The Directors are pleased to present the 54th Annual Report of the Company alongwiththe audited financial statements for the financial year ended 31st March 2017.
Pursuant to the notification dated 16th February 2015 issued by the Ministry ofCorporate Affairs the Company has adopted the Indian Accounting Standards ("IndAS") notified under the Companies (Indian Accounting Standards) Rules 2015 witheffect from 1st April 2016. Financial statements for the year ended and as at 31st March2016 have been restated to conform to Ind AS.
1. FINANCIAL RESULTS
The Company's performance during the financial year ended 31st March 2017 as comparedto the previous financial year is summarized below:
| || ||(Rs in lakhs) |
|Particulars ||31st March 2017 ||31st March 2016 |
|Total Revenue ||13454.38 ||20546.13 |
|Total Expenditure ||6286.82 ||11411.69 |
|Earnings before Interest Depreciation and Amortisation ||8249.21 ||11058.28 |
|Depreciation ||8.12 ||2.73 |
|Finance cost ||1073.53 ||1921.11 |
|Profit before tax ||7167.56 ||9134.44 |
|Tax Expenses ||(3025.67) ||(3059.58) |
|Net Profit for the year ||4141.89 ||6074.86 |
Figures For FY 2015-16 have been restated as per Ind AS and therefore may not becomparable with financials for FY 2015-16 approved by the Directors and disclosed in thefinancial statements of previous year.
Highlights of the Company's Performance for the FY 2016-17
Revenue from Operations decreased by 37.37% to Rs 11133.52 lakhs
Profit before Tax decreased by 31.82% to Rs 7167.56 lakhs
Net Profit for the year was Rs 4141.89 lakhs as compared to Rs 6074.86 lakhsduring the previous financial year.
With a view to plough back the profits of the Company into the business operations theBoard of Directors do not recommend any dividend for the financial year under review.
3. BUSINESS AND INDUSTRY OVERVIEW
Macro Economic overview
India has emerged as the fastest growing major economy in the world as per the CentralStatistics Organisation and International Monetary Fund. With an annual growth of 7.1%during the year 2017 the Indian economy is one of the most resilient and among thefastest growing economies in the world. As per the Economic Survey 2016-17 the Indianeconomy is expected to grow between 6.75 and 7.5% in FY 2017-18. Moody's has affirmed theGovernment of India's Baa3 rating with a positive outlook stating that the reforms by thegovernment will enable the country perform better compared to its peers over the mediumterm.
The real estate sector is one of the most globally recognized sectors. In India realestate is the second largest employer after agriculture and is slated to grow at 30% overthe next decade. The construction industry ranks 3rd amongst the 14 major sectors in termsof direct indirect and induced effects in all sectors of the economy.
The Indian real estate market is expected to touch US$ 180 billion by 2020. The housingsector alone contributes 5-6% to the country's GDP. In the period FY2008-2020 the marketsize of this sector is expected to increase at a CAGR of 11.2%. Retail hospitality andcommercial real estate are also growing significantly providing much-neededinfrastructure for India's growing needs. Private equity investments in real estateincreased 26% to a nine-year high of nearly Rs 40000 crore in calendar year 2016.
Mumbai is the best city in India for commercial real estate investment with likelyreturns of 12-19 % in the next five years followed by Bengaluru and Delhi-NCR.
The Government of India along with the governments of the respective states has takenseveral initiatives to encourage the development in the sector. The Smart City Projectwhere there is a plan to build 100 smart cities is a prime opportunity for the realestate companies.
The recently notified Real Estate (Regulation and Development) Act 2016 is expected tohave a huge transformational impact on the real estate sector. Goods and Service Tax isanother significant reform which will subsume all indirect taxes and pave the way for asingle market cross India. Demonetization in the third quarter of FY 2017 had a profoundimpact on the economy especially in the real estate sector.
The Union Budget has put special emphasis on the affordable housing segment.Infrastructure status for this segment will help real estate entities to raise funds atsubstantially better interest rates. The credit linked subsidy scheme for first-timehomebuyers under the Pradhan Mantri Awas Yojana is expected to push real estate demand inthe mid-income group.
Mumbai Real Estate
MMR market showed signs of revival in H2 FY16 with residential sales volume increasingby 5% y-o-y; though full year volumes were down 7% y-o-y. Also 35% decline in newlaunches led to improvement in demand-supply scenario; inventory levels improved to 11quarters compared to 12 quarters last year. While inventory of unsold units in MMR ishigher than cities such as Bangalore and Pune it is much below NCR having inventory levelof 17 quarters. Prices remained stable or increased marginally across most of themicro-markets. Prices in MMR grew 3% in FY16 higher than NCR (flat y-o-y) and Pune (2%)but were marginally below Bangalore (4%).
Despite y-o-y decline in volumes few large developers with an established brandmanaged to sell a significant chunk of the inventory mainly due to timely deliveryquality construction and a high level of services. With the implementation of Real EstateRegulatory Bill (RERA) in next 6-12 months delivery timelines and transparency isexpected to improve in the industry. We expect RERA to benefit large developers withestablished track record thereby leading to market share gains.
Activities in the office market have also improved significantly with absorptionincreasing to 7.5 mn sq ft in MMR region (highest in past four years) due to consolidationand growth by corporate entities largely in the BFSI and IT/ITeS industry. Owing to theimproved demand-supply scenario vacancy levels declined to 20% from 22% last year. Thisresulted in lease rentals increasing by 2-3% across micro-markets. With SEBI clearing mostof the roadblocks for Real Estate Investment Trusts (REIT) we believe there is a hugeopportunity in office space for developers and investors in India. Also pick up incommercial activities is expected to provide a fillip to residential sales.
The Company has undertaken an aspirational residential project by the name of LodhaGrandezza in the central business district of Thane Wagle Estate. The Project comprisestwin 18 storey residential towers in a mixed use development with three commercialSupremus towers comprising of chic boutique offices with spaces in the range of 2000square feet to 20000 square feet. The target client profile of this project is thehigher/upper middle income segment of the market.
"Lodha Excellencia" a premium residential project with 20-storeyed towerswith 2 & 3 BHK Garden Luxury Air-conditioned apartments in Thane strategicallylocated for easy connectivity was delivered in 3 years.
We are pleased to inform you that trading in the Company's shares which was suspendedsince year 2003 has been revoked by the Bombay Stock Exchange with effect from 12th May2017.
4. EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Companies Act 2013 ('the Act') and rule 12(1) of theCompanies (Management and Administration) Rules 2014 extract of annual return is annexedas Annexure I.
5. changes in share capital
During the financial year 2016-17 there has been no change in the equity share capitalof the Company.
6. directors and key managerial personnel
Mr. Mahesh Thakur resigned as Chief Executive Officer of your Company effective 12thJanuary 2017. Mr. Samujjwal Ghosh was appointed as Chief Executive Officer of yourCompany effective 7th February 2017.
In terms of Section 149 of the Act Mr. Umashankar Hegde and Mr. Bhushan Shah are theIndependent Directors of your Company. The Company has received declarations from all theIndependent Directors confirming that they meet the criteria of independence as prescribedunder the Act.
As per the provisions of the Companies Act 2013 Mr. A.L. Ananthanarayanan wouldretire at the ensuing Annual General Meeting and being eligible offers himself forreappointment.
In terms of Section 203 of the Act the following are the Key Managerial Personnel ofthe Company:
Mr. Samujjwal Ghosh Chief Executive Officer
Mr. Rameshchandra Chechani Chief Financial Officer
Mr. Varun Shah Company Secretary
7. BOARD AND COMMITTEES OF THE BOARD
Five Board meetings were held during the year and the gap between two meetings did notexceed 120 days. These were held on 16th May 2016 3rd September 2016 22nd November2016 13th January 2017 and 7th February 2017. Dates for Board meetings in the ensuingyear are decided in advance and circulated to all Directors. The agenda for each meetingalong with detailed notes is circulated in advance to the Directors.
Board Committees focus on certain specific areas and make informed decisions in linewith the delegated authority. The following statutory Committees constituted by the Boardfunction according to their respective roles and defined scope:
Nomination and Remuneration Committee
Corporate Social Responsibility Committee
Stakeholders Relationship Committee
Details of composition terms of reference and number of meetings held for respectivecommittees are given in the Report on Corporate Governance.
8. BOARD EVALUATION
The Board of Directors carried out an annual evaluation of its own performance boardcommittees and individual directors pursuant to the provisions of the Act and the Listingregulations. Performance of the board was evaluated by the board after seeking inputs fromall the directors on the basis of criteria such as the board composition and structureeffectiveness of board processes information and functioning etc. The performance of thecommittees was evaluated by the board after seeking inputs from the committee members.
The Board and the Nomination and Remuneration Committee reviewed the performance ofindividual directors on the basis of criteria such as the contribution of the individualdirector to the board and committee meetings.
In a separate meeting of independent directors performance of non-independentdirectors and the board as a whole was evaluated taking into account the views ofexecutive directors and non-executive directors. Performance evaluation of independentdirectors was done by the entire board excluding the independent director beingevaluated.
The policy on Directors' appointment and remuneration for Directors Key ManagerialPersonnel and Senior Management Personnel including policy for performance evaluation ofIndependent Directors Board Committees and other individual Directors is attached asAnnexure II.
9. AUDIT & AUDITORS
MSKA & Associates Chartered Accountants (F.K.A. MZSK & Associates) ( FirmRegistration No. 105047W) the statutory auditors of your Company hold office until theconclusion of the 58th AGM to be held in the year 2021 subject to ratification at everyAGM. The Members year on year will be requested to ratify its appointment as Auditorand to authorize the Board of Directors to fix their remuneration. In this connection theproposal for ratification of Auditors is mentioned in the notice of the forthcoming AnnualGeneral Meeting of the Company.
The Auditor's Report does not contain any qualifications reservations or adverseremarks.
Shravan A. Gupta and Associates Practicing Company Secretary was appointed asSecretarial Auditor to conduct a Secretarial Audit of records and documents of the Companyfor FY17. The Secretarial Audit Report confirms that the Company has generally compliedwith the provisions of the Act Rules Regulation and Guidelines.
The Secretarial Audit Report is provided in Annexure-III.
Cost Auditor and Cost Audit Report
Mr. Dushyant C. Dave Cost Accountant to audit cost records of the Company forfinancial year 2017. In accordance with the requirement of the Central Government andpursuant to Section 148 of the Act your Company carries out an audit of cost accountsrelating to real estate development activities every year. The Cost Audit Report and theCompliance Report of your Company for FY16 was filed on 1st October 2016.
Pursuant to Section 138 of the Companies Act 2013 the Company appointed Mr. ParagParekh Chartered Accountant as an Internal Auditor of the Company during the year2016-17. The audit carried out by him is on half yearly basis. Further the report issuedby an Internal Auditor is reviewed on an on-going basis in the Meetings of the AuditCommittee and of the Board and appropriate actions are taken as per the directions of theAudit Committee by the Board.
10. LOANS GUARANTEES SECURITY AND INVESTMENT
The Company is engaged in the business of providing "infrastructuralfacilities" as defined in Schedule VI of the Companies Act 2013 and therefore theprovisions of Section 186 are not applicable to any loans and guarantee given or securityprovided by the Company in terms of exemption provided u/s 186(11) (a). During thefinancial year ended 31st March 2017 the Company has not made any Investments.
The disclosures w.r.t Regulation 34(3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 relating to Loans and Advances to related parties is givenin the Financial Statements.
11. RELATED PARTY TRANSACTIONS
The transactions/contracts/arrangements falling within the purview of provisions ofSection 188(1) of the Companies Act 2013 entered by the Company with related parties asdefined under the provisions of Section 2(76) of the Companies Act 2013 during thefinancial year under review were in the ordinary course of business and have beentransacted at arm's length basis.
There are transactions/contracts/arrangements entered by the Company with relatedparties as defined under the provisions of Section 2(76) of the Companies Act 2013during the financial year 2016-17 that are required to be reported in Form AOC-2 which isfurnished in Annexure- IV and as such forms part of the Report.
In compliance with the Listing Regulations the Company has a policy for transactionswith Related Parties ('RPT Policy').The RPT Policy is available on the Company websiteviz. www.nsil.net.in on the Investor Relation page under the section titled 'Polices'.
12. CORPORATE SOCIAL RESPONSIBILITY
The details required under the Companies (Corporate Social Responsibility Policy)Rules 2014 are given in CSR Report appended as Annexure-V to this Report. The briefoutline of the initiatives undertaken by the Company on CSR activities are set out inAnnexure-V of this Report. The CSR Policy of the Company is also annexed to this Report asAnnexure-V.
13. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT 2013 AND OTHER DISCLOSURESAS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES 2014
In terms of the provisions of Section 197(12) of the Act read with Rule 5 of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is attachedas Annexure - VI.
Provisions of Section 197(12) of the Act read with rules 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 does not apply as thereare no employees who draw remuneration in excess of the limits set out in the said Rules.
14. HOLDING SUBSIDIARY ASSOCIATE AND JOINT VENTURE COMPANY
The Company continues to be a subsidiary of Anantnath Constructions And Farms Pvt.Ltd. which in turn is the subsidiary of Lodha Developers Private Limited. SambhavnathInfrabuild and Farms Private Limited is the Ultimate holding Company. During the financialyear ended 31st March 2017 the Company did not have any subsidiaries joint venture andassociate companies.
15. RISK MANAGEMENT
Your Company has adopted a Risk Management policy which is based on three pillars:Business Risk Assessment Operational Controls Assessment and Policy Compliance processes.Major risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis. The key risks and mitigating actions arealso placed before the Board of Directors/Audit Committee of the Company.
16. INTERNAL FINANCIAL CONTROLS
Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate. During the year under review no material orserious observation has been received from the Statutory Auditors and the InternalAuditors of the Company on the inefficiency or inadequacy of such controls. The Companyhas policies and procedures in place for ensuring proper and efficient conduct of itsbusiness safeguarding of its assets the prevention and detectiveness of frauds etc.
17. INTERNAL CONTROL SYSTEMS
The Company's internal control systems are commensurate with the nature of its businessand the size and complexity of operations. These systems are routinely tested andcertified by Statutory as well as Internal Auditor and cover all offices sites and keybusiness areas. Significant audit observations and follow up actions thereon are reportedto the Audit Committee. The Audit Committee reviews adequacy and effectiveness of theCompany's internal control environment and monitors the implementation of auditrecommendations including those relating to strengthening of the Company's riskmanagement policies and systems. These systems provide a reasonable assurance in respectof financial and operational information complying with applicable statutes safeguardingof assets of the Company prevention & detection of frauds accuracy &completeness of accounting records and ensuring compliance with corporate policies.
18. VIGIL MECHANISM
The Company has established a Vigil Mechanism process by adopting a Whistle BlowerPolicy for directors and employees. This policy outlines the procedures for reportinghandling investigating and deciding on the course of action to be taken in caseinappropriate conduct / behaviour is/are noticed reported or suspected. The Policyprovides for adequate safeguards against victimization of persons who use the mechanismand has a process for providing direct access to the Ombudsman in appropriate orexceptional cases.
The employees of the Company have the right to report their concern or grievance to theChairman of the Audit Committee. The Whistle Blower Policy is posted on the Company'swebsite http://www.nsil.net.in/pdf/ Vigil%20Mechanism%20Policy.pdf
19. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company held a familiarization programme for its Independent Directors hadfamiliarized the Independent Directors with their roles rights responsibilities in theCompany nature of the industry in which the Company operates business model of theCompany. The details of the same are put up on the website of the Company at the link http://www.nsil.net.in/pdf/Familarisation%20programme.pdf.
19. CODE OF CONDUCT
Pursuant to Regulation 34(3) and Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the declaration signed by the CEO affirming thecompliance of Code of Conduct by the Directors and senior management personnel for thefinancial year ended 31st March 2017 is annexed to and forms part of the CorporateGovernance Report appended to this Annual Report.
20. CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirement as set out by SEBI. The Report on CorporateGovernance as stipulated under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forms part of this report.
As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Practicing Company Secretary Certificate on Corporate Governance is enclosed tothe Corporate Governance Section of the Annual Report.
21. DETAILS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO
|(A) Conservation of energy || |
|a) Energy conservation measures taken ||(i) Use of variable frequency drives for all its elevators and airconditioning equipment. |
| ||(ii) Occupation censor controlled lighting and air-conditioning through home automation in its projects. |
| ||(iii) Extensive use of materials like fly ash GGBS etc. at all its projects resulting in saving of cement thus indirectly saving energy consumed in manufacturing of cement. |
| ||(iv) At all its major projects electrical designs have been fine tuned to contain the voltage drop to less than 5%. |
| ||(v) Use of low voltage PL lamps. |
|b) Capital Investment on Energy Conservations Equipment ||(i) Variable frequency drives for all its elevators and airconditioning equipment. |
| ||(ii) Censor controlled lighting and air-conditioning through home automation. |
| ||(iii) Solar water heaters and solar powered street lights. |
|c) Steps taken for utilizing alternate source of energy ||Same as Above |
|d) Impact of measures for reduction of energy consumption ||Reduction in overall maximum demand for the electricity in all its projects and consequent energy saving benefits to the residents. |
|e) Environment protection ||(i) Measures to achieve eco balance have been taken at the major sites of large developments by providing extensive green cover and creating water bodies by treating waste water and rain harvesting. |
| ||(ii) Waste water equipment plants are installed at all major projects for treating waste water and utilising it for air-conditioning watering of green spaces and flushing. |
| ||(iii) Providing dust control systems for the concrete batching plant across its projects. |
| ||(iv) Complete ban on use of mud bricks in construction and using light weight blocks which helps soil conservation and utilization of material like fly ash which otherwise would cause air pollution. |
| ||(v) Minimise use of paper in its offices across all sites. |
| ||(vi) Regulated water and power supply to labour camps across all sites. |
| ||(vii) Plantation of large number of trees and providing extensive green cover creating water bodies to enhance the ecology and environment. |
| ||(viii) Use of fly ash and other minerals in the construction to reduce cement consumption thus indirectly saving the energy used for manufacture of cement. |
| ||(ix) State of the art electronic parking management system installed to accommodate and control the movement of large number of vehicles thus helping de-congestion of the roads in the area resulting in smooth and faster passing of traffic thereby reducing fuel consumption and pollution caused due to carbon monoxide by idle running of vehicles. |
| ||(x) Use of crushed sand in the construction instead of natural sand thus helping environmental degradation as natural sand is normally dredged from the river beds. |
| ||(xi) Crushing stones obtained from excavation at the construction site itself thus saving the transportation for disposal of stones as well as import of crush aggregate saving both ways transportation and thus saving fuel. |
|B Technology Absorption || |
|1. Efforts in brief made towards technology absorption adaptation and innovation ||None |
|2. Benefits derived as result of above efforts e.g. product improvement cost reduction product development import substitution etc ||None |
|3. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) following information may be furnished ||Not applicable |
|a) Technology imported || |
|b) Year of import || |
|c) Has technology been fully absorbed? || |
|d) If not fully absorbed areas where this has not taken place reasons their || |
|4. The expenditure incurred on Research and Development ||Nil |
C. Foreign exchange earnings and Outgo
There was no foreign exchange earning or outgo during the financial year ended 31stMarch 2017.
Your Directors state that for the financial year ended March 31 2017 no disclosure isrequired in respect of the following items and accordingly confirm as under:
a. The Company has neither revised the financial statements nor the report of Board ofDirectors.
b. No cases were filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
c. There are no material changes or commitments affecting the financial position of theCompany between March 31 2017 and the date of this report
d. The Company has not accepted any deposits during financial year 2016-17.
e. No instance of fraud has been reported to Board of Directors of the Company by theAuditors or any other person.
f. There are no significant or material changes for which orders were passed by theRegulators/Courts/Tribunals which impact the going concern status and Company's operationsin future.
g. During the financial year 2016-17 there is no change in the nature of the businessof the Company.
h. There has been no Issue of equity shares with differential rights as to dividendvoting or otherwise during the financial year 2016-17
i. The Company has not issued any shares (including sweat equity shares) to employeesof the Company under any scheme during the financial year 2016-17.
25. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of clause (c) of sub-section (3) of Section 134 of theCompanies Act 2013 the Board of Directors hereby confirms that:
(a) in the preparation of the annual accounts for the financial year ended 31st March2017 the applicable accounting standards read with the requirements set out underSchedule III to the Act have been followed;
(b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2017 and of the profitof the Company for the financial year ended on that date;
(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors had laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and been operating effectively;and
(f) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Your Directors place on record their appreciation for stakeholders at all levels whohave contributed to the growth and performance of your Company.
| ||For and on behalf of the Board of Directors |
| ||National Standard (India) Limited |
| ||Maninder chhabra ||Smita Ghag |
|Date : 25th May 2017 ||Director ||Director |
|Place : Mumbai ||DIN:02630680 ||DIN: 02447362 |