DIRECTORS REPORT DEAR MEMBERS We have pleasure in presenting the Twentieth Annual Report on business and operations of the Company together with the Audited Statement of Accounts for the financial year ended 31st March, 2015. FINANCIAL OVERVIEW: During the financial year 2014-15, the Company has on a standalone basis, clocked a total income of Rs. 100,801 Lakhs as compared to Rs. 91,577 Lakhs for the previous year ended 31st March, 2014, an increase of 10% on a year-on- year basis. EBITDA has increased from Rs. 30,194 Lakhs to Rs. 31,525 Lakhs an increase of 4%. Profit after tax was at Rs. 7,000 Lakhs for the financial year ended 31st March, 2015 as compared to Rs. 8,980 Lakhs for the previous year, a decrease by 22%. The consolidated revenue for the Company for the financial year 2014-15 was Rs. 1,33,084 Lakhs as compared to Rs. 96,669 Lakhs in the previous year, a growth of 38% on year-on-year basis. EBITDA increased from Rs. 31,842 Lakhs in the previous year to Rs. 40,305 lakhs, for the financial year 2014-15, an increase of 27%. Profit after tax was at Rs. 11,495 Lakhs for the financial year ended 31st March, 2015 as compared to Rs. 8,895 Lakhs for the previous year, an increase by 29%. subsidiaries/ joint ventures and associates: The Company had a total of 12 subsidiaries, 2 joint venture entities and 1 associate company as at 31st March, 2015. During the year under review: ? BCV Developers Private limited became a subsidiary of the Company w.e.f. 21st January, 2015. BCV Developers Private Limited owns the land wherein the Brigade Orchards, the first smart township project in Bangalore is being developed by the Company on 130 plus acres of land. ? Brigade (Gujarat) Projects Private Limited was incorporated on 26th March, 2015 as a wholly owned subsidiary of the Company which would undertake the development of 1.1 mn. sq ft. development at Gujarat International Finance Tec-city (GIFT City), Ahmedabad. ? Brigade Properties Private Limited, subsidiary of the Company had acquired the entire shareholding in Brooke Bond Real Estates Private Limited on 23rd March, 2015. Due to this acquisition, Brooke Bond Real Estates became a wholly owned subsidiary of Brigade Properties Private Limited and a step down subsidiary of the Company. Brooke Bond Real Estates Private Limited owns a landmark SEZ property admeasuring 26.5 acres known as "Brookefields". financial statements of subsidiaries, joint ventures and associate companies: In accordance with the provisions of Section 129 (3) of the Companies Act, 2013 read with Clause 32 of the Listing Agreement, the consolidated financial statements have been prepared by the Company which forms part of this Annual Report. A statement containing the salient features of the financial statements of subsidiaries/joint ventures/ associates as required in Form AOC 1 is enclosed as Annexure-1 to this Report. FRAMEWORK AGREEMENT WITH GIC, SINGAPORE: During the year, the Company has entered into a framework agreement with GIC, Singapore for jointly investing up to Rs. 1,500 crores within a time frame of 3 years for acquiring properties for mixed use development in the major cities in South India. The Partnership with GIC got further strengthened with the acquisition of Brooke Bond Real Estates Private Limited which holds a prime SEZ land popularly known as "Brooke fields." SCHEME OF ARRANGEMENT: ? BCV Developers Private Limited, a subsidiary company had filed a scheme of amalgamation with two joint venture companies {BCV Estates Private Limited and CV Properties (Bangalore) Private Limited} with the appointed date for the scheme being 1st October, 2013. The scheme has been sanctioned by the Honourable High Court of Karnataka and the process of amalgamation is currently pending for filing with the Registrar of Companies. Pending such filing, the amalgamation has not been accounted for in the consolidated financial statements for the year ended 31st March, 2015. ? Prosperita Hotel Ventures Limited, a wholly owned subsidiary of the Company (transferee company) along with Subramanian Engineering Company Limited (transferor company) had filed a scheme of demerger with the appointed date for the scheme being 1st October, 2013. The scheme of demerger has been sanctioned by the Honourable High Court of Madras recently. The effect of the demerger would be given in the books of Prosperita Hotel Ventures Limited after the court order is filed with the Registrar of Companies. TRANSFER TO RESERVES: An amount of Rs. 882 Lakhs has been transferred out of the current year's profits to General Reserves towards future capital expansion. DIVIDEND: The Board of Directors of the Company have recommended a dividend of Rs. 2.00 (Rupees Two only) (20%) per Equity Share of Rs. 10 each which is subject to the approval of the Shareholders in the ensuing Annual General Meeting of the Company. The total payment on account of Dividend (including Dividend Tax) shall be Rs. 2,706 Lakhs. FIXED DEPOSITS: The Company has not accepted any deposits in terms of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014, during the year under review. Accordingly, no amount is outstanding as on the balance sheet date. DEBENTUREs: During the year under review, the Company has not issued any Debentures. As on date, the Company does not have any outstanding Debentures. DEPOSITORY SYSTEM: Company's shares are tradable only in electronic form. As on 31st March, 2015, 96.24 % of the Company's total paid up equity share capital representing 10,85,02,046 shares are in dematerialised form. TRANSFER TO INVESTOR PROTECTION FUND: The Company and the Registrar & Transfer Agents of the Company sent letters to all members whose IPO refund money and dividend were unclaimed so as to ensure that they receive their rightful dues. During the year, the Company transferred Rs. 2,23,860/- to the Investor Education and Protection Fund, the IPO refund amount which was due & payable and remained unclaimed and unpaid for a period of seven years as provided under Section 205C(2) of the Companies Act, 1956. SHARE CAPITAL: The authorised share capital of the Company is Rs. 150,00,00,000/- divided into 15,00,00,000 equity shares of Rs. 10/- each. During the year, the Company had issued and allotted 4,91,700 equity shares of the Company to the eligible employees on exercise of options granted under the Brigade Enterprises Limited Employee Stock Option Scheme, 2011. Consequently, the issued, subscribed and paid-up equity share capital of the Company has increased from 11,22,51,940 equity shares of Rs. 10/- each to 11,27,43,640 equity shares of Rs. 10/- each. EMPLOYEE STOCK OPTION SCHEME: The Employee Stock Option Scheme titled "Brigade Employee Stock Option Plan 2011" was rolled out in the financial year 2013-14. Statement giving detailed information on the plan in accordance with SEBI Regulations is contained in Annexure-2 to this Report. OPERATIONAL REVIEVV: The operations of the Company can be classified into three main Segments: 1. Income from Construction and development of Real Estate Projects 2. Revenue from Hospitality Assets 3. Lease Rental Income from Commercial and Retail Assets The Real Estate segment specialises in development of residential and commercial Real Estates projects on Sale basis. The revenues of this segment is recognised either on percentage of completion method during construction or unit sale method after the completion of the projects. The Hospitality segment develops hospitality assets and specialises in identifying Hotel operators and monitoring the operation of the hotel assets. The Commercial and Retail segment concentrates on developing commercial and retail assets and identifying suitable tenants on long term lease for the Assets owned by the Company. A detailed analysis of completed and ongoing projects as on 31st March, 2015 has been given in the Management Discussion and Analysis Report which is forming part of the Annual Report. completed projects During the year under review, the Company has completed residential projects admeasuring 1.2 million sq. ft. ONGOING PROJECTS The Company currently has 20 ongoing residential projects aggregating to 10.1 million sq. ft. of developable area (out of which Company's share is about 8.2 million sq. ft.), 10 commercial/retail projects aggregating to 3.4 million sq.ft. of developable area (out of which Company's share is about 2.1 million sq. ft.) and 2 Hospitality projects of 0.3 million sq. ft. of developable area (out of which Company's share is about 0.3 million sq. ft.). Apart from these, the Company also has 8 ongoing residential projects under SPVs aggregating to 3.6 million sq. ft. of developable area (out of which Company's share is about 1.8 million sq. ft.) and 2 Hospitality project of 0.3 million sq. ft. of developable area (out of which Company's share is about 0.2 million sq. ft.). PROPOSED PROJECTS During the financial year 2015-16, the Company proposes to launch 7.70 million sq. ft. of new launches. Out of this, Real Estate launches will be about 6.1 million sq. ft., Commercial space will be 1.30 million sq ft. and Hospitality space will be 0.30 million sq. ft. BOARD OF DIRECTORS: The Board of Directors of the Company comprises of nine directors of which 2 are Executive Directors, 5 Non-Executive Independent Directors and 2 Non-Executive Directors. The composition of the Board of Directors is in due compliance of the Companies Act, 2013 and the Listing Agreement entered with the Stock Exchanges. BOARD MEETINGS During the year under review, the Board of Directors of the Company met 6 times on the following dates: ? 7th May, 2014 ? 6th June, 2014 ? 5th August, 2014 ? 4th November, 2014 ? 31st January, 2015 ? 16th February, 2015 In accordance with the provisions of the Companies Act, 2013, a separate meeting of the Independent Directors of the Company was held on 9th March, 2015. A detailed note on the composition of various Committees of the Board and their meetings including the terms of reference were given in the Corporate Governance Report forming part of the Annual Report. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION The Directors of the Company are appointed by the members at annual general meetings in accordance with the provisions of the Companies Act, 2013 and the rules made thereunder. The Company has adopted the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement relating to the appointment and tenure of Independent Directors The Company's Remuneration Policy for Directors, Key Managerial Personnel and Senior Management Personnel is contained in Annexure-3. APPOINTMENT/ RE-APPOINTMENT OF DIRECTORS In accordance with the Articles of Association of the Company and the provisions of Section 152(6)(e) of the Companies Act, 2013, Mr. M.R. Jaishankar, Chairman & Managing Director (DIN: 00191267) and Ms. Githa Shankar, Whole-time Director (DIN: 01612882) of the Company will retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Board of Directors at their meeting held on 31st January, 2015 have appointed Mr. Bijou Kurien (DIN: 01802995) as an Additional Director of the Company. Mr. Bijou Kurien holds office up to the date of ensuing Annual General Meeting. The Company has received a notice in writing, under Section 160 of the Companies Act, from a Member along with a cheque of Rs. 1 lakh in favor of the Company proposing the candidature of Mr. Bijou Kurien as an Independent Director of the Company for a consecutive term up to five years from the date of the ensuing Annual General Meeting. The Notice convening the Annual General Meeting includes the proposals for the re-appointment of the Directors. Brief resume of the Directors proposed to be appointed/ re-appointed, nature of their expertise in specific functional areas and names of the companies in which they hold directorship/ membership/ chairmanship of the Board or Committees, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges have been provided as an annexure to the Notice convening the Twentieth Annual General Meeting. None of the Directors of the Company are disqualified under Section 164(2) of the Companies Act, 2013. DECLARATION BY INDEPENDENT DIRECTORS The Independent Directors of the Company have provided the declaration of Independence as required under Section 149(7) of the Companies Act, confirming that they meet the criteria of independence under Section 149(6) of the Companies Act and Clause 49 of the Listing Agreement entered into with BSE Limited and the National Stock Exchange of India Limited. ANNUAL PERFORMANCE EVALUATION OF THE BOARD: The Board conducted an evaluation of itself and its Committees based on identified criteria and framework pursuant to the provisions of the Companies Act, 2013 and Listing Agreement. The Board evaluated & assessed the performance and potential of each Director. The Independent Directors at a meeting conducted a review of the performance of the Chairman after taking into account the views of the Non-Executive Directors of the Board. At the same meeting, the review of the Executive Directors was also carried out. DIRECTORS' RESPONSIBILITY STATEMENT: The Board of Directors hereby confirms that: a) in the preparation of the annual financial statements for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) 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 at the end of the financial year and of the profit of the Company for that period; c) the Directors had 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; d) the annual financial statements have been prepared on a going concern basis; e) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; f) there are proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. KEY MANAGERIAL PERSONNEL: During the year under review, Mr, M. R. Jaishankar, Chairman & Managing Director, Mr. Suresh K, Chief Financial Officer and Mr. P. Om Prakash, Company Secretary were designated as Key Managerial Personnel in accordance with the provisions of Section 203 of the Companies Act, 2013. REMUNERATION DETAILS OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES: The particulars as required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is contained in Annexure-4. The statement of employees in receipt of remuneration exceeding the limits prescribed under Section 134 of the Companies Act, 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as Annexure- 5. STATUTORY AUDITORS: The members of the Company at the Nineteenth Annual General Meeting held on 5th August, 2014 approved the appointment of Messers S.R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration Number 101049W) as the Statutory Auditors of the Company for a period of 5 years till the conclusion of Twenty Fourth Annual General Meeting, which is subject to annual ratification by the members of the Company in terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014. The resolution relating to annual ratification of statutory auditors appointment is part of the notice of the Twentieth Annual General Meeting. Members may ratify the appointment of Messers S.R. Batliboi & Associates LLP, Chartered Accountants as the Statutory Auditors of the Company for the financial year 2015-16. There are no qualifications or adverse remarks in the Statutory Auditors' Report for the financial statements for the year ended 31st March, 2015 which require any explanation from the Board of Directors. SECRETARIAL AUDIT REPORT: Pursuant to provisions of the Companies Act, 2013, the Board of Directors of the Company have appointed Mr. K. Rajshekar, Practising Company Secretary (CP No. 2468) to conduct the Secretarial Audit for the financial year 2014-15 and his Report on Company's Secretarial Audit is appended as Annexure-6 to this Report. There are no qualifications or adverse remarks in the Secretarial Audit Report which require any explanation from the Board of Directors. COST AUDITORS: The Board of Directors of the Company have appointed M/s GNV & Associates, Cost Accountants (Firm Regn No. 000150) as Cost Auditors of the Company for the financial year 2014-15 at a fee of Rs. 1.25 lakhs plus applicable taxes and out of pocket expenses subject to the ratification of the said fees by the Shareholders at the ensuing Annual General Meeting of the Company pursuant to provisions of Section 148 of the Companies Act. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: The Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is forming part of the Report. CORPORATE GOVERNANCE REPORT: The Company is committed to maintaining the highest standards of Corporate Governance. Company has duly complied with all the mandatory requirements stipulated in Clause 49 of the Listing Agreement. A detailed Report on Corporate Governance and a certificate from Mr. K Rajshekar, Practising Company Secretary (CP No.2468) affirming compliance with the various conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: The details of loans given, investments made, securities provided and guarantees given are provided in note 14 and 15 forming part of the standalone financial statements. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: All transactions entered into during the financial year 2014-2015 with related parties were in the ordinary course of business and on arm's length basis. The Company has formulated a policy on Related Party Transactions which is available on the website of the Company at <http://www.brigadegroup.com/investor/> images/policy-related-party-transactions.pdf. During the year the Company has not entered in to 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. Transactions with related parties during the year are listed out in note 37 forming part of the standalone financial statements, INTERNAL FINANCIAL CONTROL SYSTEM: The Company has adequate internal financial control systems in place with reference to the financial statements. During the year under review, these controls were evaluated and no significant weakness was identified either in the design or operation of the controls. RISK MANAGEMENT COMMITTEE: As required under Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee consisting of Executive Director, Non-Executive Director and an Independent Director to identify and assess business risks and opportunities. The Risk Management Committee identifies the risks at both enterprise level as well as at the project level. The business risks identified are reviewed by the Risk Management Committee and a detailed action plan to mitigate identified risks is drawn up and its implementation monitored. The key risks and mitigation actions will also be placed before the Audit Committee of the Company. CORPORATE SOCIAL RESPONSIBILITY: A Corporate Social Responsibility (CSR) Committee has been constituted in accordance with the provisions of Section 135 of the Companies Act, 2013. In terms of Section 134 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, a brief on Corporate Social Responsibility activities of the Company has been disclosed in the Corporate Governance Report forming part of this Annual Report. VIGIL MECHANISM: The Company has established a vigil mechanism for Directors and Employees to report their genuine concerns, illegal, unethical behaviour, suspected fraud or violation of laws, rules and regulation or conduct to the Chief Vigilance Officer and the Audit Committee of the Board of Directors. The details of which have been given in the Corporate Governance Report forming part of this Annual Report. EXTRACT OF ANNUAL RETURN: In terms of Section 92 (3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return of the Company for the financial year 2014-15 in Form No. MGT-9 is appended as Annexure-7 to this Report. CODE OF CONDUCT: Pursuant to Clause 49 of the Listing Agreement, the declaration signed by the Chairman and Managing Director affirming compliance of the Code of Conduct by the Directors and senior management personnel of the Company for the financial year 2014-15 is annexed and forms part of the Corporate Governance Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: The particulars in respect of conservation of energy, technology absorption and foreign exchange earnings & outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is appended as an Annexure-8 to this report. HUMAN RESOURCES: The Company has a total workforce of 544 as on 31st March, 2015. The Company believes that the only way it can excel is by empowering its people. Training and development is conducted regularly at all levels to enable employees to reach their individual goals and better align the same with the overall corporate goal. The Company aims to contribute to the overall development of its employees through extensive training and motivational programmes. The Board of Directors would like to express their appreciation to employees for their hard work dedication & commitment. As a part of the policy for Prevention of Sexual Harassment in the organisation, the Company has in place a Committee called "Complaints Redressal Committee" for prevention and redressal of complaints on sexual harassment of women at work place in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 and relevant rules there under. During the period under review, no complaints were received by the Committee AWARDS AND RECOGNITIONS: Among the significant awards Brigade Group has received in 2014-15 are: ? Brigade Group selected as one of India's Best Companies to Work For 2014 by Economic Times and Great Place to Work Institute, for the fourth consecutive year. ? Brigade Group was recognized and awarded as one of Bangalore's Hot 50 Brand's at the Bangalore Brand Summit 2014 award ceremony by Paul Writer. ? Brigade Crescent and Brigade Horizon won awards at the 3rd Annual Silicon India Bangalore Real Estate Awards 2014. Brigade Crescent won the 'Ultra luxury Apartment Project Of The Year' in CBD limits, Bangalore and Brigade Horizon won the 'Luxury Apartment Project Of The Year', Mysore. ? Brigade Group won 5 Awards at the 6th REALTY PLUS EXCELLENCE AWARDS 2014 for the following categories: ? World Trade Centre Bangalore @ Brigade Gateway-Commercial Property of the Year ? Brigade Group for Brigade Magnum-Developer of the Year - Commercial ? Brigade Lakefront for 'WALK'-Innovative Marketing Concept of the Year ? Brigade Lakefront for' WALK'-OOH Marketing campaign of the year ? Brigade Lakefront for 'WALK'- Print campaign of the year ? Brigade Rubix has been awarded the "Best Architectural Design - Commercial" at the National Real Estate Development Council (NAREDCO) Awards 2014. ? Mr. Jaishankar was conferred the 'Construction Week India Hall of Fame' Award in recognition of his extraordinary work in the real estate sector. ? HIGH won the "IMAGES Most Admired Food Service Retail Launch of the Year: Home Grown Retailer "at the Coca Cola Golden Spoon Awards 2015 in Mumbai. ? Ms. Nirupa Shankar was awarded the "Rising Star Award - South Asia" by the International Society of Hospitality Consultants (ISHC) at the Hotel Investment Forum India (HIFI) in Delhi. ? Brigade Meadows was awarded the 'Budget Apartment Project of the year, Tier 1' category at the NDTV Property Awards 2014. ? Brigade Group won 4 awards across various categories at the CARE Awards (CREDAI Real Estate Awards) held on 27th March 2015 at ITC Gardenia, Bangalore. The Awards were split across three zones- North Karnataka, South Karnataka and Bangalore. ? The Awards Brigade Group won are: ? Brigade Sparkle won the 'Best Dwelling below 1500 sqft (Residential)' in South Karnataka. ? Brigade Rubix won the 'Best Commercial Complex' in Bangalore. ? Brigade Group received the 'Best CSR work by a Developer' for the redevelopment of the Kempegowda Playground in Malleswaram and Skywalk on Dr. Rajkumar Road. ? The most prestigious award of the evening was the Special Awards Category- Mr. M R Jaishankar, CMD, Brigade Group was given an award for 'Outstanding contribution to the Real Estate Sector'. ? Mr. Suresh Kris, CFO- Brigade Group was recognized as one of the Top 100 CFO's in the country for 2015 by the CFO India Magazine. ? Mr. Manjunath Prasad, COO Projects was awarded the Most Enterprising Real Estate Professional of the year at the Global Real Estate Brand awards 2015. ? Orion Mall won the Best Shopping Mall of the year in South India at the Indian Retail & e-Retail Awards 2015. ? Orion Mall received two of the coveted trophies -'IMAGES Most Admired Shopping Centre of the Year: South and 'IMAGES Most Admired Shopping Centre Marketing & Promotions of the Year- South', at the IMAGES Shopping Centre Awards 2015. ADDITIONAL INFORMATION TO SHAREHOLDERS: All important information such as financial results, investor presentations, press releases, new launches and project updates are made available on the Company's website www.BrigadeGroup.com on a regular basis. There were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year till the date of this report. There is no change in the nature of the business of the Company. There are no differential voting rights shares issued by the Company. Neither the Managing Director nor the Wholetime Director have received any remuneration or commission from any of the subsidiaries, joint ventures or associates. There were no sweat equity shares issued by the Company. ACKNOWLEDGEMENTS: The Directors wish to place on record their appreciation and sincere thanks to all the stakeholders for the continued support and patronage. We look forward to your support and co-operation as the Company is entering the next league of growth. By order of the Board For Brigade Enterprises Limited M. R. Jaishankar Chairman and Managing Director Date: 20th May, 2015 Place: Bangalore |