Hubtown Ltd Directors Report.

To

The Members,

Your Directors have pleasure in presenting their Thirty-second Annual Report and the Audited Financial Statements (Standalone and Consolidated) for the Financial Year ended March 31, 2020 together with the Independent Auditors Reports thereon.

1. FINANCIAL RESULTS :

The standalone and consolidated financial highlights of your Company for the financial year ended March 31, 2020 are summarized below:

(Rs in lakh)

STANDALONE CONSOLIDATED
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Income from Operations 25221 41716 27273 47078
Total Income 28836 49029 31118 54888
Total Expenses 32691 48733 34024 54919
Profit / (Loss) before Tax (3855) 296 (2906) (31)
Profit / (Loss) for the year (5947) (709) (6062) (1551)
Add : Other Comprehensive Income 60 31 70 37
Total Comprehensive Income (Loss) for the year (5887) (678) (5992) (1514)
Net Profit / (Loss) attributable to :
— Owners of the Parent - - (6074) (1504)
— Non-controlling Interest - - 12 (47)
Other Comprehensive Income attributable to :
— Owners of the Parent - - 70 37
— Non-controlling Interest - - - -
Total Comprehensive Income attributable to :
— Owners of the Parent - - (6004) (1467)
— Non-controlling Interest - - 12 (47)
Networth 167544 173431 155425 162416
Earnings per Share before Extraordinary Item ( ) (EPS) (8.18) (0.98) (8.35) (2.07)
Earnings per Share after Extraordinary Item ( ) (EPS) (8.18) (0.98) (8.35) (2.07)

2. FINANCIAL PERFORMANCE :

Standalone and Consolidated Financials Standalone Financials

Income from operations stood at Rs 25221 lakh as against Rs 41716 lakh in the previous year lower by 39.54% ;

• Total Income stood at Rs 28836 lakh, lower by 41.19% as against Rs 49029 lakh in the previous year;

• Total Expenses stood at Rs 32691 lakh as against Rs 48733 lakh in the previous year ;

• Profit/(Loss) before Tax was Rs (3855) lakh as against profit of Rs 296 lakh in the previous year;

• (Loss) for the year was Rs (5947) lakh as against loss of Rs (709) lakh in the previous year;

• Earning per Share before and after Extraordinary Item was (8.18) as against (0.98) in the previous year; and

• Networth of the Company stood at Rs 167544 lakh as against Rs 173431 lakh in the previous year.

Consolidated Financials:

• Income from operations stood at Rs 27273 lakh as against Rs 47078 lakh in the previous year lower by 42.07%;

• Total income stood at Rs 31118 lakh as against Rs 54888 lakh in the previous year lower by 43.31% ;

• Total Expenses stood at Rs 34024 lakh as against Rs 54919 lakh in the previous year;

• Loss before Tax was Rs (2906) lakh as against loss of Rs (31) lakh in the previous year;

• Loss after Tax and Other Items was Rs (6062) lakh as against loss of Rs (1551) lakh in the previous year;

• Earning per Share before and after Extraordinary Item was (8.35) as against Rs (2.07) Lakh in the previous year ; and

• Networth of the Company stood at Rs 155425 lakh as against Rs 162416 lakh in the previous year.

3. IMPACT OF COVID 19 :

COVID-19 had a significant impact on the real estate sector during the last quarter of F. Y. 2019-2020 and the first three months of the current fiscal when a nation wide lockdown was announced on March 24, 2020 which was subsequently extended three times. Due to several restrictions put in place by the Central and State Governments during lockdown, all construction activity including office routine came to a standstill. Currently, with entire labour force having migrated to their villages due to COVID – 19, there is likely to be severe shortage of unskilled and skilled labour once the pace of construction activity picks up, which will have a spiraling effect on the real estate projects which are at various stages of construction. Due to outbreak of COVID-19 globally and in India, the Companys management has made initial assessment of likely adverse impact on business and financial risks, and believes that the impact is is presently not completely ascertainable and the same will depend on how quickly the global economy recovers. The outbreak of Covid-19 pandemic is expected to adversely impact the performance of the real estate sector performance in the first half of F.Y. 2020-2021. However, the management does not see any medium to long term risks in the Companys ability to continue as a going concern.

4. DIVIDEND:

In view of the loss incurred, the Directors have not recommended any dividend on the equity shares for the Financial Year ended March 31, 2020.

5. DIVIDEND DISTRIBUTION POLICY :

The provisions of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 relating to framing of ‘Dividend Distribution Policy are presently not applicable to the Company.

6. TRANSFER TO RESERVES:

No amount is proposed to be transferred to Reserves during the Financial Year 2019-2020.

7. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:

Pursuant to the provisions of Section 124 of the Companies Act, 2013, the unclaimed dividend amount of 56,059/- for the Financial Year 2011-2012 was transferred to the Investor Education and Protection Fund (IEPF) after giving due notices to the members.

During the Financial Year 2020-2021, the dividend declared by the Company for the Financial Year 2012-2013 remaining unclaimed in terms of Section 124 of the Companies Act, 2013 will be transferred to IEPF.

8. SHARE CAPITAL:

The paid-up equity share capital of the Company as on March 31, 2020 was 7273.59 lakh. During the year under review, the Company had not issued any shares with differential rights or sweat equity shares. Presently, the Company does not have any stock option scheme for its employees.

9. DEBENTURES:

During the year under review, the Company has not made any fresh issue of debentures.

10. REVISION OF FINANCIAL STATEMENTS OR BOARDS REPORT :

During the year under review, no revision was made in the previous financial statements or the Boards Reports in respect of any of the three preceding financial years.

11. DISCLOSURE IN RESPECT OF VOTING RIGHTS NOT DIRECTLY EXERCISED BY EMPLOYEES :

There are no shares held by trustees for the benefit of employees and hence no disclosure is required under Regulation 16 (4) of the Companies (Share Capital and Debentures) Rules, 2014.

12. DETAILS OF DEMAT SUSPENSE ACCOUNT :

Pursuant to Regulation 34 (9) read with Schedule VI to SEBI Listing Regulations, the Company has opened a separate demat suspense account in the name and style of "Hubtown Limited – Unclaimed Shares Suspense Account" and credited the shares of the Company which are remaining unclaimed by the shareholders under the Initial Public Offering (IPO). The details of such unclaimed shares as on March 31, 2020 are set out here in under :

Sr. No. Particulars No. of shareholders No. of shares
1. Aggregate no. of shareholders and the outstanding shares in the aforesaid suspense account lying at the beginning of the year i.e. April 1, 2019 20 270
2. No. of shareholders who approached for transfer of shares from the said account during the year 2019-2020 Nil Nil
3. No. of shareholders to whom the shares were transferred from the said account during the year 2019-2020 Nil Nil
4. Aggregate no. of shareholders and the outstanding shares in the aforesaid suspense account lying at the end of the year i.e. March 31, 2020 20 270

The voting rights on the outstanding unclaimed shares as on March 31, 2020 shall remain frozen as long as the shares remain in the Suspense Account till the rightful owner of such shares claims the shares by submission of the requisite documentary proof of their identity to the Companys Registrar and Transfer Agent, M/s. Link In time India Private Limited.

13. CHANGE IN THE NATURE OF BUSINESS:

There has been no change in the nature of business of the Company during the year under review.

14. BUSINESS OVERVIEW:

Your Company is one of Indias leading real estate companies, engaged in the business of execution and development of real estate projects and currently operates both - on its own and through its subsidiaries / joint ventures / associate companies, partnerships firms and public private partnerships encompassing the construction and development of Residential and Commercial Premises, and Build Operate Transfer (BOT) Projects. The Company has a Western India focus with presence in major cities such as Mumbai, Thane, Pune, Ahmedabad, Surat, Vadodara and Mehsana.

OVERVIEW OF THE COMPANYS PROJECTS

(Includes projects being developed / to be developed through subsidiaries / associates / joint ventures / public-private partnerships) Residential: Projects Completed:

Hubtown Heaven – Matunga (East) ‘A and ‘B Wings Hubtown Sunstone – Bandra (East) – Phase – I
Hubtown Gardenia – Mira Road Hubtown Sunmist - Andheri (East) ‘A Wing
Hubtown Countrywoods Phase II – Kondhwa, Pune Hubtown Greenwoods – Thane Phase - I
Hill Crest – Andheri (East)
Hubtown Vedant – Sion (East) – Phase – I

Ongoing Projects:

Hubtown Seasons – Chembur Hubtown Serene – Bandra (East)
Hubtown Greenwoods – Thane Phase – II Hubtown Celeste – Worli
Hubtown Heaven – Matunga (East) ‘C Wing Hubtown Premiere – Andheri (West)
Hubtown Vedant – Sion (East) – Phase – II Rising City – Ghatkopar-Mankhurd Link Road
Hubtown Sunstone – Bandra (East) – Phase – II Twenty Five South – Prabhadevi
Hubtown Countrywoods Phase III – Kondhwa, Pune

Future Projects

Hubtown Divinity – Thane ; Hubtown Square – Thane;

Commercial: Ongoing Projects

Hubtown Solaris Phase – II – Andheri (East) ; Joyos Hubtown – Surat

Joyos Hubtown – Ahmedabad ; Joyos Hubtown – Mehsana ; Joyos Hubtown – Vadodara Hubtown Viva – Phase – II, Jogeshwari (East);

IT SEZ and Township: Ongoing

Sunstream City Phase – I - Mulund-Thane

15. MANAGEMENT DISCUSSION AND ANALYSIS :

The Management Discussion and Analysis, forming part of the Board Report for the year under review as prescribed under Regulation 34 (2) (e) read with Schedule V to the SEBI Listing Regulation is discussed here in below :

GLOBAL ECONOMY OVERVIEW :

The Coronavirus (COVID-19) pandemic, is now a truly global phenomenon with more than a third of the worlds population living under some sort of lockdown/quarantine. Globally, the outbreak of COVID19 has disrupted peoples lives, interrupted businesses and jeopardized decades of development progress.

The level of uncertainty in the economy is currently at an all-time high and the trajectory of the recovery is difficult to forecast. Although there has been no cohesive global policy response, individual countries have taken major steps to try to cushion their people and economies through this difficult period.

Amid countries applying extreme measures to contain the Coronavirus outbreak, businesses have come to a grinding halt across the world, forcing monetary agencies to slash growth forecasts for the global economy. This would be the deepest global recession since World War II, and almost three times as steep as the 2009 global recession. The World Economic Outlook has estimated global growth to decline by 5.2% in 2020 before recovering by 4.2% in 2021.

INDIAN ECONOMY OVERVIEW :

On March 25, 2020, India initiated the largest lockdown in the world, restricting 1.3 billion people. This was further extended three times in order to break the chain of transmission of corona virus and contain the COVID-19 pandemic. The COVID-19 has been at the centre of the loss of lives and livelihood on a massive scale in India. Economic activities across India have taken a hit due to the ongoing COVID-19 pandemic. Businesses and industries have remained shuttered for over three months now amid the ongoing nationwide lockdown. Even as restrictions have been eased across some parts of the country, especially with respect to domestic travel and business operations, states with a higher case burden are struggling to deal with the crisis.

The Indian economy registered a sharp fall with GDP growth for FY2020 at an 11 year low of 4.2% lower than the government projection of 5% in both, first and second advance estimates. According to Asian Development Bank, Indias GDP growth is projected to contract by 4.0% in FY 2021 before recovering sharply to 6.2% in FY 2022, on the assumption of recovery from the pandemic in the second half of 2020. However, a prolonged COVID-19 pandemic that would push the global economy into a deep recession, would further slow the growth of the Indian economy.

With the present lockdown scenario in India, consumption and investments are expected to be severely impacted in the first quarter of FY2021.

REAL ESTATE SECTOR OVERVIEW:

Indian real estate sector, which was already struggling to re-emerge from the past turbulence of structural changes brought in by demonetization, RERA, GST, IBC, and subvention scheme ban, policy reforms, and the liquidity crisis, is now set to witness another major fallout arising out of the COVID-19 pandemic.

The real sector has come to a standstill from the start of the lockdown, and is not expected to fully operationalize for another 3 quarters. As evident, project sites are shut or working at minimal capacity and construction activity has virtually stopped; Site visits from customers have also virtually stopped - immediately impacting sales and cash inflows. Also, new project launches have been deferred for an unknown period. According to JLL India report, total institutional investments in financial year 2019-2020 witnessed a decrease of 13% at $4.26 billion - the lowest in four years. The decline was influenced by several events, including the COVID-19 outbreak and several high-profile issues in the domestic banking and finance sectors in late 2019 and early 2020.

According to KMPG report titled "COVID-19: React, adapt and recover - The new reality", Indias real estate sector is estimated to face losses of as much as 1 Lakh Crore by the end of the current financial year (2020-21) due to the the COVID-19 pandemic. The pandemic will dampen real estate activity in the next 6-12 months and things are likely to change only after 18-24 months.

NBFC AND BANKING CRISIS :

Banks in India has reduced lending since the Global Financial Crisis started in the year 2008. The developers in India then started to depend more on NBFCs for their fund requirements. But in September 2018, IL&FS, a core investment company with institutional shareholders across the world, defaulted on its debt, of which major portion of amount was owed to public sector banks. The knock-on effect triggered a series of defaults, exposing hundreds of investors, banks and mutual funds associated with IL&FS.

Other firms, including Dewan Housing Finance Corporation Ltd. (DHFL), Indiabulls Housing Finance Ltd defaulted on their loans like IL&FS to various banks and institutions, further added to the pain of developers.

A government crackdown on banking-sector malpractice, combined with growing credit risk among developers, has seen banks pull the plug on real estate lending. With the non bank financial sector in similarly dire straits, developers now have nowhere to turn for finance.

SEGMENT WISE PERFORMANCE : Residential :

The unprecedented crisis put across by the current COVID-19 pandemic has certainly impacted the Indian residential real estate significantly. The sector had already been grappling with subdued demand for a long time and the liquidity crisis in 2019 and COVID-19 has made things more difficult for the sector. According to Knight Frank report, the total sale volume in top eight cities of India increased by 1 percent in 2019 to around 2,45,800 units as the sector was impacted by prolonged crisis in the NBFC sector. Housing demand has moved to user segment, and there are virtually no investors in the residential space. Investor participation in the overall demand has fallen to as low as 5-10 per cent.

The residential markets revival hinges on the intensity, duration of a pandemic, government support and concessions. To boost home-buyer sentiment, RBI announced consecutive rate cuts, and the government announced reduction of GST rates to 1% for affordable housing and 5% for others and the setting up of an Alternative Investment Fund (AIF), but these measures had little impact on the sales for the sector.

According to the KPMG report, in the residential sector, pre-COVID-19 challenges related to subdued demand and liquidity pressures will continue causing slowdown in sales in the short to medium term. With a screeching halt to site visits, discussions, documentation and closures, the early indicators depict that the residential real estate sector is likely to face a tough time for the next few quarters and the sectors recovery has been pushed further away by at least few quarters.

Commercial :

Commercial real estate, like residential real estate, is also not immune to the Covid-19 fallout. Corporate occupiers are seen delaying their purchase or leasing decisions. Various MNC and businesses are testing the waters of the work-from-home option. If proved successful/permanent, it could impact leasing activities in the future. The impact of COVID-19 in the form of shutdown of retail outlets and malls as also entertainment and fitness centers has put commercial real estate deals on a wait-and-watch mode.

According to ANAROCK Research, the magnitude of the current slowdown on office segment is tough to predict, as the world, particularly the First World, is still reeling under the impact of the virus. Considering the present scenario and assessment of past global crises in the last decade, it is estimated that supply and net absorption will be significantly lower in 2020.

However, there seem to be some opportunities arising in real estate space in the industrial sector in warehousing and data centers as technology focused companies in these spaces increase volumes.

Retail :

Corona virus pandemic amid an economic slowdown has hit Retail Sector also very badly. Retailing as a business is seasonal, highly dependent on consumer spending and during the current years vacation season. During the lockdown, owing to COVID - 19 pandemic, Indians were either locked down in homes or prohibited to congregate, as a result there was muted buying and muted spending on eating out, recreation and entertainment. Not only the lockdown but also social distancing combined with the overall economic gloom and employment uncertainty are likely to bear an impact on consumer spending.

COVID-19 outbreak has added enormous pressure to the already delicately poised Indian retail sector. New completions will be deferred, leasing activity will be delayed and rentals have already come under pressure, vacancies may see a momentary rise and the sectors growth rate will be slowed.

OPPORTUNITIES AND THREATS :

Opportunities :

The current lockdown, owing to the Coronavirus crisis, has massively impacted the world economy including real estate. However, there lies an opportunity in every crisis, and Covid-19 looks no different.

Your Company has projects in affordable housing, projects with good amenities which are close to completion, and offices with lower ticket size for office and retail to suit the requirement of customers with different requirements.

1) Increase in demand from NRIs :

Over the years, demand from NRIs has become an important driving factor of the real estate market in India. Especially since the establishment of RERA, international buyers have gained confidence to invest in the properties that are registered under RERA, which secures their investment, even while settled abroad.

In the current COVID-19 scenario, it is expected that NRIs shall be again interested to buy homes in India and this may eventually raise demand.

Also demand of NRI as investors has increased as the investment opportunities in USA and Europe have fallen due to the severity of the pandemic. Moreover, with the rupee plummeting against dollar, recent stock market volatility and reports of recession hitting market has brought a renewed interest among NRIs to invest in the Indian real estate assets for long-term, especially in the prime locations. All this has led to NRIs having more disposable money to realize investments in Indian markets.

2) Increase in demand for Affordable Housing :

Affordable housing continues to remain a significant opportunity for developers and a key focus area for the government. There is a major shortage of supply in affordable housing stock , especially housing that caters to the economically weak and low-income segments. The Government of India has been pushing for the affordable housing segment. Great emphasis has been laid on the affordable housing segment as around Rs 1.5 Crore affordable homes have been built in the last five years under the Pradhan Mantri Awas Yojna (PMAY) and 1.95 crore are being further built as part of Phase-II.

The demand for affordable housing is expected to increase further in the near future owing to subsidies provided by government to promote affordable housing. In Budget 2020, the government announced several measures to boost affordable housing.

Additional deduction of up to Rs 1.5 Lakh for interest paid on housing loans borrowed for purchase of affordable homes, extended upto March 31, 2021.

The Government of India has announced an Alternative Investment Fund (AIF) of 25,000 for the stalled Affordable and Middle Income houses which will benefit the affordable housing sector. Further, the Public Private Partnership (PPP) model introduced by the government for affordable homes has also provided a boost to the affordable housing market.

Expecting delays in project completion and extending support to the builder community, the government has announced that developers could get project deadlines extended by six months through the RERA citing the force majeure clause.

Your Company is developing several optimally sized and priced apartments at several prime locations in Mumbai.

3) Increase in demand for lower ticket size office / retail :

COVID-19 pandemic has enforced the concept of ‘Work from Home (WFH) into an officially mandated, strictly enforced rule. Even as the Coronavirus crisis eventually recedes, many employers will have discovered that they dont need large office buildings, and many employees will have discovered that they dont need to be in the office every day or spend hours commuting. Businesses will realise they dont need big setup for office when their employees can work just as efficiently from home and they dont have to come to office every day. This will lead to increase in demand for office / retail with low ticket size. Your Company is developing 4 projects in Gujarat (Ahmedabad, Mehsana, Vadodara and Surat) which cater to this segment.

4) Value for open spaces and gated communities :

The lockdown has connected people to Nature again. The need for fresh air and open spaces has gained popularity in the lockdown. In order to enjoy the openness, people might start looking for larger balconies, terrace spaces, garden spaces, amenities and sit-outs. This pandemic has also brought in a sense of comfort as gated communities have taken extreme measures to _ght the pandemic, controlled access, blocking of solicitation, ensure supply of essentials, community helping for the elderly staying alone, pet care, etc. which are not possible for stand-alone houses and buildings has brought about a greater sense of community.

Your Company is developing projects to suit the demand of open space in Chembur & Ghatkopar and is expecting to do well from sales.

5) Digitalization:

Most real estate businesses are currently highly dependent on physical visits, face-to-face discussions and transactions. COVID-19 lockdown has accelerated technology-led home buying in India. In order to avoid physical contact and reduce the risks of contagion, a lot of focus will be placed on technology including product display, discussions, comparison and transactions. This will allow the real estate professionals to develop a fast and transparent process by helping the clients with maximum information and visualization and establishing a greater connect with the client.

Virtual site visits, property selection, negotiation and purchase process can now be done digitally. Real estate will see new trends in the real estate market due to COVID-19 such as enhanced adoption of online portals, shift from brick and mortar to click and tap, adoption of remote-working technology with more emphasis on robotics and unmanned vehicles, etc.

THREATS AND CHALLENGES : Threats :

1) Delay in Finishing the Projects: The Company is majorly dealing with SRA including 3 projects in Andheri, 3 in Bandra, 1 in Sion and 1 in Worli (all in Mumbai). Vacating the land for construction and getting the required approvals are cumbersome and time consuming procedures and require heavy investment in working capital. Due to the ongoing COVID-19 pandemic, The demolition of the slum tenements is long legal road, which has delayed vacating of the plots for construction. Furthermore, due to the ongoing issues in the real estate industry, financing is not available easily for SRA projects, which has resulted in further delays in construction and finishing of the projects.

2) Shortage of Labour: Due to Pandemic and continuous lockdown, migrant labour staying in the city of Mumbai have moved back to their native place. There is an acute labour shortage being faced by the entire industry right now, which is expected to remain throughout the duration of the pandemic. This will result into further delay in finishing the project.

3) Delay in Revenue Generation and Cash Inflows: The working or self-employed customers are facing pay-cuts and falling disposable incomes due to the COVID-19 pandemic.. There has been a marked rise in the number of customers delaying due payment / installments has affected the budgeted cash inflows of the company and may ultimately result in delayed completion of the projects. Furthermore, your Company expects a small number of cancellations of bookings made especially in under construction projects due to the delays and customers inability to make the scheduled payments. Your Company also expects that new bookings and new revenue generation will be slow this year as potential customers will not be as willing to visit sites, customers loan eligibility may be impacted and customers will also be expecting substantial discounts on current prices.

4) Increased Costs: Due to shortage of labour in Mumbai, your Company expects that labour prices will continue to remain high for the next 6 months, which will impact profitability of the Company. Your Company also expects that the Company shall be able to get financing facilities at higher rates, given the crisis in the NBFC and Banking sector and the overall reduction in real estate by the major lenders in this space.

RISKS AND CONCERNS : Real Estate Specific Risks :

• Fluctuations in market conditions may affect the ability to sell units at expected prices, which could adversely impact revenues and earnings.

• Competition from existing as well as new players, both domestic as well as foreign.

• Increase in interest rates may dampen the growth rate of demand for housing units.

• Real estate price cycles have the maximum impact on the margins of the developers.

• Unfavourable changes in government policies would affect the growth of the real estate sector.

• Liquidity Risk : Liquidity crisis on account of stoppage of lending funds to real estate sector by banks, financial institutions and other lending agencies, leading to stoppage of development activity.

• Operational Risks : Longer gestation period for acquisition of land, non-availability of critical raw materials such as cement and steel, failure to comply with rules and regulations.

• Shortage or sharp increase in prices of building materials could impact the project schedule and impact thereby the revenues and margins.

• Delays in obtaining approvals from regulatory authorities.

• Economic uncertainty and political fluidity can adversely impact the economy.

• Human Resource Risk high attrition of skilled/trained manpower.

• Retrospective policy changes and regulatory bottlenecks could impact the performance of real estate companies.

• Legal and statutory risk - ownership and land title issues.

Concerns :

• Stalled Projects : Stalled housing projects continue to be stumbling blocks in the growth of the residential real estate sector, especially with buyer staying away from risky under-construction projects, thus depriving them of realizing the full benefits of the governments interest subsidy scheme under Pradhan Mantri Awas Yojna.

• Liquidity Crunch : The ongoing NBFC crisis post IL & FS default has made things even more difficult for the developer community.

• High Cost of Capital : In the absence of bank finance the developers had been resorting to PE funding to finance land purchases. This financing route increases the cost of capital drastically.

• Scarcity of Land : The non-availability of land within city limits along with rising land and construction cost is leading to an increase in the overall cost of the project, thus making the projects unviable.

• Complex Approval Process : The lengthy and complex approval process leads to a long gestation period which eventually results on project cost escalation by 20 to 30 percent.

• Restrictive development norms : Low floor area ratio, density norms, ground coverage, parking provision also pose a challenge for the real estate.

• High Cost of emerging technology absorption

OUTLOOK :

The COVID-19 pandemic has undoubtedly changed the way people live and work for the foreseeable future, and new trends will emerge that will become part of our ‘new normal. While the traditional segments of residential and commercial real estate are sure to be struggling for the next 6-9 months, new trends and opportunities are already starting to take shape as governments, businesses and communities begin to adjust to the post pandemic environment. But equally, there will be other consequences to the pandemic that will surprise us and that are not yet possible to predict.

Social distancing, health and hygiene shall become an important part of peoples life. There will be noticeable and a positive shift in trends from renting to buying. People living in a rented accommodation in a non-gated community have realized the importance of open space, health, hygiene and well-ventilated homes during lockdown.

Real estate developers will have to evolve newer products including opportunity to make smart homes with office / study rooms with provisions to install all essential gadgets, good lighting, sound proof the room which shall be isolated from other rooms by providing separate entry and exit. Furthermore, there shall also be certain newer trends which Developers shall have to adopt including innovative and newer land uses like data centres, warehousing, etc, which will be geared towards the future and faster growth industries.

There will also be consolidation in the real estate industry as smaller players grapple to deal with the liquidity crisis and increasing competition from larger organized players.

The demand shall further rise for ready to move in units and the units nearing possession (1 yr.) as new launches likely to be deferred by another six months, and due to high level of uncertainty around under construction units.

HUMAN RESOURCES:

The Company recognizes that its people are the key to the success of the organization and in meeting its business objectives. The Human Resources function endeavors to create a congenial work environment and synchronizes the working of all the departments of the organization to accomplish their respective objectives, which in turn helps the Company to build and achieve its goals and strategies. Employee relations during the year remained cordial. The Company had 296 employees on its payroll as on March 31, 2020.

INTERNAL CONTROL SYSTEMS

The Company has adequate internal control systems, commensurate with the size and nature of its business. Well documented policies and procedures to monitor business and operational performance are supported by IT systems, all of which are aimed at ensuring business integrity and promoting operational efficiency. A firm of internal auditors appointed by the Company conducts periodical audits to ensure adequacy of internal control systems, adherence to management policies and compliance with laws and regulations. Their scope of work includes internal controls on accounting, efficiency and economy of operations. The internal auditors also report on the implementation of their recommendations. Reports of the Internal Auditors are regularly reviewed at the Audit and Compliance Committee meetings. The Audit and Compliance Committee also reviews the adequacy and effectiveness of the internal control systems and suggests improvements, when so required.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS :

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25 % or more as compared to the immediately previous financial year) in key financial ratios.

Sr. No. Particulars of Ratio Ratio 2019-20 Ratio 2018-19 Percentage Change
i Debtor Turnover Ratio 0.28 1.17 76.07 %
ii Inventory Turnover Ratio 0.02 0.38 94.74 %
iii Interest Coverage Ratio 0.72 1.03 (30.10) %
iv Current Ratio 0.97 1.03 (5.83) %
v Debt Equity Ratio 0.39 0.43 (9.30) %
vi Operating Profit Margin 1.75 % 0.30 % 483.33 %
vii Net Profit Margin (23.28) % (1.71) % (1261.40) %
viii Return on Networth (3.69) % (0.41) % (800) %

Reasons for change in 25% or more in key financial ratios as compared to the immediately previous financial year:

1. Debtor Turnover Ratio : During the year, one of the joint venture entity in which the Company was a Co-venturer was dissolved resulting in substantial decline in receivables thereby resulting in improved Debtors Turnover Ratio.

2. Inventory Turnover Ratio: Sale of Finished properties recognized as per IND AS 115 "Revenue from Contracts with Customers". decreased as compared to previous year whereas inventory increased.

3. Interest Coverage Ratio : The interest coverage ratio has decreased due to lower EBITDA on account of lower sales realization during the year under review.

4. Operating Profit Margin : The increase in operating profit margin is due to higher operating profit during the year under review.

5. Net Profit Margin : Net Profit Margin has further declined due to lower Profit After Tax (PAT) on account of decrease in Revenue recognized as per the IND AS 115 "Revenue from Contracts with Customers as compared to previous year.

6. Return on Networth : Return on Networth has further declined due to lower Profit After Tax on account of lower sales realization.

16. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Directors:

Mr. Mahesh A Kuvadia, Independent Director stepped down from the Board of Directors of the Company owing to his other commitments, with effect from March 04, 2020. The Board places on record its sincere appreciation for the invaluable contribution by Mr. Mahesh A. Kuvadia to the deliberations of the meetings of the Board and of the Committee of the Board of which he was a member during his tenure as Director of the Company.

In accordance with the provisions of Section 152 (6) (e) of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Vyomesh M. Shah (DIN:00009596) Executive Non-Independent Director retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment. Mr. Vyomesh M. Shah is not disqualified from being re-appointed as a Director by virtue of the provisions of Section 164 of the Companies Act, 2013. The proposal for his reappointment has been included in the Notice convening the ensuing Annual General Meeting.

Brief resume of Mr. Vyomesh M. Shah, nature of his expertise in specific functional areas, names of companies in which he is a director and member of Board committees and shareholding in the Company as required under Regulation 36 (3) of the SEBI Listing Regulations read with clause 1.2.5 of Secretarial Standards SS-2 on general meetings, is furnished in the annexure to the Notice convening the Annual General Meeting. During the year under review, the Independent Directors and Non-Executive Director of the Company had no pecuniary relationship or transactions with the Company.

Except for the Executive Chairman and the Managing Director who are related to each other being brothers, none of the other Directors of the Company are inter-se related to each other.

Key Managerial Personnel :

Mr. Chetan S. Mody demitted office as Company Secretary of the Company at the close of business hours on April 5, 2019, after serving his notice period.

Mr. Nimesh Shah who was appointed as Company Secretary and Compliance Officer of the Company with effect from April 15, 2019 resigned with effect from close of office hours on June 6, 2019.

Mr. Amit Vyaas who was appointed as Company Secretary and Compliance Officer of the Company with effect from September 24, 2019 resigned with effect from close of office hours on April 30, 2020.

Subsequent to the close of the Financial Year, the Board of Directors on recommendation of Nomination and Remuneration Committee appointed Mr. Sadanand Lad as Company Secretary and Compliance Officer of the Company under Section 203 of the Companies Act, 2013 with effect from July 30, 2020.

Mrs. Nancy Pereira resigned as Chief Financial Officer of the Company with effect from close of office hours on July 5, 2019 for taking up another assignment within the organization.

The Board of Directors on recommendation of Nomination and Remuneration Committee appointed Mr. Sunil Mago as Chief Financial Officer (KMP) of the Company under Section 203 of the Companies Act, 2013 with effect from July 5, 2019.

Mr. Hemant M. Shah, Executive Chairman, Mr. Vyomesh M. Shah, Managing Director, Mr. Sunil Mago, Chief Financial Officer and Mr. Sadanand Lad, Company Secretary are the Key Managerial Personnel of the Company as at the date of this Report.

17. DECLARATION BY INDEPENDENT DIRECTORS:

All the Independent Directors on the Board have given a declaration of their independence to the Company as required under Section 149 (7) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations. In the opinion of the Board, all the Independent Directors possess the integrity, expertise and experience including the pro_ciency required to be Independent Directors of the Company, fulfil the conditions of independence as specified in the Act and the SEBI Listing Regulations and are independent of the management and have also complied with the Code for Independent Directors as prescribed in Schedule IV to the Act.

18. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS :

Pursuant to Regulation 25(7) of SEBI Listing Regulations, the Company imparted various familiarisation programmes for its Independent Directors including, Industry Outlook at the Board Meetings, Regulatory updates at Board and Audit Committee Meetings covering changes with respect to the Companies Act, SEBI Listing Regulations, Taxation and other matters, Prevention of Insider Trading Regulations, SEBI Takeover Regulations, meeting with Senior Executive(s) of the Company, etc.

The details of familiarization programme for Independent Directors held during and upto the year 2019-2020 have been disclosed on the website of the Company and is available at the link http://hubtown.co.in/investors.

19. PAYMENT OF REMUNERATION/COMMISSION TO EXECUTIVE DIRECTORS FROM SUBSIDIARY COMPANIES :

During the year under review, neither the Executive Chairman nor the Managing Director was in receipt of any remuneration/commission from any of the subsidiary companies of the Company. The Company has no holding company.

20. MEETINGS OF THE BOARD OF DIRECTORS :

The Board of Directors met 8 (eight) times during the year ended March 31, 2020 in accordance with the provisions of the Companies Act, 2013 and the Rules made thereunder and Regulation 17 (2) of the SEBI Listing Regulations. Additionally, during the year ended March 31, 2020, the Independent Directors held a separate meeting in compliance with the requirements of Schedule IV to the Companies Act, 2013. For further details, kindly refer to the section on ‘Corporate Governance Report forming part of this Annual Report.

21. COMMITTEES OF THE BOARD:

There are currently Six (6) Committees of the Board, which are as under:

Audit and Compliance Committee

Nomination and Remuneration Committee

Corporate Social Responsibility Committee

Stakeholders Relationship Committee

Risk Management Committee

Committee of Directors

During the year under review, the Audit and Compliance Committee was reconstituted by appointment of Mr. Mahesh A. Kuvadia, Independent Director, as a member of the Committee.

Details of the aforesaid Committees including their composition, terms of reference and meetings held during the year under review, are provided in the section on ‘Corporate Governance Report, which forms part of this Annual Report.

22. AUDIT AND COMPLIANCE COMMITTEE :

Presently, the Audit and Compliance Committee comprises of Mr. Abhijit Datta, Mr. Sunil Shah and Mr. Vyomesh M. Shah. Mr. Mahesh A. Kuvadia who was appointed as a member of the Committee during the year under review, ceased to be a member of the Audit and Compliance Committee consequent his resignation from the Board of Directors of the Company with effect from March 4, 2020. The Committee comprises of majority of Independent Directors with Mr. Datta being the Chairman. Kindly refer to the section on ‘Corporate Governance Report‘ under the heading ‘Audit and Compliance Committee for details relating to terms of reference, meetings and functions of the said Committee.

23. AUDIT AND COMPLIANCE COMMITTEE RECOMMENDATIONS :

During the year under review, all the recommendations put forth by the Audit and Compliance Committee were duly considered and accepted by the Board of Directors.

24. INTERNAL FINANCIAL CONTROLS:

The Company has in place an adequate system of internal controls commensurate with the size and nature of its business, which ensures that transactions are recorded, authorized and reported correctly apart from safeguarding its assets against loss from wastage, unauthorized use and removal. Significant audit observations and follow-up action thereon are reported to the Audit and Compliance Committee.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory and Secretarial Auditors and the reviews performed by the Management, the Board is of the opinion that the Companys internal financial controls were adequate and effective during the Financial Year 2019-2020.

25. ANNUAL PERFORMANCE EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Part ‘D of Schedule II to the SEBI Listing Regulations, the Board has carried out an annual evaluation of its own performance and that of its Committees as well as performance of the Directors individually. Feedback was sought by way of a structured questionnaire covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance and the evaluation was carried out based on responses received from the Directors.

The performance evaluation of Committees was based on criteria such as structure and composition of Committees, attendance and participation of member of the Committees, fulfilment of the functions assigned to Committees by the Board and applicable regulatory framework, frequency and adequacy of time allocated at the Committee meetings to fulfil duties assigned to it, adequacy and timeliness of the agenda and minutes circulated, comprehensiveness of the discussions and constructive functioning of the Committees, effectiveness of the Committees recommendation for the decisions of the Board, etc.

A separate exercise was carried out by the Nomination and Remuneration Committee of the Board to evaluate the performance of individual Directors. The performance evaluation of the Non-Independent Directors and the Board as a whole was carried out by the Independent Directors at their separate meeting. The performance evaluation of the Executive Chairman of the Company was also carried out by the Independent Directors, taking into account the views of the Managing Director and Non-Executive Directors. The Directors expressed their satisfaction with the evaluation process. The Independent Directors and Executive Chairman also carried out performance evaluation of the Managing Director of the Company.

In addition, the Independent Directors were also evaluated on the basis of fulfilment of independence criteria and independence from the management.

26. NOMINATION AND REMUNERATION POLICY:

The Nomination and Remuneration Policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management and the remuneration payable to them as provided under Section 178 (3) of the Companies Act, 2013 and Regulation 19 (4) (Part ‘D of Schedule II) of the SEBI Listing Regulations is appended as Annexure – ‘A to this Report.

27. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to sub-section (3) (c) of Sections 134 (3) (c) and 134 (5) of the Companies Act, 2013, in relation to the annual financial statements of the Company for the year ended March 31, 2020, the Directors of your Company, to the best of their knowledge and belief and on the basis of the information and explanations received by them, hereby state and confirm that:

(i) in the preparation of the Annual Accounts for the year ended March 31, 2020, the applicable accounting standards read with the requirements under Schedule III to the said Act had been followed along with proper explanation relating to material departures, if any;

(ii) they had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year on 31st March, 2020, and of the Loss of the Company for the year ended on that date;

(iii) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts for the financial year ended March 31, 2020 had been prepared on a ‘going concern basis;

(v) they had laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and were operating effectively; and

(vi) they had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

28. CONSOLIDATED FINANCIAL STATEMENTS

The audited Consolidated Financial Statements prepared in accordance with the applicable Ind AS and Regulation 33 of the SEBI Listing Regulations and Section 129 (3) of the Companies Act, 2013 forms part of this Annual Report.

29. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:

As on March 31, 2020, the Company had 13 subsidiaries, 4 associates and 8 joint venture companies. Applications have been made during the Financial Year 2018-2019 to the Registrar of Companies, Maharashtra (ROC) for striking off the names of two wholly owned subsidiaries namely ABP Realty Advisors Private Limited and India Development and Venture Capital Private Limited from the Register of Companies maintained by the Registrar of Companies, pursuant to Section 248 (2) of the Companies Act, 2013. The applications have not been disposed off as yet by the ROC.

Further, during the year under review, the following subsidiaries namely:

(i) City gold Farming Private Limited;

(ii) Devkrupa Build Tech Limited;

(iii) Halitious Developer Limited;

(iv) Headland Farming Private Limited;

(v) Heddle Knowledge Private Limited;

(vi) Upvan Lake Resorts Private Limited; and

(vii) Urvi Build Tech Limited have been amalgamated with another subsidiary namely City gold Education Research Limited.

The Company did not have any material subsidiary company as on March 31, 2020. There has been no change in the nature of business of any of the said subsidiaries, associates and joint venture companies.

The Policy for determining ‘material subsidiary under Explanation to Regulation 16 (1) (c) of SEBI Listing Regulations as approved by the Board of Directors is posted on the Companys website at the link: http://hubtown.co.in/investors.

In accordance with the third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company at the link: http://hubtown.co.in/investors.

Further, as per fourth proviso of the said Section, the audited annual accounts of the subsidiaries have also been placed on the website of the Company at the link: http://hubtown.co.in/investors.

The Company will make available the financial statements of its subsidiaries, joint venture companies and associates (collectively referred to as ‘Subsidiaries) and the related information to any member of the Company who may be interested in obtaining the same. The financial statements of the Subsidiaries will also be available for inspection through electronic mode between 11.00 a.m. and 1.00 p.m. on all working days upto the date of the Annual General Meeting.

During the financial year ended March 31, 2020, the Company did not have any material subsidiary, and, therefore, the provisions of Regulation 24 (1) of the SEBI Listing Regulations were not applicable to the Company.

Additional information as required under Schedule III to the Companies Act, 2013 in respect of entities consolidated as subsidiaries/associates/ jointly controlled entities is furnished in Note 3.1 to the consolidated financial statements.

30. REPORT ON THE PERFORMANCE AND THE FINANCIAL POSITION OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES:

The statement pursuant to Section 129 (3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, containing the salient features of the performance and the financial statements of the subsidiaries, associates and joint venture companies for the financial year ended March 31, 2020 in the prescribed Form AOC 1 forms part of the notes to the financial statements.

31. AUDITORS :

STATUTORY AUDITORS :

In accordance with the provisions of Section 139 of the Companies, Act, 2013 and the Rules made thereunder, M/s. M. H. Dalal & Associates, Chartered Accountants (Firm registration No.: 112449W) were appointed as the Statutory Auditors of the Company at the Twenty-Ninth Annual General Meeting held on October 30, 2017 for a term of five consecutive years till the conclusion of the Thirty-Fourth Annual General Meeting. However, M/s. M. H. Dalal & Associates, Chartered Accountants, have, vide their letter dated July 27, 2020, informed the Board that considering the present COVID – 19 situation, the delay in receipt of their fees from the Company had resulted in undue pressure on deployment of resources for completing the audit assignment, and had, therefore, expressed their inability to continue as Auditors of the Company for the Financial Year 2020-2021 and onwards, resulting in a casual vacancy in the office of the Auditors of the Company.

In accordance with aforesaid provisions of the said Act, the Board has recommended to the members for the appointment of M/s. JBTM & Associates LLP, Chartered Accountants (Firm Registration No. : 100369W) as the Statutory Auditors of the Company. a. to fill the casual vacancy caused by the resignation of M/s. M. H. Dalal & Associates, Chartered Accountants, and to hold the office of Statutory Auditors upto the conclusion of the 32nd Annual General Meeting: and b. for a period of five consecutive years from the conclusion of the 32nd Annual General Meeting till the conclusion of 37th Annual General Meeting of the Company to be held for the year 2025.

The Company has received the consent letter and eligibility certificate from M/s. JBTM & Associates LLP, Chartered Accountants, to act as Auditors of the Company along with a confirmation that, their appointment, if made, would be within the limits prescribed under the Companies Act, 2013.

M/s. JBTM & Associates, Chartered Accountants have also confirmed that they meet the criteria for independence, eligibility and qualification as prescribed in Section 141 of the said Act and do not have any pecuniary interest in the Company or its subsidiaries, associates and joint venture companies.

QUALIFICATIONS BY AUDITORS

The Notes to the Financial Statements forming part of the Balance Sheet as at March 31, 2020 and the Statement of Profit and Loss for the year ended on that date, referred to in the Auditors Report, are self explanatory and do not call for any further clarification /elaboration.

FRAUD REPORTING :

The Directors of the Company confirm that during the year under review, no instances of fraud were reported by the Auditors under Section 143 (12) of the Companies Act, 2013 and the Rules made thereunder either to the Company or to the Central Government.

COST RECORDS :

As required under Rule 8(5)(ix) of the Companies (Accounts) Rules, 2014, the Company confirms that it has prepared and maintained cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 for the year ended March 31, 2020.

COST AUDITORS:

Based on the recommendation of the Audit and Compliance Committee, the Board has appointed M/s. D. C. Dave & Co., Cost Accountants (Firm Registration No. : 000611) as Cost Auditors to conduct the audit of the cost records of the Company for the year ending March 31, 2021 at a fee of _ 5,00,000/- (Rupees Five Lakh) plus applicable taxes and reimbursement of out-of-pocket expenses, subject to ratification of the said fees by the members in the ensuing Annual General Meeting pursuant to Section 148 of the Companies Act, 2013. The resolution pertaining to ratification of the remuneration payable to the Cost Auditor forms part of the Notice of the ensuing AGM.

COST AUDIT REPORT:

The Cost Audit Report for the year ended March 31, 2020 pursuant to the Companies (Cost Accounting Records) Rules, 2011 will be filed within the period stipulated under the Companies Act, 2013 or such other period as may be prescribed.

SECRETARIAL AUDIT REPORT:

The Secretarial Audit Report from M/s. Ashish Bhatt & Associates, practicing company secretary, for the financial year ended March 31, 2020 pursuant to Regulation 24A of the SEBI Listing Regulations is appended as Annexure – ‘B to this Report.

REPLIES TO SECRETARIAL AUDITORS QUALIFICATIONS:

(1) As regards Secretarial Auditors qualification with respect to signing of financial statements for the year ended March 31, 2019 under Section 134(1) of the Companies Act, 2013, the Directors state that since the Company Secretary was out of India on the date of the Board Meeting i.e. May 28, 2019 in which the said financial statements were approved, he has not signed the said financial statements.

(2) As regards Secretarial Auditors qualification regarding non-compliance with Regulation 25 (6) of the SEBI Listing Regulations and provision of the para 2 of Clause VI of Schedule IV to the Companies Act, 2013, relating to the appointment of an Independent Director within the prescribed timeline, the Directors state that the delay in the appointment of an Independent Director within the prescribed timeline was entirely due to circumstances beyond the control of the Board and the Management and without malafide intention.

(3) The observation of the Secretarial Auditor with respect to the spending of the amount earmarked towards CSR activities during the Financial Year 2019-2020 in the current Financial Year 2020-2021 is self explanatory. For further clarification in the matter, please refer serial no. 40. of this Report.

32. EXTRACT OF ANNUAL RETURN:

An extract of Annual Return for the financial year ended March 31, 2020 in Form MGT – 9 as required under Section 92 (3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as Annexure ‘C to this Report. The said return is also available on the website of the Company at the link http://hubtown.co.in/investors.

33. MATERIAL CHANGES AND COMMITMENTS:

There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this Report.

34. DEPOSITS:

During the year under review, the Company has not accepted any deposits from public under Chapter V of the Companies Act, 2013.

35. VIGIL MECHANISM:

Pursuant to Section 177 (9) and (10) of the Companies Act, 2013 and Regulation 22 read with Regulation 4 (2) (d) (iv) of the SEBI Listing Regulations, the Company has framed a Whistle Blower Policy as the vigil mechanism for Directors and employees of the Company to report their genuine concerns in the prescribed manner, to freely communicate their concerns / grievances about illegal or unethical practices in the Company, actual or suspected, fraud or violation of the Companys Codes or Policies. The vigil mechanism is overseen by the Audit and Compliance Committee. During the year under review, no such incidence was reported and no personnel were denied access to the Chairman of the Audit and Compliance Committee.

The Whistle Blower Policy has been uploaded on the Company website at the link: http://hubtown.co.in/investors.

36. RISK MANAGEMENT:

Presently, the provisions of Regulation 21 of the SEBI Listing Regulations relating to the ‘Risk Management Committee are not applicable to the Company. However, the Board of Directors had constituted a ‘Risk Management Committee under Clause 49 of the erstwhile Listing Agreement and framed a ‘Risk Management Policy to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the functions are systematically addressed through mitigating actions on a continuing basis. The details of the Risk Management Committee are provided in the Section on ‘Corporate Governance Report forming part of this Annual Report.

37. PARTICULARS OF LOANS, INVESTMENTS OR GUARANTEES UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

As the Company is engaged in the business of ‘real estate development included in the term ‘Infrastructure Facilities as defined in Clause (8) (a) of Schedule VI to the Companies Act, 2013, the provisions of Section 186 of the said Act related to loans made, guarantees given or securities provided are not applicable to the Company. Kindly refer the financial statements for the loans, guarantees and investments given/made by the Company as on March 31, 2020.

38. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

All contracts / arrangements / transactions with related parties as defined under the Companies Act, 2013 and SEBI Listing Regulations that were entered into by the Company during the year under review were in the ordinary course of business and on an arms length basis. There were no contracts / arrangements / transactions with related parties, as defined under Section 188 of the Companies Act, 2013, which could be considered material under the SEBI Listing Regulations. Accordingly, the disclosure of related party transactions as required under Section 134 (3) of the Companies Act, 2013 in Form AOC -2 is not applicable. There were no materially significant related party transactions with the Companys Promoters, Directors, Key Managerial Personnel or their relatives which could have had a potential conflict with the interest of the Company at large.

Attention of members is drawn to the disclosure of transactions with related parties as set out in Notes to Accounts – Note 33 forming part of the standalone financial statements.

The transactions with person or entity belonging to the promoter/promoter group which holds 10 per cent or more shareholding in the Company as required under Schedule V, Part A (2A) of the SEBI Listing Regulations is given in Note 33 (on related party transactions) forming part of the standalone financial statements.

The Policy for determining the materiality of related party transactions and dealing with related party transactions as approved by the Board pursuant to Regulation 23 of SEBI Listing Regulations is uploaded on the Companys website at the link: http://hubtown.co.in/investors.

39. DISCLOSURE OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL:

During the year under review, there were no significant or material orders passed by any regulatory / statutory authorities or courts / tribunals against the Company impacting the going concern status and the Companys operations in future.

40. CORPORATE SOCIAL RESPONSIBILITY _CSR_ :

The Corporate Social Responsibility Committee has formulated the policy on Corporate Social Responsibility (CSR) indicating the activities to be undertaken by the Company, which has been uploaded on the Companys website at the link: http://hubtown.co.in/investors.

During the year under review, the Company, due to severe liquidity constraints, had not expended the amount of Rs 16.65 lakh earmarked for corporate social responsibility activities for the financial year 2019-2020, as required under the CSR Rules and the CSR Policy of the Company. However, the entire unspent amount of Rs 16.65 lakh being the minimum required CSR expenditure of the F.Y. 2019-2020 was carried forward to the next financial year (F.Y. 2020-2021) and the Company has fulfilled its obligation towards corporate social activities for the previous financial year (2019-2020) by expending an amount of 25 lakh towards CSR activities during the current financial year (2020-2021).

The amount of Rs 25 lakh spent in the current financial year for the CSR activities of the previous financial year shall be over and above the current financial years CSR allocation equivalent to atleast 2% of the average net profit of the Company for the immediately preceding three financial years.

The annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure ‘D appended to this Report.

41. DISCLOSURE UNDER ‘THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE _PREVENTION, PROHIBITION AND REDRESSAL_ ACT, 2013:

The Company has put in place a ‘Policy on Prevention of Sexual Harassment at Workplace in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. The Company afirms that during the year under review, no such complaints were received by the Committee for redressal and that adequate access was provided to any complainant who wished to register a complaint under the Policy. The said Policy is available on the website of the Company at http://hubtown.co.in/investors.

The details required to be given under the aforesaid Act forms part of the report on Corporate Governance.

42. CORPORATE GOVERNANCE:

The Report on Corporate Governance as stipulated under the SEBI Listing Regulations forms an integral part of this Annual Report. The requisite certificate from a practicing company secretary confirming compliance with the conditions of Corporate Governance as stipulated under Part ‘E of Schedule V to the SEBI Listing Regulations is appended to and forms part of the report on Corporate Governance.

43. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The nature of operations of the Company does not require disclosure of particulars relating to conservation of energy and technology absorption, as prescribed under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014. During the year under review, the Company had ‘Nil foreign exchange earnings and had incurred an expenditure of 26,375/- in foreign exchange.

44. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES :

The disclosure required under Section 197(12) of the Companies Act, 2013 read with the Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure – ‘E to this Report.

The statement containing names of top ten employees in terms of the remuneration drawn and the particulars of employees as required pursuant to Section 197 (12) of the Companies Act, 2013 read with Rules 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to and forms part of this Report. However, having regard to the provisions to the first proviso of Section 136 (1) of the Companies Act, 2013, the Annual Report is being sent to all the members of the Company excluding this information.

The aforesaid statement is available for inspection by the members through Electronice Mode 21 days before the AGM, during business hours on working days of the Company upto the date of the ensuing AGM. Any member who is interested in obtaining a copy thereof, may write to the Company Secretary at the Registered Office of the Company. The said information is also available on the website of the Company. None of the employees listed in the aforesaid statement is a relative of any Director of the Company. None of the employees of the Company is covered under Rule 5 (3) (viii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

45. CODE OF CONDUCT :

The Board of Directors has adopted Code of Conduct and Ethics for the Board of Directors and Senior Management Personnel of the Company in terms of Regulation 17 (5) of the SEBI Listing Regulations. All Board members and Senior Management Personnel have afirmed their compliance with the said Code for the financial year ended March 31, 2020. A declaration to this effect signed by the Managing Director is appended as Annexure II to the Corporate Governance Report.

The said Code of Conduct can be viewed on the Companys website at http://hubtown.co.in/investors.

46. INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

The details in respect of internal financial control and their adequacy are included in the Management and Discussion & Analysis, which forms part of this report.

47. AFFIRMATION REGARDING COMPLIANCE WITH APPLICABLE SECRETARIAL STANDARD:

The Board afirms compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India namely SS-1 and SS-2 relating to the Meetings of the Board and its Committees and General Meetings respectively.

48. CEO AND CFO CERTIFICATION:

A certificate from the Managing Director and the Chief Financial Officer, pursuant to Regulation 17 (8) of SEBI Listing Regulations for the year under review was placed before the Board of Directors of the Company at its meeting held on July 30, 2020 which is appended to and forms part of the Corporate Governance Report.

49. CERTIFICATE OF NON DISQUALIFICATION OF DIRECTORS :

A certificate from a company secretary in practice that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority as stipulated under Regulation 34 (3) read with clause 10 (i) of para C of Schedule V to the SEBI Listing Regulations is appended to and forms part of the Corporate Governance Report.

50. APPRECIATION AND ACKNOWLEDGEMENTS:

Your Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment. The Directors also take this opportunity to thank all Investors, Suppliers, Vendors, Banks, Financial Institutions, Business Associates, Contractors, Government and Regulatory Authorities and Stock Exchanges for their continued support during the year.

Your Directors would also like to thank the members for reposing their confidence and faith in the Company and its management.

DISCLAIMER :

Certain statements made in the Directors Report and the Management Discussion and Analysis may constitute ‘forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Several factors could make significant difference to the Companys operations that include labour and material availability, and prices, cyclical demand and pricing in the Companys principal markets, changes in interest rates, changes in government regulations, tax regimes, economic development within India and other incidental factors. The Company does not undertake any obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise.

For and on behalf of the Board
Hemant M. Shah
Executive Chairman
DIN: 00009659
Date : July 30, 2020
Place: Mumbai