BOARD'S REPORT TO THE MEMBERS
Your Directors present their twenty-first report together with the audited financialstatement of your Company for the year ended on 31st March 2020.
FINANCIAL HIGHLIGHTS (STANDALONE)
(Rs. in lakh)
| ||2020 ||2019 |
|Income from Operations ||43988.47 ||48603.21 |
|Other Income ||8080.93 ||6881.02 |
|Total Income ||52069.40 ||55484.23 |
|Profit / (Loss) Before Depreciation Finance cost and Taxation ||1658.05 ||9312.73 |
|Less: Depreciation ||(725.98) ||(306.12) |
|Profit / (Loss) Before Finance cost and Taxation ||932.07 ||9006.61 |
|Less: Finance Cost ||(183.71) ||(548.49) |
|Profit / (Loss) Before exceptional item & Taxation ||748.36 ||8458.12 |
|Less: Exceptional Item1 ||(23731.31) ||NIL |
|Profit / (Loss) after exceptional item and before Tax ||(22982.95) ||8458.12 |
|Less: Provision for Taxation || || |
| Current Tax ||Nil ||Nil |
| Deferred Tax (including MAT Credit) ||382.44 ||(2598.67) |
|Profit / (Loss) After Tax ||(22600.51) ||5859.45 |
|Add: Balance of Retained earnings of earlier years ||57974.86 ||55018.39 |
|Add: Transfers from Debenture Redemption Reserve ||NIL ||8375.00 |
|Less: Adjustment relating to cumulative effect of applying Ind-AS 1152 ||NIL ||(7958.14) |
|Retained earnings available for appropriation ||35374.35 ||61294.70 |
|Add: Other Comprehensive Income / (Loss)3 ||85.53 ||(77.01) |
|Less: Dividend paid on Equity Shares4 ||(3081.14) ||(3080.02) |
|Less: Income-tax on Dividend paid4 ||NIL ||(162.81) |
|Retained earnings carried forward ||32378.74 ||57974.86 |
1 Details of the exceptional item are given below in the paragraph titledOperations / State of the Company's Affairs'.
2 Based on the requirements of the Ind AS 115 pertaining to recognition ofrevenue based on satisfaction of performance obligation (at a point in time) thetransitional adjustment of '7958 lakhs (net of deferred tax) has been adjusted againstopening Retained Earnings for FY 2018-19. For further details please refer Note no. 23 tothe standalone financial statement.
3 Re-measurement of (loss)/gain (net) on defined benefit plans recognised aspart of retained earnings.
4 Pursuant to applicable provisions of Indian Accounting Standards the amount ofdividend paid and income tax thereon mentioned in the columns for 2020 and 2019 representsthe final dividend amount declared and income tax thereon for the financial years 2019 and2018 respectively.
In view of the loss for FY 2019-20 and considering the necessity to conserve resourcesof the Company during this uncertain and difficult times due to the COVID-19 pandemic theDirectors have not recommended any dividend for the financial year ended 31stMarch 2020.
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 1 and is alsoavailable on the Company's website athttps://www.mahindralifespaces.com/media/investor/codes-and-policies/Dividend%20Distribution%20Policy.pdf
During FY 2019-20 no amount has been transferred to any reserves.
OPERATIONS / STATE OF THE COMPANY'S AFFAIRS
India's economic growth decelerated significantly during the year. Gross DomesticProduct (GDP) growth for FY 2019-20 is estimated at 4.2 % compared to 6.1 % in theprevious year. This deceleration was driven by a slowdown in industry and services growtheven as agriculture grew from 2.4 % in FY 2018-19 to 4.0 % in FY 2019-20. The slowdown ineconomic activity affected the Company's performance during the year.
During FY 2019-20 the Company launched two new projects in the Mumbai MetropolitanRegion (MMR) -Vicino Andheri in the premium segment and Happinest Kalyan in theaffordable segment. In addition it launched fresh inventory in Happinest Avadi Chennai.The Company also made a conscious call to defer launches of certain residential projectsin FY 2019-20 due to the emerging Covid situation.
The Company and its subsidiaries sold 1659 residential units aggregating 1.41 millionsquare feet of saleable area in FY 2019-20 compared to 1678 units aggregating 1.69million square feet in the previous year. However due to the smaller ticket-sizeaffordable housing projects dominating the sales mix in value terms this represents salesof Rs. 81828 lakh in FY 2019-20 compared to Rs.102300 lakh in FY 2018-19. On aconsolidated basis the Company's focus on execution is reflected in the completion of1.07 million square feet during the year. Handovers of units also continued at animpressive pace with 1222 units being handed over to homeowners during FY 201920compared to 1255 units in FY 2018-19. Overall collections on a consolidated basis alsoremained robust at Rs.93044 lakh in FY 2019-20 compared to Rs.96326 lakh in FY 2018-19.
Overall in the residential business the Company and its subsidiaries are currentlydeveloping 3.60 million square feet with another 4.23 million square feet available in theform of forthcoming projects - new phases of ongoing projects and new projects that areunder planning.
In the integrated cities and industrial clusters business around 40 acres of landleases were concluded in FY 2019-20 compared to 93 acres in the previous year. Thisincludes two new customers Nissei Electric and Usui Susira in Origins Chennai its newindustrial cluster project launched in FY 2018-19. As the industrial land inventory in MWCChennai is exhausted Origins Chennai and MWC Jaipur will drive industrial leasingactivity in this segment. The Company is also developing its second industrial clusterproject -Origins (Ahmedabad) Gujarat.
Total income of your Company as a standalone entity was Rs.52069.40 lakh in FY 2019-20as compared to Rs.55484.23 lakh in FY 2018-19. Profit before tax and before exceptionalitem was Rs.748.36 lakh and the loss before tax after accounting for exceptional item wasRs.22982.95 lakh in FY 2019-20. The loss after tax was Rs.22600.51 lakh as compared toProfit after tax of Rs.5859.45 lakh in FY 2018-19. Total income in FY 2019-20 includesdividend income of Rs.1665.00 lakh from Mahindra World City (Jaipur) Limited Rs.1242.00lakh from Mahindra Infrastructure Developers Limited and Rs.178.00 lakh from MahindraWorld City Developers Limited subsidiaries of the Company. In FY 2018-19 the Company hadreceived dividend income of Rs.1665.00 lakh from Mahindra World City (Jaipur) Limited andRs.425.50 lakh from Mahindra Integrated Township Limited subsidiaries of the Company.
Total Consolidated income of your Company stood at Rs.64591.93 lakh in FY 2019-20 ascompared to Rs.65387.01 lakh in FY 2018-19. Consolidated loss before tax (afterexceptional item) was Rs.19624.48 lakh in FY 2019-20. Consolidated loss after tax wasRs.19341.17 lakh in FY 2019-20 as compared to a profit after tax of Rs.11970.52 lakh inFY 2018-19.
Mahindra Homes Private Limited (MHPL) a Joint Venture of the Company is executingresidential projects at NCR and Bengaluru. The residential project in NCR is a JointDevelopment with the land owner. The project saw a successful launch in 2015 in a buoyantmarket. The relevant market has thereafter seen muted demand and declining prices. Duringthe year MHPL also saw significant cancellations of earlier bookings. The Company hasevaluated the carrying value of its investment in MHPL and on the basis of estimated NetPresent Value of forecasted cash flows provided for an aggregate impairment loss ofRs.23731.31 lakh (exceptional item). This has been done as a matter of prudence in anuncertain market environment. On a consolidated basis the impact of impairment is Rs.13459.27 Lakh in addition to an impact of Rs. 6472.60 lakh as Share of Loss from MHPL.
The Covid-19 Pandemic
The Covid-19 pandemic presented an unprecedented health emergency. In India earlyprotective measures by the Indian Government were gradually ramped up culminating into astrict nationwide lockdown starting from 25th March 2020. Similar measures tocontain this emergency in the form of restrictions on activity and mobility by countrieshas resulted in a global slowdown even as there continues to be a severe uncertaintyaround the duration and intensity of the crisis. This affects all aspects of our lives andwill have a wide impact on the economy which includes our business.
The safety and well-being of the employees customers and other stakeholders has beenthe Company's highest priority. A cross-functional Rapid Action Force (RAF) was formedwhich is responsible for constantly monitoring the situation suggesting swift andeffective actions. Following the lockdown the Company managed to enable hundred percentof its employees to work remotely from their homes. They were engaged through learningsessions leadership communication and online team building events which helped employeesembrace the new normal. The Company also ensured timely updates to the customers -engagingthem through social media campaigns and personalised communication. Construction activityat all project sites were closed in compliance with the Government's directives. Workmenat labour camps were supported with essentials (food availability health check-ups etc.)and provided awareness sessions on social distancing measures personal hygiene and use ofmasks.
The Company resumed operations at a few of its construction sites with strict protocolsfor safety and hygiene as the government eased lockdown restrictions. The Company willcontinue to remain fully aligned with government guidelines and will progressively resumeoperations in a graded manner. Plans and protocols are in place for return to offices oncethe lockdown is lifted. To remain safe short-term and long-term changes in workplacebehaviour will be necessary and the Company has issued Back to Office' guidelines tofacilitate this.
The Company is actively monitoring the impact of the Covid-19 pandemic on its financialcondition liquidity operations suppliers industry and workforce. It has used theprinciples of prudence in applying judgments estimates and assumptions based on thecurrent estimates. In assessing the recoverability of assets such as goodwillinventories financial and other assets based on current indicators of future economicconditions the Company expects to recover the carrying amounts of its assets. The extentto which Covid-19 impacts the operations will depend on future developments which remainuncertain.
Besides this no material changes and commitments have occurred after the close of theyear till the close 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 2019-20. Some of the prestigious awards are:
The Company's ranking improved from 22nd position in FY 2018-19 to 17thposition in FY 2019-20 in the list of Great Places to Work in India in the Mid-sizecompanies' category;
Mahindra World City Chennai received bespoke award in deployment oftechnology' in fDi Global Free Zones of the Year 2019 by fDi Magazines;
Mahindra World City Jaipur received bespoke award in sustainability' infDi Global Free Zones of the Year 2019 by fDi Magazines;
The Company's Project Antheia was ranked 1st in the housing categoryin the Swachh Bharat drive by Pimpri Chinchwad Municipal Corporation;
Mahindra World City Chennai received Sustain Award 2019' in theIndian large Companies category' at Indo-German Chamber of Commerce;
The Company received Gold Best Sustainable Green Initiative at Asian CustomerEngagement Forum and Awards for its #IAmGreenArmy Initiative;
The Company received Green Excellence Awards 2020 in the GreenConstruction Company' category at iDAC Expo;
The Company received Corporate Governance and Sustainability Vision Award 2020in two categories viz. Sustainable Performance and Corporate Social Responsibility atIndian Chamber of Commerce;
The Company received YUVA Unstoppable Gratitude Award 2020' by YUVAUnstoppable an award to appreciate Company's efforts in the field of Education
Mahindra World City Jaipur received Best CSR Impact Award' by UBS Forums.
During the year the Company has allotted 12300 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.5140.02 lakh to Rs. 5141.25 lakh and the subscribed and paid up equity share capital ofthe Company has increased from Rs. 5134.91 lakh to Rs. 5136.14 lakh.
Post closure of Financial Year 2019-20 the Company has allotted 3750 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. 5141.25 lakh to Rs.5141.63 lakh and the subscribed and paidup equity share capital of the Company has increased from Rs.5136.14 lakh to Rs.5136.52lakh.
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 of theshares is certified by the concerned Stock Exchange or the Special Court (Trial ofoffenses 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 ESOS-2012 the Nomination and RemunerationCommittee on 26th July 2019 had approved grant of total 64500 Stock Optionsto the eligible employees at an exercise price of '10 each which is equal to the facevalue of the equity share of the Company.
During the year no Stock Options have been granted under ESOS - 2006. Except 5000Stock Options granted on 4th August 2012 all options granted under EsOS-2006and not exercised have lapsed. The ESOS-2006 has authorised the Nomination &Remuneration Committee of the Board to re-issue lapsed Options to the eligible employees.
The Company does not have any scheme envisaged under Section 67 of the Companies Act2013 ("the Act") in respect of shares on which voting rights are not directlyexercised by the employees.
During the year no change was made to the existing schemes
i.e. ESOS - 2006 and ESOS - 2012. The existing schemes are implemented in compliancewith Securities and Exchange Board of India (Share Based Employee Benefits) Regulations2014 ("SBEB Regulations") and other applicable Regulations and Circulars inforce from time to time.
A certificate from the Statutory Auditor confirming that the above-mentioned Schemesi.e. ESOS-2006 and ESOS-2012 have been implemented by the Company in accordance with the
SBEB Regulations and the Resolutions passed by the Members for the said schemes will beplaced before the members in the Annual General Meeting.
The disclosure in relation to ESOS-2006 and ESOS-2012 under the SBEB Regulations isuploaded on the website of the Company at https://www.mahindralifespaces.com/investors/stock-exchange-filings/other-filing-information.
As on 31st March 2020 the Promoter and the Holding company i.e. Mahindraand Mahindra Limited (M&M) holds 26439850 equity shares representing 51.48 % of thetotal paid-up equity capital of the Company. There was no change in the shareholding ofM&M in the Company during 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 45.
SUBSIDIARY AND JOINT VENTURE COMPANIES
Mahindra World City (MWC) Chennai is being implemented by Mahindra World CityDevelopers Limited (MWCDL) 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 the Green Township Certification (Stage I Gold certification) fromIGBC. Mahindra World City Chennai was launched in September 2002 and currently hasthree sector 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 zone. At the end of FY 2019-20 the project had a total area of1524 acres. The company is focusing on clients for social infrastructure having leasedentire industrial land inventory.
During the year MWCDL received approval from the Ministry of Commerce and Industry forde-notification of 55.59 hectares (which is equivalent to approximately 137 acres) in theSEZ's non-processing area. This de-notified land of 55.59 hectares is a part of 89.07hectares (equivalent to approximately 220 acres) that was leased earlier to anothersubsidiary of the Company Mahindra Integrated Township Limited (MITL) for undertakingresidential development. This de-notification will enable MITL to cater to a wider market.
Mahindra World City (MWC) 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. The project is spread across 2913 acres of land and offersmulti product SEZ along with Domestic Tariff Area (DTA) and Social & ResidentialInfrastructure.
The Company has partnered with International Finance Corporation (IFC) a member of theWorld Bank Group for the development of MWC Jaipur. IFC has invested ' 19479.03 lakh inMWCJL and is entitled to economic rights to the extent of 50% on 500 acres of gross landcomprising 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'. Additionally MITL is in theprocess of obtaining approvals for its next project at MWC Chennai. After excluding thearea under the above projects MITL still has approximately 135 acres to be developed inphases for offering products in different formats and segments. The Company directly andindirectly owns 97.14% of MITL. During the year MITL bought back 435000 equity sharesallotted to its ESOP Shareholders at a price of Rs.28.60 per share calculated inaccordance with the terms of its ESOP Scheme. The buyback offer pursuant to Section 68 ofthe Act was exclusively made to its ESOP Shareholders. The Company was not entitled toparticipate in the offer. As a result MLDL's direct and indirect holding increased from96.30 % to 97.14 % in MITL.
Mahindra Residential Developers Limited (MRDL) which is a wholly owned subsidiary ofMahindra 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) is a wholly owned subsidiary of theCompany. MBDL is developing a gated residential community Bloomdale' acrossapproximately 25.2 acres at Multi-modal International Hub Airport at Nagpur (MIHAN).
Mahindra Homes Private Limited (MHPL) is a 71.61 : 28.39 joint venture between theCompany and Actis Mahi Holding (Singapore) Private Limited (Actis') respectivelyand is developing in collaboration with a developer and land owning companies a grouphousing project "Luminare" at NCR on approximately 6.80 acres and a residentialproject "Windchimes" at Bengaluru on approximately 5.90 acres.
During the financial year 2019-20 the Company and Actis in accordance with the termsof Debentures allotted to them had applied for the conversion of the said Debentures intoEquity Shares. Accordingly MHPL has converted:
a) 32017000 Optionally Convertible Debentures (OCDs) held by the Company in MHPL andallotted 64034 fully paid-up Series C Equity Shares (non-voting rights) of the face valueof Rs.10 each at the conversion price of Rs.50000 per Equity Share;
b) 32017000 Compulsory Convertible Debentures (CCDs) held by Actis in MHPL andallotted 64034 fully paid-up Series B Equity Shares (non-voting rights) of the face valueof Rs.10 each at the conversion price of ' 50000 per Equity Share;
Consequent to the conversion the shareholding of the Company in the overall paid upshare capital (having voting and non-voting shares) of MHPL has decreased from 74.99% to71.61%. The economic interest in MHPL continues to be shared between MLDL and Actis in theratio of 50:50.
Mahindra Happinest Developers Limited (MHDL) is a 51:49 joint venture between theCompany and HDFC Capital Affordable Real Estate Fund - I (HDFC) respectively. Theeconomic interest of MLDL and HDFC in MHDL is in the ratio of 25:75. MHDL has till datelaunched two projects having development potential of upto 1.24 million square feet underthe brand Happinest'. The first of its housing project - Happinest Palghar'was launched in the year 2017-18 and the second project Happinest Kalyan' waslaunched in FY 2019-20.
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 289 acres under the brandOrigins by Mahindra World City'.
Mahindra Industrial Park Private Limited (MIPPL) a wholly owned subsidiary of theCompany has acquired around 340 acres of contiguous land at Jansali near Ahmedabad forsetting up an industrial cluster. The Company has partnered with International FinanceCorporation (IFC) a member of the World Bank Group for the development of upcomingproject at Jansali. IFC till date has invested Rs.7564.5 lakh in MIPPL and is entitledto economic rights to the extent of 50% in MIPPL. The project will be marketed under thebrand 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 98.99%subsidiary of Mahindra Infrastructure Developers Limited and consequently a subsidiary ofthe Company.
Mahindra World City (Maharashtra) Limited (MWCML) is a subsidiary of the Company whichwas set up to undertake large format development. MWCML is looking for an appropriatebusiness 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 has assured support to 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 land area.
Industrial Township (Maharashtra) Limited (ITML) and Anthurium Developers Limited(ADL) wholly owned subsidiaries of the Company are exploring the possibility of taking upreal estate development projects and Moonshine Construction Private Limited and MahindraKnowledge Park (Mohali) Limited subsidiaries of the Company are on the lookout for aviable proposition.
As of 31st March 2020 no company is an associate of the Company. Duringthe year no other company became or ceased to be a Subsidiary / Associate / Joint Venturecompany 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 the Auditors'Report forms part of this Annual Report.
The audited financial statement of each of the subsidiaries is placed on the website ofthe Company at web link: https://www.mahindralifespaces.com/investors/annual-reports/fy-20-21
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 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 Company'sapproach to sustainability in accordance with Regulation 34(2)(f) of SEBI LODR describingthe initiatives taken by the Company from an environmental social and governanceperspective are covered in the prescribed format of Business Responsibility Report whichforms 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 Companies Act 2013 pledges to spendminimum two % of the average net profits made during the three immediately precedingfinancial years towards CSR initiatives.
The Company has constituted a Corporate Social Responsibility (CSR) Committeecomprising Non-Executive Non-Independent Director Mr. Arun Nanda Non-ExecutiveIndependent Director Ms. Amrita Chowdhury and the Managing Director & CEO Ms.Sangeeta Prasad. Mr. Arun Nanda is the Chairman of the Committee. During the year Mr.Shailesh Haribhakti ceased to be a member of the Committee consequent to his resignationas an Independent Director of the Company effective from the conclusion of the 20thAnnual General Meeting held on 26th July 2019. The Board at its meeting heldon 12th September 2019 appointed Ms. Amrita Chowdhury Non-ExecutiveIndependent Director as a member of the Committee effective 12th September2019. The role of the Committee is to recommend expenditure to be incurred on CSRactivities to monitor the Company's CSR policy from time to time and to institute atransparent monitoring mechanism for the CSR projects or programs or activities undertakenby the Company.
The Company's CSR Policy lays out the vision objectives and implementation mechanism.The Company's CSR policy is available on the Company's web link at https://www.mahindralifespaces.com/wp-content/uploads/2019/07/Mahndra-Real-Estate-Sector-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.
The Company had committed CSR expenditure of Rs. 124.85 Lakh for the financial year2019-20 which has been fully spent during the year.
The annual report on the CSR activities 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 Dr. Anish Shah (DIN: 02719429) Non-Executive
Non-Independent Director retires by rotation at the 21st Annual GeneralMeeting of the Company and being eligible has offered himself for re-appointment. TheBoard has recommended his reappointment at the forthcoming Annual General Meeting asNon-Executive Non-Independent Director of the Company liable to retire by rotation.
During the year Mr. Shailesh Haribhakti resigned as an Independent Director of theCompany effective from the conclusion of the 20th Annual General Meeting heldon 26th July 2019. In his resignation he has stated that the reason forresigning is increase in his professional work leaving less time for him to continue onthe Board. He has also confirmed that there is no other material reason other than what isstated in his resignation. The Board places on record its deep appreciation for thevaluable services rendered by Mr. Shailesh Haribhakti during his tenure as a Director ofthe Company. Mr. Haribhakti was on the board of the Company for around 16 years.
The Board of Directors subject to approval of the Shareholders vide CircularResolution dated 9th August 2019 appointed Ms. Amrita Chowdhury as anAdditional Director of the Company in the category of Non-Executive Independent Directorfor a term of five consecutive year effective 13th August 2019. Pursuant toSection 161 of the Act and Article 128 of the Articles of Association of the Company Ms.Chowdhury holds office upto the date of forthcoming Annual General Meeting. The Companyhas received a notice as per the provisions of Section 160(1) of the Companies Act 2013from a Member in writing proposing her candidature for the office of Director. The Boardhas recommended her appointment at the forthcoming Annual General Meeting as anIndependent Director of the Company not liable to retire by rotation to hold office fora term of 5 (five) consecutive years commencing from 13th August 2019.
Ms. Sangeeta Prasad had submitted her resignation on 7th February 2020 fromthe position of the Managing Director & CEO and as a Director of the Company effective30th June 2020 to pursue other interests. At the request of the Board she hasconsented to continue till 30th June 2020 to ensure seamless and smoothtransition. The Board expressed its deep appreciation for the valuable contribution madeby Ms. Sangeeta Prasad during her tenure as the Managing Director & CEO. The Boardappreciated Ms. Sangeeta Prasad for her dedication and her contribution in charting thestrategic blueprint for the business and formulating initiatives taken by the Companyduring her tenure which will benefit the Company in coming years. She was instrumental inshaping the business strategies of the IC & IC business of the Company and in theformulation of Industrial Clusters (Origins by Mahindra World City) and achievingsuccessful financial and strategic partnerships with Sumitomo Corporation and IFC.
Consequent thereto and on recommendation of Nomination and Remuneration Committee theBoard of Directors at its meeting held on 17th February 2020 had appointed Mr.Arvind Subramanian as the Chief Operating Officer (COO) of the Company with effect fromeven date in addition to his role as CEO - Happinest the affordable housing business ofthe Company.
Further the Board at its meeting held on 14th May 2020 has subject to therequisite approvals appointed Mr. Subramanian as an Additional Director and subsequentlyat the same meeting appointed him as the "Managing Director" designated as the"Managing Director & Chief Executive Officer" (MD & CEO) with effectfrom 1st July 2020 for a period of 5 years . Pursuant to Section 161 of theAct and Article 128 of the Articles of Association of the Company Mr. Subramanian willhold office of the Additional Director upto the date of forthcoming Annual GeneralMeeting. The Company has received a notice as per the provisions of Section 160(1) of theCompanies Act 2013 from a Member in writing proposing his candidature for the office ofDirector. The Board has recommended to the shareholders his appointment and remunerationas the Managing Director designated as the Managing Director & CEO for a period offive years effective from 1st July 2020.
Brief resume and other details of Dr. Anish Shah Ms. Amrita Chowdhury and Mr. ArvindSubramanian in terms of Regulation 36(3) of SEBI LODR and Secretarial Standards onGeneral Meeting are provided in the Corporate Governance Report forming part of theAnnual Report. None of the Directors of the Company are inter-se related to each other.All the above mentioned three Directors are not disqualified from being re-appointed /appointed as Directors by virtue of the provisions of Section 164 of the Companies Act2013.
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 including declaration of compliance withsub-rule 1 of Rule 6 of the Companies (Appointment and Qualifications of Directors) FifthAmendment Rules 2019 as provided in the Companies Act 2013 and SEBI LODR.
In terms of Section 150 of the Companies Act 2013 read with Rule 6 of the Companies(Appointment and Qualification of Directors) Rules 2014 Independent Directors of theCompany have confirmed that they have registered themselves with the databank maintainedby The Indian Institute of Corporate Affairs Manesar (IICA'). The IndependentDirectors are also required to undertake online proficiency self-assessment test conductedby the IICA within a period of 1 (one) year from the date of inclusion of their names inthe data bank unless they meet the criteria specified for exemption.
The details of familiarization programme for Independent Directors have been disclosedon website of the Company and is available at the weblinkhttps://www.mahindralifespaces.com/ investors/annual-reports/fy-20-21
The salient features of the following policies of the Company 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 aforesaid policies (as amended) are also available at the weblinkhttps://www.mahindralifespaces.com/investors/codes- and-policies
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)
As on 31st March 2020 details of Key Managerial Personnel under theCompanies Act 2013 are given below :
|Sr. Name of the Person No. ||Designation |
|1 Ms. Sangeeta Prasad ||Managing Director & CEO (Resigned with effect from 30th June 2020) |
|2 Mr. Suhas Kulkarni ||Company Secretary |
|3 Mr. Vimal Agarwal ||Chief Financial Officer |
During FY 2019-20 Mr. Jayant Manmadkar Chief Financial Officer (CFO) of the Companyresigned w.e.f. 30th April 2019 to pursue professional opportunities outsidethe real estate sector. Consequent thereto the Board at its meeting held on 26thJuly 2019 had appointed Mr. Vimal Agarwal as the Chief Financial Officer and as a KeyManagerial Personnel of the Company with effect from 26th July 2019.
A calendar of meetings is prepared and circulated in advance to Directors. During theyear 9 (Nine) 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 on BoardMeetings and SEBI LODR as amended from time to time.
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 2020 and of the loss 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.
As on 31st March 2020 the Audit Committee comprised of three Non-ExecutiveIndependent Directors namely Mr. Ameet Hariani Ms. Amrita Chowdhury Mr. Bharat Shahand one Non-Executive Non-Independent Director Dr. Anish Shah. Mr. Ameet Hariani is theChairman of the Committee. During the year Mr. Shailesh Haribhakti ceased to be a memberof the Committee consequent to his resignation as a Director of the Company effective 26thJuly 2019. The Board at its meeting held on 21st October 2019 appointed Ms.Amrita Chowdhury as a member of the Committee with effect from 27th January2020.
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 tothe Committee. The Internal Auditor reports to the Chairman of the Audit Committee. Thesignificant audit observations and corrective actions as may be required and taken by themanagement are presented to the Audit Committee. The Board has accepted allrecommendations 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. It provides a mechanism for stakeholders to approachthe Chairman of Audit Committee or Chairman of the Company or the Corporate GovernanceCell consisting of Chief Legal Officer & Company Secretary Chief Financial Officerand Chief Ethics Officer (Chief People Officer). During the year no person was deniedaccess to the Chairman of the Audit Committee or to the Chairman of the Company or to theCorporate Governance Cell. The Whistle Blower Policy of the Company is available at weblink 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 31stMarch 2020 the Committee comprises of Managing Director & CEO Ms. Sangeeta PrasadMr. Arvind Subramanian Chief Operating Officer Mr. Vimal Agarwal Chief FinancialOfficer and Mr. Suhas Kulkarni Chief Legal Officer and Company Secretary. During theyear Mr. Jayant Manmadkar ceased to be a member of the Committee consequent to hisresignation as the Chief Financial Officer effective 30th April 2019. TheBoard at its meeting held on 12th September 2019 appointed Mr. ArvindSubramanian Mr. Vimal Agarwal and Mr. Suhas Kulkarni as Members of the Committeeeffective 12th September 2019.
The Shareholders of the Company at the 18th Annual General Meeting of theCompany held on 25th July 2017 had appointed M/s. Deloitte Haskins &Sells LLP Chartered Accountants Mumbai (ICAI Registration Number -117366W/W-100018) asStatutory Auditors of the Company to hold office until the conclusion of the 23rdAnnual General Meeting to be held in the calendar year 2022 to conduct the audit of theAccounts of the Company at such remuneration as may be mutually agreed upon between theBoard of Directors of the Company and the Auditors.
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 statements referred to in the Auditors' Report issued byM/s. Deloitte Haskins & Sells LLP Chartered Accountants Mumbai for the financialyear ended on 31st March 2020 are self-explanatory and do not call for anyfurther comments. The Auditors' Report does not contain any qualification reservation oradverse 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 2019-20. 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).
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 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 2019-20.
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(Membership No: F.C.S. No. 6221 and C.P. No. 5676) to conduct the secretarial audit of theCompany.
The Secretarial Audit Report for the financial year ended 31st March 2020is annexed herewith and marked as Annexure 4 to this Report. The Secretarial Audit Reportdoes not contain any qualification reservation or adverse remark.
SECRETARIAL AUDIT OF MATERIAL UNLISTED INDIAN SUBSIDIARY
For the Financial year 2019-20 Mahindra World City (Jaipur) Limited Mahindra HomesPrivate Limited Mahindra Bloomdale Developers Limited and Mahindra World City DevelopersLimited are the material unlisted subsidiaries of the Company. In terms of Regulation 24Aof SEBI LODR read with Section 204 of the Companies Act 2013 Secretarial Audit of theabove-mentioned subsidiaries has been conducted for the financial year 2019-20 byPracticing Company Secretaries and the said report has been annexed to the Board's Reportof such subsidiaries. None of the said Audit Reports contain any qualificationreservation or adverse remark or disclaimer.
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 no. 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 arm's lengthbasis. During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material. In view of the abovethe requirement of giving particulars of contracts / arrangements / transactions made withrelated 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 Company's website at the linkhttps://www. mahindralifespaces.com/wp-content/uploads/2019/04/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 ADVANCES AND OTHER TRANSACTIONS
Your Company has not accepted any deposits from public or its employees and as such noamount on account of principal or interest on deposit were outstanding as of the BalanceSheet date. The details of loans and advances which are required to be disclosed in theannual accounts of the Company pursuant to Regulation 34(3) read with Schedule V of theSEBI LODR are provided in the standalone financial statement at Note no. 40.
Further in terms of Regulation 34(3) read with Schedule V of the SEBI LODR details ofthe transactions of the Company with the promoter and holding company Mahindra &Mahindra Limited holding 51.48% in the paid up equity capital of the Company as on 31stMarch 2020 in the format prescribed in the relevant accounting standards for annualresults 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 to thisreport.
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 inAnnexure 6 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 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 yourCompany's 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 2020 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 2020 the Company hascomplied with provisions relating to the constitution of Internal Complaints Committeeunder the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013.
No significant or material orders were passed by the Regulators or Courts orTribunals which 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 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 2019-20 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 2019-20 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 |
|Date : 14th May 2020 ||DIN:00010029 |
|Place : Mumbai || |