Board's Report to the Members
Your Directors present their eighteenth report together with the audited financialstatement of your Company for the year ended on 31st March 2017.
FINANCIAL HIGHLIGHTS (STAND-ALONE)
(Rs. in lakh)
| ||2017 ||2016 |
|Income from Operations ||68055 ||50211 |
|Other Income ||7265 ||9943 |
|Total Income ||75320 ||60154 |
|Profit Before Depreciation Finance cost and Taxation ||10686 ||16749 |
|Less : Depreciation ||434 ||396 |
|Profit Before Finance cost and Taxation ||10252 ||16353 |
|Less : Finance Cost ||3197 ||4696 |
|Profit Before Taxation ||7055 ||11657 |
|Less : Provision for Taxation || || |
|Current Tax ||2349 ||3709 |
|Deferred Tax (including MAT Credit) ||(188) ||120 |
|Profit After Tax ||4894 ||7828 |
|Add : Balance of Profit for earlier years ||50120 ||48225 |
|Amount available for appropriation || || |
|Dividend paid* on Equity Shares (including tax on distributed profits) ||2963 ||2798 |
|Less/(Add): Transfer to/(from) Debenture Redemption Reserve ||(1031) ||3135 |
|Balance carried forward ||53082 ||50120 |
*Pursuant to applicable provisions of Indian Accounting Standards the dividendamount mentioned in the columns for 2017 and 2016 represents the dividend amount paid(including tax on distributed profits) for the financial years 2016 and 2015respectively.
For the Financial Year 2016-17 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 percent payable tothose shareholders whose names appear in the Register of Member as on the Book ClosureDate.
The equity dividend outgo for the proposed dividend on equity shares for the financialyear 2016-17 inclusive of tax on distributed profits (net of tax on distributed profits ondividend receivable from the subsidiaries during the current financial year) would absorba sum of Rs. 2753.91 lakh.
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 Dividend DistributionPolicy'. The Dividend Distribution Policy is attached herewith and marked as annexure1and is also available on the company's website at https://www.mahindralifespaces.com/media/1315/dividend-distribution-policy.pdf.
Out of the profits available for appropriation no amount has been transferred to anyreserves for the year under review.
OPERATIONS / STATE OF THE COMPANY'S AFFAIRS
The macro-economic environment in India during 2016 - 17 showed a moderate decline.According to the provisional estimates released by the Central Statistics Office India'sGross Value Added (GVA) growth for 2016-17 is pegged at 6.6 per cent compared to 7.9 percent in the previous year. On the positive side the impact of demonetisation on economicactivity was not as pronounced over a longer period of time as was initially envisaged andeconomic activity showed some improvement towards the end of the year. As far as the realestate sector is concerned while the overall demand situation remained muted during thefirst half of the year the same was further impacted during the November to Januaryperiod. However since then enquiry levels improved which if sustained can help improvethe overall demand situation.
In the residential segment the Company along with its subsidiaries sold 889residential units aggregating 0.95 million square feet of saleable area in 2016-17.Construction activity was completed in six phases across three of its projects aggregating0.93 million square feet during 2016-17 and taking the completed area to over 4.2 millionsquare feet in the last two years. This also meant a significant increase in handovers.The Company handed over 2254 units to its customers in 2016-17 almost three-times the823 units handed over in the previous year.
In the integrated cities and the industrial clusters segment over 75 acres of landleases were concluded during the year across the two operational World Cities in Jaipurand Chennai compared to 29 acres in 2015-16. The Company expects to further benefit fromthe ability to market to a wider customer base at Jaipur upon conversion of thesector-specific SEZs into a multi-product SEZ. In addition it is gearing up to launch twonew industrial clusters near Chennai and Ahmedabad in line with its strategy forgrowth in this segment.
Affordable housing continues to be an important growth area for the Company. Learningsfrom its two pilot projects at Avadi and Boisar have enabled the Company to structure astandardised model that can be scalable. The outlook in the affordable housing space ispromising especially with recent developments on the government policies front driven bythe agenda of Housing for All'.
A more detailed account of the Company's operations is provided in the ManagementDiscussion and Analysis Report which forms a part of this Annual Report.
The standalone and consolidated financial statements for 2016-17 have been prepared inaccordance with applicable Indian Accounting Standards (INDAS) and the correspondingfigures for the previous year have been restated as per INDAS for the purpose ofcomparison.
The consolidated total income of your Company increased from Rs. 68717 lakh in 2015-16to Rs. 83102 lakh in 2016-17. The consolidated Profit before tax (PBT) stood at Rs.13890 lakh in 2016-17 as compared to Rs. 13752 lakh in 2015-16 whereas the consolidatedprofit after tax (PAT) and minority interest was Rs. 10224 lakh in 2016-17 ascompared to Rs. 9170 lakh in 2015-16.
Total income of your Company as a standalone entity was Rs. 75320 lakh ascompared to Rs. 60154 lakh in 2015-16. PBT was Rs. 7055 lakh as compared to Rs. 11657lakh in 2015-16 whereas PAT was Rs. 4894 lakh as compared to Rs. 7828 lakh in 2015-16.Total income in 2016 -17 includes dividend income of Rs. 824 lakh received from itssubsidiary company Mahindra World City (Jaipur) Limited. In 2015-16 the Company hadreceived dividend income of Rs. 629 lakh from Mahindra World City (Jaipur) Limited and Rs.178 lakh from Mahindra World City Developers Limited subsidiaries of the Company.
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 during2016-17. Some of the prestigious awards are:
Mahindra Lifespace Developers Ltd was ranked 28th amongst Top 100companies in Asia in the 2016 Channel NewsAsia Sustainability Ranking.
Mahindra Lifespace Developers Ltd was ranked 2nd in theDiversified/Listed Category-Asia in the 2016 Global Real Estate Sustainability Benchmark(GRESB) Rankings.
Mahindra Lifespace Developers Ltd was awarded the 2016 Porter Prize forExcellence in Governance.
Mahindra Lifespace Developers Ltd was selected as a "2016 Working Motherand AVTAR 100 Best Company for Women in India".
Splendour by Mahindra Lifespaces Developers Ltd was among the Top 3 projectsaround the world to be honoured with the Global Human Settlements Model ofResidential Area' at the United Nations Conference on Housing and Sustainable UrbanDevelopment.
Three projects by Mahindra Lifespaces Developers Ltd
Windchimes in Bengaluru Luminare in Gurgaon and Antheia in Pune wereconferred with the Vishwakarma Award for Health Safety and Environment by theConstruction Industry Development Council.
Happinest Avadi received the Best Low Cost Housing Apartment Project ofthe Year' award at the NDTV Property Awards 2016.
Mahindra World City Jaipur received the CSR Excellence Award by the Departmentof Industries and CSR Government of Rajasthan under Life on Land' category.
During the year the Company has allotted 20400 equity shares of Rs. 10 each at anexercise price of Rs. 10 per share to the eligible grantees 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.4107.40 lakh to Rs. 4109.44 lakh and the subscribed and paid up equity share capital ofthe Company has increased from Rs. 4103.32 lakh to Rs. 4105.36 lakh.
In April 2017 the Company has allotted 2050 equity shares of Rs. 10 each at anexercise price of Rs. 10 per share to the eligible grantees pursuant to exercise of stockoptions granted under ESOS - 2012. Consequently the issued equity share capital hasincreased from Rs. 4109.44 lakh to Rs. 4109.65 lakh and the subscribed and paid upequity share capital of the Company has increased from Rs. 4105.36 lakh to Rs. 4105.56lakh.
The allotment of 40851 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 bonafide owner of the sharesis certified by the concerned Stock Exchange or the Special Court (Trial of offensesrelating to transactions in Securities).
During the year Company has not issued any equity shares with differential rights orany sweat equity shares.
The Board of Directors had at its meeting held on 27th October 2016approved Rights Issue upto an amount of Rs. 300 crore. The Rights Issue of 10273600equity shares at a price of Rs. 292 (including face value of Rs. 10 each) per equity shareaggregating Rs. 299.99 crore in the ratio of 1:4 that is 1 (one) Right Equity Share forevery 4 (four) fully paid-up equity shares of the Company held by the Equity Shareholderson the Record Date i.e. 31st March 2017. The Rights Issue was opened on 12thApril 2017 and closed on 26th April 2017 (both days inclusive). The RightsIssue proceeds are being utilized for the purpose of the Issue i.e. payment of RightsIssue expenses repayment of debt and for general corporate purposes. There is nodeviation in the use of Rights Issue proceeds from the objects stated in the Letter ofOffer dated 27th March 2017. The Right Issue was subscribed 129.18 percent ofthe Issue size in terms of number of equity shares applied. The Basis of Allotment wasfinalized on 4th May 2017 in consultation with the BSE Limited the DesignatedStock Exchange. Accordingly the basis of allotment was approved and 10263388 EquityShares of face value of Rs. 10 each issued at a price of Rs. 292 per Equity Share(including a premium of Rs. 282 per Equity Share) fully paid up were allotted on 5thMay 2017 by the Rights Issue Committee. The said equity shares have been listed on theBSE Limited and National Stock Exchange of India Limited and they rank pari-passu with theexisting equity shares in all respects. The allotment of 10212 Rights Equity Shares havebeen kept in abeyance pursuant to provisions of the Companies Act 2013 till such timethe title of the bona-fide owner of the shares is certified by the concerned StockExchange or the Special Court (Trial of offenses relating to transactions in Securities).
Consequently the issued equity share capital has increased from Rs. 4109.65 lakh toRs. 5137.01 lakh and the subscribed and paid up equity share capital of the Company hasincreased from Rs. 4105.56 lakh to Rs. 5131.90 lakh. The Securities Premium account hasincreased from Rs. 68495.25 lakh to Rs. 97438.00 lakh.
On 4th April 2013 the Company had issued and allotted 5000 SecuredListed Rated Redeemable 10.78 per cent YTM Non- Convertible Debentures (NCDs) with a facevalue of Rs. 10 lakh each for cash at par aggregating Rs. 50000 lakh (Rupees FiftyThousand lakh Only) vide Series I Series II and Series III on Private Placement basis.The proceeds of the NCDs issue have been fully utilized for the purposes of the issue.
Series I and II of Secured Listed Rated Redeemable 10.78 per cent YTM comprising of1250 and 1750 Non-Convertible Debentures (NCDs) with a face value of Rs. 10 lakh eachaggregating Rs. 30000 lakh (Rupees Thirty Thousand lakh Only) were redeemed in accordancewith the terms of NCDs on 4th April 2016 and 3rd April 2017respectively along with redemption premium. In terms of the issue the Series III ofSecured Listed Rated Redeemable 10.78 per cent YTM Non- Convertible Debentures amountingto Rs. 20000 lakh (Rupees Twenty Thousand lakh) are due for redemption on 4thApril 2018.
EMPLOYEE STOCK OPTIONS SCHEME
During the Financial Year 2016-17 in accordance with the ESOS2012 theNomination and Remuneration Committee had on 28th July 2016 approved grant oftotal 30000 Stock Options to the eligible employees at an exercise price of Rs. 10 eachwhich is equal to the face value of the equity share of the Company. No Stock Options havebeen granted under ESOS 2006.
There is no scheme as envisaged under section 67 of the Companies Act 2013 in respectof shares on which voting rights are not directly exercised by the employees.
There are no material changes made to the existing schemes i.e. ESOS 2006 andESOS 2012. The existing schemes are implemented in compliance with Securities andExchange Board of India (Share Based Employee Benefits) Regulations 2014 and otherapplicable Regulations and Circulars in force from time to time.
The Information that the Company is required to disclose in relation to ESOS-2006 andESOS-2012 under the Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 is uploaded on the website of the Company athttps://www.mahindralifespaces.com/investors/disclosures-under-sebi
At the beginning of the Financial Year 2016-17 the Promoter and the Holding Companyi.e. Mahindra and Mahindra Limited (M&M) was holding 20846126 equity sharesrepresenting 50.80 percent of the total paid up equity capital of the Company. Consequentto the allotment of equity shares in the Rights Issue of the Company M&M as on thedate of this report holds 26439850 equity shares which represents 51.52 percent of thetotal paid up equity capital of the Company.
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 Companies Act 2013 and their contribution to the overallperformance of the Company is Annexed to the Consolidated Financial Statement.
The policy for determining material subsidiaries is available on the Company's websiteat the link: https://www.mahindralifespaces.com/media/1323/policy-for-determining-material-subsidiaries.pdf
Mahindra World City (MWC) Chennai is implemented by Mahindra World City DevelopersLimited (MWCDL) currently an 89:11 joint venture between the Company and the Tamil NaduIndustrial Development Corporation Limited (TIDCO) respectively. It is the first townshipin India to receive Green Township Certification (Stage I Gold certification) from IGBC.Mahindra World City Chennai was launched in September 2002 and currently has threesector specific Special Economic Zones (SEZs) IT (services and manufacturing)Apparel and Fashion Accessories and Auto Ancillaries and a Domestic Tariff Area (DTA)for businesses catering to the Indian market. Integrated to the business zone is aResidential and Social Infrastructure zone. At the end of 2016-17 the project had a totalarea of 1524 acres. With greater stabilization in the business zone the focus is now ondeveloping the residential and social infrastructure.
Mahindra World City Jaipur is being implemented by Mahindra World City (Jaipur)Limited (MWCJL) a 74:26 joint venture between the Company and Rajasthan State IndustrialDevelopment & Investment Corporation Limited (RIICO) a Government of Rajasthanenterprise respectively. Mahindra World City Jaipur is being developed as aMulti-Product Special Economic Zone and a Domestic Tariff Area for which 2913 acres havealready been acquired. Currently the project has five SEZ zones (2 in IT/ITES 1 each inHandicrafts Engineering & Related Industries Gems & Jewellery) a DomesticTariff Area and a Social and Residential zone. Going forward the focus will continue tobe on sale of industrial land in the project. Application by MWCJL for amalgamating sectorspecific SEZs into a multi-product SEZ has been approved by Board of Approvals Ministryof Commerce Government of India at its 74th meeting held on January 6 2017.The multiproduct SEZ notification is awaited.
Mahindra Integrated Township Limited (MITL) is engaged as a co-developer in developingresidential township area at Mahindra World City New Chennai. Its current developmentsinclude Iris Court' and Nova'. Additionally MITL is in the process ofobtaining approvals for its next project at MWC comprising around 1.08 million square feetof estimated saleable area. After exculding the area under the above projects MITL stillhas approximately 120 acres to be developed in phases for offering products in differentformats and segments. MITL is 96.30 per cent owned by the Company.
Mahindra Residential Developers Limited (MRDL) which is a wholly owned subsidiary ofMahindra Integrated Township Limited (MITL) and a co-developer in developing residentialtownship area in MWC is developing a gated residential community in approximately 55 acreswithin Mahindra World City New Chennai under the name Aqualily'.
Mahindra Bebanco Developers Limited (MBDL) is a 70:30 joint venture between the Companyand B.E. Billimoria & Co. Limited one of the leading construction companies in Indiarespectively. This company is developing a residential complex across approximately 25.2acres at Multi-modal International Hub Airport at Nagpur (MIHAN). During the year certaindisputes arose between the Company and the main contractor M/s. B.E. Billimoria & Co.Ltd. The matter is presently sub-judice and the Company in consultation with lawyers istaking necessary steps to protect the interest of the Company and its customers.
Mahindra Homes Private Limited (MHPL) (earlier known as Watsonia Developers PrivateLimited and prior to that Watsonia Developers Limited) is a 74.98 : 25.02 joint venturebetween the Company and SCM Real Estate (Singapore) Private Limited (SCM) and isdeveloping in collaboration with a developer and land owning companies a group housingproject "Luminare" at NCR on approximately 6.80 acres and a residential project"Windchimes" at Bengaluru on approximately 5.90 acres. The company is exploringthe possibility of undertaking additional projects in residential development segment inIndia. At the beginning of the 2016-17 MHPL was a 50:50 joint venture between the Companyand SCM. On 30th March 2017 MHPL allotted in its Right Issue 411251 SeriesA equity shares (with voting rights) of face value Rs. 10 each to the Company. Pursuant tothe allotment the shareholding of the Company in Series A equity shares (with votingrights) of MHPL has increased from 50 percent to 74.99 percent. Basis the overall paid upshare capital of MHPL the shareholding of the Company in MHPL increased from 50.00percent to 74.98 percent. SCM Real Estate (Singapore) Private Limited holds 25.02 percentof the paid-up share capital as a joint venture partner in MHPL. Pursuant to the increasein shareholding MHPL became a subsidiary of the Company and an indirect subsidiary ofthe Promoter of the Company viz Mahindra and Mahindra Limited.
Mahindra Industrial Park Chennai Limited (MIPCL) is a 60:40 joint venture between theMWCDL and Sumitomo Corporation Japan. Accordingly MIPCL is a subsidiary of MWCDL andconsequently a subsidiary of the Company. MIPCL is setting up an industrial cluster inNorth Chennai (the NH-16 corridor) on approximately 264 acres.
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 World City (Maharashtra) Limited (MWCML) is a wholly owned subsidiary of theCompany which was set up to undertake large format development. The Company is lookingout for an appropriate business opportunity to take up projects in real estatedevelopment. The Board of Directors of MWCML has approved a Scheme of Amalgamationamalgamating Raigad Industrial & Business Park Limited a wholly owned subsidiarycompany of the Company Topical Builders Developers Private Limited and Kismat DevelopersPrivate Limited associate companies of the Company with MWCML and accordingly a Schemeof Amalgamation has been filed with National Company Law Tribunal Mumbai Bench.
Knowledge Township Limited (KTL) a wholly owned subsidiary of the Company will bedeveloping an industrial park in Maharashtra for which the company is in the process ofprocuring the required land area.
Industrial Township (Maharashtra) Limited (ITML) a wholly owned subsidiary of theCompany is exploring the possibility of taking up real estate development.
Raigad Industrial & Business Park Limited (RIBPL) a wholly owned subsidiary of theCompany is in the business of real estate development.
Anthurium Developers Limited (ADL) a wholly owned subsidiary of the Company isexploring the possibility of taking up real estate development projects.
Industrial Cluster Private Limited (ICPL) (formerly known as Mahindra Housing PrivateLimited) a wholly owned subsidiary of the Company has acquired approximately 268 acres ofcontiguous land at Jansali near Ahmedabad for setting up an industrial cluster.
Mahindra Water Utilities Limited (MWUL) is engaged in the business of operation andmaintenance service 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.
JOINT VENTURE COMPANIES
There is no direct joint venture company of the Company except Mahindra World CityDevelopers Limited Mahindra World City (Jaipur) Limited Mahindra Homes Private Limitedand Mahindra Bebanco Developers Limited which are joint venture subsidiary companies andhave been dealt in the section of Subsidiary Companies.
Topical Builders Developers Private Limited (TBPL) Kismat Developers Private Limited(KDPL) and Mahindra Knowledge Park (Mohali) Limited are the associate companies of theCompany.
During the year Mahindra Homes Private Limited which was an associate company (50: 50joint venture company with SCM) ceased to be associate company and became a subsidiary ofthe Company. No other company has become or ceased to be a Subsidiary / Associate / JointVenture company of the Company.
CONSOLIDATED FINANCIAL STATEMENT
The audited consolidated financial statement of the Company prepared in accordance withthe Companies Act 2013 and applicable Accounting Standards along with all relevantdocuments and the Auditors' Report forms part of this Annual Report.
The financial statements of Subsidiaries companies are not attached along with thefinancial statements of the Company. Separate audited financial statement of each of thesubsidiaries is placed on the website of the Company at web link: https://www.mahindralifespaces.com/investors/financial-information.
The Company will provide the financial statements of subsidiaries upon receipt of awritten request from any member of the Company interested in obtaining the same. Thefinancial statement of subsidiaries will also be available for inspection at theRegistered Office of your Company during working hours up to the date of the AnnualGeneral Meeting.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report which gives a detailed account of stateof affairs of the Company's operations forms a part of this Annual Report.
A report on Corporate Governance along with a certificate from the Auditors of theCompany regarding the compliance with the requirements of Corporate Governance asstipulated under 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 achievethe mission of Transforming urban landscapes by creating sustainable communities'.The Company has done this by putting sustainability as a core agenda for the Company. Thedetails of Company's approach to sustainability are covered in the Business ResponsibilityReport.
The Business Responsibility Report (BRR) for the financial year 2016-17 as required byRegulation 34(2)(f) of SEBI LODR forms part of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company's guiding principle for CSR is to build its relationship with stakeholdersand the community at large and contribute to their long term social good and welfare. TheCompany in every financial year in line with the new Companies Act 2013 pledges tospend two per cent of the average net profits made during the three immediately precedingfinancial years specifically towards CSR initiatives.
The Company has constituted Corporate Social Responsibility Committee comprising Mr.Arun Nanda Non-Executive Non-Independent Director Mr. Shailesh Haribhakti Non Executive Independent Director and Ms. Anita Arjundas Managing Director &CEO. The role of the Committee is to formulate and recommend a CSR policy to the Board torecommend expenditure to be incurred on CSR activities to monitor the CSR policy of theCompany from time to time and to institute a transparent monitoring mechanism forimplementation of the CSR projects or programs or activities undertaken by the Company.
The Company's CSR Policy lays out the vision objectives and implementation mechanisms.The Company's CSR policy is available on the Company's web link athttps://www.mahindralifespaces.com/media/1050/corporate-social-responsibility-csr-policy.pdf
The Company's CSR activities have traditionally focused on education skilldevelopment health environment and promoting sustainable practices.
The objective of the CSR policy is to:
Promote a unified approach to CSR to incorporate under one umbrella the diverserange of the Company's philanthropic activities thus enabling maximum impact of the CSRinitiatives;
Ensure an increased commitment at all levels in the organisation to operate inan economically socially and environmentally responsible manner while recognising theinterests of all its stakeholders;
Encourage employees to participate actively in the Company's CSR and give backto the society in an organised manner through the employee volunteering programme calledEmployee Social Options.
The Company's commitment to CSR will be manifested by investing resources in any of theareas stipulated in Schedule VII to the Companies Act 2013. The Company gives preferenceto the local area and area around it where it operates for spending the amounts earmarkedfor CSR activities.
Of the total budget of Rs. 520.59 lakh for financial year 2016-17(including Rs. 132.73lakh being unspent amount of the previous year) the Company has spent Rs. 481.49 lakh asper the approved CSR plan for financial year 2016-17. The balance Rs. 39.11 lakhwhich was earmarked for the purpose of education environment Swachh Bharat and forpromoting health measures remained unspent for following reasons:
1. Rs. 0.91 lakh of Gyandeep remained unspent due to closure of one of the schools
2. Rs. 27.67 lakh of Project Hariyali remained unspent due to unsuitable forest landparcel
3. Rs. 8.82 lakh of Gram Vikas Local infrastructure Rs. 0.95 lakh of SwachhBharat Rs. 0.53 lakh of health check-up camps and Rs. 0.23 lakh of EnvironmentalSustainability eradication of Poverty and Mal-nutrition remained unspent due to localcommunity issues.
In view of the above the Board has approved that unspent amount of Rs. 39.11 lakh outof the minimum required CSR expenditure of the financial year 2016-17 be carried forwardto the next year and the carried forward amount shall be over and above the next year'sCSR allocation equivalent to at least 2 per cent of the average net profit of the Companyof the immediately preceding three years.
The annual report on the CSR activities in the prescribed format is at Annexure 2to 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 18th Annual General Meeting of the Companyand being eligible has offered himself for reappointment.
Pursuant to Section 152 160 161 and all other applicable provisions of the CompaniesAct 2013 and Article 128 of the Articles of Association of the Company Mr. Bharat Shah(DIN: 00136969) a Non-Executive Independent Director who was appointed as an AdditionalDirector with effect from 1st August 2016 shall hold office as per theprovisions of Section 161 of the Companies Act 2013 till the date of the ensuing AnnualGeneral Meeting. The Company has received a notice as per the provisions of Section 160(1)of the Companies Act 2013 from a Member in writing proposing his candidature for theoffice of Director along with requisite deposit.
Brief resume of Mr. Arun Nanda and Mr. Bharat Shah nature of their expertise inspecific functional areas names of companies in which they hold directorships andmemberships / chairmanships of Board Committees and shareholding as stipulated underRegulation 36(3) of SEBI LODR are provided in the Corporate Governance Report formingpart of the Annual Report. None of the Directors of the Company are inter-se related toeach other. Both Directors i.e. Mr. Arun Nanda and Mr. Bharat Shah are not disqualifiedfrom being re-appointed / appointed as Directors by the provisions of Section 164 of theCompanies Act 2013.
Pursuant to the provisions of the Companies Act 2013 and Part D of Schedule II of SEBILODR evaluation of every Director's performance was done by Nomination and RemunerationCommittee. The performance evaluation of Non-Independent Directors and the Board as awhole Committees thereof was carried out by the Independent Directors. The performanceevaluation of the Chairman of the Company was also carried out by the IndependentDirectors taking into account the views of the Executive Director and Non-ExecutiveDirectors. Evaluation of Independent Directors was carried out by the entire Board ofDirectors excluding the Director being evaluated. Structured questionnaires coveringvarious aspects of the evaluation such as adequacy of the size and composition of theBoard and Committee thereof with regard to skill experience independence diversityattendance and adequacy of time given by the Directors to discharge their dutiesCorporate Governance practices etc. were circulated to the Directors for the evaluationprocess. The Directors expressed their satisfaction with the evaluation process.
The Company has received declarations from each of the Independent Directors confirmingthat they meet the criteria of independence as provided in sub-section 6 of Section 149 ofthe Companies Act 2013 and Regulation 16(1) (b) of SEBI 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/investors/disclosures-under-sebi
The following policies of the Company are attached herewith and marked as Annexure3 Annexure 4 and Annexure 5:
1. Policy on appointment of Directors and Senior Management (Annexure 3)
2. Policy on Remuneration of Directors (Annexure 4) and
3. Policy on Remuneration of Key Managerial Personnel and Employees (Annexure 5)
The Managing Director & CEO draws remuneration only from the Company and does notreceive any remuneration or commission from any of its subsidiary companies / holdingcompany.
KEY MANAGERIAL PERSONNEL (KMP)
The Company has following persons as Key Managerial Personnel under the Companies Act2013:
|Sr. No. ||Name of the Person ||Designation |
|1 ||Ms. Anita Arjundas ||Managing Director & CEO |
|2 ||Mr. Suhas Kulkarni ||Company Secretary |
|3 ||Mr. Jayantt Manmadkar ||Chief Financial Officer |
During the year under review there was no change in the KMP of the Company.
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 the meetings was within theperiod prescribed under the Companies Act 2013 Secretarial Standards 1 (SS-1)issued by the Institute of Company Secretaries of India 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 standards hadbeen followed along with proper explanation relating to material departures;
(b) they had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year 31stMarch 2017 and of the profit of the Company for that period;
(c) they had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) they had prepared the annual accounts on a going concern basis;
(e) they had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively; and
(f) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
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.
The Audit Committee of the Company as on 31st March 2017 comprised of threeindependent Directors namely Mr. Sanjiv Kapoor Mr. Shailesh Haribhakti Dr. PrakashHebalkar and one Non-Executive Non-Independent Director Dr. Anish Shah. Mr. Sanjiv Kapooris the Chairman of the Committee.
All members of the Audit Committee possess strong knowledge of accounting and financialmanagement. The Chairman of the Company the Managing Director & Chief ExecutiveOfficer Chief Financial Officer the Internal Auditors and Statutory Auditors areregularly invited to attend the Audit Committee Meetings. The Company Secretary is theSecretary to the Committee. The Internal Auditor reports to the Chairman of the AuditCommittee. The significant audit observations and corrective actions as may be requiredand taken by the management are presented to the Audit Committee. The Board has acceptedall recommendations made by the Audit Committee from time 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 Company's Code or Policies. The vigil mechanism isoverseen by the Audit Committee and provides adequate safeguards against victimisation ofstakeholders who use such mechanism.fiIt provides a mechanism for stakeholders to approachthe Chairman of Audit Committee or Chairman of the Company or the Corporate GovernanceCell consisting of Head - Legal & Secretarial Chief Financial Officer and ChiefEthics Officer (Head-Human Resources). During the year no such incidence was reported andno person was denied access to the Chairman of the Audit Committee or to the Chairman ofthe Company or to the Corporate Governance Cell. The Whistle Blower Policy of the Companyis available at web link https://www.mahindralifespaces.com/media/1318/whistle-blower-policy.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 Company has constituted a "Risk Management Committee" consisting of Mr.Shailesh Haribhakti Non-Executive Independent Director and Ms. Anita Arjundas ManagingDirector
& CEO of the Company and the Chief Financial Officer for monitoring and reviewingof the risk assessment mitigation and risk management plan from time to time. The Boardreviews implementation and monitoring of the risk management plan for the Companyincluding identification of risks if any which in the opinion of the Board may threatenthe existence of the Company.
The Shareholders of the Company at the 17th Annual General Meeting of theCompany held on 28th July 2016 had appointed M/s. B. K. Khare & Co.Chartered Accountants Mumbai (Registration Number- 105102W) as Statutory Auditors of theCompany to hold office from the conclusion of the 17th Annual General Meetinguntil the conclusion of the 18th Annual General Meeting to conduct the audit ofthe Accounts of the Company.
Under section 139(2) of the Companies Act 2013 and Rules framed thereunder it ismandatory to rotate the Statutory Auditors on completion of term including the transitionperiod permitted under the said section.
M/s. B. K. Khare & Co. Chartered Accountants have held office as Statutory Auditorof the Company from the conclusion of the 3rd AGM i.e. from 25thSeptember 2002. Pursuant to section 139(2) of the Companies Act 2013 read with Rulesframed thereunder M/s. B. K. Khare & Co. Chartered Accountants have completed aperiod of more than 10 years on the commencement of the Companies Act 2013 and havecompleted the transition period of 3 years from the date of commencement of the CompaniesAct 2013.
In terms of said section M/s. B. K. Khare & Co will be holding the office ofStatutory Auditors up to the conclusion of the forthcoming 18th Annual GeneralMeeting.
Accordingly the Board of Directors based on the recommendation of Audit Committee andsubject to approval of the Shareholders at the ensuing 18th Annual GeneralMeeting has proposed to appoint M/s. Deloitte Haskins & Sells LLP CharteredAccountants Mumbai (ICAI Registration Number -117366W/W-100018) as Statutory Auditors ofthe Company for a term of 5 consecutive years from the conclusion of the 18thAnnual General Meeting till the conclusion of the 23rd Annual General Meetingto be held in the calendar year 2022 (subject to ratification of their appointment atevery AGM) to conduct the audit of the Accounts of the Company at such remuneration asmay be mutually agreed upon between the Board of Directors of the Company and theAuditors.
The Company has also received a written consent and a certificate from M/s. DeloitteHaskins & Sells LLP Chartered Accountants to the effect that their appointment ifmade would be in accordance with the provision of Section 139 and that they satisfy thecriteria provided in section 141 of the Companies Act 2013 read with Rules framedthereunder.
The Board places on record its appreciation for the services rendered by M/s. B. K.Khare & Co Chartered Accountants during their tenure as the Statutory Auditors ofthe Company.
The notes of the financial statements referred to in the Auditors' Report issued byM/s. B. K. Khare & Co for the financial year ended on 31st March 2017 areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain 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 2016-17. 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(3) and proviso to Section148(3) read with Section 141(4) of the Companies Act 2013.
As per the provisions of the Companies Act 2013 the remuneration payable to the CostAuditor is required to be placed before the Shareholders in a General Meeting for theirratification. Accordingly a resolution seeking Shareholders' ratification for theremuneration payable to CMA Vaibhav Prabhakar Joshi Practising Cost Accountant isincluded in the Notice convening the Annual General Meeting.
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 for the financial year(s) commencing on andfrom 1st April 2014. The Secretarial Audit report for the financial year ended31st March 2017 is annexed herewith and marked as Annexure 6 to thisReport. The Secretarial Audit Report does not contain any qualification reservation oradverse remark.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013
As the Company is engaged in the business of providing infrastructural facilities theprovisions of Section 186 of the Companies Act 2013 related to loans made guaranteesgiven or securities provided are not applicable to the Company. However the details ofthe same are provided in the standalone financial statement at Note no.45.
Particulars of investment made under Section 186 of the Companies Act 2013 areprovided in the standalone financial statement at Note no. 7.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
All Related Party Transactions entered into during the year were in the Ordinary Courseof Business and on arms' length basis. During the year under review your Company hadentered into Material Related Party Transactions i.e. transactions exceeding ten percentof the annual consolidated turnover as per the last audited financial statements detailsof which as required to be provided under section 134(3)(h) of the Companies Act 2013are disclosed in Form AOC-2 marked as Annexure 7 to this Report.
The Policy on materiality of related party transactions and on dealing with relatedparty transactions as approved by the Board may be accessed on the Company's website atthe link https://www.mahindralifespaces.com/media/1322/policy-on-materiality-of-and-dealing-with-related-party-transactions.pdf
The Directors draw attention of the members to Note no. 36 to the standalone financialstatement which sets out related party disclosures.
DEPOSITS LOANS AND ADVANCES
The Company has not accepted any deposits from the public or its employees during theyear under review. The details of loans and advances which are required to be disclosedin the annual accounts of the Company pursuant to Regulation 34(3) and 53 (f) read withSchedule V of the SEBI LODR with the Company is annexed herewith and marked as Annexure8 to this Report.
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 the Annexure 9 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 Annexure10 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 Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are available at the Registered Officeof the Company 21 days before the Annual General Meeting during working hours and shall bemade available to any shareholder on request. Such details are also available on yourCompany's website at: https://www. mahindralifespaces.com/investors/disclosures-under-sebi
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is included in this Report as Annexure 11 andforms part of this Report.
No fraud has been reported during the audit conducted by the Statutory AuditorsSecretarial Auditors and Cost Auditors of the Company.
During the year under review no revision was made in the previous financial statementof the Company.
During the year ended on 31st March 2017 there were no cases filed /reported pursuant to the Sexual Harassment of women at workplace (Prevention Prohibitionand Redressal) Act 2013.
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operation in future.
Certain statements in the Directors' Report describing the Company's objectivesprojections estimates expectations or predictions may be forward-looking statementswithin the meaning of applicable securities laws and regulations. Actual results coulddiffer from those expressed or implied. Important factors that could make a difference tothe Company's operations include labour and material availability and prices cyclicaldemand and pricing in the Company's principal markets changes in government regulationstax regimes economic development within India and other incidental factors.
The Company is currently in the process of registering its ongoing projects in theapplicable jurisdictions / States under the Real Estate (Regulation and Development) Act2016 ("RERA") and wherever the Rules under RERA have been notified by therespective States in which company has projects. Till such time the projects that arerequired to be registered under RERA are registered none of the images materialprojections details descriptions and other information that are mentioned in the AnnualReport for the year 2016-17 should be deemed to be or constitute advertisementssolicitations marketing offer for sale invitation to offer invitation to acquireincluding within the purview of the RERA.fi
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 the employees of the Company.
For and on behalf of the Board
Date: 16th May 2017