Your Directors have pleasure in presenting their Thirtieth Annual Report and theAudited Financial Statements (standalone and consolidated) for the Financial Year endedMarch 31 2018 together with the Independent Auditors' Report thereon.
1. FINANCIAL HIGHLIGHTS :
T he standalone and consolidated financial highlights of your Company for the financialyear 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 |
|Total Income ||60521 ||63421 ||85321 ||57540 |
|Total Expenses ||58079 ||62187 ||87758 ||60125 |
|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 andConsolidated Financials S tandalone Financials
I ncome from operations stood at 34481 lakh as against 60304 lakh in the previous yearrepresenting a decrease of 42.82% ;
T otal Income stood at 60521 lakh lower by 4.57 % as against 63421 lakh in theprevious 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 theprevious year ; and
Networth of the Company stood at 175488 lakh as against 172822 lakh in the previousyear.
Consolidated Financials :
I ncome from operations stood at 56223 lakh as against 54250 lakh in the previous yearrepresenting an increase of 3.64 %;
T otal income stood at 85321 lakh as against 57540 lakh in the previous yearrepresenting 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 theprevious year ; and
Networth of the Company stood at 163990 lakh as against 167175 lakh in the previousyear.
3. DIVIDEND :
I n the long-term interest of all the stakeholders the Board felt that the Companyutilize the internal accruals on its projects rather than paying dividend to theshareholders. The Directors have therefore not recommended any dividend on the equityshares 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 duringthe 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 unclaimeddividend amount of _ 127845/- for the Financial Year
2009-2010 was transferred to the Investor Education and Protection Fund (IEPF) aftergiving due notices to the members. During the Financial Year 2018-2019 the dividenddeclared by the Company for the Financial Year 2010-2011 remaining unclaimed in terms ofSection 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 _ 7273.59Lakh. During the year under review the Company has not issued any shares with di_erentialvoting 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 notissued any sweat equity shares during the year under review and hence no information underthe provisions of Rule 8 (13) of the Companies (Share Capital and Debentures) Rules 2014is 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 financialstatements or the Board's 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 nodisclosure 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 yearunder review.
11. BUSINESS OVERVIEW :
Y our Company is one of India's leading real estate companies engaged in the businessof execution and development of real estate projects and currently operates both - on itsown and through its subsidiaries / joint ventures / associate companies partnerships _rmsand public private partnerships encompassing the construction and development ofResidential and Commercial Premises and Build Operate Transfer (BOT) Projects.
T he Company has a Western India focus with presence in major cities such as MumbaiThane Pune Ahmedabad Surat Vadodara and Mehsana.
OVERVIEW OF THE COMPANY'S 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 ngoingProjects
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 forthe year under review as stipulated under Regulation 34 (2) (e) read with Schedule V toSEBI Listing Regulations is discussed herein below.
GL OBAL ECONOMY
W orld growth strengthened in 2017 to 3.8 percent with a notable rebound in globaltrade which was the strongest growth since 2011. Global growth is expected to tick upto3.9 percent in 2018 and next supported by strong momentum favourable market sentimentaccommodative financial conditions etc. [IMF Report April 2018]
1The year 2017 was marked by a number of key structural initiatives to buildstrength across macro-economic parameters for sustainable growth. The growth in the _rsthalf of the year su_ered despite global tailwinds. However the weakness seen at thebeginning of 2017 bottomed out as 2018 set in. After a year of disruptions and growthslow-downs Indian economy is consolidating the gains from the recent reforms and ismoving in the right direction. With steady increase in FDI in_ows and pick-up in growth inthe Q3 2017 2018 will expectedly remain a period of strong growth for India. The biggestchallenges for 2018 are as to how the economy can maintain its recovery in the face ofincreasing in_ationary pressures combined with a higher fiscal deficit as well as anincreasing 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 Indianeconomy. In India real estate is the second largest employer after agriculture and isslated to grow at 30 per cent over the next decade. The real estate sector comprises foursub sectors - housing retail hospitality and commercial. The growth of this sector iswell complemented by the growth of the corporate environment and the demand for o_ce spaceas well as urban and semi-urban accommodations. The construction industry ranks thirdamong the 14 major sectors in terms of direct indirect and induced effects in all sectorsof the economy.
2017 has been a year of policy consolidation for the Indian Real Estate Sector. Theimplementation of GST and RERA have begun to shape up the Sector with new standards ofdelivery accountability and transparency.
2Private equity and India's debt investments in India's real estate sectorgrew 12 per cent year-on-year to US $ 4.18 billion across 79 transactions in 2017. In2017 M&A deals worth US $ 3.26 billion were made in India's real estate sector.Private equity investments in Indian retail assets increased 15 per cent in F.Y. 2017 toreach US $ 800 million.
2The Indian real estate sector has witnessed high growth in recent timeswith the rise in demand for o_ce as well as residential spaces. Private equity investmentsin real estate are estimated to grow to US $ 100 billion by 2026 with tier 1 and 2 citiesbeing the prime beneficiaries. India stood third in the US Green Building Council's(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 grosssquare meters of space. According to data released by Department of Industrial Policy andPromotion (DIPP) the construction development sector in India has received Foreign DirectInvestment (FDI) equity inflows to the tune of US$ 24.67 billion in the period April2000-December 2017. 2 - India Brand Equity Foundation
SEGMENT WISE PERFORMANCE : Residential :
2017 was the most difficult year for the residential real estate sector. This sectorfaced several challenges ranging from realigning the businesses to comply with GST rolloutto changing business models in the wake of RERA and then post-demonetization investorsdisappearing from the market. New residential launches declined 35 % in 2017 with thenumber of residential units launched across top eight cities estimated to be 74000 units.Only affordable housing segment registered an year-on-year growth of 6 per cent. Theimplementation of major reforms such as RERA GST the Benami Property Act anddemonetization promise to make Indian residential real estate more transparent than everbefore. 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 millionsq. ft. compared to 30.7 million sq. ft. in 2016 but not at par with demand. Supply grew13 per cent to 12.5 million sq. ft. compared to 11.1 million sq. ft. in 2016 and theheadwinds in the technology sector and supply crunch resulted in subdued growth.
V acancy levels remained largely unchanged through 2017 hovering at around 14 per centpan India. Select markets saw lower vacancy levels and are expected to see furtherdeclines in 2018. Overall vacancy levels will likely hover around 15 % during 2018. Spacetaken up by co-working companies saw a tremendous growth in 2017. This trend is likely tocontinue in 2018.
P rivate equity inflows in office and IT/ITES real estate have grown 150 per centbetween 2014 and 2017 backed by a strong attraction towards office sector.
R etail properties saw significantly less rental value appreciation in Tier Icities. Investments into retail real estate has shown growth in Tier II and
Tier III cities exceeding those in metros. Retail real estate is facing toughcompetition from e-commerce industry but growth of online shopping has resulted inincreased demand for warehousing space. 100 % FDI via direct route is now admissible insingle-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-commercesector continues to be the major demand driver in this segment. In the GST erawarehousing is emerging as an attractive asset class for investors and private equityplayers. The stock of modern and better managed warehouses is increasing and the trend isset to continue in 2018 as well.
R apid Urbanisation
I ndia's urban population is forecasted to almost double from 410 million in 2014 toover 583 million by 2030. The effect of urbanization is most profound in Tier Icities where a huge in_ux of migrants is causing housing demand to surge. This trend hassignificantly 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 forgrowth in India's organised retail sector.
Housing demand will also get a big boost with interest rates on home loans becomingcheaper following a drop in lending rates by major banks.
THREATS AND CHALLENGES : Regulatory Hurdles
Unfa vourable changes in government policies and the regulatory environment canadversely impact the performance of the sector. Retrospective policy changes andregulatory bottlenecks may impact Profitability and affect the attractiveness of thesector and companies operating within the sector.
M anpower and Technology Shortage
T he real estate sector faces severe manpower shortage. The sector is heavily dependenton manual labour which increases timelines and cost and often results in supplies gettingdelayed. Technologically less labour intensive alterative methods of construction needs tobe 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 inincreased cost of construction. There is an urgent need to create a single windowclearance mechanism
F unding Problems
A bsence of long term funding from banks is forcing the developers to look atalternative 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 adverselyimpact Profitability.
RISKS AND CONCERNS : REAL ESTATE SPECIFIC RISKS :
F luctuations in market conditions may affect the ability to sell units at expectedprices 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 wouldaffect the growth of the real estate sector.
Liquidity Risk liquidity crisis on account of stoppage of lending funds to real estatesector by banks financial institutions and lending agencies leading to stoppage ofdevelopment activity.
Oper ational Risks longer gestation period for acquisition of land non-availability ofcritical raw materials such as cement and steel failure to comply with rules andregulations.
Shor tage or sharp increase in prices of building materials could impact the projectschedule 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 performanceof real estate companies.
IT Risk loss/theft of important and confidential data and breakdown of IT system mayadversely affect the Company's ability to monitor progress of the project etc. andprovide 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 seweragecan hamper the growth of real estate.
Shif t in consumer preference may adversely affect the Company's business and operatingresults
A bsence of land title insurance.
C ONCERNS :
The real estate sector offers ample opportunities for development across verticals butthere are certain intrinsic challenges that hinder growth of the sector. The challenges inthe Indian real estate can be broadly classified under five categories which are lack ofsuitable developable land delays in obtaining approvals issues in land title andinsurance inadequate funding challenges and shortage of manpower.
Lack of suitable developable land : Suitable developable land with basic infrastructurehas become scarce in Indian cities. This has resulted in significant surge in land pricesin the urban areas.
Strict and prolonged regulatory process leading to delays : The process of obtainingconstruction permit has become difficult over the last several years and is among themajor reasons contributing to the delays in real estate development. The delay inobtaining approvals and adhering to regulatory processes results in avoidable time andcost overruns.
Land related issues : Lack of clear land titles and title insurance often makesdifficult to acquire suitable land parcels. Absence of clear land titles sometimes resultsin long-drawn and expensive litigation for developers. Further there is no single landpolicy 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 totalmaximum exposure to real estate including individual housing loans and lending todevelopers for construction finance. Absence of long term funding from banks results indevelopers tapping alternative sources of funds most of which do not offer affordableinterest rates and hence the supply stified.
Shortage of manpower and technology : Despite being the second largest employer in thecountry the real estate sector as a whole faces manpower shortage. The sector is heavilydependent on manual labour faces longer time lines for construction completions whichresults in supply getting deferred.
High construction costs : As the raw material costs increase over a period it becomesvery 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 policyreforms driving the market sentiments. Regulatory reforms steady demand generated throughrapid urbanization rising household income and the emergence of affordable and nuclearhousing are some of the key drivers of growth for the real estate sector. Game changingdevelopments like RERA and GST have created a strong base for the sector to grow whichcombined with India's 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 thegovernment by conferring infrastructure status' to this segment.
T he Indian real estate market is expected to touch US $ 180 billion by 2020. Housingsector is expected to contribute around 11 per cent to
India's GDP by 2020. In the period F.Y. 2008-2020 the market size of this sector isexpected 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 onthe back of policy changes that have made the market more transparent. The real estatesector is projected to receive Private Equity (PE) investments to the tune of US$4 billionduring this fiscal year. REITs are set to provide investment opportunities to smallerinvestors during the current fiscal. India's real estate markets are poised for growth inthe 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 organizationand in meeting its business objectives. The Human
Resources function endeavors to create a congenial work environment and synchronizesthe working of all the departments of the organization to accomplish their respectiveobjectives 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 itspayroll as on March 31 2018.
14. INTERNAL FINANCIAL CONTROLS :
T he Company has in place adequate internal financial controls with reference to thefinancial statements. Significant audit observations and follow-up action thereon arereported to the Audit and Compliance Committee.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the Internal Statutory andSecretarial Auditors and the reviews performed by the Management the Board is of theopinion that the Company's internal financial controls were adequate and effective duringthe Financial Year 2017-2018.
15. DIRECTORS AND KEY MANAGERIAL PERSONNEL : D irectors :
M r. Shirish Gajendragadkar Independent Director resigned as Director of the Companywith effect from September 13 2017. The Board places on record its sincere appreciationfor the invaluable contribution by Mr. Ganjedragadkar to the deliberations of the meetingsof the Board and of the Committees of the Board of which he was a member during histenure as Director of the Company.
M r. Shailesh Hingarh was appointed as an Additional and Independent Director in theBoard meeting held on March 22 2018 with effect from
March 22 2018. As per the provisions of Section 160 of the Companies Act 2013 (theAct) the Company has received a notice in writing from a member specifying his intentionto propose the appointment of Mr. Shailesh Hingarh as Director of the Company in theensuing Annual General Meeting (AGM). Further a specific resolution is included in theNotice of the AGM for the appointment of Mr. Shailesh Hingarh as an Independent Directorfor a period of 5 (five) years with effect from March 22 2018. The terms and conditionsof the appointment of the Independent Director are in accordance with Schedule IV to thesaid Act and the SEBI Listing Regulations.
I n accordance with the provisions of Section 152 (6) (e) of the Companies Act 2013and the Articles of Association of the Company
Mr. Vyomesh M. Shah (DIN : 00009596) Director of the Company who retires by rotationand being eligible offers himself for reappointment. Mr. Vyomesh M. Shah is notdisqualified from being reappointed as Director by virtue of the provisions of Section 164of the Companies Act 2013. The Notice convening the ensuing Annual General Meetingincludes the proposal for reappointment of the aforesaid Director.
Br ief resume of Mr. Shailesh Hingarh and Mr. Vyomesh M. Shah as required under theSEBI Listing Regulations and Secretarial Standards 2 on General Meetings isprovided in the Annexure to the Notice convening the AGM.
D uring the year under review the Independent Directors and Non-Executive Director ofthe Company had no pecuniary relationship or transactions with the Company.
Ex cept for the Executive Chairman and the Managing Director who are related to eachother being brothers none of the other Directors of the Company are inter-se related toeach other.
16. F AMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS :
I n compliance with the requirements of the SEBI Listing Regulations the Company hasheld familiarization programme for the Independent
Directors to familiarize them with their role rights and responsibility as Directorsthe working of the Company nature of the industry in which the Company operates businessmodel corporate policies etc. The details of familiarization programme have beendisclosed on the website of the Company and is available at the linkhttp://www.hubtown.co.in/investors/codesandpolicies.
17. P AYMENT OF REMUNERATION/COMMISSION TO EXECUTIVE DIRECTORS FROM SUBSIDIARYCOMPANIES :
D uring the year under review neither the Executive Chairman nor the Managing Directorwas in receipt of any remuneration/commission from any of the subsidiary companies of theCompany.
18. DECL ARATION BY INDEPENDENT DIRECTORS :
P ursuant to the provisions of Section 149 (7) of the Companies Act 2013 the Companyhas received individual declarations from all the
Independent Directors con_rming that they meet the criteria of independence underSection 149 (6) of the said Act and Regulation 16 (1) (b) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and that there has been no change in thecircumstances 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 inaccordance with the provisions of the Companies Act
2013 and the Rules made thereunder and Regulation 17 (2) of the SEBI ListingRegulations. Additionally during the year ended March 31 2018 the Independent Directorsheld a separate meeting in compliance with the requirements of Schedule VI to theCompanies Act 2013 and Regulation 25 (3) of the SEBI Listing Regulations. Fordetails kindly refer to the section on Corporate Governance forming part of this AnnualReport.
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 andCompliance Committee Nomination and Remuneration
Committee Stakeholders' Relationship Committee and the Risk Management Committee.Details of the aforesaid Committees including their composition terms of reference andmeetings held during the year under review are provided in the section on CorporateGovernance 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. ShaileshHingarh Mr. Sunil Shah and Mr. Vyomesh M. Shah.
The Committee comprises of majority of Independent Directors with Mr. Datta being theChairman. Kindly refer to the section on Corporate Governance under theheading Audit and Compliance Committee' for details relating to terms of referencemeetings 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 andCompliance 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 performanceits Committees and individual Directors pursuant to the requirements of the Companies Act2013 and the corporate governance requirements as prescribed by the SEBI ListingRegulations.
The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of criteria such as the board composition information andfunctioning etc. as provided in the Guidance Note on Board Evaluation issued by theSecurities and Exchange Board of India on January 5 2017.
T he Nomination and Remuneration Committee reviewed the performance of individualdirectors on the basis of criteria such as qualification attendance at Board/Committeemeetings preparedness on the issues to be discussed etc. Further the IndependentDirectors at their separate meeting held during the year reviewed the performance of theBoard as a whole its Chairman and Non-Executive Director and other items as stipulatedunder the SEBI Listing Regulations. Performance of Independent Directors was done by theentire 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 andremuneration including criteria for determining qualifications positive attributesindependence of a Director and other matters provided under Section 178 (3) of theCompanies Act 2013 and Regulation 19 (4) (Part D' of Schedule II) of SEBI (ListingObligations 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 CompaniesAct 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 bestof their knowledge and belief and on the basis of the information and explanationsreceived by them hereby state and con_rm that : (i) in the preparation of the AnnualAccounts for the year ended March 31 2018 the applicable accounting standards read withthe requirements under Schedule III to the said Act have been followed alongwith properexplanation relating to material departures if any; (ii) they have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of a_airs ofthe Company at the end of the financial year on 31st March 2018 and of the Profit of theCompany for the year ended on that date; (iii) they have taken proper and su_cient carefor the maintenance of adequate accounting records in accordance with the provisions ofthis Act for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities; (iv) the annual accounts have been prepared on a goingconcern' basis; (v) they have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and (vi) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and such systems were adequate and operatingeffectively.
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 theaudited 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 jointventure companies. The Company did not have any material subsidiary company as on March31 2018. There has been no change in the nature of business of any of the saidsubsidiaries associates and joint venture companies. D uring the year under reviewGirafie Developers Private Limited again became an associate due to cancellation of thetransaction for sale of the shares on account of non-fulfillment of the conditions ofsale.
T he Policy for determining material subsidiary' under SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 as approved is posted on the Company'swebsite at the link: http://hubtown.co.in/investors/codeandpolicies.
I n accordance with third proviso of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein its standalone and the consolidatedfinancial 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 thesaid Section the audited annual accounts of subsidiaries have also been placed on thewebsite of the Company at the link: http://hubtown.co.in/investors/codeandpolicies.
T he Company will make available the financial statements of its subsidiaries jointventure companies and associates (collectively referred to as Subsidiaries') and therelated information to any member of the Company who may be interested in obtaining thesame. The financial statements of the Subsidiaries will also be available for inspectionat the Registered Office of the Company between 11.00 a.m. and 1.00 p.m. on all workingdays. The Consolidated Financial Statements of the Company forming part of this AnnualReport include the financial statements of its subsidiaries.
D uring the financial year ended March 31 2018 the Company was not required toappoint an Independent Director of the Company on the Board of any of its non-listedIndian subsidiaries under Regulation 24 (1) of the SEBI Listing Regulations.
A dditional information as required under Schedule III to the Companies Act 2013 inrespect of entities consolidated as subsidiaries/associates/ jointly controlled entitiesis furnished in Note ___ to the consolidated financial statements.
28. REPORT ON THE PERFORMANCE AND THE FINANCIAL POSITION OF SUBSIDIARIES ASSOCIATESAND JOINT VENTURES :
T he statement pursuant to Section 129 (3) of the Companies Act 2013 read with Rule 5of the Companies (Accounts) Rules 2014 containing the salient features of theperformance and the financial statements of the subsidiaries associates and joint venturecompanies for the financial year ended March 31 2018 in the prescribed Form AOC 1 isappended 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 notdisquali_ed from continuing as Auditor of the Company They have also con_rmed that theymeet the criteria for independence eligibility and quali_cation as prescribed in Section141 of the said Act and do not have any pecuniary interest in the Company or itssubsidiaries associates and joint venture companies.
I n accordance with the Companies Amendment Act 2017 notified on May 7 2018 by theMinistry 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 werereported by the Auditors under Section 143 (12) of the Companies
Act 2013 and the Rules made thereunder either to the Company or to the CentralGovernment. AUDITORS' REPORT AND AUDIT OBSERVATIONS :
T he Management's reply to the qualified opinion of the Statutory Auditors appearing intheir Reports on the Standalone Financial Statements and the Consolidated FinancialStatements for the year ended March 31 2018 is as hereunder : T he Statutory Auditorshave 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 2018which together with the relavant Notes are self explanatory and do not call for furtherinformation/clarification.
QU ALIFICATION BY AUDITORS
T he Notes to the Financial Statements forming part of the Balance Sheet as at March31 2018 and the Statement of Profit and Loss for the year ended on that date referred toin the Auditor's Report are self explanatory and do not call for any furtherclarification /elaboration.
C OST AUDITORS :
Based on the recommendation of the Audit and Compliance Committee the Board hasappointed 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 endingMarch 31 2019 subject to ratification of the remuneration payable to them by the membersin 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 CostAuditor 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 (CostAccounting Records) Rules 2011 will be _led within the period stipulated under theCompanies Act 2013.
SECRETARIAL AUDITOR :
P ursuant to the provisions of Section 204 (3) of the Companies Act 2013 read with theCompanies (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 thisReport. 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 Instituteof 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 theextract of the Annual Return for the Financial Year ended March 31 2017 made underthe provisions of Section 92 (3) of the said Act in Form No. MGT 9 is appended asAnnexure C' to this Report.
31. M ATERIAL CHANGES AND COMMITMENTS :
T here have been no material changes and commitments affecting the financial positionof 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 northere were any amounts outstanding at the beginning of the year which were classi_ed asDeposits' 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 detailsof 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 readwith Regulation 4 (2) (d) (iv) of the SEBI Listing Regulations the Company hasestablished a Whistle Blower Policy as the vigil mechanism for Directors and employees ofthe Company to report their genuine concerns details of which have been given in theCorporate Governance Report appended to this Annual Report. During the year under reviewno such incidence was reported and no personnel were denied access to the Chairman of theAudit 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 tothe Risk Management Committee' are not applicable to your
Company. However the Board of Directors had constituted a Risk ManagementCommittee' under Clause 49 of the erstwhile Listing Agreement and framed a RiskManagement Policy' to identify assess monitor and mitigate various risks to key businessobjectives. Major risks identi_ed by the functions are systematically addressed throughmitigating actions on a continuing basis. The details of the Risk Management Committee areprovided 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 COMPANIESACT 2013 :
A s the Company is engaged in the business of real estate development' includedin the term Infrastructure Facilities' as de_ned in Clause (8) (a) of Schedule VI tothe Companies Act 2013 the provisions of Section 186 of the said Act related to loansmade guarantees given or securities provided are not applicable to the Company. Howeverthe details of the same are provided in the notes to the financial statements. Particularsof investments made under Section 186 of the said Act are provided in the standalonefinancial statements at Note 6.
36. C ONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES :
A ll contracts / arrangements / transactions with related parties that were entered bythe Company during the year under review were in the ordinary course of business and on anarm's length basis. All related party transactions are placed before the Audit andCompliance Committee and the Board on a quarterly basis for approval. Also the Companyhas obtained prior omnibus approval for related party transactions which are of repetitivenature and/or entered into in the ordinary course of business at arm's length.
T here were no materially significant related party transactions with the Company'sPromoters Directors Key Managerial Personnel or their relatives which could have had apotential con_ict with the interest of the Company at large..
A ttention of the members is drawn to Note 33 to the standalone financial statementsand Note 35 to the consolidated financial statements which sets out related partydisclosures pursuant to Ind AS - 24.
T he particulars of contracts/arrangements/transactions entered into by the Companyduring the year under review with its related parties which could be considered materialunder Section 188 of the Companies Act 2013 and the Rules made thereunder are furnishedin Form AOC 2 which is appended as Annexure D' to this Report..
T he Policy for determining the materiality of related party transactions and dealingwith related party transactions as approved by the Board is uploaded on the Company'swebsite 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 SeniorManagement Personnel. The said Code has been posted on the Company's 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_rmingcompliance with the Code of Conduct by the Directors and Senior Management Personnel ofthe Company for the Financial Year 2017-2018 is appended to and forms part of theCorporate Governance Report.
38. DISCLOSURE OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS ORTRIBUNAL :
D uring the year under review there were no significant or material orders passed byany regulatory / statutory authorities or courts / tribunals against the Company impactingits going concern status and the Company's operations in future.
39. C ORPORATE SOCIAL RESPONSIBILITY (CSR) :
T he Corporate Social Responsibility Committee has formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR) indicating the activities to beundertaken 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 SocialResponsibility Policy) Rules 2014 are given in
Annexure E' appended to this Report. Further the CSR Policy has been uploaded onthe Company website at the link : http://hubtown.co.in/investors/codeandpolicies.
40. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013 :
T he Company has in place an Anti-Sexual Harassment Policy in line with therequirements of The Sexual Harassment of Women at Work Place
(Prevention Prohibition and Redressal) Act 2013. An Internal Complaints Committee hasbeen set up to redress complaints received regarding sexual harassment. The Company a_rmsthat during the year under review no complaints were received by the Committee forredressal.
41. C ORPORATE GOVERNANCE :
T he Report on Corporate Governance as stipulated under the SEBI Listing Regulationsforms an integral part of this Annual Report. The requisite certi_cate from a practisingcompany secretary confirming compliance with the conditions of Corporate Governance asstipulated under Schedule V to the aforementioned Listing Regulations is appended to andforms part of the report on Corporate Governance.
42. C ONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO ;
T he nature of operations of the Company does not require disclosure of particularsrelating to conservation of energy and technology absorption as prescribed under Section134 (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 exchangeearnings 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 otherassets 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 theRule 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 drawnand the particulars of employees as required pursuant to Section 197 (12) of the CompaniesAct 2013 read with Rules 5 (2) and 5 (3) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 in respect of the employees of the Company areavailable at the Registered Office of the Company 21 days before the AGM during businesshours on working days of the Company upto the date of the ensuing AGM. Any member who isinterested in obtaining a copy thereof may write to the Company Secretary at theRegistered Office of the Company. None of the employees listed in the aforesaid statementis a relative of any Director of the Company. None of the employees of the Companyemployed throughout the financial year or part thereof was in receipt of remunerationduring the year which in the aggregate or as the case may be at a rate which in theaggregate 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 theequity shares of the Company.
45. C ORPORATE POLICIES :
I n compliance with the provisions of the Companies Act 2013 and the Rules madethereunder and the SEBI Listing Regulations the Board of
Directors of the Company have framed the following policies which are available on thewebsite 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 interms of SEBI (Prohibition of Insider Trading) Regulations 2015
C ode of Practices and Procedures for fair disclosure of Unpublished Price SensitiveInformation
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 toRegulation 17 (8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 for the year under review was placed before the Board of Directors of the Company atits meeting held on May 29 2018 which is appended to and forms part of theCorporate Governance Report.
47. APPRECIATION AND ACKNOWLEDGEMENTS :
Y our Directors place on record their deep appreciation to employees at all levels fortheir hard work dedication and commitment. The Directors also take this opportunity tothank all Investors Suppliers Vendors Banks Financial Institutions BusinessAssociates Contractors Government and Regulatory Authorities and Stock Exchanges fortheir continued support during the year.
Y our Directors would also like to thank the members for reposing their confidence andfaith in the Company and its management.
Certain statements made in the Directors' Report and the Management Discussion andAnalysis may constitute forward looking statements' within the meaning of applicablesecurities laws and regulations. Actual results could differ from those expressed orimplied. Several factors could make significant difference to the Company's operationsthat include labour and material availability and prices cyclical demand and pricing inthe Company's principal markets changes in interest rates changes in governmentregulations tax regimes economic development within India and other incidental factors.The Company does not undertake any obligation to publicly update any forward lookingstatements whether as a result of new information future events or otherwise.
|For and on behalf of the Board |
|Hemant M. Shah |
|Executive Chairman |
|DIN : 00009659 |
|Place: Mumbai |
|Date: May 29 2018 |