AFFLUENCE

DIRECTORS' REPORT

1. Your Directors present their 56th Annual Report, and the Audited Financial Accounts for the Financial Year ended March 31, 2015.

2 FINANCIAL OPERATIONS (SUMMARY)

i) Income from Operations for the Financial Year 2014-15 were Rs. 240.82 crore as against Rs. 203.29 crore for 2013-14, an improvement of approx. 18.46%.

ii) Gross Profit for the Financial Year 2014-15 was Rs. 185.40 crore as against Rs. 156.22 crore for 2013­14, an improvement of approx. 18.68%.

iii) Cash Profit for the Financial Year 2014-15 was Rs. 109.85 crore as against Rs. 78.55 crore for 2013­14, an improvement of approx. 39.85%.

iv) The Exceptional Items for the Financial Year 2014-15 are the write back of the Property Tax liability of the earlier years due to the retrospective amendment in respect of the Property Tax levied by the appropriate authorities, and sale of future license fees receivable from Licensees in the Nirlon House premises owned by the Company net of expenses.

v) Net Profit for the Financial Year 2014-15 (after taxes and exceptional items) was Rs. 32.58 crore as against a profit of Rs. 31.63 crore for 2013-14, an improvement of approx. 3.0%.

The Company is in the business of development of an Industrial Park, and during the year under review, there is no change in the business activity of the Company.

3. RESERVES

The Board does not propose to transfer any amount to the General Reserve account in the Balance Sheet for the Financial Year 2014-15.

4. DIVIDEND

For the year under review, your Directors recommended a dividend of Rs. 0.75 paise per equity share of Rs.10 each (7.5 %) amounting to Rs. 8.13 crore (inclusive of tax of ^ 1.37 crore), subject to the approval of Members of the Company at this ensuing Annual General Meeting.

Dividend will be paid to Members whose names appear in the Register of Members as on Thursday, September 10, 2015. In respect of shares held in Dematerialised Form, dividend will be paid to Members whose names are furnished by the National Securities Depository Limited and the Central Depository Services (India) Limited, as Beneficial Owners as on that date.

5. INDUSTRIAL PARK OPERATIONS AT GOREGAON (EAST), MUMBAI, INDIA AND FUTURE OUTLOOK

Development of the Industrial Park / Information Technology (IT) Park i.e. Nirlon Knowledge Park (NKP) - Goregaon (East), Mumbai.

Nirlon is the owner of NKP, a 23 acre campus in Goregaon (East), Mumbai. NKP is an Industrial Park as per the Consolidated Foreign Direct Investment (FDI) Policy of the Government of India (GOI), and is an IT Park under the Government of Maharashtra's (GOM) Policy. NKP, being an Industrial Park, is eligible for FDI under the automatic route as per the GOI's Consolidated FDI Policy.

Construction, Delivery of Licensed Premises, and License Fee Commencement

Planning for the development of NKP in four phases began in 2006, and construction in April/May 2007. Currently, all four phases are completed.

The Company is in the process of conceptualising, planning and evaluating the feasibility of further development / re-development of its existing old buildings in NKP (phase 5).

Phases 1, 2, 3 and 4: A total of approx. 29.46 lac sq.ft. has been constructed in Phases 1, 2, 3 and 4 corresponding to approx. 18.78 lac sq. ft. licensable area. Income by way of licence fees from approx. 14.75 lac sq.ft. licensable area, comprising the entire licensable area for Phases 1, 2 and 3 continued to be received by the Company as on March 31, 2015.

License fees for Phase 4 from approx. 98 % of its licensable area began to accrue to the Company in stages during March, June and July, 2015.

Please Note: The total constructed area of approx. 29.46 lac sq.ft. for Phases 1, 2, 3 and 4 includes two levels of basements in phases 1, 2 and 3 and one level of basement, the ground floor (part), mezzanine and four upper levels of parking in Phase 4, as well as a ten floor multi level car parking (MLCP) (which also has two basements) housing the utilities, i.e. generator, chillers, water tanks, electrical infrastructure etc. for Phases 1 and 2, in addition to visitor and occupant parking.

Licensee Fees

Gross license fees as on March 31, 2015 from Phases 1, 2 and 3 aggregated approx. Rs. 14.23 crore per month. Additional gross license fees as on March 31, 2014 of approx. Rs. 2.69 crore per month were also accruing from other licensees occupying the existing old buildings in NKP (approx. 3.27 lac sq.ft. as on March 31, 2015).

Further, as on date, approx. Rs. 3.77 crore per month is accruing to the Company from Phase 4 as license fees.

Marketing

Phases 1, 2 and 3 of Nirlon Knowledge Park continue to be fully licensed to reputed International and Indian Corporates.

Phase 4 is ready and has obtained the Occupation Certificate. Approx. 98 % of the licensable area of approx. 4.03 lac sq.ft.in Phase 4 is already licensed to well-regarded Corporates.

Once the fit outs of occupiers in Phase 4 are complete, the campus is expected to be fully occupied and operational.

Financing

The Company's debt funding to date continues to be provided by HDFC Limited, and can be broadly broken down in two categories:

1 Securitized Loans - Rs. 604.88 crore (as on July 29, 2015) being repaid in equal monthly instalments of principal and interest from the existing license fees for Phases 1, 2, 3 and 4.

2 Construction Loan - Rs. 56.00 crore for Phase 4 is still to be securitised as on July 29, 2015. However, interest on this loan is being paid on a monthly basis. This amount will be securitised once the draw down for Phase 4 is complete.

Please note: the Company is paying the same rate of interest for its securitised loans as well as for its construction loan to HDCF Limited.

The Company's business plan will continue to retain ownership of the NKP development, and to offer office space on a leave and license basis only.

6 NIRLON HOUSE

The Company continues to co-own 75% undivided interest in approx. 45,475.00 sq.ft. in the Nirlon House building in a prime location on Dr. A. B. Road, Worli in Central Mumbai.

7 OPEN OFFER BY M/S. RECO BERRY PRIVATE LIMITED

Members may be aware that M/s. Reco Berry Private Limited (Reco) of Singapore, an affiliate of GIC, the Sovereign Wealth Fund of Singapore, has:

(i) acquired 2,56,00,000 equity shares of the Company comprising of approx. 28.41% of its share capital pursuant to an Open Offer made in accordance with the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 for which a Public Announcement was made on December 23, 2014; and

(ii) acquired 3,01,59,872 equity shares of the Company comprising approx. 33.46% of its share capital by April 30, 2015, pursuant to certain Share Purchase Agreements dated December 23, 2014 and December 30, 2014.

Presently, Reco holds 5,57,59,872 equity shares of the Company comprising of approx. 61.87% of its share capital and has been classified as a Promoter of the Company, along with the existing Promoters, with effect from April 28, 2015.

8 DIRECTORS

Smt. Rajani M. Bhagat, Director, retires by rotation and being eligible, offer herself for re-appointment. The Board recommends the re-appointment of Smt. Bhagat for approval of the Members.

Brief resume of the directors, including Smt. Bhagat, nature of their expertise, and name of company/ies where they hold Chairmanships, Directorships and Memberships of Board / Committees and shareholding if any, as stipulated under Clause 49 of the listing agreement with the BSE Limited, is provided in this Report and forms part of this Notice calling the 56th Annual General Meeting.

9 NUMBER OF BOARD /AUDIT COMMITTEE MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors. During the year, six (6) Board Meetings and four (4) Audit Committee Meetings were convened and held.

The details of these meetings are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

10 DECLARATION BY AND TENURE OF THE INDEPENDENT DIRECTORS

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the listing agreement.

The Independent Directors were appointed by the Members of the Company at their meeting held on September 23, 2014 to hold the office of Independent Director for a period of five consecutive years. Accordingly, the Independent Directors shall hold office up to March 31, 2019.

Letters of appointment were issued to Independent Directors and the same were uploaded on the Company's website.

11 FORMAL ANNUAL EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the listing agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually, as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Compliance Committees.

12 VARIOUS COMMITTEES OF THE BOARD OF DIRECTORS AND THEIR ROLE AND RESPONSIBILITIES

A) AUDIT COMMITTEE (AC)

The Audit Committee of the Board played an important role during the year. It co-ordinated with the Statutory Auditors, Internal Auditors and other key personnel of the Company and has rendered guidance in the areas of corporate governance, internal audit, finance and accounts.

B) STAKEHOLDERS RELATIONSHIP COMMITTEE (SRC)

The Stakeholders Relationship Committee has met regularly in the course of the year. With the compulsory dematerialization of the Company's shares and electronic mode of transfers, postal dispatches which led to frequent complaints have been minimized. As on March 31, 2015, approx. 91.64% of the Company's total paid up equity share capital was held Dematerialized Form, and there were no investor grievances /complaints pending with the Registrar.

C) NOMINATION & REMUNERATION COMMITTEE (NRC)

The Nomination and Remuneration Committee recommends to the Board the remuneration Package of Executive Directors, Key Managerial Personnel and other employees.

D) CORPORATE SOCIAL RESPONSIBILTY COMMITTEE (CSRC)

The Board formed a Corporate Social Responsibility Committee on September 23, 2014.

E) RISK MANAGEMENT COMMITTEE (RMC)

The Board formed a Risk Management Committee on September 23, 2014.

13 ADOPTION OF VARIOUS POLICIES AND CODES BY THE COMPANY

I) POLICIES:

A) CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

The Board has formulated a Corporate Social Responsibility Policy. However, the Company has not spent any amount on CSR activities during the Financial Year 2014-15 as the average net profits of the Company made during the three (3) immediately preceding financial years were negative as calculated under the relevant Section 135 (5) of the Companies Act, 2013.

B) RISK MANAGEMENT POLICY

The Company is required to follow an orderly risk management system, as the Company is exposed to various risks which might threaten its business continuity and operations, if not identified and addressed in time.

The Company therefore follows a proactive risk management policy, aimed at protecting its employees, assets and the environment, while at the same time ensuring growth and continuity of its business. Regular updates are made available to Executive Directors and Independent Directors at Board Meetings, and in special cases on an ad-hoc basis.

C) NOMINATION & REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration.

D) WHISTLE BLOWER POLICY

The Company has a vigil mechanism system called the Whistle Blower Policy (WBP) to deal with instances of fraud and mismanagement, if any.

E) RELATED PARTY TRANSACTIONS POLICY

The Company has laid down a Related Party Transactions Policy. During the year under review, there were no Related Party Transactions except as stated in Point No. 27 of the Directors' Report.

F) ANTI-SEXUAL HARRASEMENT POLICY

The Company has an Anti Sexual Harassment Policy in place. During the year under review, there were no complaints in this regard.

II) CODES:

A) CODE OF CONDUCT FOR INDEPENDENT DIRECTORS

B) CODE FOR BOARD AND DESIGNATED EMPLOYEES UNDER CLAUSE 49 OF THE LISTING AGREMEENT

C) CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING

The above Policies and Codes are adopted by the Board, and are made available on the Company's Website, 'www.nirlonltd.com' .

14 DIRECTORS' RESPONSIBILITY STATEMENT

To the best of your Directors knowledge and belief and according to the information and explanations obtained by them, your Directors make the following Statements in terms of Section 134 (3) (c) of the Companies Act, 2013:

a) that in the preparation of the Annual Financial Statements for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently, and judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the State of Affairs of the Company as at March 31, 2015, and of the Profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the annual Financial Statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place, and that these financial controls were adequate and were operating effectively; and

f) that systems to ensure compliance with the provisions of all applicable laws were in place, and were adequate and operating effectively.

15 STATUTORY AUDITORS AND THEIR REPORT

The Company's Statutory Auditors, M/s N. M. Raiji & Co. (Firm Registration no.108296W), Chartered Accountants, retire as auditors of the Company at the conclusion of 56th Annual General Meeting, and are eligible for re-appointment. They have indicated their willingness to accept re-appointment, and have furnished the necessary certificate in terms of Section 139 of the Companies Act, 2013.

The Audit Committee has considered and recommended the re-appointment of M/s. N. M. Raiji & Co., Chartered Accountants, as Statutory Auditors of the Company to the Board of Directors.

As required under Clause 49 of the listing agreement,the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Board of Directors have accepted the Audit Committee's recommendation, and recommended the re-appointment of M/s. N. M. Raiji & Co., Chartered Accountants, to Members as the Statutory Auditors of the Company, and request Members to authorise the Board of Directors to fix their remuneration.

STATUTORY AUDITORS REPORT

The observation made by the Auditors in the Report referring to the Notes forming part of the Accounts are self-explanatory, and therefore do not require any further comments under Section 134(3) (f) of the Companies Act, 2013.

There is no qualification in the Audit Report and a certificate to that effect in 'Form A' as per Clause 31 of the listing agreement is attached to this Report as Annexure 1.

16 INTERNAL AUDITORS

M/s. DH Consultants Private Limited (earlier known as M/s. BDO Consulting Private Limited) are appointed as Internal Auditors of the Company, and their reports are reviewed by the Audit Committee appointed by the Board.

17 SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Alwyn Jay & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure 2.

There is no qualification in the Secretarial Audit Report.

18 COST AUDITORS AND COST AUDIT RECORDS

The Companies (Cost Records and Audit) Rules, 2014 read alongwith Companies (Cost Records and Audit) Amendment Rules 2014, specifies criteria for specified industries which are required to maintain cost records and get them audited. The Company's business as an Industrial Park is covered under Clause 5(a) of Schedule VI of the Companies Act, 2013 and its turnover is in excess of Rs. 100/- Crore. It is therefore required to maintain cost records which should be audited by a practicing Cost Auditor.

In view of the above provisions of the Act, the Board, based on the recommendation of the Audit Committee, has approved the appointment and remuneration of Shri Vinay B. Mulay, the Practicing Cost Auditor (ICAI-CMA No. 8791 CP No. 101159) of M/s. Vinay Mulay & Co., Mumbai to conduct the audit of the cost records of the Company for the financial year ending March 31, 2016.

In accordance with the provisions of Section 148 of the Act read with the Companies (Audit and Auditors) Rules,2014, the remuneration payable to the Cost Auditor as recommended by the Audit Committee and approved by the Board of Directors, has to be ratified by Members of the Company.

Accordingly, the consent of Members is sought for passing an Ordinary Resolution as set out at Item No.5 of the Notice for ratification of the remuneration payable to the Cost Auditor for the financial year ending March 31, 2016.

19 LOAN, GUARANTEE, SECURITY AND INVESTMENT

The Company has not made any loan, or given guarantee, or provided security to any person, and has not made any investment that attracts the provisions of Section 186 of the Companies Act, 2013, during the Financial Year.

20 HOLDING, SUBSIDIARY AND ASSOCIATE COMPANY

The Company is not a holding, a subsidiary, or an associate company of any company and vice versa.

21 FIXED DEPOSITS AND DEBENTURES

The Company has neither accepted, nor invited any fixed deposits during the Financial Year.

The Company has also not issued any debentures during the Financial Year.

22 TRANSFER OF ANY AMOUNT TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

There is no amount lying with the Company as unpaid/ unclaimed with respect to any debenture redemption amount and/or fixed deposit, and/or any outstanding interest thereon.

However, as on July 29, 2015, there is an amount of Rs. 17.69 lac lying with Bank of India in a special account named the "Nirlon Limited- Dividend unpaid / unclaimed Dividend Account - 2013-14" which pertains only to Shareholders who hold their shares in Physical Form.

23 PROMOTERS AND KEY MANAGERIAL PERSONNEL

A) Promoters

1. Shri Kunal V. Sagar

2. Shri Rahul V. Sagar

3. Smt. Rajani M. Bhagat

4. M/s. Reco Berry Private Limited (w.e.f. April 28, 2015)

B) Key Managerial Personnel

1. Shri Kunal V. Sagar, Executive Vice Chairman

2. Shri Rahul V. Sagar, Executive Director

3. Shri Jasmin K. Bhavsar, Company Secretary & Vice President (Legal) & Compliance Officer

4. Shri Manish B. Parikh, Chief Financial Officer

There is no change in Directors, Key Managerial Personnel and Promoters during the Financial Year. However, M/s. Reco Berry Private Limited has become a Promoter effective from April 28, 2015.

24 RE-CLASSIFICATON OF THE AUTHORISED SHARE CAPITAL OF THE COMPANY

As on July 29, 2015, Members of the Company are in the process of casting their vote for, inter alia, the passing of a special resolution through a Postal Ballot, including e-voting, for the alteration of Capital Clause No. 5 of the Memorandum of Association of the Company by re-classifying its 1,00,000 un-issued cumulative redeemable preference shares of of Rs. 100 each, aggregating Rs. 1,00,00,000, to 10,00,000 equity shares of Rs. 10 each, aggregating Rs. 1,00,00,000. As a result, the Company's total Authorised Share Capital will become Rs. 150,00,00,000 divided into 15,00,00,000 equity shares of Rs. 10 each.

25 DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY'S OPERATIONS IN FUTURE

There are no material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

26 FRAUD REPORTING

During the year under review, there was no fraud in the Company.

27 RELATED PARTY TRANSACTIONS

There were no related party transactions during the Financial Year, except the appointment of and remuneration being paid to the Executive Vice Chairman, and Executive Director of the Company, pursuant to the special resolutions passed by the Members, and payment of dividend as declared by the Members of the Company.

The Company has a Related Party Transactions Policy for the purpose of identification and monitoring of such transactions.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website.

None of the Directors of the Company has received any commission from the Company.

None of the Directors and Key Managerial Personnel, save and except as stated above, have any pecuniary relationships or transactions vis-a-vis the Company.

The Company has not entered in to any contracts or arrangements with related parties and hence reporting in the Form AOC-2 is not applicable.

28 SPENDING ON THE CORPORATE SOCIAL RESPONSIBILITY PROGRAMME

The Company was not required to spend any amount during the Financial Year 2014-15 as the average net profits of the Company made during the three (3) immediately preceding financial years were negative as per Section 135 (5) of the Companies Act, 2013.

29 INTELLECTUAL PROPERTY RIGHTS

The Company's trade mark/service mark, logo/s, and copyrights are registered and well protected under the respective statutes.

30 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

As required under Section 134 (3) (m) of the Companies Act, 2013 read with read with Rule 8 of The Companies (Accounts) Rules, 2014, the particulars relating to the conservation of energy, technology absorption and foreign exchange earning and outgo were as under:

A) The Company has no manufacturing activities relating to conservation of energy.

B) 1. The Company has not made any provision for research and development expenditure as the same is not applicable.

2. The Company has no activity relating to technology absorption and innovation.

C) The Company has incurred travel expenses in foreign currencies aggregating to Rs. 0.03 crore, and the Company has no foreign earnings.

The Company has incurred professional fee expenses in foreign currency aggregating to Rs. 0.99 crore.

31 MANAGERIAL REMUNERATION

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company forms a part of this Report as Annexure 3.

32 REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES:

The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Particulars of Employees) Rules, 1975, in respect of employees of the Company and Directors is furnished in Annexure 3A.

33 EMPLOYEES STOCK OPTION SCHEME (NIRLON ESOP 2012)

The disclosure as required under clause 12 of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 as on March 31, 2015 is attached as Annexure 4 and forms a part of this Report.

The Company has received a certificate from Chartered Accountants that the Scheme has been implemented in accordance with SEBI Guidelines, and the required resolution has been passed by Members. This Certificate will be available at the Company's 56th Annual General Meeting for inspection by Members.

34 CORPORATE GOVERNANCE DISCLOSURE

The Company adheres to the principles of Corporate Governance mandated by the Securities and Exchange Board of India (SEBI), and has complied with all mandatory requirements. The non-mandatory requirements have been complied with to the extent practical and applicable.

A separate section on Corporate Governance, Annexure 5, to this Report, and a certificate from M/s. Alwyn Jay & Co., a firm of Company Secretaries in Practice confirming compliance with the Corporate Governance requirements as stipulated in Clause 49 of the listing agreement entered into with the BSE Limited, form part of this Report.

The Executive Vice Chairman and Executive Director's declarations regarding compliance with the Code of Business Conduct and Ethics forms part of this Corporate Governance Report.

35 MANAGEMENT DISCUSSION AND ANALYSIS

Details are provided in Annexure 6 and form part of this Report.

36 EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Company's Annual Return in form MGT 9 are provided in Annexure 7.

37 ENHANCING SHAREHOLDERS/MEMBERS VALUE

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company's operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the Company's productive asset and resource base and nurturing its overall corporate reputation.

Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact socio-economic dimensions and contribute to sustainable growth and development.

38 PERSONNEL RELATONS AND ACKNOWLEDGE­MENTS

Personnel relations with employees continue to remain cordial. Your Directors record their appreciation for the services rendered by employees at all levels. They acknowledge and record their appreciation for the co­operation and assistance rendered by HDFC Limited, Banks and various Government authorities at State and Central levels. Your Directors thank all stakeholders for their continued support.

We would also like to place on record our sincere appreciation for the co-operation received from the Reserve Bank of India, SEBI, the BSE Limited and all other statutory and/or regulatory bodies.

For and on behalf of the Board of Directors

Nirlon Limited

Moosa Raza

Chairman

Mumbai, July 29, 2015