Your Directors are pleased to present their Twenty Fourth Reporttogether with the Audited Financial Statements of your Company for the year ended March31 2020.
1. Operations and Financial Overview
During the financial year 2019-20 your Company has registered acreditable performance given the subdued macroeconomic environment and relatively poorconsumer sentiment towards discretionary purchases which was evident in the first threequarters of the year. The outbreak of Coronavirus (COVID-19) pandemic has causedsignificant slowdown of economic activity in March 2020. Traditionally March is a peakmonth for your Company but due to COVID-19 the business operations of your Company havebeen adversely affected specially new Member Additions and Resort Operations. During thelatter part of March 2020 the Management took the decision for phased closing of resortsconsidering the safety of members and employees of your Company which affected the resortoccupancies. Resort income declined due to cancellation of bookings in March 2020.
During the year under review your Company added 15697 new members toits vacation ownership business taking the total membership to over 2.58 lakhs at the endof the year. Addition in the members is a result of continued success of Company'spull-based digital and referral leads as well as reaching out to prospects by way ofengagement through innovative platforms alliances and corporate partnerships. During theyear under review your Company has been reinventing its marketing strategy around digitalformats and platforms as media consumption has shifted towards mobile devices. Marketingand brand building activities are focused on bringing alive the 'Club Mahindra' experienceto generate a pull for the brand by making it aspirational for the target consumersegments.
Your Company added 9 resorts and 224 room units during the year underreview. The total inventory stands at 3732 room units across its 70 resorts as of March31 2020. Along with its Finnish subsidiary Holiday Club Resorts Oy's (HCR) 33 resortsyour Company has achieved a significant milestone of offering 100+ resorts to its membersduring the financial year 2019-20.
During the year under review your Company through its step- downsubsidiary Covington S.a.r.l Luxembourg (Covington) has increased its stake in HCR from96.47% to 100% with the acquisition of the balance shares.
The Ministry of Corporate Affairs (MCA) vide its notification datedMarch 30 2019 has made Indian Accounting Standard 116 "Leases" (Ind AS 116)applicable effective April 1 2019. As per Ind AS 116 a lessee recognises a right-of-use("ROU") asset representing its right to use the underlying asset and
a corresponding lease liability representing its obligation to makelease payments. The nature of expenses related to these leases has changed as Ind AS 116substitutes the operating lease expense (i.e. rent) with depreciation charge for ROUassets and interest expense on lease liabilities.
In view of the above the financial statements of your Company for thefinancial year ended March 31 2020 have been prepared in accordance with the Ind AS asprescribed under Section 133 of the Companies Act 2013 ("the Act") read withthe relevant rules issued thereunder and other accounting principles generally accepted inIndia.
Your Company has applied the modified retrospective approach as perpara C5(b) of Ind AS 116 to existing Leases as on April 1 2019 and the cumulative effectof applying this standard is recognised at the date of initial application i.e. April 12019 in accordance with para C7 of Ind AS 116 as an adjustment to the TransitionDifference under other equity. This has resulted in recognising a ROU asset of Rs.19736.60 lakhs and a corresponding lease liability of Rs. 21183.10 lakhs by adjustingTransition Difference (other equity) net of taxes of Rs. 1670.15 lakhs in standalonebooks and ROU asset of Rs. 139084.89 lakhs and a corresponding lease liability of Rs.154988.18 lakhs by adjusting Transition Difference (other equity) net of taxes of Rs.12078.67 lakhs in consolidated books as at April 1 2019. The financial informationpresented for the year ended March 31 2019 have not been restated and hence the figuresare not comparable to that extent. However this change in the applicable Ind AS does notimpact the business or cashflows.
On September 20 2019 the Government of India vide the Taxation laws(Amendment) Ordinance 2019 inserted Section 115BAA in the Income Tax Act 1961 whichprovides domestic Companies an option to pay Corporate Tax at a reduced rate effectiveApril 1 2019 subject to certain conditions. During the financial year under review yourCompany has decided to exercise the option of lower tax rate available under Section115BAA of the Income Tax Act 1961. Accordingly the Company has recognised the provisionfor income tax for the year ended March 31 2020 and remeasured the accumulated deferredtax asset at March 31 2020 based on the rate prescribed under Section 115BAA. Theresultant impact has been taken through the statement of profit and loss as a separateline item. The re-measurement of accumulated deferred tax and current tax asset hasresulted in a one-time impact amounting to Rs. 19972.94 lakhs which has been debited tothe profit and loss account in standalone and consolidated financial statements for theyear ended March 31 2020. Out of this Rs. 17775.94 lakhs has been transferred to theTransition Difference (other equity) in standalone and consolidated financial statementsfor the year ended March 31 2020.
Your Company's total income (including other income) was Rs.103711.78 lakhs in 2019-20 compared to Rs. 96343.85 lakhs in 2018-19. Profit Before Tax(PBT) grew to Rs. 12394.74 lakhs in 2019-20 from Rs. 10017.24 lakhs in 2018-19. ProfitAfter Tax
(PAT) (excluding one-time impact of change in tax rate) grew to Rs.9151.49 lakhs in 2019-20 from Rs. 6386.23 lakhs in 2018-19. As a result of one-timeimpact of change in the tax rate which augurs well for future cashflows of your Companyloss after tax (including one-time impact of change in tax rate) amounting to Rs.10821.45 lakhs in 2019-20. Diluted earnings per share (EPS) for 2019-20 stood at (' 8.14)from Rs. 4.80 in 2018-19.
Further your Company's consolidated total income (including otherincome) grew to Rs. 243114.56 lakhs in 2019-20 from
' 229566.05 lakhs in 2018-19. Consolidated Profit Before Tax (PBT)grew to Rs. 10132.62 lakhs in 2019-20 from Rs. 9804.70 lakhs in 2018-19. ConsolidatedProfit After Tax (excluding onetime impact of change in tax rate) grew to Rs. 6546.69lakhs in 2019-20 from Rs. 5957.19 lakhs in 2018-19. Your Company has accountedconsolidated loss after tax (including one-time impact of change in tax rate) amounting toRs. 13426.25 lakhs in 2019-20. Consolidated Diluted earnings per share (EPS) for 2019-20stood at (' 9.94) from Rs. 4.54 in 2018-19.
2. Financial Highlights (Standalone)
(Rs. in lakhs)
| ||2019 - 2020 ||2018 - 2019 |
|Income: || || |
|Income from sale of Vacation Ownership and other services ||97700.53 ||91829.15 |
|Other Income ||6011.25 ||4514.70 |
|Total Income ||103711.78 ||96343.85 |
|Expenditure: || || |
|Less: Employee Cost & Other Expenses ||79550.94 ||81183.92 |
|Profit before Depreciation Interest and Taxation ||24160.84 ||15159.93 |
|Less: Depreciation ||10166.79 ||5140.50 |
|Interest ||1599.31 ||2.19 |
|Profit for the year before Tax ||12394.74 ||10017.24 |
|Less: Provision for Tax - Current Tax ||2520.37 ||2201.66 |
|- Deferred Tax (net) ||722.88 ||1429.35 |
|Net Profit for the year after Tax excluding impact of change in tax rate ||9151.49 ||6386.23 |
|One-time impact on Tax Expense due to change in tax rate ||19972.94 ||- |
|Net Profit / (Loss) for the year after Tax ||(10821.45) ||6386.23 |
|Other Comprehensive Income (Net of Tax) ||(54.61) ||73921.20 |
|Total Comprehensive Income / (Loss) for the year ||(10876.06) ||80307.43 |
3. Share Capital
The Issued Subscribed and Paid up Share Capital of the Company as onMarch 31 2020 was Rs. 1335537840 (Rupees One Hundred Thirty Three Crore Fifty FiveLakhs Thirty Seven Thousand Eight Hundred and Forty only) divided into 133553784(Thirteen Crore Thirty Five Lakhs Fifty Three Thousand Seven Hundred and Eighty Four)equity shares of Rs. 10 each (Rupees Ten only).
During the year under review your Company did not issue shares withdifferential voting rights / sweat equity. Details of the Directors' shareholding as onMarch 31 2020 are mentioned in the Corporate Governance Report which forms part of thisAnnual Report.
In compliance with Regulation 43A of the Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBIListing Regulations") the Dividend Distribution Policy of the Company is annexedherewith as Annexure I and is also available at the Company's website at: https://www.clubmahindra.com/about-us/policies
The Company had changed its revenue recognition policy in accordancewith Ind AS 115 during financial year 2018-19. Consequently the Deferred Revenue andDeferred Costs had to be recomputed and has been stated as Transition Difference. TheCompany is profitable and has healthy cash flows and has declared dividends every yearfrom 2006 till 2018. The Company has sought clarification from MCA that this TransitionDifference need not be considered for the purpose of declaration of dividend under theprovisions of Section 123(1) of the Act. The declaration of dividend if any shall besubject to receipt of clarification from MCA.
5. Transfer to Reserve
Your Directors do not propose to transfer any amount to reserves.
6. Related Party Transactions
Your Company undertakes various transactions with related parties inthe ordinary course of business. All transactions entered with related parties during theyear under review are on arm's length basis and in the ordinary course of
business. Your Company has not entered into any contracts /arrangements / transactions with related parties which could be considered material inaccordance with the policy of the Company i.e. Policy on Materiality of and Dealing withRelated Party Transactions ("RPT Policy"). Accordingly AOC-2 is not applicableto the Company. Further transactions entered by the Company with related parties in thenormal course of business were placed before the Audit Committee of the Board.
There were no materially significant related party transactions withthe Promoters Directors and Key Managerial Personnel which may have a potential conflictwith the interest of the Company at large.
The RPT Policy as approved by the Audit Committee and the Board isavailable on the website of the Company at: https://www.clubmahindra.com/about-us/policies
Your Directors draw attention of the Members to Note No. 51 to theStandalone Financial Statements which sets out related party disclosure.
7. Particulars of Loans and Advances Guarantees Investments andSecurities
As your Company is engaged in the activity covered under Schedule VI ofthe Act the provisions of Section 186 of the Act relating to loans given investmentsmade guarantees given or securities provided are not applicable to the Company. Howeverthe details of such loans given and guarantees given to / on behalf of subsidiarycompanies/ JV company are provided in Note Nos. 9 10 and 20 to the Standalone FinancialStatements. These loans and guarantees for which loans are provided are proposed to beutilised by the respective recipients for their business purposes. Particulars ofinvestments made by your Company are provided in the Standalone Financial Statements atNote Nos. 7 and 16.
The details of loans and advances which are required to be disclosedin the Annual Report of the Company pursuant to Regulation 34(3) read with Schedule V ofthe SEBI Listing Regulations are furnished separately as Annexure II to this report.
8. Significant and Material Orders passed by the Regulators or Courts
There are no significant and material orders passed by theRegulators/Courts/Tribunal which would impact the going concern status of the Company andits operations in the future.
9. Corporate Social Responsibility
Corporate Social Responsibility ("CSR") activities of theCompany are guided by its CSR Policy which is framed and approved by the Board. TheCompany's CSR Policy is available on its website: https://www.clubmahindra.com/about-us/policies. These are discussed in detail in the Management Discussion and AnalysisReport which forms a part of this
Annual Report. The statutory disclosure with respect to CSR activitiesforms part of this Report and is annexed herewith as Annexure III.
In line with the philosophy of the Mahindra Group your Company iscommitted to following sustainable practices in its operations. The details of theinitiatives taken by your Company in this regard are discussed in the section onSustainability in the Management Discussion and Analysis Report which forms a part ofthis Annual Report.
11. Business Responsibility Report
The 'Business Responsibility Report' (BRR) of your Company for the year2019-20 as required under Regulation 34(2)(f) of the SEBI Listing Regulations forms partof this Annual Report.
Your Company believes that the sustainable development aims atachieving economic growth and improvement in wellbeing while preserving the naturalresources and ecosystem for future generations. Your Company also recognises theimportance of sustainability and is committed to conserve the ecological integrity of itslocations through responsible business practices.
12. Corporate Governance Report
A Report on Corporate Governance along with a certificate from theStatutory Auditors of the Company regarding the compliance of conditions of corporategovernance as stipulated under Schedule V of the SEBI Listing Regulations forms a part ofthis Annual Report. Further a certificate from M/s M Damodaran & Associates LLPPracticing Company Secretaries confirming that none of the Directors on the Board of theCompany have been debarred or disqualified from being appointed or continuing as Directorsof companies by SEBI/MCA or any such statutory authority is attached to the CorporateGovernance Report.
13. Management Discussion and Analysis Report
A detailed analysis of the Company's operational and financialperformance as well as the initiatives taken by the Company in key functional areas suchas Resort Operations Member Experience Business Excellence Human Resources andTechnology & Digitisation are separately discussed in the Management Discussion andAnalysis Report which forms a part of this Annual Report.
14. Whistle Blower Policy & Vigil Mechanism
As per the provisions of Section 177(9) of the Act and Regulation 22 ofSEBI Listing Regulations the Company is required to establish an effective VigilMechanism for Directors employees and other stakeholders to report genuine concerns. Thedetails of the Whistle Blower Policy and Vigil Mechanism have been disclosed in theCorporate Governance Report which forms a part of this Annual Report.
15. Employees' Stock Options
Employees' Stock Options represent a reward system based on overallperformance of the individual employee and the Company. It helps the Company to attractretain and motivate the best available talent. This also encourages employees to alignindividual performances with the Company and promotes increased participation by theemployees in the growth of the Company. Accordingly your Company formulated theEmployees' Stock Option Scheme in 2006 (2006 Scheme) and subsequently in 2014 (2014Scheme) after obtaining requisite approvals from the shareholders. All the balance sharesavailable under 2006 Scheme together with any other shares represented by Options that maylapse for any reason thereat was/will be considered for issuing/granting Options to theEmployees pursuant to the provisions under the 2014 Scheme.
During the year under review pursuant to the SEBI (Share BasedEmployee Benefits) Regulations 2014 ("SEBI ESOP Regulations") a total of850000 new Options were granted under the 2014 Scheme by the Nomination and RemunerationCommittee to the eligible employees and noted by the Board.
Details required to be provided under Regulation 14 of the SEBI ESOPRegulations is available on the Company's website at: https://www.clubmahindra.com/about-us/investor-relations/financials.
The details of Employees' Stock Options forms part of the Notes toaccounts of the Financial Statements in this Annual Report.
A certificate from the Statutory Auditors of the Company confirmingthat the 2006 Scheme and 2014 Scheme have been implemented in accordance with the SEBIESOP Regulations and the resolutions passed by the Shareholders will be available forinspection by Members at the ensuing Annual General Meeting ("AGM").
16. Subsidiaries Joint Venture and Associate Companies
During the year under review Holiday Club Sweden AB Sweden step downsubsidiary of the Company disinvested its entire stake in Are Villa 1 AB and Are Villa 2AB and consequently Are Villa 1 AB and Are Villa 2 AB ceased to be the step downsubsidiaries of the Company.
Further Covington a step down subsidiary of the Company acquired thebalance 3.53% stake in HCR and consequently HCR has become a wholly owned subsidiary ofCovington and in turn of the Company.
Arabian Dreams Hotel Apartments LLC Dubai (Arabian Dreams) a JointVenture company of the Company is considered as a subsidiary company from Financial Year201617 in accordance with the provisions of Ind AS. Accordingly as of March 31 2020your Company has 34 subsidiaries (including 28 indirect subsidiaries) 1 joint venturecompany (indirect) and 2 associate companies (including 1 indirect associate).
17. Performance of Subsidiaries
Gables Promoters Private Limited ('Gables') is a wholly ownedsubsidiary of the Company. Gables operates a resort property of 115 rooms at NaldehraHimachal Pradesh. Your Company avails rooms in the resort property of Gables for usage ofits guests and vacation ownership members.
Mahindra Hotels and Residences India Limited ('MHARIL') is a whollyowned subsidiary of the Company. MHARIL did not have any operations during the year underreview.
Heritage Bird (M) Sdn. Bhd Malaysia ('Heritage Bird') is a whollyowned subsidiary of the Company. Heritage Bird's principal activities are holding ofinvestments and leasing of properties. Heritage Bird has rooms/units in apartmentproperties in a well-known location in Kuala Lumpur Malaysia.
MH Boutique Hospitality Limited Thailand ('MH Boutique') in whichyour Company holds forty nine per cent of equity stake is a subsidiary of the Company byvirtue of control on the composition of the Board of MH Boutique and it mainly holdsinvestments in Infinity Hospitality Group Company Limited Thailand ('Infinity').
Infinity is the subsidiary company of MH Boutique and by virtue of thesame is also subsidiary of the Company. Infinity owns and operates a hotel/apartmentproperty at Bangkok Thailand. Your Company avails rooms in the hotel property of Infinityfor usage of its guests and vacation ownership members.
MHR Holdings (Mauritius) Limited Mauritius ('MHR Holdings') is awholly owned subsidiary of the Company. The principal activity of MHR Holdings is to holdinvestments. Currently it holds investments in Covington.
Covington is a wholly owned subsidiary of MHR Holdings and in turn asubsidiary of your Company. The principal activity of Covington is to hold investments.Currently it holds investments in HCR and HCR Management Oy ('HCRM') Finland. As onMarch 31 2020 Covington holds 100% stake in HCR and HCRM.
HCR subsidiary of Covington and in turn of the Company is the largestoperator of leisure hotels in Finland and the largest vacation ownership company inEurope. As of March 31 2020 HCR has 33 resorts of which 25 are located in Finland 2 inSweden and 6 in Spain. Further out of these 7 resorts in Finland and 1 resort in Swedenhave a spa hotel attached with indoor water parks 4 resorts have golf course and thereare 4 indoor theme parks for children called 'Angry Bird Activity Parks'. Apart from62000 families and over 1300 companies owning HCR timeshare over 1 million guests visitHoliday Club Spa Hotels annually. During the year under review total income of HCR whichincludes turnover and other operating income stood at 157.33 million compared to 161.09 million in 2018-19.
Earnings before interest tax depreciation and amortization (EBITDA)for the year were 6.73 million down from 7.79 million in 2018-19. OverallHCR recorded a PBT and PAT of 0.26 million and 0.14 million respectively in2019-20. The performance of HCR was adversely affected due to COVID-19 in March 2020which is peak holiday season in Finland.
HCRM is a wholly owned subsidiary of Covington and in turn subsidiaryof your Company. HCRM is primarily engaged in the sale and trade of real estates propertymanagement investment activities and dealing in securities. Currently HCRM holdsinvestment in the share capital of HCR.
Arabian Dreams (a Joint Venture company as per the Act and Subsidiarycompany as per Ind AS) operates a 75 room hotel property in Dubai (UAE) taken on leasebasis. Your Company avails rooms/apartments in the hotel property of Arabian Dreams forusage of its guests and vacation ownership members.
Guestline Hospitality Management & Developement Services Limited('Guestline') is an associate of your Company pursuant to the provisions of the Act asthe Company is holding more than 20% of total share capital which includes preferenceshare capital. Guestline did not have any operations during the year under review.
Kiinteisto Oy Seniori-Saimaa is an associate of HCR and consequentlyassociate of your Company.
Joint Venture Company
Tropiikin Rantasauna Oy is a Joint Venture company (JV) of HCR andconsequently JV of your Company.
A report on the performance and financial position of the subsidiariesassociate and joint venture company whose financial statements are considered forpreparation of Consolidated Financial Statements of the Company as per the Act (in theprescribed format i.e. "Form AOC-1") is provided as Annexure to the ConsolidatedFinancial Statements.
The policy for determining material subsidiaries as approved by theBoard may be accessed on the Company's website at: https://www.clubmahindra.com/about-us/policies
In accordance with the third proviso to Section 136(1) of the Act theAnnual Report of the Company containing therein its Standalone and the ConsolidatedFinancial Statements are available on the Company's website www.clubmahindra. com.Further as per fourth proviso to the said Section the Audited Annual Accounts of each ofthe said subsidiaries of the Company are also available on the Company's website www.clubmahindra.com.Any Shareholder who may be interested in obtaining a copy of the aforesaid documents maywrite to the Company Secretary at the Company's Corporate Office.
As on the date of this report your Company has 9 Directors whichincludes 5 Independent Directors 3 Non-Executive Directors (NEDs) and 1 Managing Director(ED).
At the 23rd AGM held on July 31 2019 the followingdirectors were re-appointed by the Shareholders:
a) Mr. Kavinder Singh was re-appointed as the Managing Director &CEO of the Company for a term of five years commencing from November 3 2019 to November2 2024;
b) Mr. Rohit Khattar and Mr. Sanjeev Aga were re-appointed asIndependent Directors of the Company for a second term of five consecutive years eachcommencing from August 27 2019 to August 26 2024;
c) Mr. Sridar Iyengar was re-appointed as an Independent Director ofthe Company for a second term commencing from August 27 2019 to July 31 2022; and
d) Mr. Cyrus Guzder was re-appointed as an Independent Director of theCompany for a second term commencing from August 27 2019 to July 31 2020.
Accordingly Mr. Cyrus Guzder would cease to hold office as anIndependent Director of the Company from August 1 2020 upon completion of his tenure asapproved by the Shareholders.
Mr. Cyrus Guzder has been on the Board of the Company for around 22years and has enriched the Board with his immense experience in all aspects of strategyand management financial reporting and processes. His vast experience in managingOperations Sales and Marketing Accounting Strategy Human Resources Development waspivotal in steering the growth initiatives of the Company over a period of time.
Mr. Cyrus Guzder has been the Chairman of the Nomination andRemuneration Committee and Risk Management Committee Member of Audit CommitteeStakeholders Relationship Committee Corporate Social Responsibility Committee and otherCommittees of the Board.
Mr. Cyrus Guzder has always brought a solution based approach to issueswhile remaining committed to the highest standards of governance and excellence. He hasmade significant contributions as a Director of the Company and as a member of several ofits Committees and his inputs have greatly benefited the Board and the Company.
During the year under review Ms. Radhika Shastry ceased to be anIndependent Director of the Company with effect from December 26 2019 upon completion ofher tenure. The Board places on record its sincere appreciation for the contributions madeby Ms. Radhika Shastry during her association with the Company.
Based on the recommendation of the Nomination and RemunerationCommittee the Board of Directors at their meeting held on February 1 2020 have appointed
Mrs. Sangeeta Talwar as an Additional Director in the category of anIndependent Director of the Company not liable to retire by rotation for a period of fiveyears with effect from February 1 2020. She shall hold office as an Additional Directorupto the date of the ensuing AGM. The Company has received the requisite Notice in writingfrom a Member under Section 160 of the Act proposing her candidature for the office ofDirector of the Company.
Based on the recommendation of the Nomination and RemunerationCommittee the Board of Directors at their meeting held on May 9 2020 have appointed Dr.Anish Shah as an Additional Director in the category of Non-Executive and Non-IndependentDirector of the Company liable to retire by rotation. He shall hold office as anAdditional Director upto the date of the ensuing AGM. The Company has received therequisite Notice in writing from a Member under Section 160 of the Act proposing hiscandidature for the office of Director of the Company.
In terms of the Articles of Association of the Company and as perSection 152(6) of the Act Mr. V S Parthasarathy being longest in the office is liableto retire by rotation at the ensuing AGM and being eligible offers himself forre-appointment.
The Notice convening the forthcoming AGM will include the proposal forthe appointment/ re-appointment of the aforesaid Directors. A brief resume of theDirectors seeking appointment/ re-appointment at the forthcoming AGM and other details asrequired to be disclosed in terms of Regulation 36(3) of the SEBI Listing Regulations andSecretarial Standard on General Meetings (SS-2) forms part of the Corporate GovernanceReport and will also be annexed to the Notice of AGM.
The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criteria of independence asprescribed both under the Act and SEBI Listing Regulations. Further the IndependentDirectors of the Company have also confirmed that they have registered themselves with theIndian Institute of Corporate Affairs Manesar and have included their name in thedatabank of Independent Directors within the statutory timeline pursuant to the provisionsof Rule 6(3) of the Companies (Appointment and Qualifications of Directors) Rules 2014.
19. Key Managerial Personnel (KMPs)
As on March 31 2020 Mr. Kavinder Singh Managing Director & CEOMrs. Akhila Balachandar Chief Financial Officer and Mr. Dhanraj Mulki General Counsel& Company Secretary are the KMPs as per the provisions of the Act.
20. Statement regarding opinion of the Board with regard to integrityexpertise and experience (including the proficiency) of the Independent Directorsappointed during the year
During the year under review Mrs. Sangeeta Talwar has been appointedas an Independent Director of the Company
with effect from February 1 2020 subject to the approval ofShareholders. The Board is satisfied with the integrity expertise and experience(including the proficiency) of Mrs. Sangeeta Talwar who has been appointed as anIndependent Director of the Company with effect from February 1 2020.
Regarding the experience which includes proficiency test Mrs. SangeetaTalwar is exempted from undertaking the proficiency test in accordance with Rule 6(4) ofthe Companies (Appointment and Qualifications of Directors) Rules 2014.
21. Policy on Directors' appointment and remuneration
The salient features of the following policies of the Company areattached herewith and marked as Annexure IV:
1. Policy on appointment of Directors and Senior Management
2. Policy on Remuneration of Directors and
3. Policy on Remuneration of Key Managerial Personnel and Employees
The aforesaid policies are also available at the link https://www.clubmahindra.com/about-us/policies.
The Managing Director & CEO of the Company does not receiveremuneration or commission from any of its subsidiaries and draws remuneration only fromthe Company.
22. Board Evaluation
The Board has conducted an annual evaluation of its own performanceindividual Directors Committees of the Board and that of its Non-Executive Chairman interms of the relevant provisions of the Act Rules made thereunder and SEBI ListingRegulations. The manner in which the evaluation was conducted by the Company has beenexplained in the Corporate Governance Report which forms a part of this Annual Report.
23. Number of Board Meetings
During the year under review the Board of Directors met 5 (five)times. The details of the Board Meetings and attendance of Directors are provided in theCorporate Governance Report which forms a part of this Annual Report.
24. Composition of Audit Committee
The Audit Committee consists of Mr. Sridar Iyengar as its Chairman andMr. Cyrus Guzder Mr. V S Parthasarathy Mr. Rohit Khattar and Mr. Sanjeev Aga as itsother members. Further details are provided in the Corporate Governance Report whichforms a part of this Annual Report.
25. Directors' Responsibility Statement
Pursuant to Section 134(3)(c) of the Act your Directors state that:
a) in the preparation of the annual accounts for the year ended March31 2020 the applicable Accounting
Standards had been followed and there is no material departure;
b) they have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2020 andof the profit of the Company for the year ended on that date;
c) they have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) the directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and
f) the directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
26. Internal Financial Controls and their Adequacy
Your Company has an adequate internal controls system commensuratewith the size and nature of its business. The system is supported by documented policiesguidelines and procedures to monitor business and operational performance which are aimedat ensuring business integrity and promoting operational efficiency. Further details areprovided in the Management Discussion and Analysis Report which forms a part of thisAnnual Report.
During the year under review the Statutory Auditors and SecretarialAuditor have not reported any instances of frauds committed in the Company by its Officersor Employees to the Audit Committee under Section 143(12) of the Act details of whichneed to be mentioned in this Report.
27. Consolidated Financial Statements
The Consolidated Financial Statements of the Company and itssubsidiaries associate and joint venture companies prepared in accordance with the Actand applicable Accounting Standards form part of this Annual Report.
For the purpose of preparation of the Consolidated Audited FinancialStatements of the Company for the financial year ended March 31 2020 as per Ind AS thelatest audited financial results of all the subsidiaries one associate company and onejoint venture company pertaining to HCR were considered and consolidation was done as perthe provisions of Section 129 of the Act.
28. Risk Management
Your Company has a well-defined risk management framework to identifyand evaluate elements of business risk. The Audit Committee has an oversight in the areaof financial risk and controls. Other details including details pertaining to variousrisks faced by your Company and also development and implementation of risk managementframework are discussed in the Management Discussion and Analysis Report forming part ofthis Annual Report.
29. Disclosure requirements
> Pursuant to Regulation 34(3) read with Schedule V of the SEBIListing Regulations details of transactions with persons or entities belonging to thepromoter/ promoter group which hold 10% or more shareholding in the Company are furnishedunder Note No. 51 to the Standalone Financial Statements which sets out related partydisclosure.
> The provisions in respect of maintenance of cost records asspecified under sub-section (1) of Section 148 of the Act are not applicable to yourCompany.
> The Directors have devised proper systems to ensure compliancewith the provisions of all applicable Secretarial Standards issued by the Institute ofCompany Secretaries of India and that such systems are adequate and operating effectively.
> During the year under review no revision was made in the previousfinancial statements of the Company.
A) Statutory Auditors
The Shareholders at their 21st AGM held on August 2 2017approved the appointment of M/s B S R & Co. LLP Mumbai (ICAI membershipNo:101248W/W-100022) as the Statutory Auditors of the Company for a period of five yearscommencing from the conclusion of the 21st AGM till the conclusion of 26thAGM subject to ratification of their appointment by the Members at every AGM of theCompany.
Pursuant to Notification issued by the MCA on May 7 2018 amendingSection 139 of the Act the mandatory requirement for ratification of appointment ofAuditors by the Shareholders at every AGM has been omitted. Accordingly the Shareholdersat their 22nd AGM held on August 2 2018 approved the ratification of theappointment of M/s B S R & Co. LLP Chartered Accountants as the Auditors of theCompany from the conclusion of the 22nd AGM to hold office until theconclusion of the 26th AGM of the Company to be held in the year 2022.
The Auditors' Report on the financial statements of the Company for theyear ending March 31 2020 is unmodified
i.e. it does not contain any qualification reservation or adverseremark. The Auditors' Report is enclosed with the financial statements forming part of theannual report.
B) Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act and Rulesthereunder the Company has appointed M Siroya and Company Practicing CompanySecretaries to undertake the secretarial audit of the Company. The Report of theSecretarial Auditor is annexed herewith as Annexure V.
There are no qualifications reservations or adverse remarks made by MSiroya and Company Practicing Company Secretaries Secretarial Auditor of the Company inthe Secretarial Audit Report.
Your Company has not accepted any deposits from public or its employeesand as such no amount on account of principal or interest on deposit were outstanding asof the Balance Sheet date.
32. Credit Rating
India Ratings and Research Private Limited ("India Ratings")has re-affirmed Long-Term Issuer Rating of 'IND A' with a stable outlook to your Company.The 'IND A' rating indicates adequate degree of safety regarding timely servicing offinancial obligations. India Ratings continues to take a consolidated view of the Companyand its subsidiaries including HCR Finland to arrive at the ratings.
33. Material Changes and Commitment Affecting Financial Position of theCompany
There are no material changes and commitments affecting financialposition of the Company which have occurred between the end of the financial year of theCompany i.e. March 31 2020 and the date of the Directors' Report.
34. Annual Return
As per the provisions of Section 92(3) of the Act read with Rule 12 ofthe Companies (Management and Administration) Rules 2014 as amended from time to timethe extract of the Annual Return as of March 31 2020 in the prescribed form MGT- 9 isannexed herewith as Annexure VI. The Annual Return of the Company has been placed on thewebsite of the Company and can be accessed at https://www.clubmahindra.com/about-us/investor-relations/financials.
35. Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo
Your Company continuously strives to conserve energy adopt environmentfriendly practices and employ technology for more efficient operations. Some of theseinitiatives are discussed in the section on Sustainability in the Management Discussionand Analysis Report which forms a part of this Annual Report.
The particulars relating to energy conservation technology absorptionand foreign exchange earnings and outgo as required under Section 134(3)(m) of the Actand Rule 8(3) of the Companies (Accounts) Rules 2014 are given in the Annexure VII tothis Report.
36. Human Resources
Your Company takes pride in the commitment competence and dedicationshown by its employees in all areas of its business. It considers people as its biggestassets. It has put concerted efforts in talent management and succession planningpractices strong performance management and learning and training initiatives to ensurethat your Company consistently develops inspiring strong and credible leadership. Apartfrom continued investment in skill and leadership development of its people this yearyour Company has also focused on employee engagement initiatives aimed at increasing theCulture of Innovation & Collaboration across all strata of the workforce. This yearthe Employee Engagement Scores as reflected through MCARES survey (an internalbenchmarking exercise within the Mahindra Group) has been the highest ever for yourCompany. Your Company has also been certified as one of India's Great Places to Work Forand recognised amongst the Top 100 'Best companies to work for in India' by Great Place ToWork (GPTW) Institute. These are discussed in detail in the Management Discussion andAnalysis Report forming part of this Annual Report.
The Company has a Policy on Prohibition Prevention and Redressal ofSexual Harassment of Women at Workplace and matters connected therewith or incidentalthereto covering all the aspects as contained under The Sexual Harassment of Women atWorkplace (Prohibition Prevention and Redressal) Act 2013 ("POSH Act"). TheCompany has also complied with provisions relating to the constitution of InternalComplaints Committee under the POSH Act and the Committee includes external members fromNGO and / or members with relevant experience. There were no complaint pending at thebeginning of the year. During the year under review the Company received 1 complaintunder the Policy which was disposed- off and appropriate actions were taken within thestatutory timelines. Further there were no complaints pending for more than 90 daysduring the year.
37. Particulars of Employees
The disclosure with respect to the remuneration of Directors KMPs andemployees under Section 197(12) of the Act read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 ("theRules") is attached as Annexure VIII and forms a part of this report.
The Company had 7 (seven) employees who were employed throughout theyear and were in receipt of remuneration of more than Rs. 102 lakhs per annum. There were5 (five) employees employed for part of the year and in receipt of remuneration of morethan Rs. 8.50 lakhs per month.
In terms of Section 136 of the Act the copy of the FinancialStatements of the Company including the Consolidated Financial Statements the Auditor'sReport and relevant Annexures to the said Financial Statements and reports are being sentto the Members and other persons entitled thereto excluding the information in respect ofthe said employees containing the particulars as specified in Rule 5(2) of the said Rules.If any Member is interested in obtaining a copy thereof he may write to the CompanySecretary of the Company at its Corporate Office.
The Financial Statements reports etc. of the Company are available onthe website of the Company www.clubmahindra. com.
38. Acknowledgement and Appreciation
Your Directors take this opportunity to thank the Company's CustomersShareholders Suppliers Bankers Financial Institutions and the Central and StateGovernments for their unstinted support. The Directors would like to place on record theirappreciation to employees at all levels for their hard work dedication and commitment.
For and on behalf of the Board
| ||Arun Nanda |
|Place: Mumbai ||Chairman |
|Date: May 19 2020 ||DIN: 00010029 |