DIRECTORS' REPORT To the Members, Your Directors are pleased to present the 21st Annual Report together with the Audited Statements of Accounts for the year ended 31st March, 2015. DIVIDEND In view of the brought forward losses, your directors regret their inability to recommend dividend for the year under review. PERFORMANCE REVIEW & OUTLOOK The total income for the year under review was t 6623.03 lakhs as against Rs. 4413.08 lakhs in the previous year. The total turnover of the hotel unit of the Company, Vivanta By Taj, Gurgaon-NCR, for the financial year under review was Rs. 5751.79 lakhs as compared to Rs. 3865.12 lakhs during the previous year. During the financial Year 2014-2015 the Company has reported a much higher Gross Profit amounting to Rs.1521.27 lakhs compared to Rs. 213.89 lakhs in the previous year. However mainly due to exceptional items and higher depreciation, Net Loss amounting to Rs. 4507.92 lakhs compared to Rs. 4479.43 lakhs in the previous year has been reported. The Industry Trends and outlook are summed up in the Management Discussion and Analysis which forms part of this report. SHARE CAPITAL The paid up Share Capital of the Company as on March 31, 2015, was t 96,13,82,870 consisting of 1,61,38,287 Equity shares of t 10 each and 80,00,000 - 9% Redeemable Non-Convertible Non-Cumulative Preference Shares of t 100 each. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options or sweat equity. NUMBER OF MEETINGS OF THE BOARD During the year under review, there were Five (5) Board Meetings. The details of the number of meetings of the Board held during the financial year 2014-2015 forms part of Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134 (3) (c) of the Companies Act, 2013, your Directors state that: (a) in the preparation of the Annual Accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed with proper explanation relating to material departures, if any; (b) the accounting policies adopted in the preparation of the annual accounts have been applied consistently except as otherwise stated in the Notes to Financial Statements and reasonable and prudent judgments and estimates so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2014-2015 and of the profit or loss for that period; (c) 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) the annual financial statements for the year ended 31st March, 2015, have been prepared on a going concern basis; (e) proper internal financial controls were in place and that the financial controls were adequate and operating effectively; (f) the system to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. DECLARATION BY INDEPENDENT DIRECTORS Mr. Rajesh Jain, Mrs. Asha Mehra and Mr. Luv Malhotra are Independent Directors on the Board of the Company. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013, and revised Clause 49 of the Listing Agreement with the Stock Exchange. PARTICULARS OF LOANS , GUARANTEES AND INVESTMENTS UNDER SECTION 186 Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. MAJOR EVENTS IN THE COMPANY 1. Scheme of Amalgamation of Pisces Portfolios Pvt. Ltd. with the Company was approved by the High Court of Punjab & Haryana vide its Order dated 15th September, 2014. 2. Company issued and alloted 50 Lakhs 9% Redeemable Non-Convertible Non-Cumulative Preference Shares Series II at face value of Rs. 100 each, on a Private Placement basis, after taking approval from its members via Postal Ballot. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The requirements pertaining to disclosure of particulars relating to conservation of energy and technology absorption, as prescribed under Section 134(3)(m) of the Companies Act, 2013 are not applicable to your Company. During the year under review, foreign exchange earnings were Rs. 1902.84 lakhs. The foreign exchange outgo during the said period was Rs. 36.36 lakhs towards payment of Professional and Technical fees and Rs. 63.52 lakhs towards advertisement and other expenses. RISK MANAGEMENT The Company has adopted the Risk Management Policy for Risk Assessment and minimization. These procedures are reviewed to ensure that the management controls risk through means of a properly defined framework. The Risk Management Policy is a part of Management Discussion and Analysis which forms a part of this report. DEPOSITS Your Company has neither invited nor accepted any deposits from the Public / shareholders during the year under review. There has been no default in repayment of deposits or payment of interest thereon during the year under review. SIGNIFICANT ORDERS PASSED BY THE REGULATORS OR COURTS (i) Approval of Scheme of Amalgamation of Pisces Portfolios Private Limited with the Company by the Hon'ble High Court of Punjab & Haryana. There were no other significant orders passed by the Regulators / Courts or Tribunal during the year under review which has an impact on the Going Concern status and Company's status in the future. INTERNAL CONTROL AND SYSTEMS The Company has adequate internal control procedures commensurate with its size and nature of business. The objective of these procedures is to ensure efficient use and protection of the Company's resources, accuracy in financial reporting and due compliance of statutes and corporate policies and procedures. The adequacy of internal financial control systems are reviewed by the Audit Committee of the Board in its periodical meetings. INTERNAL FINANCIAL CONTROL SYSTEM The Company has a comprehensive Internal Financial Control system commensurate with the size and scale of its operations. The system ensures the reliability of financial reporting, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources. The policies and procedures adopted by the company ensures the orderly and efficient conduct of its business and adherence to the company's policies, prevention and detection of frauds and errors and timely preparation of reliable financial information. CORPORATE GOVERNANCE The Company has complied with the Corporate Governance code as stipulated under the Listing Agreement with the Stock Exchange. A separate section on Corporate Governance for the year under review is annexed hereto and forms a part of the Annual Report. RELATED PARTY TRANSACTIONS All transactions entered with Related Parties during the financial year were on an arm's length basis and were in the ordinary course of business. Further there are no materially significant related pary transactions during the year under review made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company's website - www.hbestate.com , web link-www.hbestate.com/Investor centre/CorporateGovernance. STATEMENT PURSUANT TO LISTING AGREEMENT The Company's equity shares are listed at Bombay Stock Exchange Ltd., Mumbai. The listing fee for the year under review has been paid to BSE. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES There are no Subsidiaries or Joint Ventures of the Company. In terms of Section 2(6) of the Companies Act, 2013, Parsvnath HB Projects Pvt. Ltd. is an associate company. The required details of the same is being provided in Form AOC-1, forming part of the financial statement. DIRECTORS AND KEY MANAGERIAL PERSONNEL As per the relevant provisions of the existing Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. Lalit Bhasin, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. As per the provisions of Section 161(1) of the Companies Act, 2013 and Articles of Association of the Company, the Board of Directors had appointed Mr. Luv Malhotra as an Additional Director (Independent Non-Executive) of the Company with effect from 31st March, 2015 who shall hold office upto the date of next Annual General Meeting. The above appointment was based on the recommendation of the Nomination and Remuneration Committee subject to the approval of the Shareholders of the Company at the forthcoming Annual General Meeting. Details of the proposal for the appointment of Mr. Luv Malhotra as an Independent Director with effect from 31st March, 2015, for a period of five consecutive years, are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 21st Annual General Meeting of the Company. Pursuant to the provisions of Section 203 of the Companies Act, 2013, Mr. Praveen Gupta, Chief Financial Officer and Mr. Rajesh Singh Chahar, Company Secretary were designated as the Key Managerial Personnel of the Company. BOARD 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 various Committees. The Independent Directors also carried out the evaluation of the Chairman and the Non- Independent Directors and the manner in which the evaluation has been carried out is explained in the Corporate Governance Report. NOMINATION AND REMUNERATION POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The said Policy is marked as "Annexure - I" which is annexed hereto and forms part of the Director's Report. STATUTORY AUDITORS The Auditors, M/s P. Bholusaria & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. Observations of the Statutory Auditors are explained, wherever necessary, by way of notes to accounts. INTERNAL AUDITORS M/s. M.K. Choudhary & Co., Chartered Accountants, New Delhi are the Internal Auditors of the Company and M/s Grant Thornton India LLP, are the Internal Auditors of the hotel project of the company, Vivanta by Taj, Gurgaon- NCR, and their reports are reviewed by the Audit Committee periodically in its meetings. SECRETARIAL AUDITOR 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 Mr. A.N. Kukreja of M/s. A. N. Kukreja & Co., to conduct the Secretarial Audit of the company for the financial year 2014-2015. The Report of the Secretarial Audit in Form MR-3 is annexed as "Annexure- II". Observations made by the Secretarial Auditor: (a) The Company does not have a Managing Director or Chief Executive Officer or Manager and in their absence, a Whole-time Director, as required under Section 203 of the Companies Act, 2013. Comment: The management is searching for a suitable candidate for the post of Managing Director/ Chief Executive Officer of the Company. (b) The Company does not come within the ambit of sub-section (1) of Section 135 of the Companies Act, 2013 for the financial year 2014-15. Comment: The Company has incurred average net loss for immediately preceding three financial years. Hence the Company is not required to spend any amount on the CSR activities during the financial year 2014-15. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Board has constituted a Corporate Social Responsibility Committee pursuant to Section 135 of the Companies Act, 2013. Composition of the CSR Committee is as mentioned in the Corporate Governance Report. The Board after taking considerations from the Corporate Social Responsibility Committee approved the Corporate Social Responsibility Policy for the Company and disclosed its contents in the Corporate Governance Report. The Company has incurred average net loss for immediately preceding three financial years, hence the Company is not required to spend any amount towards CSR activities during financial year 2014-2015. The CSR Policy has also been uploaded on the website of the Company - www.hbestate.com , Web link- www.hbestate.com/Investor centre/CSR and is annexed as "Annexure - III" and forms part of the Director's Report. VIGIL MECHANISM - WHISTLE BLOWER POLICY The Company has duly approved a Vigil Mechanism - Whistle Blower Policy enabling stakeholders, including individual employees and their representative bodies, to freely communicate their concerns about illegal or unethical practices and for the directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics Policy. It provides a channel to the stakeholders, employees and directors to report to the management, concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of conduct or Policy. The whistle Blower Policy duly approved by the Board of Directors is also posted on the website of the Company-www.hbestate.com and the web link for the same is www.hbestate.com/Investor centre/ Corporate Governance. EXTRACT OF ANNUAL RETURN The details forming part of the extract of Annual Return in Form MGT-9 as required under Section 92 of the Companies Act, 2013, is marked as "Annexure - IV" which is annexed hereto and forms part of the Director's Report. SEXUAL HARASSMENT POLICY The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of Sexual Harassment at Workplace in line with the provisions of Sexual harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013 and Rules made there under. The Company has not received any complaints on sexual harassment during the year under review. ACKNOWLEDGMENTS Your Directors wish to thank and acknowledge the co-operation, assistance and support extended by the Company's associates, Bankers. Your Directors also wish to thank all the employees at all levels of the organization for the contribution and the trust and confidence reposed by the shareholders in the management of the company. For and on Behalf of The Board HB ESTATE DEVLOPERS LIMITED Sd/- LALIT BHASIN (CHAIRMAN) (DIN : 00002114) Place : Gurgaon Date : 30.05.2015 |