Hubtown Ltd Directors Report.
Your Directors have pleasure in presenting their Thirtieth Annual Report and the Audited Financial Statements (standalone and consolidated) for the Financial Year ended March 31, 2018 together with the Independent Auditors Report thereon.
1. FINANCIAL HIGHLIGHTS :
T he standalone and consolidated financial highlights of your Company for the financial year ended March 31, 2018 are summarized below:
(Rs in lakh)
|March 31, 2018||March 31, 2017||March 31, 2018||March 31, 2017|
|Income from Operations||34481||60304||56223||54250|
|Profit / (Loss) before Tax||2442||1234||(2437)||(2585)|
|Profit / (Loss) for the year||2654||654||(3049)||(4074)|
|Add : Other Comprehensive Income||12||2||8||11|
|Total Comprehensive Income for the year||2666||656||(3041)||(4063)|
|Less : Total Comprehensive Income attributable to Non-controlling Interest||-||-||(19)||(1www59)|
|Total Comprehensive Income attributable to owners of the Company||-||-||(3022)||(3904)|
|Balance brought forward from the Previous Year||71837||71181||53186||57090|
|Balance carried to Balance Sheet||74503||71837||49879||53186|
|Earnings per Share before Extraordinary Item (_)(EPS)||3.65||0.90||(4.2)||(5.4)|
|Earnings per Share after Extraordinary Item (_)(EPS)||3.65||0.90||(4.2)||(5.4)|
2. PERFORMANCE REVIEW AND STATE OF AFFAIRS OF THE COMPANY : S tandalone and Consolidated Financials S tandalone Financials
I ncome from operations stood at 34481 lakh as against 60304 lakh in the previous year representing a decrease of 42.82% ;
T otal Income stood at 60521 lakh, lower by 4.57 % as against 63421 lakh in the previous year;
T otal Expenses stood at 58079 lakh as against 62187 lakh in the previous year ;
Profit before Tax was 2442 lakh as against 1234 lakh in the previous year;
Profit after Tax was 2654 lakh as against 654 lakh in the previous year;
Earning per Share before and after Extraordinary Item was 3.65 as against 0.90 in the previous year ; and
Networth of the Company stood at 175488 lakh as against 172822 lakh in the previous year.
Consolidated Financials :
I ncome from operations stood at 56223 lakh as against 54250 lakh in the previous year representing an increase of 3.64 %;
T otal income stood at 85321 lakh as against 57540 lakh in the previous year representing an increase of 48.28 %;
T otal Expenses stood at 87758 lakh as against 60125 lakh in the previous year;
L oss before Tax was (2437) lakh as against loss of (2585) lakh in the previous year;
L oss after Tax, Minority Interest and Other Items was (3049) lakh as against loss of (4074) lakh in the previous year;
Earning per Share before and after Extraordinary Item was (4.2) as against (5.4) in the previous year ; and
Networth of the Company stood at 163990 lakh as against 167175 lakh in the previous year.
3. DIVIDEND :
I n the long-term interest of all the stakeholders, the Board felt that the Company utilize the internal accruals on its projects rather than paying dividend to the shareholders. The Directors have, therefore, not recommended any dividend on the equity shares for the Financial Year ended March 31, 2018.
4. TR ANSFER TO RESERVES :
No amount is proposed to be transferred to Reserves out of the Profits earned during the Financial Year 2017-2018.
5. TR ANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:
P ursuant to the provisions of Section 124 of the Companies Act, 2013, the unclaimed dividend amount of _ 1,27,845/- for the Financial Year
2009-2010 was transferred to the Investor Education and Protection Fund (IEPF) after giving due notices to the members. During the Financial Year 2018-2019, the dividend declared by the Company for the Financial Year 2010-2011 remaining unclaimed in terms of Section 124 of the Companies Act, 2013 will be transferred to IEPF.
6. SHARE CAPITAL :
T he paid-up equity share capital of the Company as on March 31, 2018 was _ 7273.59 Lakh. During the year under review, the Company has not issued any shares with di_erential voting rights and hence no information under the provisions of Rule 4 (4) of the Companies (Share Capital and Debentures) Rules, 2014 is furnished. Further, the Company has not issued any sweat equity shares during the year under review and hence no information under the provisions of Rule 8 (13) of the Companies (Share Capital and Debentures) Rules, 2014 is furnished.
P resently, the Company does not have any stock option scheme for its employees.
7. DEBENTURES :
D uring the year under review, the Company has not made any fresh issue of debentures.
8. RE VISION OF FINANCIAL STATEMENTS OR BOARDS REPORT :
D uring the year under review, no revision was made in the previous financial statements or the Boards Report.
9. DISCLOSURE IN RESPECT OF VOTING RIGHTS NOT DIRECTLY EXERCISED BY EMPLOYEES :
T here are no shares held by trustees for the bene_t of employees and hence no disclosure under Rule 16 (4) of the Companies (Share Capital and
Debentures) Rules, 2014 has been furnished.
10. NA TURE OF BUSINESS :
T here has been no change in the nature of business of the Company during the year under review.
11. BUSINESS OVERVIEW :
Y our 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 _rms and public private partnerships encompassing the construction and development of Residential and Commercial Premises, and Build Operate Transfer (BOT) Projects.
T he 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)
P rojects 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 , Phase III Buildings 4 and 5 Kondhwa, Pune||Hubtown Greenwoods Thane Phase - I|
|Hillcrest Andheri (East)|
|Hubtown Vedant Sion (East) Phase - I|
O ngoing 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|
Hubt own Divinity Thane ; Hubtown Square Thane; Commercial: O ngoing Projects
Hubt own Solaris Phase II Andheri (East) ; Joyos Hubtown Surat
Jo yos Hubtown Ahmedabad ; Joyos Hubtown Mehsana ; Joyos Hubtown Vadodara Hubt own Viva Phase II, Jogeshwari (East);
IT SEZ and Township: Ongoing
Sunstream City Phase I - Mulund-Thane
12. M ANAGEMENT DISCUSSION AND ANALYSIS :
T he Management Discussion and Analysis Report, forming part of the Board Report for the year under review as stipulated under Regulation 34 (2) (e) read with Schedule V to SEBI Listing Regulations is discussed herein below.
GL OBAL ECONOMY
W orld growth strengthened in 2017 to 3.8 percent with a notable rebound in global trade, which was the strongest growth since 2011. Global growth is expected to tick upto 3.9 percent in 2018 and next, supported by strong momentum, favourable market sentiment, accommodative financial conditions, etc. [IMF Report April 2018]
1The year 2017 was marked by a number of key structural initiatives to build strength across macro-economic parameters for sustainable growth. The growth in the _rst half of the year su_ered despite global tailwinds. However, the weakness seen at the beginning of 2017, bottomed out as 2018 set in. After a year of disruptions and growth slow-downs, Indian economy is consolidating the gains from the recent reforms and is moving in the right direction. With steady increase in FDI in_ows and pick-up in growth in the Q3 2017, 2018 will expectedly remain a period of strong growth for India. The biggest challenges for 2018 are as to how the economy can maintain its recovery in the face of increasing in_ationary pressures, combined with a higher fiscal deficit as well as an increasing debt burden.
1 Indian Economic Outlook March 2018 Deloitte India
REAL ESTATE SECTOR OVERVIEW
2The real estate sector is the driving force behind the growth of the Indian economy. In India, real estate is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. The real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for o_ce space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.
2017 has been a year of policy consolidation for the Indian Real Estate Sector. The implementation of GST and RERA have begun to shape up the Sector with new standards of delivery, accountability and transparency.
2Private equity and Indias debt investments in Indias real estate sector grew 12 per cent year-on-year to US $ 4.18 billion across 79 transactions in 2017. In 2017, M&A deals worth US $ 3.26 billion were made in Indias real estate sector. Private equity investments in Indian retail assets increased 15 per cent in F.Y. 2017 to reach US $ 800 million.
2The Indian real estate sector has witnessed high growth in recent times with the rise in demand for o_ce as well as residential spaces. Private equity investments in real estate are estimated to grow to US $ 100 billion by 2026 with tier 1 and 2 cities being the prime beneficiaries. India stood third in the US Green Building Councils (USGBC) ranking of the top 10 countries for Leadership in Energy and Environmental Design (LEED) certi_ed buildings, with over 752 LEED-certi_ed projects across 20.28 million gross square meters of space. According to data released by Department of Industrial Policy and Promotion (DIPP), the construction development sector in India has received Foreign Direct Investment (FDI) equity inflows to the tune of US$ 24.67 billion in the period April 2000-December 2017. 2 - India Brand Equity Foundation
SEGMENT WISE PERFORMANCE : Residential :
2017 was the most difficult year for the residential real estate sector. This sector faced several challenges ranging from realigning the businesses to comply with GST rollout to changing business models in the wake of RERA and then post-demonetization, investors disappearing from the market. New residential launches declined 35 % in 2017 with the number of residential units launched across top eight cities estimated to be 74,000 units. Only affordable housing segment registered an year-on-year growth of 6 per cent. The implementation of major reforms such as RERA, GST, the Benami Property Act and demonetization promise to make Indian residential real estate more transparent than ever before. Steady investments will continue to be seen in this asset class in 2018.
I n case of office space, new completions increased 7 per cent in 2017 to 32.7 million sq. ft. compared to 30.7 million sq. ft. in 2016, but not at par with demand. Supply grew 13 per cent to 12.5 million sq. ft. compared to 11.1 million sq. ft. in 2016, and the headwinds in the technology sector and supply crunch resulted in subdued growth.
V acancy levels remained largely unchanged through 2017, hovering at around 14 per cent pan India. Select markets saw lower vacancy levels and are expected to see further declines in 2018. Overall, vacancy levels will likely hover around 15 % during 2018. Space taken up by co-working companies saw a tremendous growth in 2017. This trend is likely to continue in 2018.
P rivate equity inflows in office and IT/ITES real estate have grown 150 per cent between 2014 and 2017 backed by a strong attraction towards office sector.
R etail properties saw significantly less rental value appreciation in Tier I cities. Investments into retail real estate has shown growth in Tier II and
Tier III cities, exceeding those in metros. Retail real estate is facing tough competition from e-commerce industry, but growth of online shopping has resulted in increased demand for warehousing space. 100 % FDI via direct route is now admissible in single-brand retailing which will allow the sector to expand rapidly.
W arehousing and Industrial Asset Class :
W arehousing saw upward momentum with total absorption of 25 million sq. ft. E-commerce sector continues to be the major demand driver in this segment. In the GST era, warehousing is emerging as an attractive asset class for investors and private equity players. The stock of modern and better managed warehouses is increasing and the trend is set to continue in 2018 as well.
R apid Urbanisation
I ndias urban population is forecasted to almost double from 410 million in 2014 to over 583 million by 2030. The effect of urbanization is most profound in Tier I cities where a huge in_ux of migrants is causing housing demand to surge. This trend has significantly increased the demand for housing in the urban context.
G rowth in household income
I ncrease in household income is expected to fuel consumption and be a support base for growth in Indias organised retail sector.
Housing demand will also get a big boost with interest rates on home loans becoming cheaper following a drop in lending rates by major banks.
THREATS AND CHALLENGES : Regulatory Hurdles
Unfa vourable changes in government policies and the regulatory environment can adversely impact the performance of the sector. Retrospective policy changes and regulatory bottlenecks may impact Profitability and affect the attractiveness of the sector and companies operating within the sector.
M anpower and Technology Shortage
T he real estate sector faces severe manpower shortage. The sector is heavily dependent on manual labour which increases timelines and cost and often results in supplies getting delayed. Technologically less labour intensive alterative methods of construction needs to be adopted on a large scale through training and skill development of manpower.
Dela yed approval of projects
D elays in clearing a project leads to deferment of construction timelines resulting in increased cost of construction. There is an urgent need to create a single window clearance mechanism
F unding Problems
A bsence of long term funding from banks is forcing the developers to look at alternative sources of funding, most of which do not offer affordable interest rates.
I nventory Pile Up
I nventory pile-up is a major concern that can severely impact real estate companies. Real estate projects involve huge project costs and inability to market them can adversely impact Profitability.
RISKS AND CONCERNS : REAL ESTATE SPECIFIC RISKS :
F luctuations in market conditions may affect the ability to sell units at expected prices, which could adversely impact revenues and earnings.
C ompetition from existing as well as new players, both domestic as well as foreign.
I ncrease in interest rates may dampen the growth rate of demand for housing units.
R eal estate price cycles have the maximum impact on the margins of the developers.
Unfa vourable changes in government policies including change in tax structure 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 lending agencies, leading to stoppage of development activity.
Oper ational 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.
Shor tage or sharp increase in prices of building materials could impact the project schedule and impact thereby the revenues and margins.
D elays in obtaining approvals from regulatory authorities.
P erennial shortage of semi-skilled and skilled labour.
E conomic uncertainty and political fluidity can adversely impact the economy.
Human Resource Risk high attrition of skilled/trained manpower.
R etrospective policy changes and regulatory bottlenecks could impact the performance of real estate companies.
IT Risk loss/theft of important and confidential data and breakdown of IT system may adversely affect the Companys ability to monitor progress of the project, etc. and provide timely information about the projects to the customers,
L egal and Statutory Risk ownership and land title issues.
Lack of supporting infrastructure such as roads, highways, electricity, water, sewerage can hamper the growth of real estate.
Shif t in consumer preference may adversely affect the Companys business and operating results
A bsence of land title insurance.
C ONCERNS :
The real estate sector offers ample opportunities for development across verticals, but there are certain intrinsic challenges that hinder growth of the sector. The challenges in the Indian real estate can be broadly classified under five categories which are lack of suitable developable land, delays in obtaining approvals, issues in land title and insurance, inadequate funding challenges and shortage of manpower.
Lack of suitable developable land : Suitable developable land with basic infrastructure has become scarce in Indian cities. This has resulted in significant surge in land prices in the urban areas.
Strict and prolonged regulatory process leading to delays : The process of obtaining construction permit has become difficult over the last several years and is among the major reasons contributing to the delays in real estate development. The delay in obtaining approvals and adhering to regulatory processes results in avoidable time and cost overruns.
Land related issues : Lack of clear land titles and title insurance often makes difficult to acquire suitable land parcels. Absence of clear land titles sometimes results in long-drawn and expensive litigation for developers. Further, there is no single land policy in India and each state has its own policy which adds to the complexities.
Inadequate funding channels : Reserve Bank of India has set threshold for the total maximum exposure to real estate, including individual housing loans and lending to developers for construction finance. Absence of long term funding from banks results in developers tapping alternative sources of funds, most of which do not offer affordable interest rates and hence the supply stified.
Shortage of manpower and technology : Despite being the second largest employer in the country, the real estate sector as a whole faces manpower shortage. The sector is heavily dependent on manual labour, faces longer time lines for construction completions, which results in supply getting deferred.
High construction costs : As the raw material costs increase over a period, it becomes very difficult to provide housing at a reasonable cost.
Uneven development of urban infrastructure.
O verall, 2018 is predicted to be a positive year for Real Estate sector with policy reforms driving the market sentiments. Regulatory reforms, steady demand generated through rapid urbanization, rising household income and the emergence of affordable and nuclear housing are some of the key drivers of growth for the real estate sector. Game changing developments like RERA and GST have created a strong base for the sector to grow, which combined with Indias strong economic advancement have provided a perfect spring board.
A _ordable housing is going to be the big thing in 2018 given the thrust by the government by conferring infrastructure status to this segment.
T he Indian real estate market is expected to touch US $ 180 billion by 2020. Housing sector is expected to contribute around 11 per cent to
Indias GDP by 2020. In the period F.Y. 2008-2020, the market size of this sector is expected to increase at a compound annual growth rate (CAGR) of 11.2 per cent . India is expected to witness an upward rise in the number of real estate deals in 2018, on the back of policy changes that have made the market more transparent. The real estate sector is projected to receive Private Equity (PE) investments to the tune of US$4 billion during this fiscal year. REITs are set to provide investment opportunities to smaller investors during the current fiscal. Indias real estate markets are poised for growth in the medium-to-long term on the back of higher transparency and further consolidation.
13. HUM AN RESOURCES :
T he 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 132 employees on its payroll as on March 31, 2018.
14. INTERNAL FINANCIAL CONTROLS :
T he Company has in place adequate internal financial controls with reference to the financial statements. 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 2017-2018.
15. DIRECTORS AND KEY MANAGERIAL PERSONNEL : D irectors :
M r. Shirish Gajendragadkar, Independent Director resigned as Director of the Company with effect from September 13, 2017. The Board places on record its sincere appreciation for the invaluable contribution by Mr. Ganjedragadkar to the deliberations of the meetings of the Board and of the Committees of the Board of which he was a member, during his tenure as Director of the Company.
M r. Shailesh Hingarh was appointed as an Additional and Independent Director in the Board meeting held on March 22, 2018, with effect from
March 22, 2018. As per the provisions of Section 160 of the Companies Act, 2013 (the Act), the Company has received a notice in writing from a member specifying his intention to propose the appointment of Mr. Shailesh Hingarh as Director of the Company in the ensuing Annual General Meeting (AGM). Further, a specific resolution is included in the Notice of the AGM for the appointment of Mr. Shailesh Hingarh as an Independent Director for a period of 5 (five) years with effect from March 22, 2018. The terms and conditions of the appointment of the Independent Director are in accordance with Schedule IV to the said Act and the SEBI Listing Regulations.
I n 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), Director of the Company, who retires by rotation, and being eligible, offers himself for reappointment. Mr. Vyomesh M. Shah is not disqualified from being reappointed as Director by virtue of the provisions of Section 164 of the Companies Act, 2013. The Notice convening the ensuing Annual General Meeting includes the proposal for reappointment of the aforesaid Director.
Br ief resume of Mr. Shailesh Hingarh and Mr. Vyomesh M. Shah, as required under the SEBI Listing Regulations and Secretarial Standards 2 on General Meetings, is provided in the Annexure to the Notice convening the AGM.
D uring the year under review, the Independent Directors and Non-Executive Director of the Company had no pecuniary relationship or transactions with the Company.
Ex cept 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.
16. F AMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS :
I n compliance with the requirements of the SEBI Listing Regulations, the Company has held familiarization programme for the Independent
Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model, corporate policies, etc. The details of familiarization programme have been disclosed on the website of the Company and is available at the link http://www.hubtown.co.in/investors/codesandpolicies.
17. P AYMENT OF REMUNERATION/COMMISSION TO EXECUTIVE DIRECTORS FROM SUBSIDIARY COMPANIES :
D uring 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.
18. DECL ARATION BY INDEPENDENT DIRECTORS :
P ursuant to the provisions of Section 149 (7) of the Companies Act, 2013, the Company has received individual declarations from all the
Independent Directors con_rming that they meet the criteria of independence under Section 149 (6) of the said Act and Regulation 16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and that there has been no change in the circumstances which may affect their status as Independent Directors during the year.
19. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS :
T he Board of Directors met 11 times during the financial year ended March 31, 2018 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, 2018, the Independent Directors held a separate meeting in compliance with the requirements of Schedule VI to the Companies Act, 2013 and Regulation 25 (3) of the SEBI Listing Regulations. For details, kindly refer to the section on Corporate Governance forming part of this Annual Report.
20. C OMMITTEES OF THE BOARD :
T here are currently six Committees of the Board, as under :
A udit and Compliance Committee
Nomination and Remuneration Committee
C orporate Social Responsibility Committee
S takeholders Relationship Committee
R isk Management Committee
C ommittee of Directors
D uring the year under review, the Board of Directors has reconstituted the Audit and Compliance Committee, Nomination and Remuneration
Committee, Stakeholders Relationship Committee and the Risk Management 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, which forms part of this Annual Report.
21. A UDIT AND COMPLIANCE COMMITTEE :
T he Audit and Compliance Committee comprises of Mr. Abhijit Datta, Mr. Shailesh Hingarh, Mr. Sunil Shah and Mr. Vyomesh M. Shah.
The Committee comprises of majority of Independent Directors with Mr. Datta being the Chairman. Kindly refer to the section on Corporate Governance under the heading Audit and Compliance Committee for details relating to terms of reference, meetings and functions of the said Committee.
22. A UDIT AND COMPLIANCE COMMITTEE RECOMMENDATIONS :
D uring 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.
23. ANNUAL EVALUATION OF PERFORMANCE :
T he Board of Directors has carried out an annual evaluation of its own performance, its Committees and individual Directors pursuant to the requirements of the Companies Act, 2013 and the corporate governance requirements as prescribed by the SEBI Listing Regulations.
The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the board composition, information and functioning, etc. as provided in the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.
T he Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as qualification, attendance at Board/Committee meetings, preparedness on the issues to be discussed, etc. Further, the Independent Directors at their separate meeting held during the year, reviewed the performance of the Board as a whole, its Chairman and Non-Executive Director and other items as stipulated under the SEBI Listing Regulations. Performance of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.
24. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION :
T he Nomination and Remuneration Policy of the Company on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178 (3) of the Companies Act, 2013 and Regulation 19 (4) (Part D of Schedule II) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is appended as Annexure A to this Report.
25. DIRECTORS RESPONSIBILITY STATEMENT :
P ursuant 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, 2018, 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 con_rm that : (i) in the preparation of the Annual Accounts for the year ended March 31, 2018, the applicable accounting standards read with the requirements under Schedule III to the said Act have been followed alongwith proper explanation relating to material departures, if any; (ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of a_airs of the Company at the end of the financial year on 31st March, 2018, and of the Profit of the Company for the year ended on that date; (iii) they have taken proper and su_cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) the annual accounts have been prepared on a going concern basis; (v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and (vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.
26. C ONSOLIDATED FINANCIAL STATEMENTS
I n accordance with the provisions of the Companies Act, 2013 and Ind AS-110 Consolidated Financial Statement read with Ind AS 28 -
Investments in Associates and Ind AS 31 Interests in Joint Ventures, the audited consolidated financial statements are annexed to this Report.
27. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES :
A s on March 31, 2018, the Company had 20 subsidiaries, 4 associates and 8 joint venture companies. The Company did not have any material subsidiary company as on March 31, 2018. There has been no change in the nature of business of any of the said subsidiaries, associates and joint venture companies. D uring the year under review, Girafie Developers Private Limited again became an associate due to cancellation of the transaction for sale of the shares on account of non-fulfillment of the conditions of sale.
T he Policy for determining material subsidiary under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as approved is posted on the Companys website at the link: http://hubtown.co.in/investors/codeandpolicies.
I n accordance with 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/ codeandpolicies. Further, as per fourth proviso of the said Section, the audited annual accounts of subsidiaries have also been placed on the website of the Company at the link: http://hubtown.co.in/investors/codeandpolicies.
T he 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 at the Registered Office of the Company between 11.00 a.m. and 1.00 p.m. on all working days. The Consolidated Financial Statements of the Company forming part of this Annual Report, include the financial statements of its subsidiaries.
D uring the financial year ended March 31, 2018, the Company was not required to appoint an Independent Director of the Company on the Board of any of its non-listed Indian subsidiaries under Regulation 24 (1) of the SEBI Listing Regulations.
A dditional 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 ___ to the consolidated financial statements.
28. REPORT ON THE PERFORMANCE AND THE FINANCIAL POSITION OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES :
T he 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, 2018 in the prescribed Form AOC 1 is appended to the consolidated financial statements as Schedule - I.
29. A UDITORS :
ST ATUTORY AUDITORS :
M essrs M. H. Dalal & Associates, Chartered Accountants (Firm Registration No. 112449W) were appointed as Statutory Auditors of the Company for a term of 5 (_ve) consecutive years, at the 29th Annual General Meeting held on October 30, 2017. Messrs M. H. Dalal & Associates, Chartered Accountants have con_rmed that they are not disquali_ed from continuing as Auditor of the Company, They have also con_rmed that they meet the criteria for independence, eligibility and quali_cation 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.
I n accordance with the Companies Amendment Act, 2017 notified on May 7, 2018 by the Ministry of Corporate Affairs, the appointment of
Statutory Auditors is not required to be ratified at every Annual General Meeting.
F urther, the Directors of your Company confirm that 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. AUDITORS REPORT AND AUDIT OBSERVATIONS :
T he Managements reply to the qualified opinion of the Statutory Auditors appearing in their Reports on the Standalone Financial Statements and the Consolidated Financial Statements for the year ended March 31, 2018 is as hereunder : T he Statutory Auditors have made observations under the headings Emphasis of matter and Other Matters respectively in their Reports on the
Standalone and Consolidated Financial Statements for the year ended March 31, 2018 which together with the relavant Notes are self explanatory and do not call for further information/clarification.
QU ALIFICATION BY AUDITORS
T he Notes to the Financial Statements forming part of the Balance Sheet as at March 31, 2018 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.
C OST AUDITORS :
Based on the recommendation of the Audit and Compliance Committee, the Board has appointed Messrs D. C. Dave & Co., Cost Accountants (Firm Registration No. : 000611) as Cost Auditors to conduct audit of the cost records of the Company for the year ending March 31, 2019, subject to ratification of the remuneration payable to them 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 the remuneration payable to the Cost Auditor forms part of the Notice of the ensuing AGM.
C OST AUDIT REPORT :
T he Cost Audit Report for the Financial Year 2017-2018 pursuant to the Companies (Cost Accounting Records) Rules, 2011 will be _led within the period stipulated under the Companies Act, 2013.
SECRETARIAL AUDITOR :
P ursuant to the provisions of Section 204 (3) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Board of Directors has appointed M/s. Ashish Bhatt & Associates, Practicing Company Secretary, to conduct the Secretarial Audit of the Company.
SECRETARIAL AUDIT REPORT :
T he report on Secretarial Audit is appended as Annexure B to this Report. There are no quali_cations, observations or adverse remarks in the
Secretarial Audit Report.
Y our Company is in compliance with the Secretarial Standards speci_ed by the Institute of Company Secretaries of India.
30. EX TRACT OF ANNUAL RETURN :
P ursuant to the provisions of Section 134 (3) (a) of the Companies Act, 2013, the extract of the Annual Return for the Financial Year ended March 31, 2017 made under the provisions of Section 92 (3) of the said Act in Form No. MGT 9 is appended as Annexure C to this Report.
31. M ATERIAL CHANGES AND COMMITMENTS :
T here 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.
32. DEPOSITS :
D uring the year under review, the Company neither accepted any public deposits nor there were any amounts outstanding at the beginning of the year which were classi_ed as Deposits in terms of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and hence, the requirement for furnishing of details of deposits which are not in compliance with Chapter V of the said Act is not applicable.
33. VIGIL MECHANISM :
P ursuant 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 established a Whistle Blower Policy as the vigil mechanism for Directors and employees of the Company to report their genuine concerns, details of which have been given in the Corporate Governance Report appended to this Annual Report. 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.
T he Whistle Blower Policy has been uploaded on the Company website at the link: http://hubtown.co.in/investors/codeandpolicies.
34. RISK MANAGEMENT :
P resently, the provisions of Regulation 21 of the SEBI Listing Regulations relating to the Risk Management Committee are not applicable to your
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 identi_ed 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 forming part of this Annual Report.
35. P ARTICULARS OF LOANS, INVESTMENTS OR GUARANTEES UNDER SECTION 186 OF THE COMPANIES ACT, 2013 :
A s the Company is engaged in the business of real estate development included in the term Infrastructure Facilities as de_ned 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. However, the details of the same are provided in the notes to the financial statements. Particulars of investments made under Section 186 of the said Act are provided in the standalone financial statements at Note 6.
36. C ONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES :
A ll contracts / arrangements / transactions with related parties that were entered by the Company during the year under review were in the ordinary course of business and on an arms length basis. All related party transactions are placed before the Audit and Compliance Committee and the Board on a quarterly basis for approval. Also, the Company has obtained prior omnibus approval for related party transactions which are of repetitive nature and/or entered into in the ordinary course of business at arms length.
T here were no materially significant related party transactions with the Companys Promoters, Directors, Key Managerial Personnel or their relatives which could have had a potential con_ict with the interest of the Company at large..
A ttention of the members is drawn to Note 33 to the standalone financial statements and Note 35 to the consolidated financial statements which sets out related party disclosures pursuant to Ind AS - 24.
T he particulars of contracts/arrangements/transactions entered into by the Company during the year under review with its related parties which could be considered material under Section 188 of the Companies Act, 2013 and the Rules made thereunder are furnished in Form AOC 2, which is appended as Annexure D to this Report..
T he Policy for determining the materiality of related party transactions and dealing with related party transactions as approved by the Board is uploaded on the Companys website at the link: http://hubtown.co.in/investors/codeandpolicies.
37. C ODE OF CONDUCT:
T he Board of Directors has laid down a Code of Conduct for Board Members and Senior Management Personnel. The said Code has been posted on the Companys website : www.hubtown.co.in. As prescribed under Part D of Schedule V read with Regulation 17 (5) of the SEBI Listing Regulations, a declaration signed by the Managing Director a_rming compliance with the Code of Conduct by the Directors and Senior Management Personnel of the Company for the Financial Year 2017-2018 is appended to and forms part of the Corporate Governance Report.
38. DISCLOSURE OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL :
D uring the year under review, there were no significant or material orders passed by any regulatory / statutory authorities or courts / tribunals against the Company impacting its going concern status and the Companys operations in future.
39. C ORPORATE SOCIAL RESPONSIBILITY (CSR) :
T he Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR) indicating the activities to be undertaken by the Company, which has been approved and adopted by the Board.
T he annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in
Annexure E appended to this Report. Further, the CSR Policy has been uploaded on the Company website at the link : http://hubtown.co.in/investors/codeandpolicies.
40. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 :
T he Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at Work Place
(Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. The Company a_rms that during the year under review, no complaints were received by the Committee for redressal.
41. C ORPORATE GOVERNANCE :
T he Report on Corporate Governance as stipulated under the SEBI Listing Regulations forms an integral part of this Annual Report. The requisite certi_cate from a practising company secretary confirming compliance with the conditions of Corporate Governance as stipulated under Schedule V to the aforementioned Listing Regulations is appended to and forms part of the report on Corporate Governance.
42. C ONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO ;
T he 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 _ 81.46 lakh in foreign exchange.
43. INSURANCE :
A ll the insurable interests of your Company including inventories, buildings and other assets are adequately insured.
44. P ARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES :
T he 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 F to this Report.
T he 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 in respect of the employees of the Company are available at the Registered Office of the Company 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. 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, employed throughout the financial year or part thereof, was in receipt of remuneration during the year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the Managing Director and holds by himself / herself or along with his/her spouse and dependent children more than two percent of the equity shares of the Company.
45. C ORPORATE POLICIES :
I n compliance with the provisions of the Companies Act, 2013 and the Rules made thereunder and the SEBI Listing Regulations, the Board of
Directors of the Company have framed the following policies which are available on the website of the Company at the link http://hubtown.co.in/ investors/codeandpolicies :
C ode of Conduct and Ethics for Directors and Senior Management
C ode of Conduct for Regulating, Monitoring and Reporting of Trading by Insiders in terms of SEBI (Prohibition of Insider Trading) Regulations, 2015
C ode of Practices and Procedures for fair disclosure of Unpublished Price Sensitive Information
P olicy on Related Party Transactions
F amiliarization program for Independent Directors
P olicy for determining Material Subsidiaries
P olicy on Prevention of Sexual Harassment at Workplace
V igil Mechanism / Whistle Blower Policy
C orporate Social Responsibility Policy
R isk Management Policy
P olicy on Board Diversity
Nomination and Remuneration Policy
P olicy on determining materiality of Events and Information
P olicy on preservation of Documents
P olicy on archival of Events and Information
46. CEO AND CFO CERTIFICATION :
A c erti_cate from the Managing Director and the Chief Financial Officer, pursuant to Regulation 17 (8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the year under review was placed before the Board of Directors of the Company at its meeting held on May 29, 2018 which is appended to and forms part of the Corporate Governance Report.
47. APPRECIATION AND ACKNOWLEDGEMENTS :
Y our 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.
Y our Directors would also like to thank the members for reposing their confidence and faith in the Company and its management.
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|
|DIN : 00009659|
|Date: May 29, 2018|