Nirlon Ltd Directors Report.

Your Directors present their 62nd Annual Report along with the Audited Financial Accounts for the Financial Year ("F.Y.") ended March 31, 2021.

1. *Financial Performance

The Companys Financial Performance for the F.Y. ended March 31,2021 is summarized below:

(Rs in Crore)

Particulars 2020-2021 2019-2020
Gross Income from Operations 319.37 310.99
Gross Profit 239.64 231.86
Interest Paid 14.03 32.12
Cash Profit 225.61 199.74
Depreciation 48.70 53.25
Net Profit for the Year before Tax: 176.91 146.49
Current tax 33.04 27.73
Deferred tax 16.47 6.29
Income tax adjustments for the earlier years - 2.99
Net Profit for the Year after tax 127.40 109.48
Proposed dividend on Equity shares 72.09 6.76
Tax on Dividend - -

*The Statement of Standalone Financial Results has been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) prescribed under Section 133 of the Companies Act, 2013 and other recognised accounting practices and policies to the extent applicable.

Your Company has been ranked by the BSE Limited at Sr. No. 534 (previous year F.Y 2019-20 at sr. no. 398) out of the top 1,000 listed companies based on Market Capitalization as on March 31,2021.

2. Financial Operations (Summary)

i. Gross Income from Operations for the F.Y 20202021 was Rs 319.37 Crore as against Rs 310.99 Crore for the F.Y. 2019-20.

ii. Gross Profit for the F.Y 2020-2021 was Rs 239.64 Crore as against Rs 231.86 Crore for the F.Y 2019- 20.

iii. Cash Profit for the F.Y. 2020-2021 was Rs 225.61 Crore as against Rs 199.74 Crore for the F.Y 2019- 20.

iv. Net Profit for the F.Y. 2020-2021 (after taxes) was Rs 127.40 Crore as against a profit of Rs 109.48 Crore for the F.Y. 2019-20.

Please Note:

During the F.Y. ended March 31, 2021, pursuant to the amendment in Ind AS-23 "Borrowing Cost", the Company has considered the specific borrowings obtained for completed phases as a part of general borrowings. Accordingly, the finance cost amounting to Rs 49.45 Crore for the F.Y 2020-21 related to such borrowings has been capitalized as a part of Capital Work In Progress. This has resulted in an increase in profit.

3. The Companys Business Activity

The Company is in the business of development and managing an Industrial Park, and during the Year under review, there is no change in the business activity of the Company.

4. Material Changes affecting the Financial position of the Company

There is no material change and commitment affecting the financial position of the Company which has occurred during the F.Y. 2020-21, or from then on till the date of this Report.

5. Reserves

The Board of Directors do not propose to transfer any amount to the General Reserve account in the Balance Sheet for the F.Y. 2020-2021.

6. Dividend

For the Year under review, the Board of Directors recommend a dividend of Rs 8.00 per equity share of Rs 10/- each (@ 80%) amounting to Rs 72.09 Crore, subject to the approval of Members of the Company at their 62nd AGM.

Dividend will be paid to Members whose names appear in the Register of Members as on Thursday, September 16, 2021 (the Record Date).

In respect of shares held in Dematerialized Form, dividend will be paid to Members whose names are furnished by the National Securities Depository Limited ("NSDL") and the Central Depository Services (India) Limited ("CDSL"), as Beneficial Owners as on the Record Date.

7. Covid 19 Impact, Industrial Park Operations at Goregaon (East), Mumbai, India & Future Outlook

The prolonged Covid 19 Pandemic has resulted in continued uncertainty for the global economy during the F.Y. 2020-21. The Company continues to make every effort to anticipate and mitigate the potential impacts to its business from the pandemic based on available data. However, the final impact cannot be ascertained or quantified at the present time.

The Company will continue to update developments quarterly, through its Financial Statements, Investor and Earnings Presentations and other filings with the BSE Ltd. and on its website, as well as through its quarterly earnings calls.

Development and Management of the Industrial Park / Information Technology (IT) Park, i.e. Nirlon Knowledge Park ("NKP") - Goregaon (East), Mumbai

Nirlon Ltd. is the owner of NKP, an approx. 23 acre campus in Goregaon (East), Mumbai. NKP is an Industrial Park as per the Consolidated Foreign Direct Investment ("FDI") Policy of the Government of India ("GOI"), and is an IT Park under the Government of Maharashtras ("GOM") Policy. The current FDI Policy of the GOI permits 100% FDI in Industrial Parks.

i. Construction, Delivery of Licensed Premises, and License Fee Commencement

The planning for the development of NKP in phases began in 2006 and construction in April / May 2007. Currently, four (4) phases of development have been completed, with the Phase 5 development (redevelopment of Phase 0) also receiving its Occupation Certificate (OC) th final handover work currently in progress.

Phases 1, 2, 3 and 4

A total of approx. 29.90 lakh sq. ft. area has been constructed in Phases 1, 2, 3 and 4 corresponding to approx. 18.78 lakh sq. ft. of licensable area. License fees for Phases 1, 2, 3 and 4 continue to be received by the Company as contracted.

Please Note: The total constructed area of approx. 29.90 lakh sq.ft. for Phases 1, 2, 3 and 4 includes two (2) levels of basements in Phases 1, 2 and 3 and one (1) level of basement, the ground floor (part), mezzanine and four upper levels of parking in Phase 4, as well as a ten (10) floor (G+9) multi level car parking ("MLCP") (which also has two (2) basements) housing utilities, i.e. generators, chillers, water tanks, electrical infrastructure etc. for Phases 1 and 2, in addition to visitor and occupant parking.

Phase 5 (re-development of Phase 0):

The Phase 5 development continued to progress satisfactorily during the F.Y. 2002-21 despite the great difficulties posed by the pandemic. The OC for Phase 5 was received on June 18 2021, a significant milestone for the Company. As on date, the Company is working with its prospective Licensee, J.P Morgan Services India Pvt. Ltd. ("JPM"), so that JPM can take Handover of the same. Subject to Covid 19 and / or monsoon related delays, Handover is estimated in the October-December 2021 quarter.

Phase 5 is also expected to be completed within budget (approx.).

Further particulars are provided in Annexure 7 to this Report, i.e. Management Discussion Analysis.

ii. License Fees

During the Year under review, gross license fees aggregated approx. Rs 275.25 Crore (as per Ind AS).

iii. Marketing

Phases 1,2, 3 and 4 of NKP continue to be approx. 92 % licensed (as on June 30, 2021) to reputed international and Indian corporate.

The Company has always made a specific effort to license its development to well regarded Corporate, and the campus remains operational and functional in all respects.

The Company has signed an Agreement to License ("ATL") with JPM for 11,59,442.99 sq.ft. of licensed area in the ongoing Phase 5 (re-development of Phase 0) development. Licensee Fees from Phase 5 are contracted to begin 5 months from Handover of the premises to JPM. As mentioned earlier in this Report, Handover is estimated to take place in the October- December 2021 quarter, subject to Covid 19 and / or monsoon related delays.

iv. Financing

The Companys debt funding to date continues to be provided by HDFC Limited.

At the request of the Company, HDFC Limited has granted a moratorium on payment of their principal securitized loan amounts effective from May 15, 2017, whereby the Company is required to repay only the interest amount on these outstanding securitized loans till June 2022. This principal moratorium has resulted in incremental cash flows being available to the Company to finance a large part of the Phase 5 (re-development of Phase 0) construction from its internal accruals.

The outstanding loan amounts as on March 31, 2021 aggregate Rs 979.86 Crore (as per IGAAP). The Company is presently paying a rate of interest @ 8.00 % p.a. to HDFC Limited (a reduction of 1.35 % p.a. as compared to rate of interest as on March 31, 2020).

The Companys business plan continues to be to retain ownership of the NKP development, and offer office space on a leave and license basis only.

8. Nirlon House

The Company continues to co-own 75% undivided interest in approx. 45,475 sq.ft. of area in the Nirlon House building in a prime location on Dr. A. B. Road, Worli in Central Mumbai.

9. A. Execution of New Management Services Agreement with Nirlon Management Services Pvt. Ltd. w.e.f. October 1, 2020 to March 31, 2024

i. Reco Berry Private Limited ("Reco") of Singapore, an affiliate of GIC, the Sovereign Wealth Fund of Singapore and Mr. Kunal V. Sagar, Mr. Rahul V. Sagar, Alfano Pte Limited and Deltron Pte Limited ("Promoters") had entered into Share Purchase and Shareholders Agreements dated December 23, 2014, pursuant to which Nirlon Management Services Pvt. Ltd. ("NMSPL") was incorporated under the provisions of the Companies Act, 2013 effective from October 7, 2015;

ii. The Members of the Company by way of an Ordinary Resolution passed at their 57th AGM held on September 20, 2016 approved interalia execution of Management Services Agreement ("MSA") with NMPSL w.e.f. October 1, 2016 to September 30, 2020.

iii. Thereafter, the Members of the Company by way of an Ordinary Resolution passed at their 61st AGM held on September 29, 2020 approved interalia execution of a New Management Services Agreement with NMPSL w.e.f. October 1, 2020 to March 31, 2024.

Please Note: All interested parties abstained from the voting on the above ordinary resolutions

B. Implementation / Commencement of Operations under the New Management Services Agreement

Effective from October 1, 2020, the Company has been receiving various management services from NMSPL under the New Management Services Agreement as contracted.

The shareholding pattern of NMSPL is given below:

Class A Shares

Sr. Name of the no. Shareholder No. of Shares held % of Share Holding
1. Mr. Kunal V. Sagar 5,000 33.335%
2. Mr. Rahul V. Sagar 5,000 33.335%
3. Reco Fortius Pte Limited 5,000 33.33%
Total 15,000 100%

Class B Shares

Sr. Name of the no. Shareholder No. of Shares held % of Share Holding
1. Mr. Kunal V. Sagar 89,100 50%
2. Mr. Rahul V.Sagar 89,100 50%
Total 1,78,200 100%

Class C Shares

Sr. Name of the no. Shareholder No. of Shares held % of Share Holding
1. Reco Fortius Pte Limited 3,16,800 100%
Total 3,16,800 100%

10. The Board & its Committees

i. Board of Directors:

As on date, the total strength of the Board of Directors of the Company consists of 6 (six) Directors including 1 (one) Independent woman Director. Of this number, 3 (three) Independent Non-Executive Directors, including 1(one) woman Director, constitute 50% of the total strength of the Board of Directors of the Company.

For more detail, please refer to the link: httDs://www.nirlonltd.com/board-committees.html

a. Re-appointment and Appointment of Directors at the 62nd AGM

A brief resume of the Directors seeking re-appointment and appointment at the 62nd AGM respectively are as per the details given below:

• Re-appointment of Mr. Kunal V. Sagar (DIN 00388877), aged 53 years, as a Director who retires by rotation; and

• Appointment of Mr. Sridhar Srinivasan (07240718), aged 61 years, as a Non-Executive Independent Director for a term of five (5) years with effect from September 29, 2020.

The Board recommends:

• Re-appointment of Mr. Kunal V. Sagar as a Director to retire by rotation; and

• Appointment of Mr. Sridhar Srinivasan as a Non - Executive Independent Director for a term of five (5) years with effect from September 29, 2020.

For more details, please refer to Note no. 22 of the 62nd AGM Notice

b. Changes in the Board during the F.Y. 2020-21

• The final terms of Mr. Moosa Raza (DIN 00145345) and Mr. Arjan Gurbuxani (DIN 00425885), as NonExecutive Independent Directors had expired on September 30, 2020, on completion of their terms of 18 months.

• Mr. Sridhar Srinivasan (DIN 07240718) was appointed as additional Non-Executive Independent Director w.e.f September 29, 2020 for a period of five (5) years.

c. The nature of each Directors expertise, and the name of company / ies where they hold Chairmanships, Directorships and Memberships of Board / Committees and shareholding, if any, as stipulated under the required Regulation of the Listing Obligations & Disclosure Requirements Regulations, as well as the justification for re-appointment of Mr. Kunal V. Sagar, Director, who retires by rotation at the ensuing AGM, and appointment of Mr. Sridhar Srinivasan, as Non-Executive Independent Director who was appointed by the Board of Directors at their meeting held on September 29, 2020, is provided in this Report, and forms part of the Notice calling the 62nd AGM.

ii. Re-constitution of Various Committees of the Board of Directors

The Board of Directors at their meetings held on September 29, 2020 have appointed Mr. Rajinder Pal Singh, Non-Executive Independent Director, as the new Chairman of the Board effective from October 1, 2020, and have also re-constituted various Committees effective from October 1, 2020.

Details of the same are given below:

a. Audit Committee

i. Mr. Rajinder Pal Singh, Chairman & NE & ID;

ii. Ms. Anjali Seth, NE& ID; and

iii. Mr. Sridhar Srinivasan, NE& ID.

b. Stakeholders Relationship Committee

i. Ms. Anjali Seth, Chairperson & NE& ID;

ii. Mr. Rajinder Pal Singh, NE & ID; and

iii. Mr. Sridhar Srinivasan, NE& ID.

c. Nomination & Remuneration Committee

i. Ms. Anjali Seth, Chairperson & NE& ID;

ii. Mr. Rajinder Pal Singh, NE & ID; and

iii. Mr. Sridhar Srinivasan, NE& ID.

d. Corporate Social Responsibility Committee

i. Mr. Sridhar Srinivasan , Chairman & NE & ID;

ii. Mr. Kunal V. Sagar, Promoter Director; and

iii. Mr. Rahul V. Sagar, Executive Director & C.E.O.

e. Risk Management Committee

i. Mr. Rajinder Pal Singh, Chairman & NE & ID;

ii. Ms. Anjali Seth, NE& ID;

iii. Mr. Kunal V. Sagar, Promoter Director; and

iv. Mr. Rahul V. Sagar, Executive Director & C.E.O.

f. Independent Directors Committee

i. Mr. Rajinder Pal Singh, Chairman & NE & ID;

ii. Ms. Anjali Seth, NE& ID; and

iii. Mr. Sridhar Srinivasan, NE& ID.

*NE & ID means Non-Executive Independent Director ** C.E.O. means Chief Executive Officer

iii. Committees of the Board of Directors and their Roles and Responsibilities

a. Audit Committee (AC)

The AC of the Board played an important role during the Year under review, including recommending the appointment /re-appointment of, and co-ordinating with the Statutory Auditors, Internal Auditors, Cost Auditors and other Key Managerial Personnel of the Company. The AC has also rendered guidance, inter alia, in the areas of corporate governance, internal audit, finance, taxation, accounts etc.

b. Stakeholders Relationship Committee (SRC)

The SRC met regularly over the course of the Year to attend various aspects in the interest of Members. With the compulsory dematerialization of the Companys shares and electronic mode of transfers, postal dispatches / e-mail correspondence which led to frequent complaints have been minimized.

As on March 31, 2021, approx. 95.89% of the Companys total paid up equity share capital was held

in Dematerialized Form, and there were no investor grievances / complaints pending.

c. Corporate Social Responsibility Committee (CSRC)

The Board formed a Corporate Social Responsibility Committee on September 23, 2014 and based on its recommendations the Company implemented activities under its CSR policy during the Year under review as per the Act.

d. Nomination & Remuneration Committee (NRC)

The NRC recommends to the Board the remuneration / compensation packages of the Executive Director and Key Managerial Personnel.

e. Risk Management Committee (RMC)

The Board formed a Risk Management Committee on September 23, 2014. During the Year under review, this Committee has continued to fulfill its role in, inter alia, identifying, evaluating and mitigating potential risks to the Company.

The Risk Management Committee met once on February 10, 2021.

For more detail on various Committees, please refer to the links:

i. https://www.nirlonltd.com/pdf/audit.pdf

ii. https://www.nirlonltd.com/pdf/stackholders relationship.pdf

iii. https://www.nirlonltd.com/pdf/csr.pdf

iv. https://www.nirlonltd.com/pdf/nomination remuneration.pdf

v. https://www.nirlonltd.com/pdf/risk management.pdf

vi. https://www.nirlonltd.com/pdf/ind directors.pdf

f. Prevention of Sexual Harassment (POSH) Committee

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 read with rules made thereunder, your Company has constituted a Committee which is responsible for redressal of complaints related to sexual harassment.

During the Year under review, there was no complaint pertaining to sexual harassment received. For more detail, please refer to the link: https://www.nirlonltd.com/pdf/posh.pdf 11. Policies & Codes

SEBI introduced the SEBI LODR effective from December 1, 2015. The SEBI LODR provides, inter alia, for various regulations, annexures and schedules, and hence all prescribed companies were required to comply with the SEBI LODR latest by March 31, 2016.

In view of the above, the Company made suitable modifications to its existing Polices, and also reviewed the same from time to time. Your Company is compliant with the SEBI LODR.

I. Policies

i. Determination of Materiality of Events / Information (DMEI) Policy Aims of the DMEI Policy

The DMEI Policy for determination of materiality of events / information inter alia, aims to:

a. Ensure that all investors have equal access to important information that may affect their investment decisions;

b. Ensure that adequate and timely information is provided to investors;

c. Avoid establishment of a false market in the securities of the Company; and

d. Communicate the principles of materiality based on which the Company shall make disclosures of events or information.

For more detail, kindly refer to the link: https://www.nirlonltd.com/pdf/dmei policy mar 16.pdf

ii. Related Party Transaction (RPT) Policy

The RPT Policy is in accordance with the requirement of Regulation 23 of the SEBI LODR and Section 188 of the Companies Act, 2013, and is intended to ensure the proper approval and reporting of transaction / s between the Company and its Related Parties.

Aims of the RPT Policy

Inter alia, to disclose in the Financial Statements of the Company applicable transaction/s between the Company and Related Parties, as well as policies concerning transaction / s with Related Parties. Such transactions are appropriate only if they are in the best interest of the Company and its shareholders.

For more detail, kindly refer to the link: https://www. nirlonltd.com/pdf/related party transaction policy mar 16.pdf

iii. Whistle Blower (WB) Policy

The Company has a vigil mechanism system called the Whistle Blower Policy to deal with instances of fraud and mis-management, if any.

Aims of the WB Policy

The WB Policy meets with the requirement of Regulation 22 of the SEBI LODR and Section 177 of the Act, and is intended to ensure that the Directors and Employees or any other person report their genuine concerns. During the Year under review, there was no case of whistle blowing reported.

For more detail, kindly refer to the link: https://www.nirlonltd.com/Ddf/whistle blower policy feb 21v3.pdf_iv.

Corporate Social Responsibility (CSR) Policy

The CSR Policy is in compliance, and in agreement with Section 135 of the Act.

Aims of the CSR Policy:

a. To formulate and recommend to the Board, a Corporate Social Responsibility Plan which shall indicate the activities to be undertaken by the Company as specified in Schedule VII to the Act;

b. To recommend the amount of expenditure to be incurred on CSR activities;

c. To monitor CSR activities;

d. To ensure that the Company spends in every financial year, at least two (2) % of the average net profits of the Company made during the three (3) preceding financial years.