Board REPORT Dear Members, Your Company’s Directors are pleased to present the 44th Annual Report and the Audited financial Statements of the Company for the year ended 31st March, 2015. FINANCIAL HIGHLIGHTS AND STATE OF COMPANY AFFAIRS The total income of the Company for the year under review is Rs. 1,394.41 crore. The Profit before tax stood at Rs. 7.43 crore and Loss after tax stood at Rs. 15.81 crore. On consolidated basis, the total income of the Company and its subsidiaries stands at Rs. 3,719.56 crore. The consolidated loss before tax stood at Rs. 50.81 crore and loss after tax stood at Rs. 128.34 crore. The earnings per share (EPS) on an equity share having face value of Rs. 2 stands at Rs. (0.06) considering the total equity capital of Rs. 523.26 crore. On consolidated basis, the real estate and related division contributed Rs. 1,738.15 crore in the revenues of the Company, whereas the contribution from the Property Management business was Rs. 383.74 crore and from the Transmission Towers business was Rs. 289.10 crore. Hospitality and other segments contributed the balance revenues of Rs. 1,020.18 crore. KEY HIGHLIGHTS OF THE BUSINESS AND OPERATIONS During the year under review, there was no change in the nature of business of the Company. Some of the key highlights pertaining to the business of the Company, including its subsidiaries and associates, for the year under review and period subsequent thereto are given hereunder: Project Sales and Delivery In line with the trend in the last few years, given depressed market conditions, your Company focused on project delivery against launch and sale of new projects. In fact, since Q2, 2014-15, the Company has not launched any new projects. During the year under review, your Company launched new projects totaling an area of 0.64 million sq.ft. The Company achieved sales bookings for a total area of 1.3 million sq.ft. during 2014-15 valued at Rs. 828 crore. In terms of total area sold in 2014-15, 0.31 million sq.ft. was sold in Gurgaon, 0.21 million sq.ft. in Noida & Greater Noida, 0.14 million sq.ft. in Chennai, 0.10 million sq.ft. in Kolkata and 0.54 million sq.ft. in other cities. In terms of segment wise sales, 54% of the area sold was from the residential segment while 46% was from non-residential. The average realization, in 2014-15, from the non-residential segment was Rs. 7,233 per sq. ft. as compared to the residential segment’s average realization of Rs. 5,629 per sq. ft. Project Execution and Delivery Your Company delivered 3.16 million sq. ft. of completed area during the year and handing over is in progress in 41 projects across various regions of the country. As at 31st March, 2015, a total of 37.49 million sq.ft. area is under development. In order to efficiently execute the much higher scale of projects across markets, the Company is substantially upgrading its operations. During the year under review, the Company continued to focus on strengthening the back end infrastructure of the construction division to improve the quality and output of construction work. More details about the business and operations of the Company are provided in the Report on Management Discussion and Analysis forming part of this Report. DIVIDEND Your Directors have not recommended any dividend for the year ended 31st March, 2015. MANAGEMENT DISCUSSION AND ANALYSIS REPORT The Management Discussion and Analysis Report, for the year under review, as stipulated under Clause 49 of the Listing Agreement is given separately and forming part of this Report. REPORT ON CORPORATE GOVERNANCE The Report on Corporate Governance along with a certificate from M/s. RSD & Associates LLP, a firm of Company Secretaries in Practice (CP No. 714) confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this report. CONSOLIDATED FINANCIAL STATEMENTS The Audited Consolidated Financial Statements of the Company provided in the Annual Report are prepared in accordance with the Act and Accounting Standard (AS) 21 on ‘Consolidated Financial Statements’ read with Accounting Standard (AS) 23 on ‘Accounting for Investments in Associates’ and (AS) 27 on ‘Financial Reporting of Interest in Joint Ventures’. SUBSIDIARIES, JOINT VENTURES & ASSOCIATES Pursuant to first proviso to Section 129(3) of the Companies Act, 2013 (“the Act”), a statement, containing salient features of financial statements of Company’s subsidiaries, joint ventures and associates (in Form AOC-1), is attached to the financial statements. The said statement describes the performance and financial position of each of Company’s subsidiaries, joint ventures and associates. The policy for determining material subsidiaries as approved may be accessed on the Company’s website at the link: http://www.unitechgroup.com/investor-relations/corporate-governance.asp. The audited financial statements and related information of the subsidiaries is available on website of the Company, viz. www. unitechgroup.com and will be made available, upon request by any member of the Company & shall also be made available for inspection at the registered office of the Company. During the year under review, Khatu Shyamji Infratech Pvt. Ltd. was acquired by Unitech Agra Hi-tech Township Limited, a wholly owned subsidiary of the Company. EXTRACT OF ANNUA L RETURN The details forming part of the extract of the Annual Return in Form MGT-9 as required under Section 92 (3) of the Act, read with rule 12(1) of the Companies (Management and Administration) Rules, 2014 is annexed herewith as Annexure-I to this report. KEY MANAGERIAL PERSONNEL (KMP) In compliance with the provisions of Section 203 of the Companies Act, 2013, the following Executive Directors and Senior Officials of the Company are designated as the Key Managerial Personnel of the Company w.e.f 1st April, 2014: 1. Mr. Ramesh Chandra Executive Chairman 2. Mr. Sanjay Chandra Managing Director 3. Mr. Ajay Chandra Managing Director 4. Mr. Sunil Keswani EVP & CFO 5. Mr. Deepak Jain VP & Company Secretary DIRECTORS In accordance with the provisions of Section 152 of the Act and rules made there under, Mr. Sanjay Chandra, Managing Director (DIN:00004484), retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The Directors recommend re-appointment of Mr. Sanjay Chandra at the ensuing Annual General Meeting. Based on the recommendations of the Nomination & Remuneration Committee and after reviewing the declarations submitted by Mr. Sunil Rekhi (DIN: 00062990) and Mr. Chanderkant Jain (DIN: 06709287), confirming that they meet the criteria of Independence as prescribed under section 149 (6) of the Act and Clause 49 of the Listing Agreement, the Board of Directors of the company by way of circular resolution passed on 23rd May 2015, appointed them as Additional Non-Executive Independent Directors of the Company. Mr. Sunil Rekhi and Mr. Chanderkant Jain, appointed as Additional Independent Directors holds office upto the date of ensuing Annual General Meeting (AGM), are proposed to be appointed at the ensuing AGM as Independent Directors of the Company under Section 149 of the Companies Act, 2013 for a period of five years w.e.f. 23rd May 2015, on non rotational basis. Since last Board Report, Dr. P. K. Mohanty (DIN: 00238329), Mr. Anil Harish (DIN: 00001685) and Mr. Ravinder Singhania (DIN: 00006921), Independent Directors resigned from the Board w.e.f 13th August, 2014, 23rd May, 2015 and 23rd May, 2015 respectively. The Board wishes to place on record its deep sense of appreciation for the valuable services rendered by them to the Board and the Company during their tenure as Directors. The details of programmes on familiarization of Independent Directors with the Company, their roles, rights and responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are available on the Company’s website under web link: http://www.unitechgroup.com/investor-relations/corporate-governance.asp During the year under review, four meetings of the Board of Directors were held. The intervening gap between two consecutive meetings was not more than one hundred and twenty days as provided in section 173 of the Act. The details of meetings are disclosed under Corporate Governance Report forming part of this Report. BOAR D EVALUA TION Pursuant to the provisions of Section 134, 149 & Schedule IV of the Act and Clause 49 of the Listing Agreement annual performance evaluation of the Directors as well as of the various committees of the Board has been duly carried out. The performance evaluation of the Independent Directors was carried out by the entire Board and the performance evaluation of the Chairman & Non Independent Directors was carried out by the Independent Directors at their properly convened meeting. The performance evaluation of the various Committees of Directors was carried out by the Board. NOMINATION AND REMUNERATION POLICY The Nomination and Remuneration Policy containing criteria for determining qualifications, positive attributes, independence of a director and policy relating to remuneration for the Directors, Key Managerial Personnel and Senior Management personnel of the Company are disclosed in the Corporate Governance Report forming part of this report. DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to the requirements of Section 134(3)(c) of the Act the Directors confirm that: • in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; • the Directors had selected such accounting policies and applied them consistently and made judgments and estimates 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 loss of the company for the year ended on that date; • the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; • the Directors had prepared the annual accounts on a going concern basis; • the Directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and • the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. INTERNAL FINANCIAL CONTROL FOR FINANCIAL STATEMENTS Your Company has an effective internal financial control system, which is continuously evaluated by internal and statutory auditors. The internal control is designed to ensure that financial and other records are reliable for preparing financial information and for maintaining accountability of assets. All financial and audit control systems are also reviewed by the Audit Committee of the Company. AU DIT COMMITTEE The composition of the Audit Committee is provided in the Corporate Governance Report forming part of this report. AU DITORS AND AU DITORS’ REPORT Statutory Auditors M/s. Goel Garg & Co., Chartered Accountants, retire as Auditors of the Company at the conclusion of the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept the office of auditors, if reappointed. A) The Auditors’ in their Report to the members, have given two qualified opinions and the response of your Directors with respect to it are as follows:- Response to Point (1) The advances for the purchase of land, projects pending commencement and to joint ventures and collaborators amounting to Rs. 7,242,711,244 (previous year Rs. 7,718,890,401) have been given in the normal course of business to land owning companies, collaborators, projects and for purchase of land. Further Rs. 476,179,157 (previous year Rs. 1,529,898,595) have been recovered / adjusted during the current financial year. The management of the company based on the internal assessment and evaluations considers that these advances, which are in the normal course of business are recoverable/ adjustable and that no provision is necessary at this stage. The management is confident of recovering/ appropriately adjusting the balance in due course. Response to Point (2) The Management believes that the diminution in value of investments, if any, that exists is only temporary and that sufficient efforts are being undertaken to revive the said subsidiaries in the foreseeable future so as to recover carrying value of the investment. Further, the management believes that the loans and advances given to these companies are considered good and recoverable based on the future projects in these subsidiaries and accordingly no provision other than those already accounted for, has been considered necessary. B) The Auditors’ in their report to the members, have stated two “Emphasis of matter” and the response of your Directors on them are as follows:- Response to Point (1) The Company has sought relief under section 74(2) of the Act from Hon’ble Company Law Board (“CLB”). As per the order passed by Hon’ble CLB on 3rd July, 2015 & 15th July, 2015, the Management has earmarked certain unencumbered properties of the Company to the satisfaction of Hon’ble CLB. The Hon’ble CLB has constituted a “Sale Committee” consisting of former CLB Chairman, an Advocate representing some of the Depositors and one representative of Company to sell the earmarked properties of the Company. Further, the management is committed to repay all the public deposits along with interest thereon and making all efforts to arrange the necessary resources required for the purpose. Response to Point (2) The management does not consider any adjustment in respect of the balance of short term loans aggregating to Rs. 5,00,6,504,267 (Previous Year Rs. 4,296,647,377) and investments aggregating to Rs. 277,257,892 (Previous Year Rs. 275,323,078) because the matters are sub-judice and the management is hopeful of recovery of the same. C) Further, the Board gives the following explanations, to the comments of the Auditors’ in para 2(f) to Report on Other Legal and Regulatory Requirements:- Your company has sought legal advice with respect to matured unpaid debentures and public deposits outstanding as at the balance sheet date. Based on the said advice, the Board is of the view that the provisions of sub-section (2) of Section 164 of the Companies Act, 2013 does not apply to the Company. D) Further, the Board also gives the following explanations, to the comments of the Auditors’ in the Annexure to Auditors’ Report to the members:- Response to Point (v) During the year under review, the Company has filed a reschedulement application before the Hon’ble CLB, New Delhi Bench under Section 74(2) of the Act seeking extension of time for repayment of deposits. Further, as per the order passed by Hon’ble CLB on 30th June, 2015, the Management has earmarked certain unencumbered properties of the Company to the satisfaction of Hon’ble CLB. The Hon’ble CLB has constituted a “Sale Committee” comprising of Former CLB Chairman, an Advocate representing some of the Depositors & one representative of Company to sell the earmarked properties of the Company. Further, the management is committed to repay all the public deposits along with interest thereon and making all efforts to arrange the necessary resources required for the purpose. Response to Point (vii) The Board is of the view that there are few delays in the payment of income tax, service tax & provident fund, however, with improved business scenario the Company will be able to meet its obligations in time. The Board is hopeful and committed to their level best to streamline the same in future. Response to Point (ix) The real estate sector, as a whole, is passing through tough time and your company is also facing this heat. In this challenging phase, cash-flows of the company have been adversely impacted and there were certain delays/defaults in timely repayment of dues (including interest) to Banks and financial institutions in respect of term loans and nonconvertible debentures. It is submitted that the company endeavors to streamline its future operations and discharge the said liabilities in time. Cost Auditors The Board of Directors, on recommendation of the Audit Committee, has appointed M/s. M.K. Kulshrestha & Associates, Cost Accountants as Cost Auditors for the financial year 2014-15 and 2015-16 to carry out the audit of cost records maintained by the Company. In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors for the financial year 2014-15 and 2015-16 is subject to ratification by the shareholders of the Company. The Notice convening the Annual General Meeting contains the proposal for ratifications of the remuneration payable to the Cost Auditors. Secretarial Auditors Pursuant to provisions of Section 204 of the Act read with Rule 9 of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. RSD & Associates LLP, a firm of Company Secretaries in Practice (CP No. 714), to conduct the Secretarial Audit of the Company for the year ended March 31, 2015. The Secretarial Audit Report (Form MR-3) is annexed as Annexure II forming part of this Report. The responses of your Directors on the observations made by the Secretarial Auditor are as follows:- Response to Point No.1 The real estate sector, as a whole, is passing through the challenging times and your company is also facing this heat. In this challenging phase, the cash flows of the company have been adversely impacted. It is submitted that the company is trying hard and undertaking several steps to successfully going through this tough time. The Company is hopeful that in the near future, it will streamline its operations and provide its due share towards the betterment of the society by making the required contribution for the CSR activities envisaged by the company. Response to Point No.2 Your company has sought legal advice with respect to matured unpaid debentures and public deposits outstanding as at the balance sheet date. Based on the said advice, the Board is of the view that the provisions of sub-section (2) of Section 164 of the Companies Act, 2013 does not apply to the Company. Response to Point No.3 Your company is going through a hard phase due to stretched liquidity position and there are delays in delivering projects and repayments of creditors this resulted in rise in litigations. Your company is trying hard to make timely repayments and deliveries and hopeful to get out of it soon. Response to Point No.4 The Board is of the view that there are few delays in the payment of income tax, service tax & provident fund, however, with improved business scenario the Company will be able to meet its obligations in time. The Board is hopeful and committed to their level best to streamline the same in future. Response to Point No.5 Your company is law abiding entity, and filed the necessary forms & returns with the authorities. However, there were few delays which the management ensures to file the same in time. RISK MANAGEMENT Pursuant to the requirement under Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of the Committee are set out in the Corporate Governance Report, forming part of this Report. A well defined risk management mechanism is in place. The objective of the mechanism is to minimize the impact of various risks identified and advance actions to mitigate it. A detailed exercise is carried out to identify, evaluate, monitor and manage both business and non-business risks. The Company has framed a Risk Management Policy to identify and assess the key risk areas, monitor and report effectiveness of the policy and procedure. VIGIL MECHANISM Pursuant to Section 177(9) of the Act read with relevant Rules and Clause 49 of Listing Agreement, the Company has a Vigil Mechanism/Whistle Blower Policy for Directors and employees to report genuine concerns. The said Policy has been posted on Company’s website (www.unitechgroup. com). During the year under review, no concerns or grievances pursuant to the same were reported. CORPORATE SOCIAL RESPONSIBILITY [CSR] Pursuant to Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board has constituted a CSR committee and based on the recommendation of the Committee the CSR policy has been approved by the Board of Directors of the Company. The same is available on the website of the Company (www.unitechgroup.com). During the year under review, the Company has contributed an amount towards its CSR activities which is less than the statutory required expenditure, i.e. 2% of the average net profit for three preceding financial years. Your Company is one of the country’s premier real estate developer with pan India presence. The growth of the Company is closely correlated to the overall growth in the country’s real estate sector. The real estate sector, as a whole, is passing through challenging times and therefore the company is also facing the subsequent impact of slowdown in the economy. In this challenging phase, the cash flows of the company have been adversely impacted. It is submitted that the company is undertaking several steps to successfully face these challenging times and thereby ensure that, in the near future, the Company increases its contributions to CSR activities as the Company is committed to contribute towards the betterment of the Communities where we live and work. The annual report on CSR activities is attached at Annexure-III forming part of this report. PARTICULARS OF LOAN S, GUARAN TEES OR INVESTMENTS Particulars of Loans given, Guarantees given or Investments made under Section 186 of the Act are given in notes to standalone financial statements. DEPOSITS During the year under review, the Company has not accepted any deposits under the provisions of Section 73 of the Act read with the Companies (Acceptance of Deposits), Rules 2014 RELATED PARTY TRANSACTIONS All related party transactions attracting compliance under Section 188 of the Act and Clause 49 of the Listing Agreement are placed before the Audit Committee and the Board. Prior omnibus approval of the Audit Committee was also obtained for the transactions which were of a foreseen and repetitive nature. All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on arm’s length basis. During the year under review, the Company has not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the policy of the company on materiality of related party transactions. In view of the same, the requirement of giving particulars in Form AOC-2 is not applicable for the year under review. The Company has framed, approved and implemented a policy on dealing with Related Party Transactions and the same is available on Company’s website under web link http://www.unitechgroup.com/investor-relations/corporategovernance. asp . Your Directors draw attention of the members to Note No. 33 to the standalone financial statement which sets out related party disclosures. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES The ratio of remuneration of each Director to the median employees’ remuneration and other details in terms of Section 197(12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules, 2014 is provided as Annexure IV forming part of this report. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules, 2014 will be provided upon request by any member of the Company. However, in pursuance of Section 136 of the Act, this report is being sent to all shareholders of the Company, excluding the aforesaid information and the said particulars are made available for inspection at the Registered Office of the Company during the period as per the Articles of Association of the Company and any member interested in obtaining such information may write to the Company Secretary at the Registered Office of the Company. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION Since the Company does not own any manufacturing facility, the requirements pertaining to disclosure of particulars relating to conservation of energy and technology absorption are not applicable. FOREIGN EXCHANGE EARNINGS AND OUTGO The Company is engaged in developing/constructing residential and commercial properties in India and selling the immovable properties to customers in India and abroad. The Company receives remittances of sale consideration for immovable properties located in India, purchased by the customers abroad. The foreign exchange earnings and outgo of the Company during the year under review were NIL and Rs. 15.99 crore as compared to NIL and Rs. 5.33 crore in the previous year respectively. SIGNIFICANT AND MATERIAL ORDERS During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals that would impact the going concern status and Company’s operation in future. PREVENTION OF SEXUA L HARASSMENT AT WORKPLACE The Company had formulated and adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. Further during the year under review, no case/complaints pursuant to the same were reported to the Board. ACKNOWLEDGEMENTS Your Directors wish to express their sincere appreciation for the co-operation received from the financial institutions, banks, government authorities, customers, vendors and suppliers during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the significant contribution made by each & every employee of the Company. The Directors are also thankful to depositors and all other stakeholders for their continued patronage. FOR AND ON BEHALF OF BOAR D OF DIRECTORS FOR UNITECH LIMITED Ramesh Chandra Chairman DIN: 00004216 Place: Gurgaon Date: 13th August, 2015 |