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Directors Report of Brigade Enterprises Ltd.

Mar 31, 2013

Dear Member,

The have pleasure in presenting the Eighteenth Annual Report on business and operations of the Company together with the Audited Statement of Accounts for the financial year ended 31st March, 2013.

Financial Highlights:

(Rupees in Lakhs)

Particulars Standalone Consolidated

2012-13 2011-12 2012-13 2011-12

Total Revenue 78,812 60,932 83,461 65,103

Operating 57,297 43,153 61,380 47,013 Expenditure

Earnings before Interest, 21,515 17,779 22,081 18,090 Depreciation and Amortisation

Deprecia;ion and 7,224 4,925 7,733 5,323 Amortisation

Finance Cost 8,288 6,039 8,982 6,039

Profit Before Tax 6,003 6,815 5,358 6,728

Tax Expenses

Current Tax 1,201 1,365 1,208 1,368

Deferred tax charge/(Credit) 627 (300) 398 (274)

MAT Credit entitlement (2,250) (59) (2,250) (59)

Profit after Tax 6,425 5,809 6,002 5,693

Minority Interest - - (11) -

Share of profit from - - 131 - Associate

Profit for the year 6,425 5,809 6,122 5,693

Financial Overview Performance

During the financial year 2012-13, the Company has on a standalone basis, registered total revenue of Rs 78,812 Lakhs as compared to Rs 60,932 Lakhs in the previous year, showing a Y-O-Y increase of 30%, EBITDA has increased from Rs 17,779 lakhs to Rs 21,515 lakhs, an increase of 21%.

The consolidated revenue of the company for the financial year 2012-13 was Rs 83,461 lakhs, a growth of 28% from the previous year. EBITDA has increased from Rs 18,090 lakhs to Rs 22,081 lakhs, an increase of 22%.

Transfer to reserves

An amount of Rs 321 lakhs has been transferred out of the current year''s profits to General Reserve.

Dividend

The Board of Directors of the Company have recom- mended a dividend of Rs 1.50 (Rupee One & Paise fifty only) (15%) 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 1970 lakhs.

Share Capital

The issued, subscribed and paid up capital of the Company is Rs 112,25,19,400 (Rupees One Hundred and Twelve Crores, Twenty Five Lakhs and Nineteen Thousand and Four Hundred only) divided into 11,22,51,940 (Eleven Crores Twenty Two lakhs, Fifty One Thousand Nine Hundred and Forty Only) equity shares of Rs 10 each.

There has been no change in the share capital of the Company during the year.

Debentures

During the year under review, the company has not issued any debentures. As on date the company does not have any outstanding debentures.

Operational Overview Completed Projects

During the year under review, the Company has completed and capitalised retail and commercial projects measuring 0.81 million and 1.13 million square feet respectively.

Ongoing Projects

The company currently has 16 ongoing residential projects aggregating to 6.55 million square feet of developable area (out of which the Company''s share is about 5.09 million square feet), 6 commercial/retail projects aggregating to 1.84 million square feet of developable area (out of which the Company''s share is about 1.35 million square feet) and 2 Hospitality projects aggregating to 0.40 million square feet of developable area (out of which the Company''s share is about 0.25 million square feet).

Proposed projects

During the financial year 2013-14, the Company proposes to launch residential projects measuring 7.80 million square feet of developable area (out of which the Company''s share is about 5.64 million square feet) and Commercial / Hospitality projects measuring 1.30 million square feet of developable area (out of which the Company''s share is about 0.88 million square feet) in various cities across south India including Bangalore, Mysore and Chennai.

Business Overview

Brigade Enterprises Ltd is a public limited company with its equity shares listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

The operations of the Company can be classified into three main Segments:

- Income from Construction and development of Real Estate Projects

- Revenue from Hospitality Assets

- Lease Rental Income from Commercial and Retail Assets

Real Estate Division specialises in construction and devel- opment of residential and commercial Real Estates projects on Sale basis. The revenues of this vertical is recog- nised either on percentage of completion method during construction or unit sale method after the completion of the projects.

Hospitality division specialises in identifying Hotel operator and monitoring the operation of the hotel assets.

Commercial and Retail Asset Division concentrates on identifying suitable tenants on long term lease for the Assets owned by the Company.

A detailed analysis of completed and ongoing projects as on March 31, 2013 has been given in the Management Discussion and Analysis Report which is part of the Annual Report.

Subsidiaries:

Brigade Hospitality Services Limited (BHSL) is a wholly owned subsidiary of the Company that runs and manages clubs, serviced residences and convention centres. During the financial year 2012-13 BHSL has registered income from operations amounting to Rs 3249 lakhs and earned a profit of Rs 4 Lakhs.

Orion Mall Management Company Limited (OMMCL), a wholly owned subsidiary of the Company undertakes the mall management business. OMMCL manages the 0.8 million sq.ft. of Orion Mall at Brigade Gateway Campus, Bangalore. The Company has posted a turnover of Rs 1,575 Lakhs and incurred a loss of Rs 307 Lakhs.

WTC Trades & Projects Private Limited (WTC) a wholly owned subsidiary of the Company which holds the World Trade Centre license for the city of Bangalore from World Trade Centers Association, USA. WTC had a turnover of Rs 158 Lakhs and a net profit of Rs 33 lakhs.

Prosperita Hotel Ventures Limited is a newly incorpo- rated wholly owned subsidiary of the Company, incorporated during the year which is undertaking the construction of hotel project at the beginning of Old Mahabalipuram Road(OMR). The construction has started for this project. The Hotel would be operated by Holiday Inn.

Brigade Tetrarch Private Limited (BTPL) is also a wholly owned subsidiary of the Company with its main business in the field of sports related activities. BTPL has not registered income from operations and incurred a loss of Rs 34 Lakhs.

Brigade Infrastructure & Power Private Limited is a wholly owned subsidiary of the Company with it main objects in the field of Infrastructure and Power. Brigade Estates and Projects Private Limited is a wholly owned Subsidiary of the Company with main business in the field of real estate development. These Companies are in the process of being fully operational.

Joint Ventures and Special Purpose Vehicle:

BCV Developers Private Limited and BCV Estates Pvt. Ltd are a 50:50 joint venture between the Company, Classic Group and Valmark Group which owns land of 130 acres in Devanahalli, Bangalore for the Brigade Orchards Project. This Joint Venture has generated revenues of Rs 710 Lakhs and incurred a loss of Rs 136 Lakhs.

Brigade Properties Private Limited is a 51:49 joint venture between the company and Reco Begonia Pte. Limited a Special Purpose Vehicle of Government Investment Corpo- ration (GIC), Singapore to develop 9.3 acres land located in the heart of Whitefield. The Company is in the process of obtaining the final set of approvals for launching the project.

Statement relating to Subsidiaries

Pursuant to the general exemption granted by the Ministry of Corporate Affairs vide General Circular No.2/2011 dated February 08, 2011, the balance sheet, profit and loss account and other schedules thereto of subsidiary companies as prescribed under Section 212 of the Companies Act, 1956, have not been attached. As stipulated in the Circular, the Company has disclosed the requisite financial information of the subsidiaries in the Annual Report. Further, the annual accounts and the relevant information of the said subsidiaries shall be provided to the Members upon request and the same shall also be available for inspection on any working day during business hours at the registered office of the Company and the respective subsidiary companies.

Consolidated Financial Statements:

The Consolidated Financial statements have been prepared by the Company pursuant to Clause 32 of the Listing Agreement entered with the Stock Exchanges. The Consoli- dated Financial Statements and Auditors'' Report thereon forms part of the Annual Report.

Fixed Deposits:

The company has not accepted any deposit in terms of the provisions of Section 58A of the Companies Act, 1956, during the year under review.

Management Discussion & Analysis Report:

In accordance with the requirements of the Listing Agreement, the Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.

Directors

As on date, the Board of Directors of the Company comprise of eight Directors of which four are Independent Directors.

In terms of Article 108, 109 and 110 of Articles of Associ- ation, and Sections 255 and 256 of the Companies Act, 1956, Mr M. R. Shivram and Mr P. V. Maiya, Non Executive Directors are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

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 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 Annual General Meeting.

None of the Directors of the Company are disqualified under Section 274(1)(g) of the Companies Act, 1956.

Board Committees

A detailed note on the Committees of the Board of Directors is given in the Corporate Governance Report forming part of the Annual Report.

Auditors

M/s. Narayanan, Patil & Ramesh, Chartered Accountants, the Statutory Auditors of the Company retire at the ensuing Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of M/s. Narayanan, Patil & Ramesh, Chartered Accountants, as the Statutory Auditors of the Company, subject to the approval of the members at the Annual General Meeting.

M/s. Narayanan, Patil & Ramesh, Chartered Accountants have confirmed that the appointment, if made, will be in accordance with the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Secretarial Audit

The Secretarial Audit Report for the year ended March 31, 2013 issued by M/s.Jayasurya & Associates, Practicing Company Secretary confirming compliance with all the applicable provisions of Corporate Laws and the Listing Agreements is attached separately in the Annual Report.

Human Resources

Brigade Group is one of the leading Real Estate and Project Development companies in India with a total workforce of 424 as on March 31, 2013. 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 getting the same aligned 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 and dedication.

Directors'' Responsibility Statement:

The Director''s Responsibility Statement, setting out compliance with the accounting and financial reporting requirements specified under Section 217(2AA) of the Companies Act, 1956, in respect of the financial statements, is furnished below and on behalf of the Board of Directors, it is hereby confirmed that:

i. In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any.

ii. 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 end of the Financial Year and of the profit and loss of the Company for that period.

iii. The Directors have 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 irregu- larities.

iv. The Directors have prepared the accounts on a going concern basis.

Report on Corporate Governance:

A detailed report on Corporate Governance and a certificate from M/s Jayasurya & Associates, Practicing Company Secretary affirming compliance with the various conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement has been included as an attachment to this Report.

Code of Conduct

Pursuant to Clause 49 of the Listing Agreement, the decla- ration 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 2012-13 is annexed and forms part of the Directors'' and Corporate Governance Report.

Particulars of Employees:

In terms of the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of employees are set out in the annexure to the Directors'' Report. However, having regard to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all members of the Company and others entitled thereto. Any person interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Conservation of energy, technology absorption, Foreign Exchange earnings and outgo:

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings & outgo pursuant to the provisions of Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are set out as an Annexure to this report.

Awards and Recognitions

- Brigade Group won the following awards at the CREDAI Real Estate Awards, 2012:

- ''Best theme based township of the year''—Brigade Gateway, Bangalore

- ''Best Office space of the Year''—World Trade Center, Bangalore

- Brigade Group received the Platinum Award of Excellence at the Construction World Awards, 2012 for being recognised as one of India''s Top 10 Builders for 5 consecutive years (2007-2011)

- The Company has won the following awards at CNBC AWAAZ Real Estate Awards 2012:

- Brigade Gateway Residences has won the National Award for the Best Project in the Mid-segment Housing category.

- World Trade Center was awarded the Best Commercial project in Bangalore.

- Brigade Gateway residences again bagged the award for the Best Residential project in Bangalore.

- Orion Mall at Brigade Gateway was awarded the Best Retail project in Bangalore.

- Brigade Group has been selected as one of "India''s best companies to work for 2012" by Great Place to Work Institute & The Economic Times for the second time in a row. The group was ranked 23rd on an illus- trious list of TOP 50 Companies having upto 1000 employees and also ranked 3rd in the Real Estate Industry.

- Brigade Group was awarded with following awards at the "ET Now—Asia Retail Congress 2012 Awards":

a. Best Retailer of the year (Real Estate)—Brigade Group

b. Best emerging Retailer (Real Estate)—Brigade Group

c. Best Marketing Campaign of the year—Orion Mall

- The World Trade Center at Brigade Gateway has won the Best Office Space award at the CREDAI REAL ESTATE AWARDS KARNATAKA 2013.

- Brigade Group won the Special Jury Award for Apart- ments at the CREDAI Mysore Real Estate Awards 2013 for constructing Mysore''s First Tallest Building —Brigade Horizon, residential project.

Acknowledgements:

The Directors would like to place on record our sincere appreciation to all our stakeholders for their co-operation and continued support to the Company during the year under review. The Board expresses its deepest sense of appreciation to the employees at all levels for their profes- sional commitment and initiatives for the organisation''s growth and success.

For and on behalf of the Board

Brigade Enterprises Limited

Place: Bangalore M. R. Jaishankar

Date: May 07, 2013 Chairman and Managing Director

 
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