DIRECTORS REPORT We have pleasure in presenting the twenty ninth Annual Report on the is business and operations of the Company together with the audited ts for the financial year ended 31 March 2015. Dividend Your Board approved a dividend policy for the Company in its meeting held on 6 August 2013. The said dividend policy indicate that the Company will endeavor to pay 33.33% of the Profit After Tax (PAT) earned by the Company during each Financial Year, having regard to the business exigencies and general economic Outlook for distribution as Dividend to the Shareholders, including Dividend Distribution Tax and/or such other Taxes payable on Dividends Distributed. In line with the aforesaid dividend policy, the Board had recommended at its meet held on 15 May 2015, a Final dividend amounting to Rs.1.55 per equity share (31.00%) on 237,149,686 equity shares of Rs.5/- each, for the financial year ended 31 March 2015. The Register of Members and Share Transfer Books will remain closed from 17 September 2015 - 24 September 2015 (both days inclusive) for the purpose of payment of the final dividend for the Financial Year ended March 31, 2015. The Annual General Meeting (AGM) is scheduled to be held on 24 September 2015. Transfer to Reserves Since the Board has decided to pay a dividend of Rs.1.55 per equity share (31.00%) for the Financial Year ended 31 March 2015, an amount of Rs.8.54 crore (10% of the Standalone net profit for the year) has been transferred to the General Reserves pursuant to Sec 123 of the Companies Act 2013. Details of adequacy of Internal Financial Controls (IFC) In pursuance to section 134(5)(e), your Company has a proper and adequate system of internal controls in place to ensure that all transactions are authorised, recorded and reported correctly, and assets are safeguarded and protected against loss from unauthorised use or disposition and smooth functioning of its business. The processes and the systems are reviewed constantly and changed to address the changing regulatory and business environment. The Control Systems provide a reasonable assurance of recording the transactions of its operations in all material aspects and of providing protection against misuse or loss of Company's assets. In addition there are operational controls and fraud risk controls, covering the entire spectrum of internal financial controls. The ERP system which your Company had implemented has helped in further strengthening the IFC that are in place. The existing IFC and their adequacy are frequently reviewed and improved upon to meet the changing business environment. The internal auditors periodically review the internal control systems, Policies and procedures for their adequacy, effectiveness, and continuous operation for addressing risk management and mitigation strategies. Share Capital The paid-up equity share capital as on 31 March 2015 was Rs.118.58 crore. There was no public issue, rights issue, bonus issue or preferential issue etc. during the year The Company has not issued shares with differential voting rights, sweat equity shares nor has it granted any stock options Debentures During the year your Company has not issued any Debentures and the total debentures outstanding as on the date of this report is H Nil. Fixed Deposits During the year your Company did not invite nor accept any fixed deposits from public and as such, there existed no outstanding principal or interest as on the Balance Sheet date. Directors and Key Managerial Personnel Pursuant to the section 149(4) of the Companies Act, 2013, every listed company is required to have at least one third of its directors as independent directors. The board already has one half of its directors in the category of independent directors in the terms of the provisions of Clause 49 of the listing agreement The Board therefore in its meeting, held on 7 August 2014 approved the appointment of Mr. Anup S. Shah (DIN: 00317300), Mr. RVS Rao (DIN: 00061599) and Mr. Pradeep Guha(DIN: 00180427), the existing 'Independent Directors' under Clause 49, as 'Non-Executive Independent Directors' (NEID) pursuant to Companies Act, 2013, subject to approval of Shareholders. Further, as required under the said Act and the rules made thereunder, at the AGM held on 22 September 2014, the said directors were appointed as NonExecutive Independent Director (NEID) by the shareholders for a period of 5 years, commencing from 22 September 2014 to 21 September 2019, for a remuneration (in the form of commission and sitting fee) to be paid as may be decided by Board of directors of the company, subject to the limits as approved by them at same AGM as held aforesaid. According to Sec 149(13) of the Companies Act, 2013, the said directors shall not be liable to retire by rotation. During the Year Mrs. Geetanjali Vikram Kirloskar (DIN: 01191154) was appointed as an additional director in a capacity of Non-Executive Independent Director (NEID) of the company by the Board of Directors on 22 September 2014, whose appointment requires the approval of the shareholders at the forthcoming Annual General Meeting. Keeping in view the overall limit of 5 years (extendable by additional term of 5 more years) and subject to the aforesaid approval by the shareholders, the term of proposed appointment would be up to 21 September 2019. Mr. Anup S. Shah Resigned as Independent Director of the Company w.e.f. the Closing Hours of 21st July, 2015 Your Directors place on record their sincere appreciation of the valuable contribution made by the aforesaid Directors and Company Secretary to the Company. Necessary details have been annexed to the Notice of the meeting in terms of Section 102(1) of the Companies Act, 2013. All the continuing 'Non-Executive Independent Directors' have submitted the declaration of independence, as required pursuant to Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in Section 149(6) of the said Act and Clause 49 of the Listing Agreement with the Stock Exchanges. With the proposed appointment of 'Non Executive Independent Director', the conditions specified in the Act and the rules made there under as also under new Clause 49 of the Listing Agreement stands complied. The existing Whole-time Directors were appointed earlier as Directors not to Retire by Rotation vide a Resolution passed by the Shareholders at the Annual General Meeting held on 24 September 2011. To ensure compliance to Section 152 of the Companies Act, 2013, the Board of Directors based on the Shareholders Authorisation as aforesaid and with a view to Comply with the aforesaid provisions, passed a Resolution at its Board Meeting held on 7 August 2014, to make the Whole-time Directors liable to retire by rotation. In line with the Resolution, Mr. Ashish Ravi Puravankara, Director of the Company, is liable to retire by rotation at the forthcoming Annual General Meeting and being eligible for re-appointment offer himself for re-appointment as a director. Details of Directors seeking Appointment/ Re-Appointment at the Annual General Meeting (pursuant to Clause 49(VIII)(E) of the Listing Agreement), forms part of the Notice of the Annual General Meeting. Changes in the Whole-time directors/Company Secretary/Senior Management/KMP Based on the resolution passed by the Board of directors at its Board Meeting held on 15 May 2015, the following changes in Whole-time directors/Senior Management/KMP were affected by the company:- 'Changes subject to the Approval of the shareholders at the ensuing Annual General Meeting. *Mr. Anil Kumar resigned as Chief Financial Officer (CFO) of the company w.e.f 20 March 2015. The board wishes to place on record its deep appreciation for the valuable contribution made by him during his tenure as the CFO of the Company. #Mr. Hari Ramakrishnan, Deputy CFO was appointed as the Key Managerial Personnel with a designation as Chief Financial Officer, pursuant to Sec 203 of the Companies Act, 2013, w.e.f 15 May 2015. Mr. V. P. Raguram resigned as Company Secretary of the Company w.e.f. the Closing Hours of 14 August, 2015 Mr. V. Ravi Kumar Reddy was appointed as Company Secretary & Compliance Officer of the Company w.e.f 14 August 2015 Meetings of the Board Five (5) meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance forming part of this Annual Report. Policies Created During the Year Following are the policies created during the year and placed on the website of your company: 1. Code of Conduct for prevention of Insider Trading 2. Code of practices and procedures for fair disclosure of Unpublished Price Sensitive Information(UPSI) 3.Policy for determining material Subsidiaries 4.Policy on materiality of Related Party Transaction 5. Policy for Corporate Social Responsibility 6. Nomination and Remuneration Policy including Criteria for making payment to Directors (Non-Executive and Executive) and Senior Management Personnel. 7. Risk Management Policy Committees Created During the Year Following are the Committees created during the year and placed on the website of your company: 1. Corporate Social Responsibility Committee. 2. Risk Management Committee. Directors' Responsibility Statement Pursuant to Section 134(5) of the Companies Act, 2013, your Directors hereby confirm that: a) in preparation of the annual accounts the applicable accounting standards have been followed; b) the Directors have 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 at the year ended 31 March 2015 and of the profit of the Company for that period; c) the Directors have taken proper and sufficient care 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; and d) the annual accounts of the Company have been prepared on a 'going concern' basis. e) 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. f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Directors' Remuneration Policy and Criteria for matters required under Section 178 The Board on the recommendation of the Nomination and Remuneration Committee has framed a Nomination and Remuneration Policy, providing (a) criteria for determining qualifications, positive attributes and independence of directors and (b) a policy on remuneration for directors, key managerial personnel and other employees. The detailed Remuneration Policy is placed on the Company's website www. puravankara.com Familiarisation Programme With a view to familiarise the Independent Directors with the Company's operations, as required under Clause 49, the Company has held various familiarization programmes for the Independent Directors throughout the year on an ongoing and continuous basis. Some of the familiarization programmes carried out during the year were as under: 1. Various presentations were made by business heads of the Company from time to time on different functions and areas. 2. Deliberations were held and presentations were made from time to time on major developments in the areas of the new Companies Act, 2013, the new Clause 49 of the Listing Agreement. The details of familiarization programmes are also placed on the Company's website www. puravankara.com Auditors & Auditors' Report M/S. Walker Chandiok & Co. LLP, (formerly Walker, Chandiok & Co), Chartered Accountants, (LLP Registration No. 001076N/N500013), Chartered Accountants, statutory auditors of the Company hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received from M/S. Walker Chandiok & Co. LLP, a consent letter to the effect that their appointment, if made, would be within the prescribed limits under Section 141(3) (g) of the Companies Act, 2013. The Consolidated Auditors' Report and the Standalone Auditors' Report to the shareholders for the year ended 31 March 2015 does not contain any qualification and hence do not call for any further comments. Cost Auditors The Board has appointed M/s. GNV Associates, Cost Accountants; for conducting the audit of cost records of the Company for the financial year 2014-15. Secretarial Audit The Board has appointed Mr. V Karthick (Membership No. ACS-11910, PCS-4680), Practising Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is attached herewith marked as Annexure I to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Particulars of Loans given, Investments made, Guarantees given and Securities provided Particulars of loans given, investments made, guarantees given and securities provided are disclosed in Note 12 and 14 to the standalone financial statement of the Company. Contracts and arrangements with Related Parties All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had 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. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website www. puravankara.com The details of the related party transactions are attached herewith as Annexure II Form AOC-2 Consolidated Financial Statements In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates and Clause 32 of the Listing Agreement entered into with the Stock Exchanges, the audited Consolidated Financial Statements forms part of this Annual Report. Subsidiaries The Company has in all 20 Subsidiaries (including a step-down subsidiary in Sri Lanka) out of which 16 Companies are in India and 4 are abroad (6 -Public Limited Companies & 14 - Private Limited Companies). Of these, only Provident Housing Ltd. is a Material Non-listed Indian Subsidiary Company (MNLIS) as defined under the Listing Agreement. In pursuance to Clause 49(V) of the Listing Agreement, Mr. Anup S. Shah and Mr. Pradeep Guha, Independent Directors on the Board of the Company was also on the board of Provident Housing Ltd., which is a Materially Non-listed Indian Subsidiary Company (MNLIS). He resigned as Director w.e.f the closing hours of 21 July 2015. Mr. RVS Rao was appointed as Director of Provident Housing Limited w.e.f 14 August 2015 No Investments were effected by Provident Housing Limited during the year. The Audit Committee of the Company reviews the Financial Statements of the said Subsidiary and its Minutes are also placed before the Board of Directors of the Company. Your Company had invested Rs.221,186,000 during Jun' 2007 in Keppel Magus Development Private Limited, in consideration of being allotted 362,600 shares of Rs.610/- each, holding 36.26% stake in the Company, together with Wisley Pte Ltd. -Part of Keppel Group, holding 37.74% and RSJ Developers Private Limited, holding 26.00%. On 9 May 2014, your Company entered into a Share Purchase Agreement with BMS Reality Pvt. Ltd. to sell its entire holdings together with Wisley Pte. Ltd. and RSJ Developers Private Limited. Further, a Supplementary Share Purchase Agreement was entered on 27 June 2014 so as to complete the sale on 2 July 2014. The Sale Consideration amounted to Rs.322,113,271 and was duly received by your Company on 2 July 2014. On a Historical Cost basis, the Investment has earned a profit of Rs.100,927,271. Consequent to the aforesaid sale, Keppel Magus Development Private Limited, ceases to be an Associate Company. On 6 April 2015 Investment (10,000 Shares of H10 /- each) in Purva Good Earth Properties Pvt. Ltd. was transferred to Provident Housing Ltd. (a Subsidiary of the Company) for a Consideration of Rs.1,00,000. Profit on sale of Investment amounted to Rs.0 (NIL). Consequently, Purva Good Earth Properties Pvt. Ltd. ceases to be a Subsidiary company with effect from that date and has becomes a step-down Subsidiary of the company. Details of Companies which became / ceased to be Company's Subsidiaries, Joint Ventures or Associate Companies are specified in Annexure III. Statement relating to Subsidiaries & its financial statements Information regarding each subsidiary pertaining to capital, reserves, total assets, total liabilities, details of investment, turnover, profit before taxation, provision for taxation, profit after taxation/loss and proposed dividend are attached herewith as Annexure IV (i.e. Form AOC-1). Your Directors hereby inform you that the audited annual accounts and related information of the subsidiaries will be available for inspection on any working day during business hours at the Registered Office of the Company. In accordance with the provisions of Sections 136 of the Companies Act, 2013, the annual financial statements and the related documents of the subsidiary companies of the company are placed on the Company's website www.puravankara. com Material Changes and Commitments There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the balance sheet relates and the date of this report. Energy, Technology Absorption and Foreign Exchange Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo: Technology Absorption: Your Company firmly believes that adoption and use of technology is a fundamental business requirement for carrying out business effectively and efficiently. While the industry is labor intensive, we believe that mechanisation of development through technological innovations is the way to address the huge demand supply gap in the industry. We are constantly upgrading our technology to reduce costs and achieve economies of scale. We have also invested in automating our processes to accelerate the decision making process and have commenced implementation of Ramco ERP software during the year for the entire group. We have also commenced work on implementing an entity wide ERP platform during the year. We intend to continue this process of investments in innovative techniques. Energy: The Company is in the business of property development and does not require large quantities of energy. However, wherever possible energy saving measures are being taken across all its projects. Foreign Exchange: Foreign exchange earned during the year ended 31 March 2015 is equivalent to Rs.3.05 crore and the expenditure is equivalent to Rs.6.56 crore. Risk Management Policy Information on the development and implementation of a Risk Management Policy for the Company including identification therein of elements of risk which in the opinion of the Board may threaten the existence of the Company is given in the Corporate Governance Report. Corporate Social Responsibility (CSR) Puravankara Projects Limited had commitment to invest in social causes even before the same was made mandatory under the Companies Act 2013. Our CSR initiatives have focused on improving civic amenities, promoting interest in arts and sports apart from sponsoring education to the needy. Efforts include the development and maintenance of roads, parks, fire station and a war memorial apart from supporting schools and creches for the children of unskilled labourers as well as support to old-age homes. Constitution of Corporate Social Responsibility Committee According to Section 135 of the Companies Act, 2013 read together with Companies (Corporate Social Responsibility Policy) Rules, 2014 and revised Schedule VII to the said Act which came into effect from 1 April 2014, all companies having net worth of Rs.500 crore or more, or turnover of Rs.1,000 crore or more or a net profit of Rs.5 crore or more during any financial year are required to constitute a Corporate Social Responsibility Committee of the Board of Directors comprising 3 or more directors, with at least one of them being an Independent Director. CSR Activities in Financial Year 2014-15 Puravankara strongly believes that corporates have a special and continuing responsibility towards social development. The Group focusses on creating a sustainable impact on the development of communities through initiatives in education, health and safety, arts and sports, civic amenities as well as environment. The Group strives to ensure that environmental management is assigned a high level of importance. Puravankara is committed to make the environment greener and healthier by maintaining parks/medians with nurturing plants and trees around the city. The public amenities maintained by the Group are the Kamaraj Road Median, Anil Kumble Circle, Cubbon Road Median, Indian Express Median in front of the Coffee Board, Marathalli Median, Domlur Park, War Memorial, Rest House Park, Ulsoor Road and SuvarnaJayanti Park. The art and culture of our nation are a vast continuum evolving incessantly since time immemorial. Preserving and nurturing our art and culture is therefore essential and assumes a lot of importance. Towards this effort, Puravankara sponsored the efforts of Sursagar, a non-profit organisation that promotes Art by conducting events, and also sponsors talented students from socially and economically backward communities from rural Karnataka. The company has also identified a Cultural Trust which runs a theatre and also conducts various trainings for the promotion of arts. This theatre requires substantial refurbishment and upgrading of equipments to ensure availability of modern technologies. The Trust is managed by veteran artists and other senior renowned personalities and also they conduct international film festivals. The company intends to contribute for this cause which would help the promotion of the arts and culture. Puravankara has also contributed to Premanjali Educational Trust, a non-profit organisation in Bengaluru for destitute and homeless children. Premanjali Education Trust provides formal education and holistic development to the underprivileged children with conceptualized projects and programs. They also periodically conduct events to raise funds, and Puravankara was the key sponsor for the 6th Premanjali festival held recently. This prestigious event showcased three legends of the Indian music Dr. L Subramaniam, Dr. Balamurali Krishna & Pt. Hariprasad Chaurasia who shared the dais for the first time ever. In association with various voluntary organisations, support was provided to a number of children of unskilled laborers at our project sites. At Purva Highland/ High Crest, we continue to run a school for such children, where basic education is imparted along with a midday meal. As a part of our initiative to support a Home for the aged, we associated with the non-profit organisation Little Sisters of the Poor. This is a charitable institution that receives the aged, 65 years of age and above, men and women, irrespective of caste, creed or religion, who are really in need of home, care and concern. 2015 marked 100 years of Little Sisters of the Poor being in India, and Puravankara wholly supported this endeavour, as they plan to expand and leverage their resources to a larger group. Puravankara in its pursuit for inclusive growth, has joined hands with the policies of the Government by contributing to the Prime Minister's Relief Funds and similar other funds for rural development. The Annual report on CSR Activities are attached herewith as Annexure V. Extract of Annual Return Extract of Annual Return of the Company, in pursuance to Section 92 of the Companies Act, 2013 is attached herewith as Annexure VI to this Report. Particulars of Employees and related disclosures The statement containing particulars of employees, including ratio of Remuneration of Director etc., as required under Section 197(12) of the Companies Act, 2013, read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel), Rules, 2014 are attached herewith as Annexure VII to this Report. However, having regard to the provisions of Section 136(1) of the Companies Act, 2013, the Annual Report excluding the particulars of employees as aforesaid is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such information may write to the Company Secretary at the Registered Office of the Company. Corporate Governance A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding the compliance of the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement entered into with the stock Exchanges form a part of this Annual Report. Management Discussion and Analysis A separate section on Management Discussion and Analysis as stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchanges forms a part of this Annual Report. Credit Rating Long-term rating of the Company stands at [ICRA] BBB, in respect of the various Fund and Non-Fund based Credit Facilities totaling to Rs.1,650 crores sanctioned to the Company. The rating has been issued by ICRA during December 2014 and will be reviewed by them on an ongoing basis Shares under Compulsory Dematerialization: The Company's equity shares are compulsorily tradable in electronic form. As on 31 March 2015, 0.0002% of the Company's total equity paid-up capital representing 402 shares (6 Shareholders) is in physical form and the remaining shares namely 237,149,284 (99.9998%) are in electronic form. In view of the numerous advantages offered by the Insider Trading Regulations SEBI had brought in a new regulation named as SEBI (Prohibition of Insider Trading Regulation) 2015, in place of SEBI Insider trading regulation 1992. Pursuant to the new regulation your company has formulated Code of Conduct for Prevention of Insider Trading & Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information the same is placed in the website of your company. Statutory Disclosures Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. 2. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 3. In compliance with the requirements of a new legislation viz. "Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace Act, 2013", introduced by the Government of India, which came into effect from 9 December 2013, the Company has adopted a 'Policy to provide Protection Against Sexual Harassment of Women in Workplace', which has been displayed on the Website of the Company. There were no cases reported during the year under review under the said policy. Acknowledgements Your Directors express their grateful appreciation for the assistance and co-operation received from the financial institutions, banks, government authorities, customers, vendors and shareholders during the said financial year. Your Directors would also like to once again place on record their appreciation to the employees at all levels, which through their dedication, co-operation, support and smart work have enabled the Company to move towards achieving its Corporate Objectives. For and on behalf of the Board of Directors Ravi Puravankara Chairman Ashish Ravi Puravankara Managing Director & Chief Executive Officer Place : Bengaluru Date : 14 August, 2015 |