Your Directors have pleasure in presenting the Twenty Sixth AnnualReport on the business and operations of the Company together with the audited results forthe financial year ended March 31 2021.
(Rs. in million)
|Particulars ||Standalone ||Consolidated |
| ||2020-21 ||2019-20 ||2020-21 ||2019-20 |
|Total Revenue ||21911.51 ||38304.87 ||21904.00 ||38256.59 |
|Operating Expenditure ||14650.33 ||26488.29 ||14346.34 ||26386.16 |
|Earnings before Interest Depreciation and Amortisation ||7261.18 ||11816.58 ||7557.66 ||11870.43 |
|Depreciation and Amortisation ||754.96 ||673.52 ||793.67 ||722.85 |
|Finance Cost ||5759.58* ||6732.28* ||6012.14** ||6816.03** |
|Profit Before Tax ||746.64 ||4410.78 ||751.85 ||4331.55 |
|Tax Expenses ||91.25 ||1515.99 ||129.09 ||1514.86 |
|Profit after Tax ||655.39 ||2894.79 ||622.76 ||2816.69 |
* Includes notional interest accrued on advance from customers as perInd AS 115 2515 million 3558 million for the year ended March 31 2021 and year endedMarch 31 2020 respectively.
** Includes notional interest accrued on advance from customers as perInd AS 115 2650 million 3558 million for the year ended March 31 2021 and year endedMarch 31 2020 respectively.
There have been no material changes and commitments effecting thefinancial position of the Company which have occurred between the end of the financialyear to which the balance sheet relates and the date of this report.
BUSINESS AND OPERATIONS
A. BUSINESS OVERVIEW
The Company is operating in the following two segments:
Construction and development of residential and commercialprojects
A summary of completed and ongoing projects as on March 31 2021 hasbeen detailed in the Management Discussion and Analysis Report titled ManagementReport' forming part of the Annual Report.
B. FINANCIAL OVERVIEW
During the Financial Year 2020-21 the Company has on a standalonebasis earned total revenues of 21911.51 million as comparedto38304.87millionintheprevious year a decrease of 42.80% y-o-y. The Profit before Taxduring the year was 746.64 million as against 4410.78 million in the previous yeardecreased by 83.07% and Profit after Tax during the year was 655.39 million as against2894.79 million in the previous year that is decreased by 77.36%.
The consolidated revenues of the Company during the financial year2020-21 were 21904.00 million a decrease of 42.74% from the previous year. The Profitbefore Tax decreased by 82.64% and Profit after Tax (after considering minority interest)decreased by 77.89% as compared to the financial year 2019-20.
Transfer to Reserves
Your Directors propose to transfer 65.54 million of the current profitsto the General Reserve.
The Board of Directors subject to the approval of the shareholders atthe ensuing Annual General Meeting are pleased to recommend a dividend of 3.50/- perequity share of 10/- each.
C. OPERATIONAL OVERVIEW
During the year under review the Company executed and handed over 0.23million square feet real estate projects and 2.33 million square feet of contractualprojects resulting in an aggregate development of 2.56 million square feet.
The Company has completed construction of 112.30 million square feet ofarea since inception.
The Company currently has real estate projects aggregating 30.11million square feet of developable area. It has 5.64 million square feet of ongoingcontractual projects which are under various stages of construction. The Company has ageographic presence in 27 cities across 14 states in India.
SHARE CAPITAL RELATED MATTERS
A. SHARE CAPITAL
The authorized share capital of the Company is 2000000000 dividedinto 150000000 equity shares of 10 each and 5000000 preference shares of 100 each. Atthe beginning of the year under review the Issued subscribed and fully paid up capitalwas 948458530 divided into 94845853 equity shares of 10 each. There was no change inthe issued subscribed and fully paid up share capital of the Company during the yearunder review. Sobha Limited is a public limited company and its equity shares are listedon National Stock Exchange of India Limited and BSE Limited.
B. BUYBACK OF EQUITY SHARES
There was no buyback offer made by the Company during the period underreview.
C. CHANGES IN SUBSIDIARIES JOINT VENTURES AND ASSOCIATES
During the year under review there was no change in SubsidiariesJoint Ventures and Associates.
However Sobha Highrise Ventures Private Limited a wholly ownedsubsidiary of the Company during the year acquired the entire shares of Annalakshmi LandDevelopers Private Limited making it a wholly owned subsidiary of Sobha Highrise VenturesPrivate Limited. With this acquisition as on the date of this report the Company has sixdirect subsidiaries and six step down subsidiaries.
The details of subsidiaries step down subsidiaries and associates aregiven elsewhere in the Annual Report.
BOARD OF DIRECTORS AND ITS COMMITTEES
A. COMPOSITION OF THE BOARD OF DIRECTORS
As on 31st March 2021 the Board of Directors of theCompany comprises of seven Directors of which four are Non-Executive IndependentDirectors and three are Executive Directors. The composition of the Board of Directors isin compliance with Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (Listing Regulations) and Section 149 of the Companies Act 2013.
The Company has received necessary declarations from the IndependentDirectors stating that they meet the criteria of independence as specified in Section149(6) of the Companies Act 2013 and Regulation 25(8) of the Listing Regulations.
B. CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review Mr. Jagadish Nangineni has resigned fromthe position of Deputy Managing Director and Whole-time Director with effectfrom February 24 2021. Except the above there were no changes in the key managerialpersonal of the company.
During the year under review the Board of Directors met 4 times on thefollowing dates:
June 27 2020
August 07 2020
November 07 2020
February 12 2021
In accordance with the provisions of the Companies Act 2013 aseparate meeting of the Independent Directors of the Company was held on 31stMarch 2021.
D. RE-APPOINTMENT OF DIRECTORS RETIRING BY ROTATION
Pursuant to the provisions of Section 152 of the Companies Act 2013Mr. J C Sharma Vice Chairman and Managing Director (DIN: 01191608) is liable toretire by rotation at the ensuing Annual General Meeting and being eligible offers himselffor re-appointment. The Board of Directors based on the recommendation of NominationRemuneration and Governance Committee have recommended the re-appointment of Mr. J CSharma Director retiring by rotation.
The Notice convening the Annual General Meeting includes the proposalfor re-appointment of Mr. J C Sharma as a Director. A brief resume of Mr. J C Sharma hasbeen provided as an Annexure to the Notice convening the Annual General Meeting. Specificinformation about the nature of Mr. J C Sharma's expertise in specificfunctional areas and the names of the companies in which he holds directorship andmembership / chairmanship of the Board Committees have also been provided in the Noticeconvening the Annual General Meeting.
E. PERFORMANCE EVALUATION
In terms of Section 134 (3) (p) read with Articles VII and VIII ofSchedule IV of the Companies Act 2013 the Board has carried out an annual performanceevaluation of its own performance and that of its statutory committees - the AuditCommittee Stakeholder Relationship Committee Nomination Remuneration and GovernanceCommittee and that of Individual Directors.
The Board assessed the performance and the potential of each of theIndependent Directors with a view to maximizing their contribution to the Board. Asenvisaged by the Act the Independent Directors reviewed the performance of the Chairmanof the Board at a meeting especially called for that purpose. At the same meeting areview of the Executive Directors were also carried out.
F. DIRECTORS' RESPONSIBILITY STATEMENT
According to the information and explanations obtained pursuant toSection 134(5) of the Companies Act 2013 your Directors hereby confirm that:
a) in the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanations relating to materialdepartures;
b) the directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;
c) proper and sufficient care was taken 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 annual accounts have been prepared on a going concern basis;
e) internal financial controls to be followed by the Company have beenlaid down and such internal financial controls are adequate and were operatingeffectively; and
f) proper systems have been devised to ensure compliance withthe provisions of all applicable laws and that such systems were adequate andoperating effectively.
AUDIT RELATED MATTERS
A. AUDIT COMMITTEE
The composition of the Audit Committee as on 31st March 2021was:
1. Mr. R V S Rao (Independent Director) - Chairman
2. Mr. Sumeet Puri (Independent Director) - Member
3. Mr. J C Sharma (Vice Chairman and Managing Director) - Member Theterms of reference powers role and responsibilities of the Audit Committee are inaccordance with the requirements mandated under Section 177 of the Companies Act 2013 andRegulation 18 of the Listing Regulations. During the period under review the advice andsuggestions recommended by the Audit Committee were duly considered and accepted by theBoard of Directors. There were no instances of non-acceptance of such recommendations.
B. STATUTORY AUDITORS
At the Twenty Second Annual General Meeting held on 4thAugust 2017 the members appointed M/s. B S R & Co. LLP Chartered Accountants (FirmRegistration No.101248W/W-100022) as Statutory Auditors of the Company for a period of 5years from the conclusion of the Twenty Second Annual General Meeting until the conclusionof the Twenty Seventh Annual General Meeting. The Statutory Auditors expressed anunmodified opinion in the audit reports with respect to audited financial statements forthe financial year ended March 31 2021. There are no qualifications or adverse remarks inthe Statutory Auditors' Report which require any explanation from the Board ofDirectors.
C. SECRETARIAL AUDIT
Secretarial Audit of the Company for the year ended March 31 2021 wasconducted by Mr. Nagendra D Rao Practicing Company Secretary. The Secretarial AuditReport issued by Mr. Nagendra D Rao in accordance with the provisions of Section 204 ofthe Companies Act 2013 is provided separately in the Annual Report (Annexure A).
There are no qualifications or adverse remarks in the Secretarial AuditReport which require any explanation from the Board of Directors.
D. COST AUDIT
The Cost Audit Report for the financial year 2019-20 was filed with theMinistry of Corporate Affairs New Delhi within the due date prescribed under theCompanies (Cost Records and Audit) Rules 2014. There were no qualifications or adverseremarks in the Cost Audit Report which require any explanation from the Board ofDirectors.
Based on the recommendations of the Audit Committee the Board ofDirectors have re-appointed M/s. Srinivas and Co. Cost Accountants (Firm Registration No:000278) as the Cost Auditors of the Company for the financial year 2020-21. In terms ofRule 14 of the Companies (Audit and Auditors) Rules 2014 the remuneration payable to theCost Auditors for the financial year 2020-21 is subject to ratification by theshareholders of the Company. The Notice convening the Annual General Meeting contains theproposal for ratification of the remuneration payable to the Cost Auditors.
E. INTERNAL AUDIT AND INTERNAL FINANCIAL CONTROLS
The in-house Internal Audit Team is responsible for assurance withregard to the effectiveness accuracy and efficiency of the internal control systems andprocesses in the Company. The Company's Audit Team is independent designed to addvalue and empowered to improve the Company's processes. It helps the Companyaccomplish its objectives by bringing a systematic disciplined approach for evaluatingand improving the effectiveness of risk management control and governance processes.There are adequate internal financial controls in place with reference to thefinancial statements. During the year under review the Internal Audit Departmentand the Statutory Auditors tested these controls and no significant weakness wasidentified either in the design or operations of the controls. A report issued bythe Statutory Auditors M/s. B S R & Co. LLP on the Internal FinancialControls forms a part of the Annual Report.
A. NOMINATION AND REMUNERATION POLICY
The Nomination Remuneration and Governance Committee of the Board ofDirectors is responsible for recommending the appointment of the directors and seniormanagement to the Board of Directors of the Company. The Company has in place a Nominationand Remuneration Policy containing the criteria for determining qualifications positiveattributes and independence of a director and policy relating to the remuneration for thedirectors key managerial personnel and senior management personnel of the Company. TheCommittee also postulates the methodology for effective evaluation of the performance ofindividual directors committees of the Board and the Board as a whole which should becarried out by the Board committee or by an independent external agency and reviews itsimplementation and compliance. The Nomination and Remuneration Policy is available on theCompany's website: https: //w w w.sobha.com /wp - content /uploads/2020/10/153630165920180907.pdf Extracts from the policy are reproduced in AnnexureB to this report.
B. THE RISK MANAGEMENT FRAMEWORK
The Company has developed and implemented a risk management frameworkdetailing the various internal and external risks faced by the Company and methods andprocedures for identifying monitoring and mitigating such risks. The Board of Directorsof the Company has constituted a Risk Management Committee which is entrusted with thetask of evaluating monitoring and reviewing the risk management plan and procedures ofthe Company. The risk management function is supporting the internal control mechanism ofthe Company and supplements the internal and statutory audit functions. There were nooffence or fraud that needs to be reported by the Statutory Auditors as per Section 143(12) of the Companies Act 2013.
C. CORPORATE SOCIAL RESPONSIBILITY POLICY
The Company believes that its achievements do not refer only to itsgrowth but are also spread to society. Accordingly under the aegis of its CSR arm SriKurumba Educational & Charitable Trust it has adopted three village panchayats -Vadakkenchery Kizhakkenchery and Kannambra in Palakkad district of Kerala eachconsisting of 2 villages to improve the lifestyle of the people at the grassroot level.The Corporate Social Responsibility Policy as formulated by the Corporate SocialResponsibility Committee and approved by the Board of Directors is available on theCompany's website at: https: //w w w.sobha.com /wp - content /uploads/2020/10/158036284320200130.pdf In terms of Section 134 of the Companies Act2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014 theannual report on the Corporate Social Responsibility activities of the Company is given inAnnexure C to this report.
D. VIGIL MECHANISM
The Company has established a vigil mechanism to promote ethicalbehaviour in all its business activities. It has in place a mechanism for employees anddirectors to report any genuine grievances illegal unethical behaviour suspected fraudor violation of laws rules and regulations or conduct to the Vigilance Officer and theAudit Committee of the Board of Directors. The policy also provides for adequateprotection to the whistle blower against victimisation or discriminatory practices. Thepolicy is available on the Company's website at: https: //w w w.sobha.com /wp- content / uploads/2020/10/153630159420180907.pdf During the year under review theCompany did not receive any complaints relating to unethical behaviour actual orsuspected fraud or violation of the Company's code of conduct from any employee orDirectors.
There were no outstanding debentures as on the closure of thefinancial year ended 31st March 2021.
The Company has not accepted any deposits in terms of Chapter V of theCompanies Act 2013 read with the Companies (Acceptance of Deposit) Rules 2014during the year under review. As such no amount of principal or interest was outstandingas on date of this report.
C. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
In compliance with Section 124 of the Companies Act 2013 thedividends pertaining to the financial year 2012-13 which were lying unclaimed with theCompany were transferred to the Investor Education and Protection Fund during thefinancial year 2020-21. The details of unclaimed dividends transferred to the InvestorEducation and Protection Fund have been detailed in the Corporate Governance Reportforming part of the Annual Report.
As required under Section 124 of the Companies Act 2013 and the Rulesmade thereunder 2574 equity shares in respect of which dividend had not been claimed bythe shareholders for seven consecutive years or more were transferred to the InvestorEducation and Protection Fund during the year under review. The details of the shares andshareholders are available on the Company's website.
D. SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS / COURTS
During the year under review there were no significant or materialorders passed by the regulators or courts or tribunals impacting the going concern statusand Company's operations in future.
E. HUMAN RESOURCES
Employee relations continue to be cordial at all levels and inall divisions of the Company. The Board of Directors would like to express itssincere appreciation to all the employees for their continued hard work and steadfastdedication.
As on March 31 2021 the Company had an organisational strength of3061 employees. Details about the Employees are provided in a separate section of theAnnual Report.
F. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The Company has adopted a policy for the prevention and redressal ofsexual harassment at the workplace. Pursuant to the provisions of the Sexual Harassment ofWomen at the Workplace (Prevention Prohibition and Redressal) Act 2013 the Company hasin place an Internal Complaints Committee for prevention and redressal of complaints ofsexual harassment of women at the workplace. No complaints were received by the Companyduring the year under review.
G. AWARDS AND RECOGNITIONS
During financial year 2020-21 the Company was conferred with variousawards and recognitions the details of which are given in a separate section of theAnnual Report.
H. CORPORATE GOVERNANCE
In accordance with Regulation 34(3) read with Schedule V of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 a separate report onCorporate Governance forms part of this report. A certificate from Mr. Nagendra D RaoPracticing Company Secretary affirming compliance with the various conditions ofCorporate Governance in terms of the Listing Regulations is given in Annexure D to thisreport.
I. CODE OF CONDUCT
The Company has laid down a Code of Conduct for the Directors as wellas for all senior management of the Company. As prescribed under Regulation 17 of theListing Regulations a declaration signed by the Vice Chairman and Managing Directoraffirming compliance with the Code of Conduct by the Directors and senior managementpersonnel of the Company for financial year 2020-21 forms part of the Corporate GovernanceReport.
J. DISCLOSURE ON CONFIRMATION WITH SECRETARIAL STANDARDS
The Directors confirm that the Secretarial Standards issued by theInstitute of Company Secretaries of India have been complied with pursuant to theCompanies Act 2013 and rules made thereunder.
K. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with the requirements of the Listing Regulations theManagement Discussion and Analysis Report titled Management Report' ispresented in a separate section of the Annual Report.
L. ANNUAL RETURN
In accordance with the Companies Act 2013 the annual return in theprescribed format is available under the link https://www.sobha.com/investor-relationsdownloads.php
M. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
In terms of Section 134 of the Companies Act 2013 the particulars ofloans guarantees and investments made by the Company under Section 186 ofthe Companies Act 2013 are detailed in Notes to Accounts of the FinancialStatements.
N. RELATED PARTY TRANSACTIONS
During the year the Company did not enter into anycontract/arrangement/transaction with a related party which can be considered asmaterial in terms of the policy on related party transactions laid down by the Board ofDirectors. Related party transactions if any pursuant to the Listing Regulations wereapproved by the Audit Committee from time to time prior to entering into thetransactions. The related party transactions undertaken during financial year 2020-21 aredetailed in the Notes to Accounts of the Financial Statements.
Further during the year under review there were no contracts orarrangements with related parties referred to in subsection (1) of Section 188 of theCompanies Act 2013. Therefore there is no requirement to report any transactionin Form AOC-2 in terms of Section 134 of the Companies Act 2013 and the rules madethereunder.
O. CONSERVATION OF ENERGY
TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
In terms of Section 134 of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 the details of energy conservationtechnology absorption foreign exchange earnings and outgoings are given as Annexure E tothis report.
P. REMUNERATION DETAILS OF DIRECTORS KEY MANAGERIAL PERSONNEL ANDEMPLOYEES
Details of remuneration of Directors key managerial personnel and thestatement of employees in receipt of remuneration exceeding the limits prescribed underSection 134 of the Companies Act 2013 read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in Annexure F to thisreport.
Q. FINANCIAL POSITION AND PERFORMANCE OF SUBSIDIARIES JOINT VENTURESAND ASSOCIATES
In terms of Section 134 of the Act and Rule 8(1) of the Companies(Accounts) Rules 2014 the financial position and performance of the subsidiaries aregiven as an annexure to the Consolidated Financial Statements.
R. BUSINESS RESPONSIBILITY REPORT
As required under Regulation 34 of the Listing Regulations theBusiness Responsibility Report is given in Annexure G to this report.
S. ADDITIONAL INFORMATION TO SHAREHOLDERS
All important and pertinent investor information such as financialresults investor presentations press releases new launches and project updates are madeavailable on the Company's website (www.sobha.com) on a regular basis.
The Directors would like to place on record their sincere appreciationto the Company's customers vendors and bankers for their continued support to theCompany during the year. The Directors also wish to acknowledge the contribution made byemployees at all levels for steering the growth of the organisation. We thank theGovernment of India the State Governments and other government agencies for theirassistance and cooperation and look forward to their continued support in future. Finallythe Board would like to express its gratitude to the members for their continued trustco-operation and support.
| ||For and on behalf of the Board of Directors of Sobha Limited |
| ||Sd/- ||Sd/- |
|Place: Bangalore ||Ravi PNC Menon ||T P Seetharam |
|Date: June 22 2021 ||Chairman ||Whole-time Director |