BOARD'S REPORT Dear Shareholders, The Directors are pleased to present their Eighteenth Annual Report on the business operations of the Company for the year ended on 31st March 2015. Business Business Overview Prestige Estates Projects Limited is a public limited company listed on National Stock Exchange of India Limited and Bombay Stock Exchange of India Limited. The details of Equity capital of the Company is as under: Real estate development business, which is our principal business focuses on the development of real estate projects in the residential (including plotted developments), commercial (including built to suit developments), hospitality and retail segments of the real estate industry. In addition, we generate revenues from leasing commercial, hospitality and retail space. Our real estate services business, focuses on property management services for our real estate projects, sub leasing and fit out services, project and construction management services and mall management and facilities management (including the operation of our hospitality business) services. Financial Overview During the fiscal year 2014-15, on a consolidated basis, the Company has registered revenue of Rs 35,184 mn, up by 33% from Rs 26,467 mn in FY14. Further it has reported EBIDTA of Rs 10,925 mn, up by 34% from Rs 8,179 mn in FY14 and PAT of Rs 3,675 mn, up by 14.31% from Rs 3,215 mn in FY14. Operational Overview Sales: The Company has for the year ended 31st March 2015 sold 4,058 Residential units & 0.81 mn square feet of Commercial space, totaling to 7.73 mn square feet, amounting to Rs 50,135 mn of Sales, up by 13% from that of FY14. (Of this, Prestige share is 3,716 residential units totaling to 6.69 mn square feet amounting to Rs 43,625 mn of Sales, up by 20% from that of FY14.) Collections: Total collections for the year ended 31st March 2015 aggregated to Rs 38,843 mn, up by 32% from that of FY14. (Prestige share is Rs 32,316 mn, up by 31% from that of FY14). Total collections for FY14 were Rs 29,408 mn and Prestige share of collections were Rs 24,753 mn. Launches: The Company has launched 14.63 mn square feet of developable area during FY 14-15. Completions: The Company has delivered 8.92 mn square feet of developable area during FY 14-15. CHANGES TO EQUITY SHARE CAPITAL During the year, 2014-15, the Company has issued and allotted 2,50,00,000 equity shares of Rs 10 each on 12th August, 2014 at the Issue Price of Rs 245 per Equity Share (including Rs 235 per share towards securities premium) against the receipt of full and final payment of application money aggregating to Rs 6,12,50,00,000/- through private placement to Qualified Institutional Buyers such as Foreign Institutional Investors registered with SEBI and mutual funds. DIVIDEND Your Board of Directors has recommend a dividend of Rs 1.50 per equity share, (previous year Rs 1.50 per share) for the year ended 31st March 2015 amounting to pay-out of Rs 674.97 mn (inclusive of dividend distribution tax of Rs 112.47 mn) for consideration and approval by the shareholders at the ensuing Annual General Meeting. TRANSFER TO RESERVES There is no transfer to general reserve during the year 2014-15. DETAILS RELATING TO DEPOSITS The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. CHANGE IN DIRECTOR AND KEY MANAGERIAL PERSONNEL During the 17th Annual General Meeting of the Company, the Members had re-appointed Mr. Irfan Razack who was liable to retire by rotation. Mr. Jagadeesh K Reddy, Mr. Biji George Koshy, Dr. Pangal Ranaganath Nayak and Mr. Noor Ahmed Jaffer were appointed as the Independent Directors of the Company for a period of five years from the conclusion of 17th Annual General Meeting. During the year, Ms. Uzma Irfan was appointed as an Additional Director of the Company with effect from 11th November, 2014. Pursuant to the provisions of Section 203 of the Act, which came into effect from 1st April, 2014, the appointments of Mr. Irfan Razack, Chairman and Managing Director, Mr. Rezwan Razack, Joint Managing-Director, Mr. Noaman Razack, Whole-time Director, Mr. Venkat Narayana, Chief Financial Officer and Ms. Medha Gokhale, Company Secretary as key managerial personnel of the Company were formalized. CHANGES IN SUBSIDIARIES & ASSOCIATES The Company has 23 subsidiaries as on 31st March, 2015. There are 5 associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). There has been no material change in the nature of the business of the subsidiaries. During the year, the Company has increased its stake in Prestige Garden Constructions Private Limited from 35% to 50%. The Company has also increased its stake in Prestige Notting hill Investments from 47% to 51%. Valdel Xtent Outsourcing Solutions Private Limited, the subsidiary Company has acquired 65.92% stake in Dollars Hotel & Resorts Private Limited, making it a step down subsidiary of the company. Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements of the Company. Pursuant to the provisions of section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS: During the year 2014-15 there were no significant and material orders passed by the regulators or Courts or Tribunals impacting the going concern status and the company's operations in future. BOARD OF DIRECTORS The Company's Board consists of an appropriate mix of Executive and Independent Directors. Currently, the Board consists of 8 Directors including an Executive Chairman, 3 Executive Directors and 4 Independent Directors. COMMITTEES OF BOARD OF DIRECTORS The details on Committees of Board of Directors, composition and roles & responsibilities are stated in the Corporate Governance Report which forms part of this report. INTERNAL FINANCIAL CONTROLS There are adequate internal financial controls in place with reference to the financial statements. MEETINGS OF THE BOARD OF DIRECTORS During the year 2014-15, four meetings of the Board of Directors were held. The details of the meeting along with the attendance of Directors are stated in the Corporate Governance Report which forms part of this report. DECLARATION BY INDEPENDENT DIRECTORS The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that they meet with the criteria of their Independence laid down in Section 149(6). POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS The Company's policy on directors' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the directors' report. The policy has also been uploaded on the website of the Company. EXTRACT OF ANNUAL RETURN As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 forms part of this Annual Report as Annexure 1. CORPORATE GOVERNANCE The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, forms part of this Report. The Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under the aforementioned Clause 49 is also attached to this Report. MANAGEMENT DISCUSSION & ANALYSIS REPORT Management Discussion and Analysis Report as required under Clause 49(VIII)(D) is attached along with this Report. AUDITORS & AUDIT REPORT Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, Deloitte Haskins & Sells, Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the seventeenth annual general meeting (AGM) of the Company till the conclusion of the twentieth AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. Report by the Auditors for the year ended 31st March 2015 forms part of the Financials. Pursuant to Section 204 ofthe Companies Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Secretarial Audit has been carried out by Mr. Nagendra D Rao, Practicing Company Secretary. Report of the secretarial auditor is given as an Annexure 2 which forms part of this report. Remark: There have been instances of delay in depositing statutory dues. Reply: In the opinion of the Board, the instances of delay in depositing statutory dues were on account of temporary mismatch in Cash Flows. The Board has set up good system to ensure timely deposit of statutory dues in future. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO Conservation of Energy: The Company has made energy saving efforts wherever possible. As part of Green Initiative, IGBC-LEED requirements and Energy conservation code, following energy conservation measures have been taken in our various projects: • Use of solar lighting for landscape • Use of VFD's • Use of CFL's, LED's in lighting of common areas • Conform to lighting power density requirements as per Green building norms for basements, driveways and other common areas • Use of glass on external facade to maximize daylight views with appropriate shading coefficients, solar factor and solar heat gain coefficient • Use of daylight sensors in office areas • Use of lighting management system with timers for external lighting • Use of surface reflective paint for reducing heat island effect and thereby reduce A/C lo ads The Company's initiative of Green Building in one of its projects in subsidiary company, i.e. Cessna Business Park, has been awarded Platinum Certification under USGB's LEED ID+C rating system. This is the highest rated Platinum LEED ID+C projects in Asia and the second highest in the world having been awarded a total of 97 points by the U.S Green Building Council. The projects Prestige Palladium Bayan and Prestige Polygon at Chennai have achieved precertification under the LEED India for Core & Shell Rating System. Technology Absorption: The Company as a part of progressive growth is always on the lookout for new technological innovations that can enhance the product quality, increase process speed, reduces adverse impact on the environment. Some of the measures used are: • Use of low flow toilet fixtures with sensors, concealed valves, etc • Use of STP treated water for flushing, landscaping and air-conditioning • Harvesting rain water in the form of deep well recharging, collection, treatment and use of terrace storm water, etc • Increased use of water cooled chillers • Installation of organic waste converters in large residential projects • Use of centralised LPG reticulation system with piped gas supply to individual flats • Use of CCTV, door video phones to enhance security • Use of modular toilet partitions in lieu of conventional block work, tiling and wooden flush doors • Use of in situ concrete load bearing walls constructed using aluminum formwork instead of RCC framed structure in-filled with block masonry that would be plastered on both internal and external faces Research and Development: The Company has verified and on research has adopted best suitable methods for execution of the projects. Some of such methods are listed here below: • Adoption of pre-polished cut-to-size engineered stone flooring as against unpolished random slabs that caused large wastages in terms of time and effort put in for cutting, lifting, placing and polishing • Introduction of laminated wooden flooring for faster and cleaner execution in place of conventional tiled flooring • Use of soil nailing, shotcreting /guniting for stabilising steep slopes of excavation • Use of chemical stabilisation techniques by using admixtures of available soil for road sub-base construction • Introduction of non-destructive testing like Pile Dynamic Analyser test to reduce the dependency on conventional maintained pile load test, use of pile integrity test for assessing soundness of concrete in piled foundation Foreign exchange earnings and outgo: Foreign exchange earned during the year is equivalent to Rs 25.60 mn (previous year Rs 50.40 mn) and the expenditure is Rs 593.30 mn (previous year Rs 364.10 mn). PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: The particulars of loans, guarantees and investments have been disclosed in the financial statements. RISK MANAGEMENT: The Board of the Company has formed a risk management committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area offinancial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of this report. CORPORATE SOCIAL RESPONSIBILITY POLICY & INITIATIVES: Pursuant to the provisions of section 135 and schedule VII of the Companies Act, 2013, CSR Committee of the Board of Directors was formed to recommend (a) the policy on Corporate Social Responsibility (CSR) and (b) implementation of the CSR Projects or Programs to be undertaken by the Company as per CSR Policy for consideration and approval by the Board of Directors. The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure 3 of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the Company. RELATED PARTY TRANSACTIONS: None of the transactions with related parties falls under the scope of Section 188(1) of the Act. Information on transactions with related parties pursuant to Section 134(3)(h) are detailed in the notes to accounts in the Financial Statements of the Company. VIGIL MECHANISM: The Company has formulated and published a whistle blower policy to provide vigil mechanism for employees including directors of the Company to report genuine concerns. The provisions of this policy are in line with Section 177(9) of the Act and the revised clause 49 of the Listing agreement. FORMAL ANNUAL EVALUATION: The board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49"). The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role. In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed. PARTICULARS OF EMPLOYEES Information as required under the provisions of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are detailed in Annexure 4 to this report. DIRECTORS' RESPONSIBILITY STATEMENT In pursuance of section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, hereby confirm that: (a) in the preparation of the annual accounts, the applicable accounting standards had 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 and loss 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 this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts 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; and (f) 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 ACKNOWLEDGEMENTS The Board of Directors sincerely thank the Company's valued customers, clients, suppliers, vendors, investors, bankers and shareholders for their trust and support towards the Company. The Board expresses its deepest sense of appreciation to all the employees whose professional committed initiative has laid the foundation for the organization's growth and success. For and on behalf of the board Sd/- Irfan Razack Chairman & Managing Director Sd/- Rezwan Razack Joint Managing Director Place: Bengaluru Date: 30 May 2015 |