprehensive loss for the year
Loss for the year	-	-	(4,936)	-	(4,936)

Other comprehensive loss
Translation reserve - associates	-	-	-	(4,304)	(4,304)
Total other comprehensive loss for the year	-	-	-	(4,304)	(4,304)

Total comprehensive loss for the year	-	-	(4,936)	(4,304)	(9,240)
Transactions with owners, recorded directly in equity (Contributions by and distributions to owners)
Issue of shares under Directors' annual options	2	-	(2)	-	-
Grant of Directors' annual share options	-	-	100	-	100
Total transaction with owners	2	-	98	-	100

Balance at 31 March 2011	1,457	622	105,699	2,788	110,566
Total comprehensive loss for the year
Loss for the year	-	-	(1,230)	-	(1,230)

Other comprehensive loss
Translation reserve - associates				(8,856)	(8,856)
Total other comprehensive loss for the year	-	-	-	(8,856)	(8,856)

Total comprehensive loss for the year			(1,230)	(8,856)	(10,086)
Transactions with owners, recorded directly in equity (Contributions by and distributions to owners)
Issue of shares under Directors' annual options	1	-	(1)	-	-
Grant of Directors' annual share options	-	-	100	-	100
	1	-	99	-	100

Balance at 31 March 2012	1,458	622	104,568	(6,068)	100,580

The attached notes 1 to 24 form an integral part of these financial statements.

	Share capital	Share Capital Redemption Reserve	Retained earnings / (losses)	Total equity
COMPANY	£000's	£000's	£000's	£000's
Balance at 1 April 2010	1,455	622	118,898	120,975
Total comprehensive loss for the year
Loss for the year	-	-	(8,809)	(8,809)
Total comprehensive loss for the year	-	-	(8,809)	(8,809)
Transactions with owners, recorded directly in equity (Contributions by and distributions to owners)
Issue of shares under Directors' annual options	2	-	(2)	-
Grant of Directors' annual share options	-	-	100	100
Total transaction with owners	2	-	98	100

Balance at 31 March 2010	1,457	622	110,187	112,266
Total comprehensive loss for the year
Loss for the year	-	-	(9,937)	(9,937)
Total comprehensive loss for the year	-	-	(9,937)	(9,937)
Transactions with owners, recorded directly in equity (Contributions by and distributions to owners)
Issue of shares under Directors' annual options	1	-	(1)	-
Grant of Directors' annual share options	-	-	100	100
Total transaction with owners	1	-	99	100
Balance at 31 March 2012	1,458	622	100,349	102,429

The attached notes 1 to 24 form an integral part of these financial statements.

Notes to the Financial Statements

1 1 The Company

The Company was incorporated in the Isle of Man on 11 August 2006 as a public company under the Isle of Man Companies Acts 1931 to 2004 with registered number 117470C. The Company's Ordinary Shares are traded on Alternative Investment Market ("AIM").

The principal activity of the Company and its subsidiaries is that of investment holding.

2 Statement of Compliance with IFRS

The Group and the Company's financial statements are prepared in accordance with and comply with International Financial Reporting Standards ("IFRS"). A summary of the principal accounting policies which have been applied consistently, is set out in note 3. The preparation of financial statements in accordance with International Financial Reporting Standards requires the Directors to make estimates and assumptions that could affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

3 Accounting Policies

(a) Basis of preparation

The Company and the Group's financial statements have been prepared in accordance with International Financial Reporting Standards (''IFRS''). The financial statements are presented in pounds sterling. The financial statements have been prepared under the historical cost convention except for investment properties that have been measured at fair value.

(b) Standards and interpretations not yet effective

At the date of authorisation of the financial statements, the following standards and interpretation were in issue, but not yet effective. The impact of these statements on the Group's financial statements in the period of initial application is not known at this stage. These statements, where applicable, will be applied in the year when they are effective.

International Accounting Standards (IAS/IFRS)		Effective for accounting periods beginning on or after
IFRS 9	Financial instruments	1 January 2015
IFRS 10	Consolidation and amended standard on separate financial statements (IAS 27)	1 January 2013
IFRS 11	Joint arrangements and amended standards on associates and joint ventures	1 January 2013
IFRS 12	Disclosure of interests in other entities	1 January 2013
IFRS 13	Fair value measurement	1 January 2013
IAS 32	Financial Instruments: Presentation - Classification of Rights Issues (Amendment)	1 January 2012
IFRIC 19	Extinguishing Financial Liabilities with Equity Instruments (Amendment)	1 January 2012
IFRIC 14	Prepayments of a Minimum Funding Requirement (Amendment)	1 January 2012

The Directors do not expect the adoption of the other standards and interpretations to have a material impact on the Group's financial statements in the period of initial application.

The Group financial statements incorporate the net assets and liabilities of the Group at the reporting date and their results for the year then ended.

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement. The financial statements of subsidiaries are prepared for the

3 Accounting Policies

same reporting year as the Company, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them are eliminated.

(d) Investment in subsidiaries

In the Company's financial statements, investments in subsidiaries are shown at cost. Where an indication of impairment exists, the recoverable amount of the investment is assessed. Where the carrying amount is greater than the estimated recoverable amount, the difference is charged to profit or loss. On disposal of the investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to profit or loss.

(e) Interests in associates

The Group's interests in its associates, being those entities over which it has significant influence and which are neither subsidiaries nor joint ventures, are accounted for using the equity method of accounting. The accounting policies of associates are adjusted where necessary to be consistent with those of the Group.

Under the equity method, the investment in an associate is carried in the statement of financial position at cost plus post acquisition changes in the Group's share of the net assets of the associate, less distributions received and less any impairment in value of individual investments. Cost includes fees directly attributable to the acquisition of associates, including those payable to third parties for finding and recommending the acquisition of the investment measured at the date of acquisition (see ''Adviser Fees'' below). The group statement of comprehensive income reflects the share of the associate's results after tax, with any other changes in the Group's share of an associate's net assets being included within the statement of changes in equity. Any impairment provisions are recognised in the Group's profit or loss.

Provided that business activities are restricted to the holding or the development of property, acquisitions of interests in property via corporate entities (including interests held by associates) are not treated as business combinations. Accordingly, no goodwill arises on such acquisitions and the cost of the entity is allocated between the individual identifiable assets and liabilities acquired based on their relative fair values at the date of acquisition.

(f) Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding sales taxes. In particular:

(a) Revenue from the disposal of properties is recognised on legal completion of the contract.

(b) Where properties are under development and agreement has been reached to sell such properties when construction is complete, revenue is recognised when the significant risks and rewards of ownership and effective control of the real estate have been transferred to the buyer. In most cases the significant risks and rewards of ownership and control over the existing incomplete real estate are not transferred until the buyer obtains possession at contractual completion. If the revenue recognition criteria have been met before construction is complete, then:

(i) if remaining work is required to finish construction of real estate already delivered into the possession of the buyer, then an obligation is recognised for the costs to complete the construction at the same time as the sale is recognised; or

(ii) if the remaining work represents goods or services that are separately identifiable from the real estate already delivered to the buyer, then part of sale proceeds are allocated, based on the relative fair values of the completed and outstanding work, to the outstanding work and is recognised when the outstanding work is performed.

(c) Rental income represents amounts in respect of operating leases where the Group is lessor. Rentals receivable under operating leases, and incentives given for lessees to enter into lease arrangements, are spread on a straight-line basis over the term of the lease, even if payments are not made on that basis.

(d) Interest income is recognised on a time proportion basis.

(g) Adviser fees

Adviser fees in respect of executory contracts, such as fees payable under the Investment Advisory Agreement for ongoing advisory services, are charged to profit or loss as they accrue.

Adviser fees payable in respect of other services, such as the performance fees payable under the Investment Advisory Agreement for finding and recommending investments to the Group, are recognised when the service has been provided. Performance fees are not payable until the Group exits from each investment or the agreement is terminated other than for cause.

Where such fees are directly attributable to the acquisition by the Group of an associate they are included in the cost of investment in that associate. However, any subsequent changes in the discounted estimates of the payments to be made are recognised in profit or loss (see ''Other financial liabilities-adviser fees'' note 3(m)).

(h) Properties held as inventory

Properties intended for sale in the ordinary course of business (including properties under development) are classified as inventory on the date of their acquisition and carried at the lower of cost and net realisable value in the accounts of the associates.

Cost includes all costs of purchase, conversion and other costs incurred in bringing the properties to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Upon a change in use resulting in the transfer of a property held for sale to investment property, the property is accounted for at fair value and any difference between the fair value of the property at the date of transfer and its previous carrying amount is recognised in profit or loss.

(i) Investment property

The Group adopted Amendment to IAS 40 Investment property that amended the definition of investment property to include property that is being constructed or developed for future use as investment property.

Land and buildings owned by the Group for the purposes of generating rental income or capital appreciation or both and property that is being constructed or developed for future use as investment property (which includes freehold/leasehold land) are classified as investment properties.

Investment properties are initially measured at cost, including related transaction costs. Subsequent to initial recognition, investment properties are accounted for using the fair value model under IAS 40. Any gain or loss arising from a change in value is recognised in profit or loss.

When an item of property, plant and equipment is transferred to investment property following a change in its use, any differences arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity as revaluation surplus if it is a gain. Upon disposal of the item, the gain is transferred directly to retained earnings to the extent of the revaluation surplus recognised in equity. Any loss arising in this manner is recognised in profit or loss immediately.

If the investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of reclassification becomes its deemed cost for subsequent accounting.

(j) Borrowing costs

Borrowing costs are recognised as an expense in the period they are incurred, except to the extent they are capitalised.

Borrowing costs that are directly attributable to the development of properties are capitalised in the cost of those properties. The interest capitalised is the gross interest incurred on the specific borrowings less any investment income arising from the temporary investment of those borrowings. Interest is capitalised from the commencement of development work until the date of practical completion when the asset becomes available for occupation. The capitalisation of finance costs is suspended if there are prolonged periods when development activity is interrupted.

(k) Share based payments

The cost of equity-settled transactions with employees and Directors is measured by reference to the fair value at the date on which the entitlement is granted and is recognised in profit or loss, together with a corresponding increase in equity, over the vesting period.

Fair value is determined by reference to the equity instrument issued using an appropriate option pricing model where necessary. In valuing equity settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company (market conditions). No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

At each reporting date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non-market conditions and of the number of equity instruments that will ultimately vest or in the case of an instrument subject to a market condition, be treated as vesting as described above. The movement in cumulative expense since the previous balance sheet date is recognised in the statement of comprehensive income, with a corresponding entry in equity.

Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if this difference is negative.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet recognised in profit or loss for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense in the statement of comprehensive income.

(l) Foreign currency translation

Each subsidiary and associate of the Company determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency at the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are re-translated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the statement of comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The functional currency of the operations in India is the Indian Rupee. The functional currency of the subsidiaries in Mauritius is Sterling. At the reporting date, the assets and liabilities of the Company's associates are translated into the presentation currency of the Group at the rate of exchange ruling at the reporting date and their statements of comprehensive income are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign entity, the deferred cumulative amount recognised in other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

(m) Financial instruments

Financial assets and liabilities are recognised on the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instruments. Financial assets and liabilities are initially measured at fair value which includes transaction costs. Subsequent to initial recognition, they are measured as set out below:-

(m) Financial instruments (continued)

Trade and other payables

Trade and other payables are stated at their nominal value.

Loans to subsidiaries

Loans to subsidiaries are stated at amount disbursed net of any capital repayments, and are interest free.

Interest-bearing loans and borrowings

Loans and borrowings are initially recognised at fair value net of directly attributable issue costs.

After initial recognition, interest-bearing loans and borrowings are measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

Gains and losses are recognised in profit or loss when the liabilities are derecognised or impaired, as well as through the amortisation process.

Other financial liabilities-Adviser fees

Liabilities arising from Adviser fees that are determined by amounts realised on disposal of investments, or by the occurrence of other events, are financial liabilities and are initially recognised at fair value. Fair value is determined as the Directors' estimate of the present value of the future cash flows payable. Where no reliable indicators of future market conditions exist, the Directors base their estimates of future cash flows on conditions in the market at the date of approval of the financial statements. The discount rate used represents the Directors' estimate of the risk adjusted value of money.

After initial recognition the liability is measured at amortised cost using the effective interest rate method. The estimates of the payments to be made are reviewed at each reporting date and the carrying value of the liability is adjusted to reflect actual and revised estimated cash flows using the instrument's original effective interest rate. The adjustment is recognised in profit or loss.

(n) Taxation

Current tax assets and liabilities are measured at the amounts expected to be paid to or recovered from the taxation authorities, based on tax rates and laws that are enacted or substantially enacted by the reporting date.

Deferred tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions:

(a) where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss

(b) in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and

(c) deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilized.

Deferred tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the reporting date.

Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income tax is recognised in the statement of comprehensive income.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(o) Impairment of assets

At each reporting date, the carrying amounts of assets are assessed to determine whether there is any indication of impairment. If such indication exists, the Group estimates the recoverable amount of the asset, being the higher of the asset's net selling price and its value in use. If the recoverable amount of the asset is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount. Impairment losses are recognised as an expense in profit or loss.

(p) Related parties

Related parties are individuals and companies where the individuals or companies have the ability, directly or indirectly, to control or exercise significant influence over the other party in making financial and operating decisions.

(q) Cash and cash equivalents

Cash and cash equivalents comprise cash deposited with banks.

4. Critical accounting judgments and key sources of estimation uncertainty

Critical accounting judgments in applying the Group's accounting policies

In the process of applying the Group's accounting policies, which are described in note 3, the Directors have made the following judgements that have a significant effect on the amounts recognised in the financial statements:

Determination of functional currency

The determination of the functional currency of Group companies is critical since recording of transactions and exchange differences arising thereon are dependent on the functional currency selected. The Directors have considered those factors therein and have determined the functional currency of the Company and the Mauritius subsidiaries to be Pounds Sterling and of the Indian Associates to be Indian Rupee.

Provision for fees payable to the Investment Adviser

In accordance with the accounting policy presented in note 3, the Directors have made their best estimate of the amount payable to the Investment Adviser at the reporting date. In order to determine the liability, the Directors have used a model to calculate the expected Internal Rate of Return ("IRR") of each project which forms the basis of the adviser fees payable. Inputs to the model are based on various assumptions including future sale proceeds, building costs, financing costs, and an appropriate discount rate.

Valuation of investment properties

The fair value of investment properties held by associates was determined by independent valuers. The financial markets have seen significant reduction in the volume of transactions due to current difficulties which have led to a degree of uncertainty in the property market as to the volatility of values in the near future. In these circumstances there is a greater degree of uncertainity than which exists in a more active and stronger market in forming an opinion of the realisation prices of investment properties.

The significant methods and assumptions used by the valuers in estimating fair value of investment properties is set out in note 11.

5. Net finance income

	Group	Company	Group	Company
	2012	2012	2011	2011
	£000's	£000's	£000's	£000's
Interest income on bank balances	116	116	107	107
Net finance income	116	116	107	107

6. Taxation

Isle of Man

With effect from 6 April 2006 the Corporate Income Tax rate for Isle of Man resident companies is zero per cent. As such, the Company's tax liability is zero. Additionally, the Isle of Man does not levy tax on capital gains.

Shareholders resident outside the Isle of Man will not suffer any income tax in the Isle of Man on any income distributions to them.

Other

The subsidiaries and associates of the Company are taxed in accordance with the applicable tax laws in the countries in which they were incorporated.

7. Segment reporting

The Directors consider the Group to be operating in one geographic segment and one business segment since all investments are in India and all the operations in India are concerned with property development. Consequently no segmental disclosures are presented.

8. Administrative expenses

	Group	Company	Group	Company
	2012	2012	2011	2011
	£000's	£000's	£000's	£000's

Directors' fees and expenses	159	159	155	155
Secretarial and administration	110	74	108	72
Audit fees	85	63	81	60
Investment Adviser fee (note 21)	2,840	-	3,040	-
Other professional fees	244	240	357	355
Other expenses	99	97	135	131
Grant of Directors' annual share options	100	100	100	100
	3,637	733	3,976	873

The Company has no employees.

9. Directors' remuneration

Details of the Directors' remuneration are as follows:

	2012	2012	2011	2011
	Basic salary per annum	No. of ordinary shares under option	Basic Salary per annum	No. of ordinary shares under option
	£000's		£000's

R.P. Chitale	30	nil	30	nil
T.G. Walker	35	nil	35	nil
I.J. Henderson	60	300,000	60	300,000
V Radice	nil	90,000	nil	90,000
N.C. Raheja	nil	nil	nil	nil
S.J.R. Vernon	nil	nil	nil	nil
Anne Elizabeth Couper Woods	20	nil	20	nil

Total remuneration paid/payable to the Directors for the year ended 31 March 2012 amounted to £145,000 (2011: £131,250).

The Directors are each entitled to receive reimbursement of any expenses in relation to their appointment. Total expenses reimbursed to the Directors for the year ended 31 March 2012 amounted to £13,344 (2011: £54,227).

	Value of options	Effective date of appointment / re-appointment
	£
Ian Henderson	40,000	7 November 2009
Vittorio Radice	30,000	7 November 2009
Stephen Vernon	30,000	1 August 2010

*From 7 November 2009, Ian Henderson opted to receive 60% of his annual remuneration of £100,000 in cash and the balance 40% in share options, instead of the earlier 100% in shares options.

	31 March 2012		31 March 2011
Name	No. of ordinary shares	Average price per share (pence)	No. of ordinary shares	Average price per share (pence)
Ian Henderson	70,633	56.63	64,381	62.13
Vittorio Radice	52,975	56.63	48,285	62.13
Stephen Vernon	48,804	61.47	53,629	55.94

Details of the terms attaching to the share options are set out in note 23.

10. Write-down of investments in associates

At 31 March 2011 and 31 March 2012, the Group wrote-down its investments in associates, including the cost of performance fees payable, to its share of net assets in respect of those associates holding investment properties which were stated at valuation. The investment in one of the associates, which holds properties held for sale, has not been written down and is stated at cost plus share of profits/losses and cost of performance fees payable.

The reversal of investment adviser performance fee as referred to in note 19 and the movement in deferred tax liability related to the valuation gains arising on the investment properties held by the associates have been adjusted against the above write-down.

11. Investments in associates

	2012	2011
GROUP	£000's	£000's
Unquoted
Balance brought forward from 1 April	100,727	106,497
Share of post-tax (losses) /profit of associates	(847)	2,459
Write-back/(write-down) of investments to share of net assets in associates*	1,531	(3,925)
Foreign currency translation	(8,856)	(4,304)
	92,555	100,727

* As detailed in note 10, the Group wrote-down its investments in associates except for one associate which holds properties held for sale. Had the fair value gains on the properties in this associate been recorded in the books, the investment in associate would have been higher by GBP 7.114 million (31 March 2011: GBP 15.228 million).

Properties held by the associates have been valued by Cushman & Wakefield (India) Pvt. Limited at 31 March 2012. All the properties were valued on the basis of market value. The valuations have been made in accordance with the appropriate sections of both the current Practice Statements and United Kingdom Practice Statements contained within the RICS Appraisal and Valuation Standards, 6^th Edition (the "Red Book"). For development projects, the valuation assumes completion to a high standard and is based on gross development value less future expenditure to be incurred on costs of development.

The valuers have made certain assumptions for the input variables to form an opinion of value. While they consider their assumptions as reasonable and appropriate the values reported are valid only within the context of the assumptions adopted by them.

Details of the investments in associates are as follows:

Investee company

Country of incorporation

Type of shares

Cost

31 March 2012

Holding 31 March 2012

Cost

31 March 2011

Holding

31 March 2011

Trion Properties Private Limited

India

Equity

Preference *1.)

21,179,491

2,777,645

40.00%

100.00%

21,179,491

2,777,645

40.00%

100.00%

Serene Properties Private Limited

India

Equity

Preference *1.)

35,774,656

2,800,100

40.00%

100.00%

35,774,656

2,800,100

40.00%

100.00%

Magna Warehousing and Distribution Private Limited

India

Equity

Preference *1.)

11,083,105

2,777,645

40.00%

100.00%

11,083,105

2,777,645

40.00%

100.00%

Genext Hardware and Parks Private Limited

India

Equity

Preference *3.)

20,127,633

40.00%

20,127,633

40.00%

Sundew Properties Private Limited

India

Equity

Preference *2.)

26,028,732

40.00%

26,028,732

40.00%

Intime Properties Private Limited

India

Equity

Preference *2.)

10,696,151

40.00%

10,696,151

40.00%

Newfound Properties and Leasing Private Limited

India

Equity

Preference *3.)

26,234,787

40.00%

26,234,787

40.00%

*1.) The Preference Shares shall be redeemed at par at any time at the option of the Company, but in no event earlier than three years from the date of allotment or any such period as may be required by law and not later than seven years from the date of allotment or such other period as may be required by law. The Preference Shares shall, subject to availability of profits during any financial year, be entitled to nominal non cumulative dividend of INR1 per Preference Share per year. The preference shares shall not carry any voting rights, even if dividend on the Preference Shares has remained unpaid for any year or dividend has not been declared by the Company for any year.

*2.) The Preference Shares to be compulsorily converted into Equity shares in one tranche at the expiry of a period of three years and ten calendar days from the date of the allotment. Out of the face value of INR100,000 of each of the preference share upon its conversion, INR10 shall be treated as the face value of each equity share and INR99,990 shall be treated as premium payable in respect of each such equity share. The Preference Shares, till the date of conversion and subject to availability of profits during any financial year, were entitled to nominal non cumulative dividend of INR1 per Preference Share per year. The preference shares did not carry any voting rights, even if dividend on the Preference Shares has remained unpaid for any year or dividend has not been declared by the Company for any year. On 15 June 2010, preference shares in Intime Properties Private Limited were converted into equity shares and consequently the percentage of shareholding in equity is now 40% in the associate. On 1 July 2010, preference shares in Sundew Properties Private Limited were converted into equity shares and consequently the percentage of shareholding in equity is now 40% in the associate.

*3.) The Preference Shares to be compulsorily converted into Equity shares in one tranche at the expiry of a period of three years and ten calendar days from the date of the allotment. Out of the face value of INR1,000,000 of each of the preference share upon its conversion, INR10 shall be treated as the face value of each equity share and INR999,990 shall be treated as premium payable in respect of each such equity share. The Preference Shares shall, till the date of conversion and subject to availability of profits during any financial year, be entitled to nominal non cumulative dividend of INR1 per Preference Share per year. The preference shares shall not carry any voting rights, even if dividend on the Preference Shares has remained unpaid for any year or dividend has not been declared by the Company for any year. On 9 August 2010, preference shares in Genext Hardware and Parks Private Limited were converted into equity shares and consequently the percentage of shareholding in equity is now 40% in the associate. On 23 November 2010, preference shares in Newfound Properties and Leasing Private Limited were converted into equity shares and consequently the percentage of shareholding in equity is now 40% in the associate.

The principal activity of all associates is to do business in real estate.

All associates draw up their accounts to 31 March.

Summarised financial information extracted from the 31 March 2012 financial statements of the associates are given below:

	Genext	Trion	Serene	Magna	Sundew	Intime	Newfound
	£000's	£000's	£000's	£000's	£000's	£000's	£000's
Share of the associates balance sheet:
Total assets	70,893	37,258	65,765	22,332	43,154	34,262	9,715
Total liabilities	61,804	27,350	52,938	18,991	30,994	20,931	3,964
Share of the associates results:
Total revenue	460	5,645	6,110	-	1,946	4,486	-
Profit/(loss) for the year (excluding movements in valuation of properties)	2,255	(427)	(808)	(355)	(628)	(505)	(379)
Profit/(loss) for the year (excluding depreciation and movements in valuation of properties)	2,255	399	(261)	(338)	(241)	1,522	(379)

Summarised financial information extracted from the 31 March 2011 financial statements of associates are given below:

	Genext	Trion	Serene	Magna	Sundew	Intime	Newfound
	£000's	£000's	£000's	£000's	£000's	£000's	£000's
Share of the associates balance sheet:
Total assets	68,924	42,308	63,330	16,710	42,894	39,576	11,063
Total liabilities	60,983	31,450	46,058	13,559	26,396	27,693	4,087
Share of the associates results:
Total revenue	1,447	3,530	3,598	-	1,367	4,325	4
Profit/(loss) for the year (excluding movements in valuation of properties)	2,601	(155)	(436)	(29)	(920)	1,681	(283)
Profit/(loss) for the year (excluding depreciation and movements in valuation of properties)	2,601	582	29	(29)	(505)	2,876	(283)

As a result of the Amendment to IAS 40 Investment Property, except for one associate which holds properties held for sale, share in the assets and liabilities in associates includes valuation gain on investment properties and the related deferred tax liability.

12. Investments in subsidiaries

	Group	Company	Group	Company
	2012	2012	2011	2011
	£000's	£000's	£000's	£000's
Balance brought forward	-	86,766	-	94,809
Write-down	-	(9,320)	-	(8,043)
At 31 March	-	77,446	-	86,766

Details of investments in subsidiaries are given below:

Name of subsidiaries	Country of incorporation	% Holding	Principal activity
Held by the Company
I Holding Company (Mauritius) Ltd	Mauritius	100%	Investment holding	Ord Shares

Held by I Holding Company (Mauritius) Ltd
I-1 Company (Mauritius) Ltd	Mauritius	100%	Investment holding	Ord Shares
I-2 Company (Mauritius) Ltd	Mauritius	100%	Investment holding	Ord Shares
I-3 Company (Mauritius) Ltd	Mauritius	100%	Investment holding	Ord Shares
I-4 Company (Mauritius) Ltd	Mauritius	100%	Investment holding	Ord Shares
I-5 Company (Mauritius) Ltd	Mauritius	100%	Investment holding	Ord Shares
I-6 Company (Mauritius) Ltd	Mauritius	100%	Investment holding	Ord Shares
I-7 Company (Mauritius) Ltd	Mauritius	100%	Investment holding	Ord Shares
I-8 Company (Mauritius) Ltd	Mauritius	100%	Investment holding	Ord Shares

The registered office of each of the above subsidiary undertakings is 3^rd Floor, Tower A, 1 Cybercity, Ebene, Mauritius.

13. Amounts due from subsidiaries

	Group	Company	Group	Company
	2012	2012	2011	2011
	£000's	£000's	£000's	£000's

Loan due from I-Holding Company (Mauritius) Ltd	-	14,942	-	12,002
	-	14,942	-	12,002

The above loan is unsecured, interest free and has no fixed repayment terms.

14. Trade and other receivables

	Group	Company	Group	Company
	2012	2012	2011	2011
	£000's	£000's	£000's	£000's

Debtors and prepayments	95	84	129	117

15. Cash and short term deposits

	Group	Company	Group	Company
	2012	2012	2011	2011
	£000's	£000's	£000's	£000's


Cash at bank and in hand	333	284	814	786
Short term deposits	9,806	9,793	12,781	12,685
	10,139	10,077	13,595	13,471

The short term deposits are made for varying periods between one month and six months depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. The interest rate earned on short term deposits fluctuated between 0.5% and 1.3% during the year (2011: 0.4% and 1.0%).

16. Share capital and share premium

	31 March 2012	31 March 2011
Authorised:
Number of ordinary shares of £0.01 each	400,000,000	400,000,000
Share Capital (£ 000's)	4,000	4,000

Allotted, called up and fully paid:
Number of ordinary shares of £0.01 each	145,801,158	145,681,721
Share Capital (£ 000's)	1,458	1,457

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company's assets.

Details of shares are as follows:

	Number of shares	Nominal value £	Share premium £	Share capital redemption reserve £
As at 31 March 2010	145,515,426	1,455,154	-	622,340
Shares issued under options to Directors	166,295	1,663	-	-
As at 31 March 2011	145,681,721	1,456,817	-	622,340
Shares issued under options to Directors	119,437	1,194	-	-
As at 31 March 2012	145,801,158	1,458,011	-	622,340

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board manages the Group's affairs to achieve shareholder returns through capital growth rather than income, and monitors the achievement of this through growth in net asset value per share.

Gearing may be employed by the Group with the aim of enhancing shareholder returns. This is in the form of bank borrowings, secured on specific investment properties, taken on by the Company's associates.

Group capital comprises share capital and reserves.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

17. Loss per share

Basic and diluted loss per share

Basic loss per share is calculated by dividing the net loss attributable to the equity shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.

Diluted loss per share is the same as basic loss per share.

GROUP
	2012	2011
	£000's	£000's
Loss attributable to equity holders of the company (£000's)	(1,230)	(4,936)
Weighted average of number of ordinary shares in issue (thousands)	145,684	145,547

Weighted average number of ordinary shares in issue (diluted) (thousands)	145,684	145,547

Basic loss per share (pence)	(0.84)	(3.39)

Diluted loss per share (pence)	(0.84)	(3.39)

18. Trade and other payables

	Group	Company	Group	Company
	2012	2012	2011	2011
	£000's	£000's	£000's	£000's

Amounts due to other creditors	669	9	775	15
Accruals	136	111	99	75
	805	120	874	90

19. Financial liabilities

	Group	Company	Group	Company
	2012	2012	2011	2011
	£000's	£000's	£000's	£000's

Investment Adviser performance fees	1,404	-	3,011	-

As at 31 March	1,404	-	3,011	-

The provision for performance fees payable to the Investment Adviser represents the Directors' estimate of the present value of the future cash flows payable, discounted using the Directors' estimate of the risk adjusted value of money. These fees are considered to be directly attributable to the acquisition by the Group of its investment in its associates and the amount provided on initial recognition has been included in the cost of the Group's investment in associates.

Subsequent to initial recognition, any adjustment is recognised in profit or loss. The amount of such adjustment for the year ended 31 March 2012 was a reversal of £1,607,000 (2011: reversal of £399,000). Details of the agreement are disclosed in note 21.

20. Financial instruments

The Group's activities expose it to a variety of financial risks: market price risk, foreign exchange risk, credit risk, liquidity risk and cash flow interest rate risk.

Market price risk

The Company's strategy on the management of market price risk is driven by the Company's investment objective. The Company has been established to invest in the real estate development in India. The main objective of the Company is to provide shareholders with capital growth.

% of Net Assets

The Group is exposed to property price and property rental risk. The Group is not exposed to the market price risk with respect to financial instruments as it does not hold any equity securities.

Foreign exchange risk

The Group's operations are conducted in India, via its associates, which generate revenue, expenses, assets and liabilities in Indian Rupees, not the Company's functional currency (GBP). As a result, the Group is subject to the effects of exchange rate fluctuations with respect to the Indian Rupee.

The Group's policy is not to enter into any currency hedging transactions.

At the reporting date the Group had the following exposure in terms of net assets:

	31 March 2012	31 March 2011
Currency	% of Net Assets	% of Net Assets
UK Sterling	18	18
Indian Rupees	82	82

If the Indian Rupee appreciated/depreciated by 5% against Sterling the effect on net assets would be to increase/decrease net assets by £4,120,000 (2011: £4,529,000).

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Group.

The carrying amounts of financial assets best represent the maximum credit risk exposure at the reporting date.

At the reporting date, the Group's financial assets exposed to credit risk amounted to the following:

	31 March 2012	31 March 2011
	£000's	£000's
Trade and other receivables	95	129
Cash at bank and short term deposits	10,139	13,595
	10,234	13,724

Management does not expect any counterparty to fail to meet its obligations.

Liquidity risk

The Group manages its liquidity risk by maintaining sufficient cash balances.

The Group's liquidity position is monitored by the Board of Directors.

Residual undiscounted contractual maturities of financial liabilities:

Year ended 31 March 2012

	Less than 1 Month £000's	1-3 months £000's	3 months to 1 year £000's	1 - 5 years £000's	Over five years £000's
Financial liabilities
Trade and other payables	674	131	-	-	-
Investment Adviser performance fees	-	-	-	2,807	-
	674	131	-	2,807	-

Year ended 31 March 2011

	Less than 1 Month £000's	1-3 months £000's	3 months to 1 year £000's	1 - 5 years £000's	Over five years £000's
Financial liabilities
Trade and other payables	777	97	-	-	-
Investment Adviser performance fees	-	-	-	5,368	-
	777	97	-	5,368	-

Interest rate risk

The Group is exposed to interest rate risk via cash balances, which are invested at short-term market interest rates.

The weighted average interest rate on cash balances as at 31 March 2012 was 1.18% (31 March 2011: 0.90%). Cash balances comprise short term deposits which mature as follows:

	31 March 2012	31 March 2011
	Cash balances	Cash balances
	£000's	£000's

Less than 1 month	5,921	5,510
1-3 months	2,218	5,085
3 months to 1 year	2,000	3,000
	10,139	13,595

In addition, the financial liability regarding Investment Adviser fees is measured initially at fair value and then at amortised cost using the effective interest rate method.

The effective interest rate on the financial liability is the discount rate used in the calculation of the net present value of the future liabilities, which is 25%.

21. Related party transactions

Terms and Conditions of Transactions with Subisidiaries

At the reporting date there was a £14.942 million (2011: £12.002 million) amount due from the Company's subsidiary, I Holding Company (Mauritius) Limited ("I Holdings"). This loan is unsecured, interest free and has no fixed repayment terms. There are other intercompany loans between I Holdings and the Mauritian sub-subsidiary holding companies ("Mauritian SPVs") outstanding at 31 March 2012 which are eliminated on consolidation and are not disclosed in these accounts.

Investment Adviser Fees

The Investment Adviser is entitled to a performance fee in respect of each Mauritian SPV which is designed to encourage the Investment Adviser to seek the highest returns on the underlying projects. Pursuant to the performance fee arrangements, if the Mauritian SPVs achieve an SPV level IRR in respect of the partial or total realisation of an investment in excess of 10 per cent, then the Investment Adviser will be entitled to a performance fee of 20 per cent of the realised proceeds which exceeds the proceeds required to achieve a 10 per cent SPV level IRR (with such participation increasing to 30 per cent for that portion of the realised proceeds from an investment which exceeds the proceeds required to achieve a 20 per cent SPV level IRR). The fair value of the total performance fee payable to the Investment Adviser at 31 March 2012 is £1.404 million (2011: £3.011 million).

In addition, the annual base fee paid to the Investment Adviser for the year in accordance with the terms of the agreement is £2,840,250 (2011: £3,039,600). The annual base fee is calculated on a quarterly basis based on the agreed formula of 2% on committed capital less an allowance of £150,000 per annum pro-rated per quarter. Since October 2011, the annual base fee has been revised from 2% to 1.75% on committed capital less an allowance of £150,000 per annum pro-rated per quarter.

Directors' Interests

Neel Raheja is a shareholder and director of various K Raheja Corp entities. These entities include the Indian Investment Vehicles, which are 40% owned by the Company, the K Raheja entities which have sold shares in the Indian Investment Vehicles to the Company and K Raheja Corporate Services Private Limited which is contracted to provide services to the Indian Investment Vehicles.

The amount received by the Indian Investment Vehicles from K Raheja Corp entities towards income from lease rentals and other recoveries was £3.966 million (2011: Nil).

In the previous year, Chitale & Associates, in which Rajendra Chitale is a Partner, received fees of GBP 13,319 for providing professional services to the Company.

Information on Directors' emoluments and share options is given in note 9.

22. Holding and ultimate holding company

Ishaan Real Estate plc, is the holding and ultimate parent company of the Group.

23. Share based payments

In November 2006, 390,000 share options were granted to Directors under the "IPO option plan" and remain outstanding at the year end. The exercise price of the options is equal to the market price of the shares on the date of grant. The options vest within three years from date of grant. The fair value of the options granted is estimated at the date of grant using a binomial pricing model, taking into account the terms and conditions upon which the options were granted. The weighted average contractual life of each option granted is ten years. There are no cash settlement options. The IPO options will generally become exercisable at the third anniversary of their date of grant ("exercise date"), and are not subject to the satisfaction of performance targets. The IPO options may not be exercised under any circumstances following the tenth anniversary of grant.

The expected volatility assumption reflects the assumption that the historical volatility is indicative of future trends which may not necessarily be the actual outcome.

The charge recognised in the share based equity reserve for the year is Nil (2011: Nil).

Three of the Directors, Ian Henderson, Vittorio Radice and Stephen Vernon are entitled to receive a grant of annual share options. The options are exercisable immediately and have an exercise price of GBP0.01. Each is entitled to receive an agreed value of shares per annum following the first anniversary of their effective dates as follows:

	Value of options £	Effective date
Ian Henderson *	40,000	7 November 2006
Vittorio Radice	30,000	7 November 2006
Stephen Vernon	30,000	1 August 2007

*From 7 November 2009, Ian Henderson had opted to receive 60% of his annual remuneration of £100,000 in cash and the balance 40% in share options, instead of the earlier 100% in share options.

The charge recognised during the year ended 31 March 2012 was as follows:

	2012	2011
	£	£

Ian Henderson	40,000	40,000
Vittorio Radice	30,000	30,000
Stephen Vernon	30,000	30,000
	100,000	100,000

This charge has been recognised in the share based equity reserve.

24. Events after the reporting date

There have been no material post-balance sheet events which would require disclosure or adjustment to the
31 March 2012 financial statements.

Corporate Information

Registered office:	Bankers
Top Floor	Royal Bank of Scotland International
14 Athol Street	Isle of Man Branch
Douglas	PO Box 151, 2 Victoria Street
Isle of Man	Douglas
IM1 1JA	Isle of Man
British Isles	IM99 1NJ

	Lloyds TSB Corporate Banking
Registered number:	Victory House, Prospect Hill
Registered in the Isle of Man	Douglas
No: 117470C	Isle of Man
	IM99 2JY

Company secretary:	Standard Chartered Bank
Anne Elizabeth Couper Woods	3^rd Floor, Basinghall Avenue
	London, EC2V 5DD

Directors:
Ian James Henderson (Chairman)
Rajendra Prabhakar Chitale	Auditors
Vittorio Radice	KPMG Audit LLC
Neel Chandru Raheja	Heritage Court
Timothy Graham Walker	41 Athol Street
Stephen John Roland Vernon	Douglas
Anne Elizabeth Couper Woods	Isle of Man
	IM99 1HN
Investment adviser
Neerav Investment Advisory Services
(Dubai) Limited	Solicitors
Level 8, Suite 810B, Liberty House	Simmons & Simmons
Dubai International Financial Centre	City Point, One Ropemaker Street
P O Box 506731	London
Dubai, United Arab Emirates	EC2Y 9SS


Nominated adviser and broker	Administrator and registrar
Deutsche Bank AG, London Branch	IQE Limited
1 Great Winchester Street	Top Floor
London	14 Athol Street
EC2N 2DB	Douglas
	Isle of Man
	IM1 1JA
Broker
J P Morgan Cazenove
20 Moorgate
London
EC2R 6DA

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR URVBRUNANUAR

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Thursday 21 June, 2012

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