Boards Report to the Members
Your Directors present their twentieth report together with the audited financialstatement of your Company for the year ended on 31st March 2019.
FINANCIAL HIGHLIGHTS (STANDALONE)
(Rs. in lakh)
| ||2019 ||2018 |
|Income from Operations ||48603 ||47500 |
|Other Income ||6881 ||8222 |
|Total Income ||55484 ||55722 |
|Profit Before Depreciation Finance cost and Taxation ||9312 ||11830 |
|Less : Depreciation ||(306) ||(396) |
|Profit Before Finance cost and Taxation ||9006 ||11434 |
|Less : Finance Cost ||(548) ||(3541) |
|Profit Before Taxation ||8458 ||7893 |
|Less : Provision for Taxation || || |
|Current Tax ||NIL ||(2566) |
|Deferred Tax (including MAT Credit) ||(2599) ||(15) |
|Profit After Tax ||5859 ||5312 |
|Add: Balance of Retained earnings of earlier years ||55018 ||53216 |
|Add: Transfers from Debenture Redemption Reserve ||8375 ||- |
|Less: Adjustment relating to cumulative effect of applying Ind-AS 115* ||(7958) ||- |
|Retained earnings available for appropriation ||61294 ||58528 |
|Add: Other Comprehensive Income / (Loss)** ||(77) ||(15) |
|Less: Dividend paid on Equity Shares*** ||(3080) ||(3079) |
|Less: Income-tax on Dividend paid*** ||(163) ||(416) |
|Retained earnings carried forward ||57974 ||55018 |
* The Ministry of Corporate Affairs vide notification dated 28th March 2018 hasmandated Ind AS 115 "Revenue from Contracts with Customers" (Ind AS 115) from1st April 2018. The Company has applied the modified retrospective approach as per paraC3(b) of Ind AS 115 to contracts that were not completed as on 1st April 2018 and thecumulative effect of applying this standard is recognised at the date of initialapplication i.e.1st April 2018 in accordance with para C7 of Ind AS 115 as an adjustmentto the opening balance of Retained Earnings only to contracts that were not completed asat 1st April 2018. The transitional adjustment of Rs. 7958.14 lakhs (net of deferredtax) has been adjusted against opening Retained Earnings based on the requirements of theInd AS 115 pertaining to recognition of revenue based on satisfaction of performanceobligation (at a point in time). For further details please refer Note no. 30 to thestandalone financial statement.
** Re-measurement of (loss)/gain (net) on defined benefit plans recognised as part ofretained earnings.
***Pursuant to applicable provisions of Indian Accounting Standards the amount ofdividend paid and income tax thereon mentioned in the columns for 2019 and 2018 representsthe dividend amount paid and tax paid thereon for the financial years 2018 and 2017respectively.
For the Financial Year 2018-19 your Directors have recommended a dividend of Rs. 6 perequity share of the face value of Rs. 10 each of the Company i.e. 60 (sixty) percentpayable to those shareholders whose names appear in the Register of Members as on the BookClosure Date.
The equity dividend outgo for the proposed dividend on equity shares for the financialyear 2018-19 inclusive of tax on distributed profits and net of tax on distributedprofits on dividend proposed by the subsidiaries during the current financial yearamounts to Rs. 3335.75 lakh. The dividend shall be paid out of the profits for thefinancial year 2018-19.
DIVIDEND DISTRIBUTION POLICY
In terms of Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("SEBI LODR") the Board of Directors of the Company at itsmeeting held on 27th October 2016 has formulated and adopted a DividendDistribution Policy. The Policy is attached herewith and marked as Annexure 1and is also available on the Companys website athttps://www.mahindralifespaces.com/media/investor/codes-and-policies/Dividend%20Distribution%20Policy.pdf
Out of the profits available for appropriation no amount has been transferred to anyreserves for the year under review.
OPERATIONS / STATE OF THE COMPANYS AFFAIRS
India experienced an economic slowdown during FY19 which saw the Gross DomesticProduct (GDP) grow at 7.0 per cent compared to 7.2 per cent in the previous year. Thisdownturn was primarily driven by degrowth in the agriculture and services sectors even asgrowth rate of the manufacturing sector accelerated from 5.9 per cent in FY 2017-18 to 7.7per cent in FY 2018-19.
The real estate industry saw signs of revival during the year where the constructionsector grew at 8.9 per cent in FY 2018-19 after an average growth of 4.4% in the previousfive years. The uptick in the sectoral growth was evident in the Companysperformance during the year which saw higher completion of construction works salescollections new launches and land acquisition. The Company sold 1678 residential unitsaggregating to 1.69 million square feet of saleable area in FY 2018-19 compared to 1357units aggregating 1.16 million square feet in the previous year. In value terms thisrepresents a growth of 67% in sales from Rs. 61100 lakh in FY 2017-18 to Rs. 102300 lakhin FY 2018-19. The Companys collections saw a significant growth from Rs. 60308lakh in FY 2017-18 to Rs. 96321 lakh in FY 2018-19. The Companys focus on executionwas strongly reflected in the completion of 1.84 million square feet in FY 2018-19compared to 0.68 million square feet in FY 2017-18. The Company handed over 1225 units toits customer in FY 2018-19.
The consolidated total income of your Company stood at Rs. 65387 lakh in FY 2018-19 ascompared to Rs. 64413 lakh in FY 2017-18. The consolidated Profit before tax (PBT) stoodat Rs. 14326 lakh in FY 2018-19 as compared to Rs. 13454 lakh in FY 2017-18 whereas theconsolidated profit after tax (PAT) and minority interest was Rs. 11971 lakh in FY2018-19 as compared to Rs. 10100 lakh in FY 2017-18.
The total income of your Company as a standalone entity in FY 2018-19 was Rs. 55484lakh as compared to Rs. 55722 lakh in FY 2017-18. PBT in FY 2018-19 was Rs. 8458 lakh ascompared to Rs. 7893 lakh in FY 2017-18 whereas PAT was Rs. 5859 lakh as compared toRs. 5312 lakh in FY 2017-18. Total income in FY 2018-19 includes dividend income of Rs.1665 lakh from Mahindra World City (Jaipur) Limited and Rs. 425 lakh from MahindraIntegrated Township Limited subsidiaries of the Company. In FY 2017-18 the Company hadreceived dividend income of Rs. 666 lakh from Mahindra World City (Jaipur) Limited andRs. 370 lakhs from Mahindra Integrated Township Limited subsidiaries of the Company.
During FY 2018-19 the Company launched three new projects Roots inKandivali Mumbai Metropolitan Region (MMR) Lakewoods in Mahindra World City(MWC) Chennai and Centralis in Pimpri Pune. Additionally it launched freshinventory in two of its existing projects Antheia (Pune)Bloomdale (Nagpur).
In the affordable housing segment the Company launched fresh inventory in two of itsexisting projects - Happinest Avadi (Chennai) and HappinestPalghar (MMR).
The Company is currently developing 3.68 million square feet with another 5.16 millionsquare feet available in the form of forthcoming projects which includes new phases ofongoing projects and new projects that are to be launched.
In the Integrated Cities and Industrial Clusters (IC & IC) business the companycontinued to focus on deals through new clients & existing customer base. It executedland leases of around 93 acres in FY 2018-19 at MWCs Chennai Jaipur & OriginsChennai compared to 62 acres in the previous year. The IC & IC business has leasedentire industrial land inventory at Mahindra World City Chennai. OriginsChennai the first industrial cluster project launched in FY 2018-19 in partnershipwith Sumitomo Corporation signed its anchor customer. Origins Ahmedabad thesecond industrial cluster project has obtained all key approvals for the first phase ofthe project and the initial development work has already started. It is being developed bythe Companys subsidiary Mahindra Industrial Park Private Limited (MIPPL) in astrategic partnership with International Finance Corporation. The IC & IC businesswill continue to offer a wide choice of industrial land leasing to its clients through thenational footprint across Northern Western & Southern India. The multi-product SEZnotification in FY 2018-19 at MWC Jaipur has enabled the business to engage in newindustrial segments.
No material changes and commitments have occurred after the close of the year till theclose of this Report which affects the financial position of the Company.
AWARDS AND RECOGNITION
Your Company and its subsidiaries received several awards and recognitions during thefinancial year 2018-19. Some of the prestigious awards are:
The Company was recognized as one of Indias Top Builders 2018 at the ConstructionWorld Architect and Builder Awards.
The Company was ranked 22nd in the list of Great Places to Work in India in theMid-size Companies Category.
The Company was ranked among the Top 100 Best Companies for Women in Indiaby Working Mother and AVTAR.
The Company received Digital Marketing Effectiveness (Gold) at Asian CustomerEngagement Forum for Social media campaign #18Daychallenge.
The Company received Best use of medium length video (Silver) at Lighthouse InsightsDigital Marketing Awards 2018 for Social media campaign #Building Together.
The Company received Best Twitter Case Study at
Lighthouse Insights Digital Marketing Awards 2018 for Social media campaign#18Daychallenge.
During the year the Company has allotted 20950 equity shares of Rs. 10 each at anexercise price of Rs. 10 per share to the eligible employees pursuant to exercise of stockoptions granted under Employee Stock Option Scheme - 2012 (ESOS - 2012). No Stock Optionswere exercised under Employee Stock Option Scheme 2006 (ESOS 2006).
Consequently during the year the issued equity share capital has increased from Rs.5137.92 lakh to Rs. 5140.02 lakh and the subscribed and paid up equity share capital ofthe Company has increased from Rs. 5132.81 lakh to Rs. 5134.91 lakh.
Post closure of Financial Year 2018-19 the Company has allotted 3300 equity shares ofRs. 10 each at an exercise price of Rs. 10 per share to the eligible employees pursuant toexercise of stock options granted under ESOS - 2012. Consequently the issued equity sharecapital has increased from Rs. 5140.02 lakh to Rs. 5140.35 lakh and the subscribed andpaid up equity share capital of the Company has increased from Rs. 5134.91 lakh to Rs.5135.24 lakh.
The allotment of 51063 equity shares of the Company has been kept in abeyance inaccordance with Section 206A of the Companies Act 1956 (now corresponding to Section 126of the Companies Act 2013) till such time the title of the bona-fide owners ofthe shares is certified by the concerned Stock Exchange or the Special Court (Trial ofoffences relating to transactions in Securities).
During the year Company has not issued any equity shares with differential rights orany sweat equity shares.
EMPLOYEE STOCK OPTIONS SCHEME
During the year in accordance with ESOS2012 the Nomination and RemunerationCommittee had on 30th July 2018 and 14th February 2019 approved grant of total 25500Stock Options to the eligible employees at an exercise price of Rs. 10 each which isequal to the face value of the equity share of the Company.
During the year no Stock Options have been granted under ESOS 2006. Except5000 Stock Options granted on 4th August 2012 all options granted under ESOS-2006 andnot exercised have lapsed. There is no scheme as envisaged under Section 67 of theCompanies Act 2013 ("the Act") in respect of shares on which voting rights arenot directly exercised by the employees. During the year no change was made to theexisting schemes i.e. ESOS 2006 and ESOS 2012. The existing schemes areimplemented in compliance with Securities and Exchange Board of India (Share BasedEmployee Benefits) Regulations 2014 and other applicable Regulations and Circulars inforce from time to time.
The disclosure in relation to ESOS-2006 and ESOS-2012 under the Securities and ExchangeBoard of India (Share Based Employee Benefits) Regulations 2014 is uploaded on thewebsite of the Company at https://www.mahindralifespaces.com/media/investor/stock-exchange-filings/other-filings-information/2018/2%20Disclosure%20under%20SEBI%20Share%20Based%20Employee%20Benefits%20 Regulations%202014%202017-18.pdf
As on 31st March 2019 the Promoter and Holding company i.e. Mahindra and MahindraLimited (M&M) holds 26439850 equity shares representing 51.49 percent of the totalpaid-up equity capital of the Company. There was no change in the shareholding of M&Mduring the year.
The Company continues to be a Subsidiary Company of M&M. All subsidiary companiesof the Company are consequently subsidiary companies of M&M.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES AS PER COMPANIES ACT 2013
A report highlighting performance of each of the subsidiaries associates and jointventure companies as per the Act and their contribution to the overall performance of theCompany is provided in the consolidated financial statement at note no 44.
SUBSIDIARY AND JOINT VENTURE COMPANIES
Mahindra World City (MWC) Chennai is being implemented by Mahindra World CityDevelopers Limited (MWCDL) a 89:11 joint venture between the Company and the TamilNadu Industrial Development Corporation Limited (TIDCO) respectively. It is the firsttownship in India to receive Green Township Certification (Stage I Gold certification)from IGBC. Mahindra World City Chennai was launched in September 2002 and currently hasthree sector specific Special Economic Zones (SEZs) IT (services andmanufacturing) Apparel and Fashion Accessories and Auto Ancillaries and a DomesticTariff Area (DTA) for businesses catering to the Indian market. Integrated to the businesszone is a Residential and Social zone. At the end of FY 2018-19 the project had a totalarea of 1524 acres. The company is focusing on clients for social infrastructure havingleased entire industrial land inventory.
Mahindra World City (MWC) Jaipur is being implemented by Mahindra World City(Jaipur) Limited (MWCJL) a 74:26 joint venture between the Company and RajasthanState Industrial Development & Investment Corporation Limited (RIICO) a Government ofRajasthan enterprise respectively. The project is spread across 2913 acres of land andoffers multi product SEZ along with Domestic Tariff Area (DTA) and Social &Residential Infrastructure. The erstwhile four sector specific zones (IT/ITeS Engineeringand Related Industries Handicrafts and Gems & Jewellery) have now been merged into amulti-product SEZ vide notification dated 17th April 2018 issued by the Ministry ofCommerce and Industries (Department of Commerce) Government of India.
During the year the Company has partnered with International Finance Corporation(IFC) a member of the World Bank Group for the development of MWC Jaipur. IFC hasinvested Rs. 194 Crore in MWCJL and is entitled to economic rights to the extent of 50% on500 acres of gross land comprising first 250 acres of SEZ and first 250 acres of DTA.
Mahindra Integrated Township Limited (MITL) is a co-developer in developing theresidential township area at Mahindra World City Chennai. Its current developmentsinclude Iris Court Nova and Lakewoods. ProjectLakewoods was launched during the year with a total saleable area of 0.90million square feet. Additionally MITL is in the process of obtaining approvals for itsnext project at MWC Chennai. After excluding the area under the above projects MITLstill has approximately 135 acres to be developed in phases for offering products indifferent formats and segments. The Company owns 96.40 percent of MITL.
Mahindra Residential Developers Limited (MRDL) which is a wholly owned subsidiaryof Mahindra Integrated Township Limited (MITL) and a co-developer is developing a gatedresidential community in approximately 54 acres within Mahindra World City Chennai underthe name Aqualily.
Mahindra Bloomdale Developers Limited (MBDL) [formerly known as Mahindra BebancoDevelopers Limited] is wholly owned subsidiary of the Company. MBDL was a 70:30 jointventure company between the Company and B. E. Billimoria & Co Limited (BEBL)respectively. The Company BEBL and MBDL had entered into a Shareholders Agreementgoverning the terms of the joint venture. MLDL and BEBL agreed on the transfer ofBEBLs shareholding in MBDL to MLDL. Accordingly MLDL acquired 15000 equity sharesheld by BEBL and MBDL ceased to be a joint venture cum partially owned subsidiary andbecame a wholly owned subsidiary of the Company effective 28th May 2018. MBDL isdeveloping a gated residential community Bloomdale across approximately 25.2acres at Multi-modal International Hub Airport at Nagpur (MIHAN).
Mahindra Homes Private Limited (MHPL) is a 74.98 : 25.02 joint venture between theCompany and Actis Mahi Holding (Singapore) Private Limited (Actis) [Actisacquired the stake held by SCM Real Estate (Singapore) Private Limited (SCM) held inMHPL] respectively and is developing in collaboration with a developer and land owningcompanies a group housing project "Luminare" at NCR on approximately 6.80 acresand a residential project "Windchimes" at Bengaluru on approximately 5.90 acres.
Mahindra Happinest Developers Limited (MHDL) is a 51:49 joint venture between theCompany and HDFC Capital Affordable Real Estate Fund I respectively. MHDL launchedfirst phase of its first affordable housing project in Palghar Maharashtra onapproximately 8.35 acres under the brand Happinest.
Mahindra Industrial Park Chennai Limited (MIPCL) is a 60:40 joint venture betweenMWCDL and Sumitomo Corporation Japan respectively. MIPCL is setting up an industrialcluster in North Chennai (the NH-16 corridor) on approximately 264 acres under the brandOrigins by Mahindra World City.
Mahindra Industrial Park Private Limited (MIPPL) [formerly known as IndustrialCluster Private Limited (ICPL)] a wholly owned subsidiary of the Company has acquired339.92 acres of contiguous land at Jansali near Ahmedabad for setting up an industrialcluster. The Company has partnered with International Finance Corporation (IFC) a memberof the World Bank Group for the development of upcoming project at Jansali. The projectwill be marketed under the brand Origins by Mahindra World City.
Mahindra Infrastructure Developers Limited (MIDL) a wholly owned subsidiary of theCompany is an equity participant in the project company namely New Tirupur AreaDevelopment Corporation Limited (NTADCL) implementing the Tirupur Water Supply andSewerage project.
Mahindra Water Utilities Limited (MWUL) is engaged in the business of operation andmaintenance services for water and sewerage facilities at Tirupur India and is a 98.99percent subsidiary of Mahindra Infrastructure Developers Limited and consequently asubsidiary of the Company.
Mahindra World City (Maharashtra) Limited (MWCML) is a wholly owned subsidiary ofthe Company which was set up to undertake large format development. MWCML is looking foran appropriate business opportunity to take up projects in large format development.
Deep Mangal Developers Private Limited (DMDPL) is a subsidiary of MWCML andconsequently a subsidiary of the Company. DMDPL intends to develop its land at Murud onsouthern coast of Maharashtra as a one-of-its-kind tourist destination catering toglobally growing need of holistic healthcare and wellness tourism besides promotingadventure and heritage tourism. The State Government will support the project byfacilitating necessary infrastructure in the region.
Knowledge Township Limited (KTL) a wholly owned subsidiary of the Company will bedeveloping an industrial park in Maharashtra under the brand Origins by MahindraWorld City for which the company is in the process of procuring the required landarea.
Industrial Township (Maharashtra) Limited (ITML) and Anthurium DevelopersLimited (ADL) wholly owned subsidiaries of the Company are exploring the possibilityof taking up real estate development projects.
During the year consequent to coming in to force of the Companies Amendment Act 2017effective 7th May 2018 Mahindra Knowledge Park (Mohali) Limited which was an associatecompany of the Company became a subsidiary of MWCML and consequently the subsidiary ofthe Company. Similarly Mahindra Construction Company Limited which was an indirectsubsidiary of the Company ceased to be a subsidiary of the Company.
As of 31st March 2019 no company is an associate of the Company.
Except as aforesaid during the year no other company became or ceased to be aSubsidiary / Associate / Joint Venture company of the Company.
CONSOLIDATED FINANCIAL STATEMENT
The audited consolidated financial statement of the Company prepared in accordance withthe applicable Accounting Standards along with all relevant documents and theAuditors Report forms part of this Annual Report.
The financial statements of Subsidiary companies as per the Companies Act 2013 are notattached along with the financial statements of the Company. Separate audited financialstatement of each of the subsidiaries is placed on the website of the Company at web link:https://www.mahindralifespaces.com/ investors/annual-reports/fy-18-19 The Company willprovide the financial statements of subsidiaries upon receipt of a written request fromany member of the Company interested in obtaining the same. The financial statement ofsubsidiaries will also be available for inspection at the Registered Office of yourCompany during working hours up to the date of the Annual General Meeting.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report which gives a detailed account of stateof affairs of the operations of the Company and its subsidiaries forms part of this AnnualReport.
A report on Corporate Governance along with a certificate from the Auditors of theCompany regarding the compliance with the conditions of Corporate Governance as stipulatedunder Para E of Schedule V of the SEBI LODR forms part of this Annual Report.
SUSTAINABLE DEVELOPMENT AND BUSINESS RESPONSIBILITY REPORT
Your Company has been at the forefront of the real estate industry in India to achievemission of Transforming urban landscapes by creating sustainable communities.Sustainability is thus a core agenda for the Company. The details of the Companysapproach to sustainability are covered in the Business Responsibility Report.
Presently the requirement of publishing Business Responsibility Report (BRR) underRegulation 34(2)(f) of SEBI LODR is not applicable to the Company. However the Companyhas voluntarily provided the BRR for the financial year 2018-19 which forms part of thisAnnual Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Companys guiding principle for CSR is to build its relationship withstakeholders and the community at large and contribute to their long term social good andwelfare. The Company in every financial year in line with the Companies Act 2013pledges to spend two percent of the average net profits made during the three immediatelypreceding financial years towards CSR initiatives.
The Company has constituted a Corporate Social Responsibility (CSR) Committeecomprising Non-Executive Non-Independent Director - Mr. Arun Nanda Independent Director -Mr. Shailesh Haribhakti and the Managing Director & CEO Ms. Sangeeta Prasad. Mr. ArunNanda is the Chairman of the Committee. During the year Ms. Anita Arjundas ceased to be amember of the Committee consequent to her resignation as Managing Director and as aDirector of the Company effective 30th September 2018. The Board at its meeting held on28th September 2018 has appointed Ms. Sangeeta Prasad the Managing Director &
CEO as a member of the Committee effective 1st October 2018. The role of the Committeeis to formulate and recommend a CSR policy to the Board to recommend expenditure to beincurred on CSR activities to monitor the CSR policy of the Company from time to timeand to institute a transparent monitoring mechanism for the CSR projects or programs oractivities undertaken by the Company.
The Companys CSR Policy lays out the vision objectives and implementationmechanism. The Companys CSR policy is available on the Companys web link athttps:// www.mahindralifespaces.com/wp-content/uploads/2019/04/corporate_social_responsibility_csr_policy.pdf The Companys CSR activities havetraditionally focused on education skill development health environment and promotingsustainable practices.
The objective of the CSR policy is to:
Promote a unified approach to CSR to incorporate under one umbrella the diverse rangeof the Companys philanthropic activities thus enabling maximum impact of the CSRinitiatives;
Ensure an increased commitment at all levels in the organisation to operate in aneconomically socially and environmentally responsible manner while recognising theinterests of all its stakeholders;
Encourage employees to participate actively in the Companys CSR and give back tothe society in an organised manner through the employee volunteering programme calledEmployee Social Options.
The Companys commitment to CSR will be manifested by investing resources in anyof the areas stipulated in Schedule VII to the Companies Act 2013. The Company givespreference to the local area and area around it where it operates for spending the amountsearmarked for CSR activities.
The Company had committed CSR expenditure of Rs. 289.77 Lakh for the financial year2018-19 which included an unspent amount of Rs. 97.20 Lakh pertaining to financial year2017-18. As against the committed CSR expenditure of Rs. 289.77 Lakh the Company hasspent Rs. 291.21 Lakh during the financial year 2018-19. The annual report on the CSRactivities is at Annexure 2 to this Report.
Pursuant to Section 152 of the Companies Act 2013 and Article 116 of the Articles ofAssociation of the Company Mr. Arun Nanda (DIN: 00010029) Non-Executive Non-IndependentDirector retires by rotation at the 20th Annual General Meeting of the Company and beingeligible has offered himself for reappointment.
Ms. Anita Arjundas resigned as the Managing Director and as a Director of the Companyeffective 30th September 2018. She resigned to pursue her interests in the development /social sector. The Board expressed its sincere appreciation for the valuable contributionmade by Ms. Anita Arjundas during her tenure as the Managing Director & CEO. The Boardappreciated
Ms. Anita Arjundas for her remarkable contribution in putting in place systemsprocesses and best practices which are comparable to the best-in-class in the Real Estateindustry. Under her stewardship the Company continued to be a leader in the integratedcities business expanded its presence in the mid-premium residential segment acrossgeographies and embarked on a journey to become a dominant player in the affordablehousing sector.
Consequent thereto and on recommendation of Nomination and Remuneration Committee theBoard of Directors at its meeting held on 28th September 2018 appointed Ms. SangeetaPrasad then CEO of the Company as an Additional Director and as the Managing Directordesignated as "Managing Director & Chief Executive Officer" (MD & CEO)with effect from 1st October 2018. Pursuant to Section 161 of the Act and Article 128 ofthe Articles of Association of the Company Ms. Prasad holds office upto the date offorthcoming Annual General Meeting. Further in terms of Section 152 of the Companies Act2013 read with the Companies (Appointment and Qualification of Directors) Rules 2014 theBoard has proposed to the Shareholders appointment of Ms. Sangeeta Prasad as a Director ofthe Company not liable to retire by rotation. Also her appointment as Managing Directordesignated as MD & CEO effective 1st October 2018 and her remuneration is being putup for the approval of the shareholders at the forthcoming Annual General Meeting of theCompany. Brief resume and other details of Mr. Arun Nanda and Ms. Sangeeta Prasadin terms of Regulation 36(3) of SEBI LODR and Secretarial Standards on General Meetingare provided in the Corporate Governance Report forming part of the Annual Report. None ofthe Directors of the Company are inter-se related to each other. Both Directors i.e. Mr.Arun Nanda and Ms. Sangeeta Prasad are not disqualified from being reappointed / appointedas Directors by virtue of the provisions of Section 164 of the Companies Act 2013.
The performance evaluation of Non-Independent Directors and the Board as a wholeCommittees thereof and Chairman of the Company was carried out by Independent Directors.Pursuant to the provisions of the Act the Nomination & Remuneration Committee (NRC)specified the manner of effective evaluation of the performance of the Board itsCommittees and individual Directors. In terms of manner of performance evaluationspecified by the NRC the performance evaluation of the Board its Committees andindividual Directors was carried out by NRC and the Board of Directors. Further pursuantto Schedule IV of the Act and Regulation 17(10) of the SEBI LODR the evaluation ofIndependent Directors was done by the Board of Directors. For performance evaluationstructured questionnaires covering various aspects of the evaluation such as adequacy ofthe size and composition of the Board and Committee thereof with regard to skillexperience independence diversity attendance and adequacy of time given by theDirectors to discharge their duties Corporate Governance practices etc. were circulatedto the Directors for the evaluation process. All Directors unanimously expressed that theevaluation outcome reflected high level of engagement of the Board of Directors and itsCommittees amongst its members with the Company and its management and that they are fullysatisfied with the same.
The Company has received declarations from each of the Independent Directors confirmingthat they meet the criteria of independence as provided in the Companies Act 2013 andSEBI LODR.
The details of familiarization programme for Independent Directors have been disclosedon website of the Company and is available at the link https://www.mahindralifespaces.com/wp-content/uploads/2019/04/details_of_familiarisation_programmes_for_independent_directors_2018-19.pdf The salient features of the followingpolicies of the Company and changes therein made during the year are attached herewith andmarked as Annexure 3:
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 aforesaidpolicies (as amended) are also available at the linkhttps://www.mahindralifespaces.com/investors/codes-and-policies The Managing Director& CEO draws remuneration only from the Company and does not receive any remunerationor commission from any of its subsidiary companies / holding company.
KEY MANAGERIAL PERSONNEL (KMP)
As on 31st March 2019 details of Key Managerial Personnel under the Companies Act2013 are given below :
|Sr. No. Name of the Person ||Designation |
|1 Ms. Sangeeta Prasad ||Managing Director & CEO |
|2 Mr. Suhas Kulkarni ||Company Secretary |
|3 Mr. Jayant Manmadkar ||Chief Financial Officer |
Effective 30th September 2018 Ms. Anita Arjundas resigned as the Managing Directorand as Director. Ms. Sangeeta Prasad who was holding position of the CEO effective 1stApril 2018 was later appointed as the Managing Director designated as the ManagingDirector & CEO effective 1st October 2018. Mr. Jayant Manmadkar ChiefFinancial Officer (CFO) of the Company resigned w.e.f. 30th April 2019 to pursueprofessional opportunities outside the real estate sector. The Board puts on record itssincere appreciation for the services rendered by Mr. Manmadkar during his tenure as theCFO.
A calendar of meetings is prepared and circulated in advance to the Directors. Duringthe year seven Board Meetings were convened and held the details of which are given inthe Corporate Governance Report. The intervening gap between two consecutive meetings waswithin the period prescribed under the Companies Act 2013 Secretarial Standards-I onBoard Meetings and SEBI LODR.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Directors based on therepresentations received from the operating management and after due enquiry confirmthat: (a) in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures; (b) theyhad selected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year 31st March 2019 and of theprofit of the Company for that period; (c) they had taken proper and sufficient care forthe maintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; (d) they had prepared the annual accounts on agoing concern basis; (e) they had laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and are operatingeffectively; and (f) they had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference to theFinancial Statements. The Audit Committee of the Board reviews the internal controlsystems the adequacy of internal audit function and significant internal audit findingswith the management Internal Auditors and Statutory Auditors.
As on 31st March 2019 the Audit Committee comprised of three Independent Directorsnamely Mr. Ameet Hariani Mr. Shailesh Haribhakti Mr. Bharat Shah and one Non-ExecutiveNon-Independent Director Dr. Anish Shah. Mr. Shailesh Haribhakti resigned as the Chairmanof the Audit Committee from the close of business hours of meeting of the Audit Committeeheld on 27th April 2018 but continued as a member of the Audit Committee. Mr. AmeetHariani Independent Director was appointed as a member of the Audit Committee in theBoard Meeting held on 27th April 2018 and was appointed as the Chairman of the AuditCommittee at the meeting of Audit Committee held on 30th July 2018.
All members of the Audit Committee possess strong knowledge of accounting and financialmanagement. The Chairman of the Company the Managing Director Chief Executive OfficerChief Financial Officer the Internal Auditors and Statutory Auditors are regularlyinvited to attend the Audit Committee Meetings.
The Company Secretary is the Secretary to the Committee. The Internal Auditor reportsto the Chairman of the Audit Committee. The significant audit observations and correctiveactions as may be required and taken by the management are presented to the AuditCommittee. The Board has accepted all recommendations made by the Audit Committee fromtime to time.
VIGIL MECHANISM / WHISTLE BLOWER MECHANISM
The Company has established a vigil mechanism by adopting a Whistle Blower Policy forstakeholders including directors and employees of the Company and their representativebodies to report genuine concerns in the prescribed manner to freely communicate theirconcerns / grievances about illegal or unethical practices in the Company actual orsuspected fraud or violation of the Companys Code or Policies. The vigil mechanismis overseen by the Audit Committee and provides adequate safeguards against victimisationof stakeholders who use such mechanism._It provides a mechanism for stakeholders toapproach the Chairman of Audit Committee or Chairman of the Company or the CorporateGovernance Cell consisting of Chief Legal Officer & Company Secretary Chief FinancialOfficer and Chief Ethics Officer (Chief People Officer). During the year no person wasdenied access to the Chairman of the Audit Committee or to the Chairman of the Company orto the Corporate Governance Cell. The Whistle Blower Policy of the Company is available atweb link https://www.mahindralifespaces.com/media/investor/codes-and-policies/Whistle%20Blower%20Policy.pdf
The Company has in place a process to inform the Board about the risk assessment andminimisation procedures. It has an appropriate risk management system in place foridentification and assessment of risks measures to mitigate them and mechanisms fortheir proper and timely monitoring and reporting. Presently Regulation 21 of the SEBILODR with respect to Risk Management Committee is not applicable to your Company. Howeverthe Board has constituted Risk Management Committee for monitoring and reviewing of therisk assessment mitigation and risk management plan from time to time. As on 31st March2019 the Committee comprised of Independent Director Mr. Shailesh Haribhakti ManagingDirector & CEO Ms. Sangeeta Prasad and Chief Financial Officer Mr. Jayantt Manmadkar(resigned w.e.f. 30th April 2019). During the year Ms. Anita Arjundas ceased to be amember of the Committee consequent to her resignation as the Managing Director andDirector of the Company effective 30th September 2018. The Board at its meeting held on28th September 2018 appointed Ms. Sangeeta Prasad as a member of the Committee effective1st October 2018.
The Shareholders of the Company at the 18th Annual General Meeting of the Company heldon 25th July 2017 had appointed M/s. Deloitte Haskins & Sells LLP CharteredAccountants Mumbai (ICAI Registration Number 117366W/W-100018) as Statutory Auditors ofthe Company to hold office until the conclusion of the 23rd Annual General Meeting to beheld in the calendar year 2022 to conduct the audit of the Accounts of the Company atsuch remuneration as may be mutually agreed upon between the Board of Directors of theCompany and the Auditors. Pursuant to amendment to Section 139 (1) of the Companies Act2013 ratification of appointment of Statutory Auditor at every Annual General Meeting isnot required.
As required under the provisions of Section 139(1) and 141 of the Companies Act 2013read with the Companies (Accounts and Auditors) Rules 2014 the Company has received awritten consent and certificate from the auditors to the effect that they are eligible tocontinue as Statutory Auditor of the Company. The notes of the financial statementsreferred to in the Auditors Report issued by M/s. Deloitte Haskins & Sells LLPChartered Accountants Mumbai for the financial year ended on 31st March 2019 areself-explanatory and do not call for any further comments. The Auditors Report doesnot contain any qualification reservation or adverse remark.
The Board of Directors on recommendation of the Audit Committee has appointed CMAVaibhav Prabhakar Joshi Practising Cost Accountant Mumbai as Cost Auditor of theCompany to conduct audit of the cost records maintained by the Company for the financialyear 2018-19. CMA Vaibhav Prabhakar Joshi has confirmed that his appointment is within thelimits of Section 141(3)(g) of the Companies Act 2013 and has also certified that he isfree from any disqualification specified under Section 141 and proviso to Section 148(3)of the Act. As per the provisions of the Companies Act 2013 the remuneration payable tothe Cost Auditor is required to be placed before the Shareholders in a General Meeting fortheir ratification. Accordingly a resolution seeking Shareholders ratification forremuneration payable to CMA Vaibhav Prabhakar Joshi Practising Cost Accountant isincluded in the Notice convening the Annual General Meeting.
The Company is required to maintain cost records as specified under Section 148 (1) ofthe Companies Act 2013 and such accounts and records are made and maintained by theCompany for the financial year 2018-19.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed M/s. Martinho Ferrao & Associates Practising Company Secretaries toconduct the secretarial audit of the Company. The Secretarial Audit Report for thefinancial year ended 31st March 2019 is annexed herewith and marked as Annexure 4to this Report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013
The Company being formed for and engaged in real estate development (Infrastructuralfacilities) is exempt from the provisions of Section 186 of the Companies Act 2013related to any loans made or any guarantees given or any securities provided or anyinvestments made by the Company. However the details of the investments made and loansgiven are provided in the standalone financial statement at Note nos. 7 and 8.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an armslength basis. During the year the Company had not entered into any contract / arrangement/ transaction with related parties which could be considered material. In view of theabove the requirement of giving particulars of contracts / arrangements / transactionsmade with related parties in Form AOC-2 are not applicable for the year under review.
The "Policy on materiality of and on dealing with related party transactions"(as amended) as approved by the Board may be accessed on the Companys website at thelink https://www.mahindralifespaces.com/wp-content/uploads/2019/04/policy-on-materiality-of-and-dealing-with-related-party-transactions.pdfThe Directors draw attention of the members to Note no. 36 to the standalone financialstatement which sets out related party disclosures.
DEPOSITS LOANS ADVANCES AND OTHER TRANSACTIONS
During the year the Company has not accepted any deposits from the public or itsemployees. The details of loans and advances which are required to be disclosed in theannual accounts of the Company pursuant to Regulation 34(3) and 53 (f) read with ScheduleV of the SEBI LODR are provided in the standalone financial statement at Note no. 40.
Further in terms of Regulation 34(3) and 53 (f) read with Schedule V of the SEBI LODRdetails of the transactions of the Company with the promoter and holding company Mahindra& Mahindra Limited holding 51.49 percent in the paid up equity capital of the Companyas on 31st March 2019 in the format prescribed in the relevant accounting standards forannual results are given in Note No. 36 to the Standalone Financial Statement.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information relating to the Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo as per Section 134(3)(m) of the Companies Act 2013 read withthe Rule 8(3) of the Companies (Accounts) Rules 2014 is given in Annexure 5 tothis Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures with respect to the remuneration of Directors KMPs and employees asrequired under Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are given in Annexure6 to this Report.
Details of employee remuneration as required under provisions of Section 197(12) of theCompanies Act 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are available at the Registered Officeof the Company during working hours up to the date of the Annual General Meeting and shallbe made available to any shareholder on request. Such details are also available on yourCompanys website at: https://www.mahindralifespaces.com/investors/stock-exchange-filings/other-filing-information
EXTRACT OF ANNUAL RETURN
The Annual Return in Form MGT-7 and its extract in Form MGT-9 for the financial yearended 31st March 2019 are available on the website of the Company athttps://www.mahindralifespaces.com/investors/stock-exchange-filings/other-filing-information
The Directors have devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards and that such systems are adequate andoperating effectively.
No fraud has been reported during the audit conducted by the Statutory AuditorsSecretarial Auditors and Cost Auditors of the Company.
During the year no revision was made in the previous financial statement of theCompany.
For the financial year ended on 31st March 2019 the Company has complied withprovisions relating to the constitution of Internal Complaints Committee under the_ SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
No significant or material orders were passed by the
Regulators or Courts or Tribunals which impact the going concern status andCompanys operation in future.
Certain statements in the Directors Report describing the Companysobjectives projections estimates expectations or predictions may be forward-lookingstatements within the meaning of applicable securities laws and regulations. Actualresults could differ from those expressed or implied. Important factors that could make adifference to the Companys operations include labour and material availability andprices cyclical demand and pricing in the Companys principal markets changes ingovernment regulations tax regimes economic development within India and otherincidental factors.
The Company shall be registering its forthcoming projects at an appropriate time in theapplicable jurisdictions / States under the Real Estate (Regulation and Development) Act2016 (RERA) and Rules thereunder. Till such time the forthcoming projects are registeredunder RERA none of the images material projections details descriptions and otherinformation that are mentioned in the Annual Report for the year 2018-19 should be deemedto be or constitute advertisements solicitations marketing offer for sale invitationto offer or invitation to acquire within the purview of the RERA. The Company uses carpetareas as per RERA in its customer communication. However the data in saleable area termshas been presented in the Annual Report for the year 2018-19 to enable continuity ofinformation to investors and shall not be construed to be of any relevance to home buyers/ customers.
The Directors would like to thank all shareholders customers bankers contractorssuppliers joint venture partners and associates of your Company for the support receivedfrom them during the year. The Directors would also like to place on record theirappreciation of the dedicated efforts put in by employees of the Company.
| ||For and on behalf of the Board |
| ||Arun Nanda |
| ||Chairman |
| ||DIN: 00010029 |
|Date: 12th June 2019 || |
|Place: Mumbai || |