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IITL Projects Ltd.

BSE: 531968 Sector: Infrastructure
NSE: N.A. ISIN Code: INE786E01018
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VOLUME 20
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52-Week low 19.00
P/E
Mkt Cap.(Rs cr) 11
Buy Price 0.00
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Sell Price 22.00
Sell Qty 30.00
OPEN 22.00
CLOSE 22.95
VOLUME 20
52-Week high 34.75
52-Week low 19.00
P/E
Mkt Cap.(Rs cr) 11
Buy Price 0.00
Buy Qty 0.00
Sell Price 22.00
Sell Qty 30.00

IITL Projects Ltd. (IITLPROJ) - Director Report

Company director report

Dear Shareholders

Your Directors are pleased to present the 23rd Annual Report on the business andoperations of the Company together with Audited Financial Statements for the year endedMarch 31 2017.

Financial Performance

The summarized standalone and consolidated financial results of your Company and itsassociates/joint ventures are given in the table below.

(' In lacs)

Particulars

Standalone

Consolidated

For the year ended March 31 2017 *For the year ended March 31 2016 For the year ended March 31 2017 *For the year ended March 31 2016
Total Income 171.61 293.07 9994.42 13293.62
Profit/(loss) before Interest Depreciation & Tax (EBITDA) (274.47) (404.53) 288.63 (169.86)
Finance Charges 0.06 461.35 682.97 662.03
Depreciation 0.76 1.72 7.23 7.58
Net Profit/(Loss) Before Tax (275.29) (867.60) (401.57) (839.47)
Provision for Income Tax (including for earlier years) 1.55 (1.39) 42.37 18.38
Net Profit/(Loss) After Tax (276.84) (866.21) (443.94) (857.85)
Profit/(Loss) brought forward from previous year (969.57) (103.36) (828.01) (70.09)
Consolidation adjustment - - - 98.42
Reversal of proposed dividend and tax thereon - - 31.70 -
Profit for associate for the year - - 1.53 1.51
Profit/(Loss) carried to Balance Sheet (1246.41) (969.57) (1238.72) (828.01)
From this the Directors have transferred to: - - -
Special Reserve - - - -
General Reserve - - - -
Capital Redemption Reserve - - - -
Tax on proposed Dividend - - - -
Leaving a balance to be carried forward (1246.41) (969.57) (1238.72) (828.01)

* Previous year figures have been regrouped/rearranged wherever necessary.

Results of operations and State of Company's affairs

The total Income of the Company for the year under review is ' 171.61 Lacs ascompared to ' 293.07 Lacs in the previous year. During the period under review theCompany entered into One Time Settlement ("OTS") with Industrial InvestmentTrust Limited ("IITL") of outstanding loan of ' 3648 Lacs granted to theCompany alongwith outstanding interest amount of ' 361.06 Lacs. Further theinterest of ' 547.20 Lacs has been waived subject to recompensing the holdingcompany in case the Company turns profitable in future and has surplus cash flows. Onaccount of the interest of ' 547.20 Lacs being waived the loss before tax stood

at ' 275.29 Lacs for the year ended March 312017 as compared to ' 867.60Lacs in the previous year. On consolidation the loss attributable to shareholders of theCompany stood at ' 442.41 Lacs for the year ended March 312017 as compared to '856.34 Lacs in the previous year.

Material changes and commitments that have occurred after the close of the financialyear till date of this report which affects the financial position of the Company.Pursuant to Section 134(3)(I) of the Companies Act 2013.

The Company had availed unsecured loan amounting to ' 3648.00 Lacs from itsHolding Company Industrial Investment Trust Limited

("MTU') for its business purpose in various tranches over a period of time. TheCompany was regular in servicing its interest obligation upto 30th June 2015. However from1st July 2015 it has defaulted in its obligation to service interest.

Due to crisis in real estate industry the Company and its Joint Ventures which arealso into the business of Real Estate could not achieve the expected sales volume and werenot able to generate sufficient cash flows for servicing its interest obligations and tofurther repay the loan. This affected the profitability as well the debt repaymentcapacity of the Company and its Joint-Ventures.

In view of the above said circumstances the Company approached IITL with a request forOne Time Settlement ("OTS") of its outstanding loan and interest amount.

In view of the above the Board of Directors of our Company in their Meeting held on8th March 2017 have consented for OTS and subsequent to the approval received from theshareholders of the Company and that of IITL the Company has entered into a One TimeSettlement (OTS) Agreement on 18th May 2017 with IITL for the settlement of outstandingunsecured loan alongwith the outstanding interest thereon.

As per the terms of the OTS Agreement the Company has transferred its investment inWorld Resorts Limited totaling to 5000000 Zero % Non-Convertible Redeemable PreferenceShares amounting to ' 2833.14 Lacs and its investment in Capital InfraprojectsPrivate Limited totaling to 10849120 Zero % Non-Convertible Redeemable PreferenceShares amounting to ' 1175.92 Lacs in favour of IITL.

As per the terms of the OTS Agreement IITL has also consented to waive off theoutstanding Interest for the period April 2016 to March 2017 amounting to ' 547.20Lacs subject to recompensing IITL in case the Company turns profitable in future and hassurplus cash flows.

Extract of Annual Return

Pursuant to section 92(3) of the Companies Act 2013 ('the Act') and rule 12(1) of theCompanies (Management and Administration) Rules 2014 extract of annual return isAppended as Annexure 1 in the prescribed Form MGT-9 which forms part of thisreport.

Consolidated Accounts

The Consolidated Financial Statements of your Company for the financial year 2016-17are prepared in compliance with applicable provisions of the Companies Act 2013 read withrelevant Accounting Standards issued by the Institute of Chartered Accountants of Indiaand the Listing Regulations. The Consolidated Financial Statements have been prepared onthe basis of audited financial statements of the Company its associate and jointventures.

Business Overview

The Company is engaged in Real Estate business construction of residential complex inthe National Capital Region (NCR). It has acquired a plot of land on long term leaseunder Builders Residential Scheme (BRS) of the Greater Noida Industrial

Development Authority (GNIDA). The construction has been completed and the flats arehanded over to the purchasers.

Apart from constructing its own project the Company is also engaged in construction ofresidential flats through Special Purpose Vehicles (SPVs) and these SPVs have beenallotted plots of land on long term lease basis under Builders Residential Scheme (BRS)of the New Okhla Industrial Development Authority (NOIDA) Greater Noida IndustrialDevelopment Authority (GNIDA) and Yamuna Expressway Industrial Development Authority(YEIDA). The total lease hold area allotted to the Company alongwith SPVs is around265000 sq. meters and the projects are under various stages of construction

Project developed by the Company:-

Express Park View I (EPV): The Company's Project 'Express Park View I' has beendeveloped and completed. The Project comprises of multi-stored towers/ buildings havingresidential flats alongwith with other common services and facilities. The Project overallcomprises of 4 towers of total 334 residential flats of which 317 residential flats havebeen sold as on date and possession of 295 flats have been handed over and about 150families are already residing in the campus. A Residents Welfare Association (RWA) hasbeen formed and the complex is now completely handed over to the Residents WelfareAssociation.

Projects being developed by the Company through SPV's:

1) The Hyde Park

2) The Golden Palms

3) Express Park View-ll &

4) The Golden Palm Village

A separate note on the status of the projects developed through SPV's are highlightedin the Management Discussion Analysis (MDA) Report and forms an integral part of thisreport.

Statement containing salient features of Associate Companies/ Joint Ventures

Pursuant to sub-section 3 of Section 129 of the Companies Act 2013 read with Rule 5 ofthe Companies (Accounts) Rules 2014 a statement containing the salient features of thefinancial statements of Associate Company and Joint Ventures are given in Form AOC-1 andforms an integral part of this report as Annexure 2.

Indian Accounting Standards (IND AS)

Your Company has adopted IND AS with effect from 1st April 2017 pursuant to Ministryof Corporate Affairs notification dated 16th February 2015 notifying the (IndianAccounting Standard) Rules 2015. The IND AS is proposed to be implemented in the SPV'salso to ensure consistent standards.

Transfer to Reserves:

During the year under review there is no transfer to reserves. Dividend

In view of the losses incurred by the Company no dividend has been proposed for theyear ended March 31 2017.

Management Discussion and Analysis

The Management Discussion and Analysis Report comprising an overview of the financialresults operations/ performance and the future prospects of the Company as required underRegulation 34 of SEBI (Listing Obligations & Disclosures Requirements) Regulations.2015 is provided in a separate section and forms an integral part of this report.

Change in Capital Structure

During the year under review there was no change in the Capital Structure of theCompany.

However during the year under review the Company in its Meeting held on March 082017 has variated the existing terms of 7000000 12 % Non-Convertible CumulativeRedeemable Preference Shares of the Company allotted to its Holding Company IndustrialInvestment Trust Limited with regard to waiver of dividend reduction in coupon rate andextension of redemption period.

Internal Financial controls and their adequacy

As required by the Companies Act 2013 your Company has implemented an InternalFinancial Control (IFC) Framework. Section 134(5)(e) requires the Directors to make anassertion in the Directors Responsibility Statement that your company has laid downinternal financial controls which are in existence adequately designed and operateeffectively. Under Section 177(4) (vii) the Audit Committee evaluates the internalfinancial controls and makes a representation to the Board. The purpose of the IFC is toensure that policies and procedures adopted by your Company for ensuring the orderly andefficient conduct of its business are implemented including policies for safeguarding itsassets prevention and detection of frauds and errors accuracy and completeness ofaccounting records. The IFC framework implementation required all processes of yourCompany to be documented alongside the controls within the process. All processes weresatisfactorily tested for both design and effectiveness during the year.

M/s J.PJ Associates Chartered Accountants a consulting / audit firm were appointedfor determining the adequacy and operating effectiveness of the existing InternalFinancial Controls over Financial Reporting of the Company on behalf of the management.

The Statutory Auditors have made an observation on the Internal Financial Control andin the opinion of the Management; the Company has been scrupulously adhering to theAccounting Standard as prescribed under the law. The qualification made by the auditorrelating to material weakness in the Internal Financial Control Report is only one off theincidence and the IITL-Nimbus the Express Park View-ll (EPV II) Joint Venture of theCompany is already negotiating and discussing the restructuring package with theirpromoters and in view of the same the interest was not provided and the Company's sharehas not been considered in the financials of the Company for the year ended March 312017.

Save and except there are no other deficiency pointed out by the Auditor.

Directors and Key Managerial Personnel Retiring by Rotation

In accordance with the provision of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Mr. Bipin Agarwal retires by rotation at the ensuingAnnual General Meeting of the Company and being eligible offers himself forre-appointment.

Resignation

During the period under review Mr. R.S. Loona and Mrs. Beroz Rumie Gazdar resigned asDirectors from the Board with effect from June 21 2016 and May 04 2017 respectively. TheBoard places on record its appreciation or the valuable contributions made by them duringtheir tenure as Director of the Company

Key Managerial Personnel

Pursuant to provision of Section 203 of the Companies Act 2013 the Key ManagerialPersonnel of the Company are - Mr. D.P Goyal Managing Director Mr. Kaushik Desai ChiefFinancial Officer and Ms. Shubhangi Lohia Company Secretary & Compliance Officer ofthe Company.

The Board in its meeting held on August 08 2017 accepted the resignation of Mr.Kaushik Desai from the post of Chief Financial Officer (KMP) of the Company from the closeof the business hours on August 08 2017. However the Board will try to fill the vacancyat the earliest in order to comply with the provisions of Section 203 of the CompaniesAct 2013

Familiarization Programme for Independent Directors

The Company has formulated a Familiarization Programme for Independent Directors withan aim to familiarize the Independent Directors with the Company their roles rightsresponsibilities in the Company nature of the industry in which the Company operatesbusiness model of the Company etc. to provide them with better understanding of thebusiness and operations of the Company and so as to enable them to contributesignificantly to the Company.

The details of programme for familiarization of Independent Directors with the Companyare put up on the website of the Company under the web link http://www.iitlproiects.com/AboutUs. aspx

Evaluation of Board its Committees and Individual Directors

In compliance of Circular No. SEBl/HO/CFD/CMD/ClR/P/2017/004 dated January 05 2017titled as "Guidance Note on Board Evaluation" issued by SEBI Nomination andRemuneration Committee carried out certain revisions in the criteria and the assessmentquestionnaires designed for the performance evaluation of the Directors CommitteesChairman and the Board as a whole.

In terms of provisions of Companies Act 2013 and Schedule ll - Part D of Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 the Board carried out the annual performance evaluation of its own

including the various Committees and individual Directors with a detailed questionnairecovering various aspects of the Boards functioning like composition of Board and itsCommittees Board culture performance of specific duties and obligations.

In a separate meeting of Independent Directors performance of Non-IndependentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated. Based on the feedback received from the Independent Directors and taking intoaccount the views of Executive Directors and the Non-Executive Directors the Boardevaluated its performance on various parameters such as composition of Board and itscommittees experience and competencies performance of duties and obligationscontribution at the meetings and otherwise independent Judgment governance issueseffectiveness of flow of information.

Meeting of the Board

During the year under review six meetings of the Board of Directors were held. Forfurther details please refer Report on Corporate Governance which forms part of thisreport.

Directors' Responsibility Statement

Pursuant to Section 134(3) (c) of the Companies Act 2013 your Directors to the bestof their knowledge and belief make following statements that:

(a) In preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards read with requirements set out under Schedule Ill to theAct have been followed and there are no material departures from the same;

(b) Such accounting policies have been selected and applied them consistently and madeJudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company as at March 31 2017 and loss of the Company forthe year ended on that date;

(c) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) The annual accounts have been prepared on a going concern basis;

(e) The proper internal financial controls were in place and that such internalfinancial controls are adequate and were operating effectively;

(f) The systems to ensure compliance with the provisions of all applicable laws were inplace and that such systems were adequate and operating effectively.

Corporate Governance

Your Company has been practicing the principles of good Corporate Governance over theyears and it is a continuous and ongoing process. A detailed Report on CorporateGovernance practices followed by your Company in terms of Regulation 34(3) of SEBI

Listing Regulations 2015 together with a Certificate from the Auditors confirmingcompliance with the conditions of Corporate Governance are provided separately in thisAnnual Report.

Declaration by Independent Directors

The Company has received the necessary declarations from all the Independent Directorsof the Company in accordance with Section 149(7) of the Companies Act 2013 that he/shemeets the criteria of independence as laid out in sub-section 6 of Section 149 of theCompanies Act 2013 confirming that they meet the criteria of independence as prescribedboth under the Act and in accordance with Regulation 16(b) of SEBI (Listing Obligationsand Disclosures Requirements) Regulations 2015.

Nomination and Remuneration Policy

The Board of the Directors have framed the policy which lays down a framework inrelation to Remuneration of Directors Key Managerial Personnel and Senior Management ofthe Company. This policy also lays down criteria for selection and appointment of BoardMembers. The Nomination and Remuneration Policy as approved by the Board is uploaded onthe Company's weblink viz. http://www.iitlproJects.com/AboutUs.aspx .

Particulars of Loans given Investments made Guarantees given and Securities provided

The details of loans given investments made guarantees given and securities providedunder the provision of Section 186 of the Companies Act 2013 are given in the Notes tothe Financial Statements.

Conservation of energy technology absorption foreign exchange earnings and outgo:

The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:

(A) Conservation of energy: Not Applicable

(B) Technology absorption: Not Applicable

(C) Foreign exchange earnings and Outgo: Not Applicable Risk Management

The Company has formulated a Risk Management Policy. The Company through the Committeefor Risk Management identifies evaluates analyses and prioritizes risks in order toaddress and minimize such risks. This facilitates identifying high level risks andimplement appropriate solutions for minimizing the impact of such risks on the business ofthe Company.

Related Party Transactions

The company has laid down a Related Party Transactions Policy for purpose ofidentification and monitoring of such transactions. The policy on Related PartyTransactions as approved by the Board is uploaded on the Company's weblink viz. http://www. iitlproiects.com/AboutUs.aspx.

All Related Party Transactions are placed before the Audit Committee and also theMembers/Board for their approval wherever necessary.

All Related Party Transactions entered during the financial year by the Company are inordinary course of business and on an arms' length basis. Particulars of materialcontracts or arrangements made with related parties referred to in Section 188(1) of theCompanies Act 2013 in the prescribed Form AOC-2 is appended as Annexure 3 to theDirectors' Report.

None of the Directors has any pecuniary relationships or transactions vis-a-vis theCompany.

Corporate Social Responsibility (CSR)

The Corporate Social Responsibility Committee has formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR Policy) indicating the activities tobe undertaken by the Company which has been approved by the Board.

The CSR Policy is disclosed on the Company's website http://www.iitlproiects.com/AboutUs.aspx

The report on CSR activities is attached as Annexure 4 to this Report.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Company has appointed M/s. Chandanbala Jain & Associates PracticingCompany Secretary (CP No. 6400) to undertake the Secretarial Audit of the Company. TheSecretarial Audit Report is included as Annexure 5 and forms an integral part ofthis report. The said Report does not contain any adverse observation or qualificationrequiring explanation or comments from the Board under Section 134(3) of the CompaniesAct 2013.

Vigil Mechanism / Whistle Blower Policy

The Company has a Vigil Mechanism / Whistle Blower Policy to report to the managementinstances of unethical behavior actual or suspected fraud or violation of the company'scode of conduct. The details of the Vigil Mechanism policy have been provided in theCorporate Governance Report and also disclosed on the website of the Company viz.http://www.iitlproiects.com/AboutUs.aspx .

Auditors and Auditors Report

The members had at the 20th Annual General Meeting (AGM) held on August 30 2014approved the appointment of M/s Deloitte Haskins & Sells (ICAI Registration No.117365W) as Statutory Auditors of the Company four financial years (2014-2015 to 20172018)subject to ratification of their appointment by the Members at every Annual GeneralMeeting.

M/s. Deloitte Haskins & Sells Chartered Accountants have indicated theirunwillingness to seek ratification of their appointment as Statutory Auditors of theCompany.

The Board has recommended M/s. Maharaj N R Suresh and Co. Chartered Accountants (FirmRegistration No. 001931S) to be appointed as the Statutory Auditors of the Company. TheMembers are requested to consider their appointment as Statutory Auditors and authorizethe Board of Directors to fix their remuneration.

M/s. Maharaj N R Suresh and Co. Chartered Accountants have confirmed theireligibility under Section 141 of the Companies Act 2013 and the Rules framed thereunderto the effect that their appointment if made would be within the prescribed limits underthe Act and that they are not disqualified for appointment. As required under Regulation33(1)(d) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theAuditors have also confirmed that they hold a valid certificate issued by Peer ReviewBoard of the Institute of Chartered Accountants of India. Accordingly an OrdinaryResolution is submitted to the meeting for the consideration and approval of members.

Auditors' Report

The Auditors' in their Report to the members have given a following qualification inthe Standalone and Consolidated Financials of the Company:

Standalone Audit Report:-

As stated in Note 3.36 of the Audit Report a Jointly controlled entity namely"IITL Nimbus The Express Park View" has not provided for interest of '34798105/- for the year 2016-2017 on one of its loan accounts. As a result theCompany's share of loss from the Firm is understated by ' 8134195/- andconsequently the loss for the year is understated and consequently the shareholders' fundsas at the year end is overstated by an equivalent amount.

Consolidated Audit Report:-

As stated in Note 2.39 of the Audit Report a Jointly controlled entity namely"IITL Nimbus The Express Park View" has not provided for interest of '34798105/- for the year on one of its loan accounts. As a result Consolidated Cost ofSales and consequently the loss for the year are understated by ' 8134195/- andconsequently the Shareholders' funds as at the year end is overstated by an equivalentamount.

Management Views

IITL Nimbus The Express Park View - Jointly Controlled Entity (the Firm) has stated inits Audited Financial Statements that interest (forming part of Construction WIP) of '347.99 Lakhs for the year in case of one of the loan accounts is not provided for and thematter is in discussion with the Lender. The Auditors of the firm have drawn attention tothis matter in their report on the financial statements of the Firm as at and for the yearended 31.03.2017. The Auditors of the Company have qualified their opinion on thissubject. The Management of the Company has estimated the Company's share of loss for theyear is understated by ' 81.34 Lakhs. Due to slow down in the real estate industryoverall and specifically in the Noida region the sales in the EPV II Project are veryslow. This has adversely affected the cash flows and the fund position in the EPV IIproject.

Significant and material orders passed by the regulators

During the period under review there were no significant and material orders passed bythe regulators/ courts or tribunals that would impact going concern status of the Companyand its future operations.