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Directors Report of Hubtown Ltd.

Mar 31, 2015

TO

THE MEMBERs

The Directors have pleasure in presenting their Twenty-seventh Annual Report along with the Audited Accounts of your Company for the year ended March 31, 2015.

FINANCIAL HIGHLIGHTs :

The financial performance of the Company for the year ended March 31, 2015 is summarized :

(Rs.in lac)

STANDALONE CONSOLIDATED

March 31, 2015 March 31, 2014 March 31, 2015 March 31, 2014

Revenue from Operations 41146 47764 44326 47346

Other Income 4298 3924 9465 7338

Total Income 45444 51688 53791 54684

Operating Expenditure 11148 18783 11266 17369

Profit before Depreciation / Interest / Tax 34296 32905 42525 37315

Depreciation 403 557 980 985

Finance costs 32259 30465 40341 35673

Profit before Tax 1634 1883 1204 657

Add : Extraordinary item 350 __ 350 __

Add / (Less) : Provision for Tax (504) (118) (743) (149)

Excess / (Short) provision for taxation in respect of 313 (520) 266 (694) earlier years

Deferred Tax credit / (charge) (497) 2296 (501) 2323

Prior Period Adjustments (net) (221) 3 (445) 22

Minority Interest / Share of Profit / (Loss) from associates companies __ __ (74) 134 / pre-acquisition loss

Capital reserve written back on dilution __ __ 17 __

Net Profit for the Year 1075 3544 74 2293

Balance Profit brought forward from Previous Year 68233 67843 60766 61628

Reversal of proposed equity dividend and tax thereon 850 696 850 696

Amount available for appropriation 70158 72083 61690 64617

APPROPRIATIONs :

Debenture Redemption Reserve __ 3000 __ 3000

Proposed Dividend __ 727 __ 727

Dividend Distribution Tax __ 124 __ 124

General Reserves __ __ __ __

Balance carried to Balance sheet 70158 68232 61690 60766

Earnings per share before Extraordinary Item (`) (EPs) 1.00 4.87 0.10 3.15

Earnings per share after Extraordinary Item (`) (EPs) 1.48 4.87 0.10 3.15

OPERATIONs OF THE COMPANY :

Your Company recorded a satisfactory performance during the year under review, amidst weak economic conditions and poor investor / consumer sentiments. The total revenue of the Company on a standalone basis stood at Rs.45444 lacs, 12.08 percent lower than Rs.51688 lacs in the previous year. Operational expenditure was lower by 40.65 percent at ` 11148 lacs, as against Rs.18783 lacs in the previous year. The Operating Profit (EBITDA) increased by 4.22 percent to Rs.34296 lacs from Rs.32905 lacs in the previous year. Profit after Tax for the year was lower by 69.66 percent at Rs.1075 lacs as against Rs.3544 lacs in the previous year.

The consolidated turnover of the Company stood at Rs.53791 lacs, as against Rs.54684 lacs in the previous year. The consolidated operational expenditure was lower by 35.13 percent at Rs.11266 lacs as against ` 17369 lacs in the previous year. The Consolidated Operating Proft (EBITDA) increased by 13.96 percent percent to Rs.42525 lacs from ` 37315 lacs in the previous year. Consolidated Proft after Tax for the year was Rs.74 lacs, lower by 96 percent over Rs.2293 lacs in the previous year.

During the year under review, your Company's performance was to a greater extent impacted due to rising inflation, rupee depreciation, increased cost of capital, increased cost of construction and restrained demand from end-users. The operational cash flows were adversely impacted for a major part of the year under review due to lower than expected sales level, resulting in intense pressure on profit margins.

DIVIDEND :

As a prudent economic measure and in order to conserve the scarce liquid resources of the Company, the Directors do not recommend any dividend on the equity shares for the year under review.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:

Pursuant to the provisions of Section 124 of the Companies Act, 2013, the unclaimed dividend amount of Rs.49,337/- being the dividend for the year ended March 31, 2007 and the interim dividend amount of Rs.35,655/- paid for the year ended March 31, 2008 were transferred to the Investor Education and Protection Fund (IEPF) after giving due notices to the members.

During the Financial Year 2015-2016, the dividend declared by the Company for the Financial Year 2007-2008, remaining unclaimed in terms of Section 124 of the Companies Act, 2013 will be transferred to IEPF.

RESERVES :

During the year under review, no amount was transferred to General Reserve. An amount of Rs.4300.00 lacs has been transferred from Debenture Redemption Reserve to General Reserve.

CHANGES IN SHARE CAPITAL :

There are no changes in the share capital of the Company. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.

DEBENTURES :

During the year under review, the Company has :

i. fully redeemed three series of Secured Redeemable Non-Convertible Debentures aggregating Rs.5200.32 lacs, Rs.211.85 lacs and Rs.2500 lacs respectively outstanding at the beginning of the year; and

ii. raised funds through the issue of Secured Redeemable Non-convertible Debentures aggregating Rs.2500 lacs on private placement basis.

DIRECTORS :

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mrs. Priti K. Shah, Director (DIN : 01880436) of the Company, who retires by rotation, and being eligible, offers herself for reappointment.

INDEPENDENT DIRECTORS :

At the Twenty-sixth Annual General Meeting of the Company held on September 25, 2014, Mr. Arvind Kumar Joshi, Mr. Abhijit Datta and Mr. Sunil C. Shah were appointed as Independent Directors under the provisions of the Companies Act, 2013, each for a term of five consecutive years with effect from September 25, 2014.

Pursuant to the requirement under Section 134 (3) of the Companies Act, 2013, with respect to statement on declaration by Independent Directors under Section 149 (6) of the said Act, the Board hereby confirms that all the Independent Directors of the Company have given a declaration confirming that they meet the criteria of independence as laid down under Section 149 (6) of the said Act and Clause 49 (II) (B) of the Listing Agreement.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS :

The particulars of the meetings of the Board of Directors held during the year under review have been provided in the Corporate Governance Report, which forms part of this Annual Report.

BOARD COMMITTEES :

During the year under review, the Board of Directors has :

i. reconstituted and enhanced the terms of reference of the Audit and Compliance Committee;

ii. enhanced the terms of reference of the Remuneration Committee and reconstituted and renamed the Committee as the 'Nomination and Remuneration Committee' ;

iii. enhanced the terms of reference of the 'Shareholders'/Investors' Grievance Committee', and reconstituted and renamed the Committee as the 'Stakeholders Relationship Committee';

iv. constituted a 'Corporate Social Responsibility (CSR) Committee in accordance with the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014; and

v. constituted a 'Risk Management Committee' in accordance with the provisions of Clause 49 (VI) of the Listing Agreement.

Details of the aforesaid Committees along with their respective composition, terms of reference, meetings held during the year, are provided in the 'Report on Corporate Governance' forming part of this Annual Report.

PERFORMANCE EVALUATION :

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 (II) (B) (5) of the Listing Agreement, evaluation of every Director's performance was carried out by the Nomination and Remuneration Committee. The performance of Non-Independent Directors and the Board as a whole and the Committees thereof and the Chairman of the Company was carried out by Independent Directors. Evaluation of Independent Directors was carried out by the entire Board of Directors, excluding the Director being evaluated.

The evaluation of the Board and its Committees was based on objective and tangible criteria, including the performance of the Company, accomplishment of long term strategic objectives, blending of ethics and business and the development of management, etc.

The evaluation of individual director was based on the effective contribution by the director concerned, the commitment to the role including commitment of time for Board and Committee meetings and any other duties.

COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION :

The Policy of the Company on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters as provided under Section 178 (3) of the Companies Act, 2013 and Clause 49 (IV) (B) (1) of the Listing Agreement is appended as Annexure – 'A' to this Report.

DIRECTORS' RESPONSIBILITY STATEMENT :

Pursuant to sub-section (3) (c) of Section 134 of the Companies Act, 2013, the Directors of your Company, to the best of their knowledge and belief and on the basis of the information and explanations received by them, hereby state and confirm that :

(i) in the preparation of the Annual Accounts for the year ended March 31, 2015, the applicable Accounting Standards read with the requirements under Schedule III to the said Act have been followed and there are no material departures from the same;

(ii) such accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and applied them consistently and judgments and estimates have been made that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a 'going concern' basis;

(v) proper internal financial controls are in place and that such internal financial controls are adequate and are operating effectively; and

(vi) proper systems to ensure compliance with the provisions of all applicable laws are in place and are adequate and operating effectively.

SUBSIDIARIES, JOINT VENTURE COMPANIES AND ASSOCIATE COMPANIES :

As on March 31, 2015, the Company had 21 subsidiaries, 8 joint venture companies and 6 associate companies. There has been no change in the nature of business of the said subsidiaries, the said joint venture companies and the said associate companies.

During the year under review :

i. Citywood Builders Private Limited (Citywood), which was an associate became a subsidiary of the Company. Subsequent to the close of the year, Citywood has become a wholly owned subsidiary of the Company;

ii. Citywood Builders Private Limited, Holiac Realty Private Limited, and Harbinger Developers Private Limited ceased to be associates of the Company;

iii. Shubhsiddhi Builders Private Limited became an associate of the Company; and

iv. Adhivitiya Properties Limited, Arnav Gruh Limited, Heeler Hospitality Private Limited, Merrygold Buildcon Private Limited and Vishal Nirman (India) Limited ceased to be subsidiaries of the Company.

A statement pursuant to Section 129 (3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, containing the salient features of the performance and the financial statements of the subsidiaries, joint venture companies and associates companies in the prescribed Form AOC 1 is appended to the consolidated financial statements as Schedule - I.

The Policy for determining 'material subsidiary' as approved is posted on the Company's website at the link: http://www.hubtown.co.in/company information/investors/policies/policyonsubsidiaries.pdf.

Additional information as required under Schedule III to the Companies Act, 2013, in respect of entities consolidated as subsidiaries/associates/joint ventures is furnished in Note '1' of Notes to the consolidated financial statements.

In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company at the link : http:/ www.hubtown.co.in/company-information/ investors/annual-reports/annual-report-2014-2015 /pdf. Further, as per fourth proviso of the said Section, audited annual accounts of each of the subsidiary companies have also been placed on the website of the Company at the link : http://www.hubtown.co.in/company-information/investors/ annual-reports/report-and-accounts-of-subsidiaries-2014-2015/pdf. Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary at the Company's registered office. These documents will also be available for inspection at the Registered Office of the Company during the working hours up to the date of the Annual General Meeting.

PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES, JOINT VENTURE ENTITIES AND ASSOCIATES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

A statement on the performance and financial position of each of the subsidiaries, joint venture companies and associates companies included in the consolidated financial statements is given as Schedule - I to the consolidated financial statements and hence not repeated here for the sake of brevity.

AUDITORs :

statutory Auditors :

M/s. Dalal Doshi & Associates (formerly Doshi Doshi & Associates), Chartered Accountants, (Firm Registration No. : 121773W) were reappointed as Statutory Auditors of the Company to hold office from the conclusion of the 26th Annual General Meeting (AGM) held on September 25, 2014 until the conclusion of the third consecutive AGM of the Company to be held in the year 2017 (subject to ratification of their appointment by the members at every AGM held after the AGM held on September 25, 2014).

As required under Section 139 (1) of the Companies Act, 2013, the Company has obtained a written certificate from M/s. Dalal Doshi & Associates to the effect that their reappointment, if made, would be in accordance with the Companies Act, 2013 and the Rules framed there under and that they satisfy the criteria provided in Section 141 of the Companies Act, 2013.

The proposed reappointment would be subject to ratification by the members in the ensuing Annual General Meeting in terms of the first proviso to Section 139 (1) of the Companies Act, 2013.

As required under Clause 49 of the Listing Agreement, the Statutory Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

A resolution seeking ratification of the appointment of M/s. Dalal Doshi & Associates as the Statutory Auditors of the Company pursuant to Section 139 of the Companies Act, 2013 forms part of the Notice.

Cost Auditors :

M/s. N. I. Mehta & Co., Cost Accountants (Firm Registration No. : 000023) have been appointed as Cost Auditors by the Board of Directors to conduct audit of the cost records of the Company for the year ending March 31, 2016. M/s. N. I. Mehta & Co. have confirmed that their appointment is within the limits of Section 139 (9) read with Section 141 (3) (g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under Section 141 (3) and (4) read with proviso to Section 148 (3) of the said Act.

COST COMPLIANCE REPORT :

The Cost Compliance Report for the Financial Year 2013-2014 pursuant to the Companies (Cost Accounting Records) Rules, 2011 was fled within the due date.

secretarial Auditors :

Pursuant to the provisions of Section 204 (3) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s. Ashish Bhatt & Associates (CP No. : 2956), a firm of Company Secretaries in Practice, to conduct the secretarial audit of the Company.

In terms of Section 204 (1) of the Companies Act, 2013, the Report of the Secretarial Auditor on the Company's Secretarial Audit is appended as Annexure – 'B' to this Report.

There are no qualifications or observations or adverse remarks made by the Secretarial Auditor in his said Report.

AUDIT COMMITTEE AND AUDIT RECOMMENDATIONS :

The Audit Committee comprises of three Independent Directors namely Mr. Abhijit Datta as Chairman, Mr. Arvind Kumar Joshi and Mr. Sunil C. Shah and One Non-Independent Executive Director – Mr. Vyomesh M. Shah. The Chairman, the Chief Financial Officer, the Internal Auditors and the Statutory Auditors are permanent invitees to the Audit Committee meetings. During the year under review, all the recommendations put forth by the Audit Committee were duly considered and accepted by the Board of Directors. There were no instances of non-acceptance of such recommendations.

AUDITORS' REPORT AND AUDIT OBSERVATIONS :

The Statutory Auditors have : (i) stated an 'Emphasis of Matter' and "Other Matters" and made certain observations in clauses (vii) (a) and (ix) of the Annexure referred to in their Report on the Standalone Financial Statements for the year ended March 31, 2015; (ii) stated an 'Emphasis of Matter' and "Other Matters" and made certain observations in clauses (vii) (a) and (ix) of the Annexure referred to in their Report on the Consolidated Financial Statements for the year ended March 31, 2015 and the response of your Directors thereto is as follows:

As regards "Emphasis of Matter" and "Other Matters", the Notes to the Standalone Financial Statements and Consolidated Financial Statements for the year ended March 31, 2015 respectively are self explanatory and do not call for further clarification/elaboration.

As regards observations in clauses (vii) (a) and (ix) of the Annexure referred to in the Auditors' Report on the Standalone Financial Statements, and observation in clauses (vii) (a) and (ix) of the Annexure referred to in the Auditors' Report on the Consolidated Financial Statements, the Directors have to state that :

"The delays caused by the Company in making timely payment of the statutory dues and payment of principal and interest on its borrowings have been due to prolonged stagnation in demand in the real estate sector accentuated by economic slowdown, inordinate delays in approval process, inflationary pressures, volatility in foreign exchange, liquidity crunch and costly debt. The Company is also facing lack of adequate sources of finance to fund development of its real estate projects resulting in delayed realisations from its customers and lower availability of funds to discharge its liabilities. The Company is exploring alternative sources of finance to generate adequate cash infows for meeting these obligations and to overcome this temporary liquidity shortage and is hopeful that these efforts will yield fruitful results."

As regards observations in clause (ix) of the Annexure referred to in the Auditors' Report on the Consolidated Financial Statements, the Directors have to state that :

"The delays caused by the subsidiary companies and jointly controlled entities in repayment of dues to banks, financial institutions and debenture holders is purely temporary on account of cash flow mismatch and efforts are being made and steps being taken to make good the delays at earliest."

REPORTING OF FRAUD BY STATUTORY AUDITORS :

The Statutory Auditors have not reported any instance of fraud under Section 143 (12) of the Companies Act, 2013.

VIGIL MECHANISM :

Pursuant to Section 177 (9) and (10) of the Companies Act, 2013, the Company has established a Whistle Blower Policy as a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Annual Report. The Whiste Blower Policy has been uploaded on the Company website at http:/www.hubtown.co.in/companyinformation/investors/ policies/whistleblowerpolicy/pdf.

RISK MANAGEMENT POLICY :

Risk evaluation and management is an ongoing process within the organization. The Company has constituted a 'Risk Management Committee' to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the functions are systematically addressed through mitigating actions on a continuing basis.

EXTRACT OF ANNUAL RETURN :

The details forming part of the extract of the Annual Return in Form No. MGT - 9 is appended as Annexure – 'C' to this Report.

MATERIAL CHANGEs AND COMMITMENTs :

No material changes or commitments affecting the financial position of the Company have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY'S OPERATIONS IN FUTURE :

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals which would impact the going concern status of the Company's operations in future.

INTERNAL FINANCIAL CONTROLs :

The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by the Statutory as well as Internal Auditors. Significant audit observations and follow-up action thereon are reported to the Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company's risk management policies.

DEPOSITS :

With effect from April 1, 2014, the Company has stopped accepting/renewing fixed deposits. All the deposits accepted by the Company prior to April 1, 2014 have been refunded by the Company. There were no deposits that remained unpaid or unclaimed as at March 31, 2015.

There are no deposits which are not in compliance with the provisions of Chapter V (relating to acceptance of deposits by companies) of the Companies Act, 2013.

PARTICULARS OF LOANS, INVESTMENTS OR GUARANTEES UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The provisions of Section 186 of the Companies Act, 2013 relating to loans made, guarantees given or securities provided are not applicable to the Company as it is engaged in the business of providing infrastructural facilities as defined in Clause (8) of Schedule VI to the Companies Act, 2013. However, particulars of loans given, investment made, guarantees given and securities provided are disclosed in the notes to the financial statements.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES :

All contracts / arrangements / transactions with related parties that were entered into by the Company during the year under review were on an arm's length basis and in the ordinary course of business. Hence no particulars in Form AOC - 2 have been furnished. There were no materially significant related party transactions with the Company's Promoters, Directors, Key Managerial Personnel or their relatives which could have had a potential conflict with the interest of the Company at large. All related party transactions are placed before the Audit Committee as also the Board for approval.

The Policy on Related Party Transactions as approved by the Board is uploaded on the Company's website at http : www.hubtown.co.in company information / investors / policies / policy on related party transactions / pdf.

Attention of the members is drawn to Note 33 to the standalone financial statements and Note 31 to the consolidated financial statements which sets out related party disclosures.

CONSOLIDATED FINANCIAL STATEMENTS :

The Consolidated Financial Statements of the Company which have been prepared in accordance with the relevant Accounting Standards (AS) viz. AS 21 – 'Consolidated Financial Statements', AS 23 – 'Accounting for Investments in Associates' and AS 27 – 'Financial Reporting of interests in Joint Ventures' issued by the Institute of Chartered Accountants of India form part of this Annual Report.

CODE OF CONDUCT :

As prescribed under Clause 49 (II) (E) of the Listing Agreement, a declaration signed by the Managing Director affirming compliance with the Code of Conduct by the Directors and Senior Management Personnel of the Company for the Financial Year 2014-2015 is annexed to and forms part of the Corporate Governance Report.

CORPORATE GOVERNANCE :

A separate report on 'Corporate Governance' is provided on Page No. 41 to 58 of this Annual Report together with a Certificate from a Company Secretary in Practice regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement. A certificate by the Managing Director and Chief Financial Officer of the Company in terms of Clause 49 (IX) of the Listing Agreement, inter-alia confirming the correctness of the financial statements, adequacy of internal control measures and reporting of the matters to the Audit Committee is also annexed.

DISCLOSURE UNDER 'THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013' :

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of 'The Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. The Company affirms that during the year under review, no cases were fled under the said Act by any of its woman employee before the Internal Complaints Committee.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO :

The nature of operations of the Company does not require disclosure of particulars relating to conservation of energy and technology absorption, as prescribed under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014. During the year under review, the Company had 'Nil' foreign exchange earnings and had incurred an expenditure of Rs.139.07 lacs in foreign exchange.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

During the year under review, three (3) employees of the Company employed for the full year received remuneration in excess of Rs.60 lacs and 1 (one) employee employed for part of the year received remuneration in excess of Rs.5 lacs per month.

In terms of the provisions of Section 197 (12) of the Companies Act, 2013 read with Rules 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules is appended to this Report.

In terms of the provisions of Section 136(1) of the Companies Act, 2013, the Directors' Report is being sent to the shareholders excluding the aforesaid statement. Shareholders who are interested in obtaining a copy of the said statement may write to the Company Secretary at the Company's registered office. The aforesaid statement is also available for inspection by the shareholders at the Registered Office of the Company 21 days before the Twenty- seventh Annual General Meeting and up to the date of the said Annual General Meeting during the business hours on working days.

Disclosures pertaining to remuneration and other details as required under Section 197 (12) of the said Act read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in Annexure 'D' to this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR) :

The Company has constituted a Corporate Social Responsibility Committee in accordance with the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 (the Rules). The CSR Policy of the Company and the details about the initiatives taken by the Company on Corporate Social Responsibility during the year as per annexure attached to the Rules have been appended as Annexure 'E' to this Report. Further, the CSR Policy has been uploaded on the Company website at the link : http://www.hubtown. co.in/company-information/investors/policies/corporate-social- responsibility-policy/pdf.

HUMAN RESOURCES :

The Company recognizes that its people are key to success of the organization and in meeting its business objectives. The Human Resources function endeavours to create a congenial work environment and synchronizes the working of all the departments of the organization to accomplish their respective objectives, which in turn helps the Company to build and achieve its goals and strategies. Employee relations during the year remained cordial.

The Company had 180 employees on its payroll as on March 31, 2015.

INSURANCE :

All the insurable interests of your Company including inventories, buildings and other assets are adequately insured.

APPRECIATION AND ACKNOWLEDGEMENTS :

Your Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment. The Directors also take this opportunity to thank all Investors, Suppliers, Vendors, Banks, Financial Institutions, Business Associates, Contractors, Government & Regulatory Authorities and Stock Exchanges for their continued support during the year.

DISCLAIMER :

Certain statements made in the Directors' Report and the Management Discussion and Analysis may constitute 'forward looking statements' within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Several factors could make significant difference to the Company's operations that include labour and material availability, and prices, cyclical demand and pricing in the Company's principal markets, changes in interest rates, changes in government regulations, tax regimes, economic development within India and other incidental factors. The Company does not undertake any obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise.



For and on behalf of the Board



Hemant M. shah

Executive Chairman

Mumbai, May 30, 2015. DIN : 00009659


Mar 31, 2014

THE MEMBERS

The Directors have pleasure in presenting the Twenty Sixth Annual Report of your Company together with the Audited Accounts for the financial year ended March 31, 2014.

FINANCIAL RESULTS :

The salient features of the Company''s standalone and consolidated financial results for the year under review as compared to the previous financial year are as follows:

(Rs. in lac)

STANDALONE CONSOLIDATED

March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013

Revenue from Operations 47764 44972 47606 44106

Other Income 3924 8924 7338 12534

Total Income 51688 53896 54944 56640

Operating Expenditure 18783 15535 17369 12612

Profit before Depreciation / Interest / Tax 32905 38361 37575 44028

Depreciation 557 573 985 1070

Interest and Finance Charges 30465 35016 35673 43458

Profit / (Loss) before Tax 1883 2772 917 (500)

Provision for Tax (118) — (149) (10)

Add / (less): Excess / (Short) provision for taxation in respect of (520) (24) (694) (15) earlier years

Deferred Tax credit / (charge) 2296 310 2323 267

Prior Period Adjustments (net) 3 8 22 (259)

Minority Interest / Share of Profit / (loss) of Subsidiaries & Associates — — (126) 305 / Others

Net Profit / (Loss) for the Year 3544 3066 2293 (212)

Balance Profit brought forward from Previous year 67843 65509 61628 62685

Tax Credit on proposed dividend — 114 — —

Amount available for appropriation 71387 68689 63921 62473

APPROPRIATIONS

Debenture Redemption Reserve 3000 — 3000 —

Proposed Dividend 727 727 727 727

Reversal of proposed dividend and tax thereon (696) — (696) —

Dividend Distribution Tax 124 118 124 118

General Reserves — — — —

Balance carried to Balance sheet 68232 67844 60766 61628

Earnings per share before Extraordinary Item (Rs.) (EPs) 4.87 4.22 3.15 (0.29)

Earnings per share after Extraordinary Item (Rs.) (EPs) 4.87 4.22 3.15 (0.29)

FINANCIAL PERFORMANCE :

Consolidated Financials

During the year under review, your Company''s consolidated turnover was lower by 2.99 % at Rs. 54944 lacs as compared to Rs. 56640 lacs for the previous year. Profit before tax stood at Rs. 917 lacs for the year under review as compared to loss of Rs. 500 lacs for the previous year. Profit after tax stood at Rs. 2293 lacs as compared to loss of Rs. 212 lacs in the previous year.

Standalone Financials

During the year under review, the turnover of the Company was lower by 4.09 % at Rs. 51688 lacs as compared to Rs. 53896 lacs in the previous year. Profit before Tax was lower by 32.07 % at Rs. 1883 lacs as compared to Rs. 2772 lacs for the previous year. Profit after Tax was higher by 15.59 % at Rs. 3544 lacs as compared to Rs. 3066 lacs in the previous year.

In view of the downturn in the economy during the year under review, your Company''s performance as well as Profits were to a greater extent impacted due to rising infation, rupee depreciation, increased cost of capital, increased cost of construction and restrained demand from end-users. The operational cashflows were adversely impacted for a major part of the year under review due to lower than expected sales level resulting in intense pressure on Profit margins.

APPROPRIATIONs :

Despite the challenging business environment, sluggish industry volumes and increased costs, your Directors are pleased to recommend a dividend of Rs. 1/- (10 %) (Previous year : Rs. 1.00 per share – 10 %) per equity share of the face value of Rs. 10 each for the year ended March 31, 2014, aggregating Rs. 727 lacs (Previous year : Rs. 727 lacs) subject to the approval of the members at the ensuing Annual General Meeting. The dividend distribution tax to be borne by the Company amounts to Rs. 124 lacs (Previous year : Rs. 118 lacs). The dividend will be paid in accordance with the applicable rules and regulations.

MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)

This Report includes MD&A at appropriate places so that repetition and overlap between Directors'' Report and MD&A is avoided.

THE BUSINESS :

your Company is one of the leading real estate development companies in India and currently operates both - on its own and through its subsidiaries / joint ventures / associate companies, partnerships firms and public private partnerships encompassing the construction and development of Residential and Commercial Premises, SEZs, IT Park, Biotech Park and Build Operate Transfer (BOT) Projects. Operations of the Company include identifcation of projects, acquisition of land / development rights, architectural and engineering designing, project management including obtaining necessary approvals, planning, execution and marketing of the projects.

The Company has a Western India focus with presence in major cities such as Mumbai, Thane, Pune, Surat, Ahmedabad, Vadodara, and Mehsana.

The Company''s presence in Mumbai is well distributed amongst western suburbs, eastern suburbs, the island city and Mumbai Metropolitan Region (MMR).

The construction and development of projects at various locations is currently in progress.

your Company has already initiated steps for sustaining growth through cost optimization, process improvement and efcient management of working capital. Tools of innovation are employed for all new projects / marketing initiatives, the purpose being to constantly stay ahead in terms of ideas.

OVERVIEW OF THE COMPANY''S PROJECTS

(includes projects being developed / to be developed through subsidiaries / associates / joint ventures / public-private partnerships.)

Residential: Ongoing Projects:

Hubtown Sunmist - Andheri (East)

Hubtown Countrywoods Phase I – Kondhwa, Pune

Hubtown Shikhar – Andheri (East)

Hubtown Gardenia – Mira Road

Hubtown Greenwoods – Thane

Hubtown Jewell – Andheri (West)

Hubtown Vedant – Sion (East)

Hubtown Season – Chembur

Hubtown Sunstone – Bandra (East)

Hubtown Serene – Bandra (East)

Hubtown Mont Metro – Peddar Road

Hubtown Celesté – Worli

Hubtown Grove – Andheri (West)

Rising City – Ghatkopar Mankhurd link Road

Commercial: Ongoing Projects

Hubtown Solaris – Andheri (East) Hubtown Viva – Andheri (East) Hubtown Central – Surat Hubtown Central – Ahmedabad Hubtown Central – Mehsana Hubtown Central – Vadodara

IT SEZ and Township Ongoing

Sunstream City Phase – I - Mulund-Thane

AUDITORS :

M/s. Doshi Doshi & Associates (Firm Registration No. 121773W), Chartered Accountants, Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting (AGM) in accordance with the provisions of the Companies Act, 1956 and being eligible ofer themselves for reappointment. In terms of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, M/s. Doshi Doshi & Associates are eligible to be reappointed for a period of 3 (three) years subject to ratifcation in every AGM by the members.

The Board of Directors, upon the recommendation of the Audit and Compliance Committee, proposes the reappointment of M/s. Doshi Doshi & Associates as Statutory Auditors of the Company for a period of 3 (three) years from the conclusion of the ensuing AGM until the conclusion of the AGM to be held for the year 2017, subject to ratifcation at every AGM held after the ensuing AGM.

M/s. Doshi Doshi & Associates, the retiring Auditors, have confirmed that their reappointment, if made, would be in conformity with the provisions of Section 139 (1) of the Companies Act, 2013 and that they are not disqualified for reappointment within the meaning of Section 141 of the said Act read with Rule 4 of the Companies (Audit and Auditors) Rules, 2014. The necessary resolution is included in the Notice of the ensuing Annual General Meeting.

AUDITORS'' REPORT :

The Notes forming part of the Financial Statements (Balance Sheet and the Statement of Profit and loss) for the year ended March 31, 2014, referred to in the Auditors'' Report are self explanatory.

In terms of sub-section (3) of Section 217 of the Companies Act, 1956, the Management''s replies to ''Emphasis of Matter'' and ''Other matters'' reported by the Statutory Auditors in their Audit Reports to the members on the financial statements for the year ended March 31, 2014 are as hereunder :

Emphasis of Matter :

a. Note 2 (III) (A) (ii) and (iii) to standalone financial statements and Note 3 (III) (A) (ii) and (iii) to consolidated financial statements :

The emphasis of matters included by the Statutory Auditors in their respective Reports are self explanatory and require no further clarifcation.

b. Footnote ''d'' to Note ''4'' to standalone financial statements and footnote ''c'' to Note ''5'' to consolidated financial statements :

The management is confdent of obtaining the requisite consent of the Debentureholders prior to the Annual General Meeting so as to facilitate the declaration of dividend at the ensuing Annual General Meeting and distribution thereafter to the shareholders.

c. Footnote ''e'' to Note ''4'' to standalone financial statements and footnote ''d'' to Note ''5'' to consolidated financial statements :

Due to paucity of liquid funds, the Company was not able to make the requisite investment / deposit in terms of Circular No. 11/02/2012-Cl-V (A) /04/2013 dated February 11, 2013 issued by the Ministry of Corporate Afairs. The Company is exploring alternative sources of finance for meeting this statutory obligation and is hopeful of meeting with the statutory requirement during the current year.

d. Footnote (''j'') to Note 5 to standalone financial statements and footnote ''k'' to Note 6 to consolidated financial statements :

The emphasis of matters included by the Statutory Auditors in their respective Reports are self explanatory and require no further clarification.

e. Footnote ''b'' to Note 12 to consolidated financial statements :

The emphasis of matters included by the Statutory Auditors in their Report are self explanatory and require no further clarifcation.

f. Footnote ''c'' to Note ''13'' to standalone financial statements and foot note ''b'' to Note ''14'' to consolidated financial statements :

The emphasis of matter included by the Statutory Auditors in their respective Reports are self explanatory and require no further clarifcation.

g. Footnote to Note 18 to standalone financial statements and footnote to Note 19 to consolidated financial statements:

The emphasis of matter included by the Statutory Auditors in their respective Reports are self explanatory and require no further clarifcation.

h. Footnote (d) to Note 13 to standalone financial statements and clause (g) to Auditors'' Report on consolidated financial statements :

The emphasis of matter included by the Statutory Auditors in their respective reports are self explanatory and require no further clarifcation.

i. Footnote to Note 28 to consolidated financial statements:

The emphasis of matter with respect to footnote to Note 28 to consolidated financial statement is self explanatory and requires no further clarifcation.

j. Note 33 (B) to standalone financial statements and Note 36 (B) to consolidated financial statements :

and

Footnote to Note ''33'' to standalone financial statements and footnote to Note ''36'' to consolidated financial statements:

The corporate guarantees have been given by the Company on behalf of other entities which are having projects located at prime locations and such projects are in various stages of construction/development. All these projects when completed will have net realizable value which will be in excess of the amount of corporate guarantees given by the Company. The management is confdent that there will not be any financial liability on the Company on account of any default by any of the entities on whose behalf the corporate guarantees have been given.

The emphasis of matter with respect to footnote to Note 33 to standalone financial statements and footnote to Note 36 to consolidated financial statements are self explanatory and require no further clarification.

k. Clause ''a'' – ''Other matters'' in Auditors'' Report on standalone financial statements :

The observations of the Auditors are self explanatory and do not require any further clarifcation.

l. Clause ''k'' in Auditors'' Report on consolidated financial statements :

Effects on the consolidated financial statements of the Group have been given based on the audited separate financial statements of the said six joint ventures and an associate. The management is of the view that, even after the inclusion of audited consolidated financial statements of the said joint ventures and the associate, there would not be any material impact on the reported consolidated financial statements of the Group.

Annexure to Auditors'' Report (standalone Financial statements) : Clause (ix) (a) of the Annexure referred to in the Auditors'' Report on standalone financial statements :

and

Clause (xi) of the Annexure referred to in the Auditors'' Report on standalone financial statements :

The delays caused by the Company in discharging its statutory liabilities and in making timely payment of principal and interest on its borrowings have been due to prolonged stagnation in demand in the real estate sector accentuated by economic slowdown, inordinate delays in approval process, infationary pressures, volatility in foreign exchange and stock market, liquidity crunch and costly debt. The Company is also facing lack of adequate sources of finance to fund development of its real estate projects resulting in delayed realisations from its customers and lower availability of funds to discharge its liabilities.The Company is exploring alternative sources of finance for meeting these obligations and to overcome the temporary liquidity shortage and is hopeful that these eforts would yield fruitful results.

CONSOLIDATED ACCOUNTS :

In terms of Clause 41 of the listing Agreement executed with the Stock Exchanges, the Consolidated Financial Statements which have been prepared in accordance with Accounting Standards – AS-21 on ''Consolidated Financial Statements'' read with AS-23 on ''Accounting for Investments in Associates'' in Consolidated Financial Statements and AS-27 on ''Financial Reporting of Interests in Joint Ventures'' as issued by the Institute of Chartered Accountants of India, are annexed to and form part of this Annual Report.

COST AUDITORS :

Pursuant to Section 148 and other applicable provisions, if any, of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors in its meeting held on August 14, 2014, based on the recommendation of the Audit and Compliance Committee, appointed M/s. N. I. Mehta & Co., Cost Accountants (Firm Registration No. 000023) as Cost Auditors of the Company for conducting the audit of the cost accounting records of the Company for the Financial year ending March 31, 2015. The remuneration proposed to be paid to the Cost Auditors is upto Rs. 5,00,000/- (Rupees Five lacs only) plus reimbursement of service tax and out-of-pocket expenses, if any, subject to ratifcation by the members at the ensuing Annual General Meeting vide resolution no. 9 of the Notice of the AGM.

M/s. N. I. Mehta & Co. have confirmed that their appointment is within the limits of Section 139 (9) read with Section 141 (3) (g) of the Companies Act, 2013 and have also certified that they are free from any disQualifications specified under Sections 141 (3) and 141 (4) read with proviso to Section 148 (3) of the said Act.

COST COMPLIANCE REPORT :

The Cost Compliance Report for the Financial year 2012-2013 pursuant to the Companies (Cost Accounting Records) Rules, 2011 was fled within the due date. The due date for submission of the Cost Compliance Report for the Financial year 2013-2014 is 180 days from March 31, 2014 i.e. on or before September 30, 2014.

FIXED DEPOSITS :

Total amount of deposits outstanding as on March 31, 2014 was Rs. 1040.83 lacs. There were no unclaimed/unpaid deposits as at the year end.

INSURANCE :

All the insurable interests of your Company including inventories, buildings are adequately insured.

INFORMATION TECHNOLOGY :

During the year under review, the Company undertook an extensive exercise to upgrade its Oracle system to the latest version of Oracle i.e. 12.1.3. The upgradation has been successfully completed.

During the current year, the Company plans to initiate and develop Customer Facing Portals which would act as a single point of contact providing all the related information to the customers. The Company also plans to digitalize rehab unit information which would enhance and streamline Business Processes.

TRANsFER OF AMOUNTs TO INVEsTOR EDUCATION AND PROTECTION FUND :

The unpaid dividend amount pertaining to the Financial year 2006-2007 will be transferred to the Investor Education and Protection Fund during the current year pursuant to the provisions of Sections 124 (5) and 125 of the Companies Act, 2013 (corresponding to Section 205A and 205C of the erstwhile Companies Act, 1956).

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of Information regarding unpaid and unclaimed amount lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on September 30, 2013 (date of last Annual General Meeting) on the Company''s website (www.hubtown.co.in) and on the Ministry of Corporate Afairs'' website (www.mca.gov.in).

DILUTION OF PROMOTER''S SHAREHOLDING :

Subsequent to the close of the year under review, the Promoter Group of your Company diluted its shareholding in the Company by an Ofer for Sale (OFS) through the stock exchange mechanism in order to increase the minimum level of public shareholding in the Company to 25 % of the total paid-up share capital of the Company as mandated by Securities and Exchange Board of India. Post OFS, the public shareholding is 25.02 % and the Promoter group shareholding is 74.98 %.

Your Company is in compliance with the provisions of Securities Contracts (Regulation) Rules, 1957 and Clause 40A of the listing Agreement relating to minimum level of public shareholding.

CORPORATE GOVERNANCE :

A separate section on Corporate Governance, forming part of the Directors'' Report and a certifcate from a company secretary in wholetime practice confirming compliance with the Corporate Governance norms, as prescribed under Clause 49 of the listing Agreement has been annexed hereto as part of this Annual Report.

In terms of sub-clause (v) of Clause 49 of the listing Agreement, a certifcate from the Managing Director and the Chief Financial officer, inter alia, confirming the correctness of the financial statements, adequacy of internal control measures and reporting of matters to the Audit and Compliance Committee in terms of the said Clause, is also annexed as a part of this Annual Report.

CODE OF CONDUCT :

Pursuant to Clause 49 of the listing Agreement, the declaration signed by the Managing Director afrming compliance of the Code of Conduct by the Directors and Senior Management Personnel for the year under review is annexed to and forms part of the Corporate Governance Report.

SUBSIDIARIES :

The Company has in all 25 subsidiaries. All the subsidiary companies are non-material, non-listed subsidiary companies as Defined under Clause 49 of the listing Agreement. There has been no material change in the nature of the business of the subsidiaries during the year under review.

The Audit and Compliance Committee reviews the financial statements of the subsidiaries. The minutes of the meetings of the Board of Directors of the respective subsidiaries are also placed before the meetings of the Board of Directors of the Company.

In terms of the general exemption under Section 212 (8) of the Companies Act, 1956 granted by the Ministry of Corporate Afairs (MCA) vide General Circular No. 2/2011 dated February 8, 2011 and in compliance with the conditions enlisted therein, the Audited Statement of Accounts and the Auditors'' Report thereon for the financial year ended March 31, 2014 along with the Reports of the Board of Directors of the subsidiary companies have not been annexed to this Annual Report. However, as directed by the aforesaid MCA Circular, the summarized financials of the subsidiary companies have been disclosed in the consolidated balance sheet under the heading ''Summary of Financial Statements of Subsidiary Companies'' which forms part of this Annual Report.

The annual accounts and the related detailed information of the subsidiary companies shall be made available to any member of the Company and its subsidiaries seeking such information at any point of time. Further, the annual accounts of the subsidiary companies will also be kept for inspection by any member of the Company/its subsidiaries at the registered office of the Company and that of the respective subsidiary companies during working hours between 11.00 a.m. and 1.00 p.m. upto the date of the ensuing Annual General Meeting.

DIRECTORS :

Mr. Vyomesh M. Shah, Managing Director of the Company retires by rotation, and being eligible, ofers himself for reappointment at the ensuing Annual General Meeting (AGM).

The Board of Directors of the Company in its meeting held on August 14, 2014, appointed Mr. Sunil C. Shah and Mrs. Priti K. Shah as Additional Directors of the Company who will hold office upto the date of the ensuing AGM and are eligible for reappointment. Under the existing Clause 49 of the listing Agreement, Mr. Sunil C. Shah and Mrs. Priti K. Shah are designated as Non-Executive, Independent Directors.

In view of the provisions of Section 149 of the Companies Act, 2013 and the amended Clause 49 of the listing Agreement, the Board of your Company has proposed the appointment of Mr. Arvind Kumar Joshi, Mr. Abhijit Datta and Mr. Sunil C. Shah as Independent Directors at the ensuing Annual General Meeting. Pursuant to Section 160 of the Companies Act, 2013, the Board has also proposed the appointment of Mrs. Priti K. Shah as a Non-Executive Director of the Company liable to retire by rotation.

The Company has received the requisite Notices in writing proposing the appointment of Mr. Arvind Kumar Joshi, Mr. Abhijit Datta and Mr. Sunil C. Shah as Independent Directors and Mrs. Priti K. Shah as a Non-Executive Director.

Appropriate resolutions for the reappointment/appointment of Directors are being placed before you for your approval at the ensuing Annual General Meeting. The brief profle of the aforesaid Directors and other information have been detailed in the Section on ''Corporate Governance'' which forms part of this Annual Report.

BOARD COMMITTEES :

Subsequent to the close of the year under review and pursuant to the applicable provisions of the Companies Act, 2013, the Rules made thereunder and Revised Clause 49 of the listing Agreement:

i. the Audit and Compliance Committee was reconstituted and the terms of reference were revised;

ii. the ''Investors''/Shareholders Grievance Committee'' was reconstituted and renamed as the ''Stakeholders Relationship Committee'' and the terms of reference were revised;

iii. the Remuneration Committee was reconstituted and renamed as the ''Nomination and Remuneration Committee'' and the terms of reference were revised; and

iv. two new Committees of the Board were constituted namely the ''Corporate Social Responsibility Committee'' and the ''Risk Management Committee''.

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

DIRECTORS'' RESPONSIBILITY STATEMENT :

Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, the Directors of your Company, to the best of their knowledge and belief and on the basis of the information and explanations received by them, hereby state and confirm that :

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

(ii) they 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 afairs of the Company as at March 31, 2014 and of the Profit of the Company for the year ended on that date;

(iii) they have taken proper and sufcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) they have prepared the annual accounts on a ''going concern'' basis.

STATUTORY INFORMATION :

Since the Company is not engaged in any manufacturing activity, there is nothing to report on particulars relating to conservation of energy and technology absorption as stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1998.

Expenditure incurred in foreign currency amounted to Rs. 43.04 lacs. There was no earning in foreign exchange during the year under review.

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 the 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 said Act, the Annual Report excluding the aforesaid statement is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered office of the Company.

APPRECIATION :

your Directors take the opportunity to express their deep sense of gratitude to bankers, government authorities, financial institutions, business associates, suppliers, consultants, customers and contractors and other stakeholders at large for the valuable co-operation and support received during the year under review and look forward to the same in greater measure in the coming years.

Your Directors would also like to thank the members for reposing their faith and confdence in the Company and its Management.

Your Directors also wish to place on record their appreciation for the hard work and eforts put in by the employees at all levels of the Company.

Your Directors look forward to the long term future with confdence.

For and on behalf of the Board

Hemant M. shah

Executive Chairman

Mumbai, August 14, 2014. DIN : 00009659


Mar 31, 2013

TO THE MEMBERS

The Directors have pleasure in presenting their Twenty Fifth Annual Report of the Company together with the Audited Accounts for the year ended March 31, 2013.

FINANCIAL RESULTS :

The salient features of the Company''s standalone and consolidated fnancial results for the year under review are as follows :

(Rs.in lacs) STANDALONE CONSOLIDATED 31 March 2013 31 March 2012 31 March 2013 31 March 2012

Net Sales / Income from Operations 34691 26044 39179 43491

Other Income 19205 17234 17461 15558

Total Income 53896 43278 56640 59049

Operating Expenditure 17107 10586 14184 21881

Proft before Depreciation / Interest / Tax 36789 32692 42456 37168

Depreciation 573 703 1070 2179

Interest and Finance Charges 33444 28710 41886 33503

Proft / (Loss) before Extraordinary Item and Tax 2772 3279 (500) 1486

Extraordinary Item (350) (353)

Proft / (Loss) before Tax 2772 2929 (500) 1133

Provision for Tax (10) (493)

Add / (Less): Excess/ (Short) provision for taxation in respect of (25) 1246 (15) 1714 earlier years

Deferred Tax credit/ (charge) 311 415 267 341

Prior Period Adjustments (net) 8 (605) (259) (596)

Minority Interest/ Share of Proft/ (Loss) of Subsidiaries & 305 271

Associates / Others Net Proft / (Loss) for the Year 3066 3985 (213) 2370

Balance Proft brought forward from Previous Year 65509 65369 2686 65611

Tax Credit on proposed dividend 114

Amount available for appropriation 68689 69354 62473 67981

APPROPRIATIONS

Debenture Redemption Reserve 3000 4450

Proposed Dividend 727 727 727 727

Dividend Distribution Tax 118 118 118 118

General Reserves

Balance carried to Balance Sheet 67844 65509 61628 62686

Earnings per Share before Extraordinary Item (Rs.) (EPS) 4.22 5.96 (0.29) 3.74

Earnings per Share after Extraordinary Item (Rs.) (EPS) 4.22 5.48 (0.29) 3.26

FINANCIAL PERFORMANCE :

Consolidated Financials

During the year under review, the consolidated turnover of the Company was lower by 4.08 % at Rs. 56640 lacs as against Rs. 59049 lacs in the previous year. The Company incurred a net loss of Rs. 213 lacs for the year under review as compared to net proft of Rs. 2370 lacs earned in the previous year.

Standalone Financials

During the year under review, the turnover of the Company was higher by 24.53 % at Rs. 53896 lacs as against Rs. 43278 lacs in the previous year. Proft before Tax stood at Rs. 2772 lacs as compared to Rs. 2929 lacs for the previous year, representing a decline of 5.36 %. Proft after Tax stood at Rs. 3066 lacs as compared to Rs. 3985 lacs for the previous year, representing a decline of 23.06 %.

In view of the downturn in the economy during the year under review, your Company''s performance as well as profts were to a greater extent impacted due to rising infation, rupee depreciation, increased cost of capital, increased cost of construction and restrained demand from end-users. The operational cashfows were adversely impacted for a major part of the year under review due to lower than expected sales level resulting in intense pressure on proft margins.

APPROPRIATIONS :

Despite the diffcult economic environment in which the Company operated during the year under review, your Directors have recommended a dividend of Rs. 1/- (10 %) (Previous Year : Rs. 1.00 per share – 10 %) per equity share of the face value of Rs. 10 each for the year ended March 31, 2013, aggregating Rs. 727 lacs (Previous Year : Rs. 727 lacs) subject to the approval of the members at the ensuing Annual General Meeting. The dividend distribution tax to be borne by the Company amounts to Rs. 118 lacs (Previous Year : Rs. 118 lacs).

FINANCE :

Issue of Debentures :

During the year under review, the Company issued Secured, Redeemable, Non-convertible, Taxable Debentures amounting to Rs. 25 crores on private placement basis.

AUDITORS :

M/s. Doshi Doshi & Associates, Chartered Accountants and M/s. Haribhakti & Co., Chartered Accountants, Joint Statutory Auditors of the Company retire at the conclusion of this Annual General Meeting. M/s. Doshi Doshi & Associates, being eligible have offered themselves for reappointment. The other frm of Statutory Auditors M/s. Haribhakti & Co., have expressed their desire not to seek reappointment in view of their heavy prior professional commitments. The Board of Directors, upon the recommendations of the Audit and Compliance Committee, proposes the reappointment of M/s. Doshi Doshi & Associates as Statutory Auditors of the Company for conducting the audit of the accounts of the Company for the year ending March 31, 2014.

M/s. Doshi Doshi & Associates have forwarded their certifcate to the Company, stating that their appointment if made, would be within the limits specifed in that behalf under Section 224 (1) (b) of the Companies Act, 1956. The necessary resolution is included in the Notice of the ensuing Annual General Meeting.

AUDITORS'' REPORT :

The Notes forming part of the Financial Statements (Balance Sheet and the Statement of Proft and Loss) for the year ended March 31, 2013, referred to in the Auditors'' Report are self explanatory. In terms of sub-section (3) of Section 217 of the Companies Act, 1956, the Management''s replies to certain observations/qualifcations of the Statutory Auditors in their Audit Reports on the fnancial statements for the year ended March 31, 2013 are as hereunder :

Basis of Qualifed opinion :

a. Note ‘29'' to the standalone fnancial statements and Note ‘30'' to the consolidated fnancial statements:

The observation of the Auditors read with Note ‘29'' and Note ‘30'' are self explanatory and require no further clarifcation.

Emphasis of Matter :

a. Note 2 (III) (A) (ii) and (iii) to standalone fnancial statements and Note 3 (III) (A) (ii) and (iii) to the consolidated fnancial statements :

The emphasis of matters included by the Statutory Auditors in their respective Reports are self explanatory and require no further clarifcation.

b. Footnote ‘c'' to Note ‘4'' to standalone fnancial statements and footnote ‘b'' to Note ''5'' to consolidated fnancial statements :

Regulation 16 (2) of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 read with Clause 36.1.5 of the Debenture Trust Deed dated February 24, 2011 executed by the Company with the Trustees for Debentureholders provides that in case of any defaults in payment of interest on debt securities or redemption thereof, any declaration or distribution/payment of dividend to the shareholders shall require approval of the Debenture Trustees. The management is confdent of obtaining the requisite consent of the Debenture Trustees prior to the Annual General Meeting so as to facilitate the declaration of dividend at the ensuing Annual General Meeting and distribution thereafter to the shareholders.

c. Footnote ‘d'' to Note ‘4'' to standalone fnancial statements and footnote ‘c'' to Note ‘5'' to consolidated fnancial statements :

Due to the prevailing economic scenario, the Company was not able to make requisite investment /deposit in terms of Circular No. 11/02/2012-CL-V (A) /04/2013 dated February 11, 2013 issued by the Ministry of Corporate Affairs. The Company will meet with the requirements of the said Circular during the current fnancial year.

d. Footnote ‘c'' to Note ‘13'' to standalone fnancial statements and foot note ‘b'' to Note ‘14'' to consolidated fnancial statements :

The emphasis of matter included by the Statutory Auditors in their respective Reports are self explanatory and require no further clarifcation.

e. Note ‘13'' (F) and (G), Note 17 and Note ‘10'' to standalone fnancial statements :

The emphasis of matter included in the Auditors'' Report read with Note ‘13'' (F) and (G), Note 17 and Note ‘10'' to the standalone fnancial statements are self explanatory and require no further clarifcation.

f. Footnote ‘e'' to Note ‘13'' to standalone fnancial statements :

The emphasis of matter included in the Auditors'' Report read with footnote ‘e'' to Note ‘13'' to the standalone fnancial statements is self explanatory and requires no further clarifcation.

g. footnote ‘b'' to Note ‘18'' to standalone fnancial statements and footnote to Note ‘19'' to consolidated fnancial statements :

The emphasis of matter included by the Statutory Auditors in their respective Reports read with footnote ‘b'' to Note ‘18'' to standalone fnancial statements and footnote to Note ‘19'' to consolidated fnancial statements are self explanatory and require no further clarifcation.

h. Footnote to Note ‘22'' to standalone fnancial statements and footnote to Note ‘23'' to consolidated fnancial statements :

The emphasis of matter included by the Statutory Auditors in their respective Reports read with footnote to Note ‘22'' to standalone fnancial statements and footnote to Note ‘23'' to consolidated fnancial statements are self explanatory and require no further clarifcation.

i. Note ‘34'' (B) to standalone fnancial statements and Note ‘38'' to consolidated fnancial statements : and

Footnote to Note ‘34'' to standalone fnancial statements and footnote to Note ‘38'' to consolidated fnancial statements:

The corporate guarantees have been given by the Company on behalf of other entities which are having projects located at prime locations and such projects are in various stages of construction/development. All these projects when completed will have net realizable value which will be in excess of the amount of corporate guarantees given by the Company. The management is confdent that there will not be any fnancial liability on the Company on account of any default by any of the entities on whose behalf the corporate guarantees have been given.

The emphasis of matter with respect to footnote to Note ‘34'' to standalone fnancial statements and Note ‘38'' to consolidated fnancial statement are self explanatory and require no further clarifcation.

j. Emphasis of matter – item (i) of the Auditors'' Report on Consolidated Financial Statements :

Effects on the consolidated fnancial statements of the group have been given based on the audited separate fnancial statements of the said four Subsidiaries, the said Joint Venture and an Associate. The management is of the view that, even after the inclusion of audited consolidated fnancial statements of the said subsidiaries and the said joint venture, there would not be any material impact on the reported consolidated fnancial statements of the group.

In case of the associate having two step down subsidiaries, the share of loss of the said associate has already been accounted for while preparing the consolidated fnancial statements of the Company. The management is of the view that there would not be any material change in the reported fgures in the consolidated fnancial statement even after completion of audit of the consolidated fnancial statements of the said associate.

Annexure to Auditors'' Report (Standalone Financial Statements) :

Clause (ix) (a) of the Annexure referred to in the Auditors'' Report on standalone fnancial statements :

As explained in the operational highlights in the Directors'' Report, the then prevailing adverse economic conditions during the year under review resulted in some delays in the payment of certain statutory dues. The Company is making good the delays at the earliest.

Clause (xi) of the Annexure referred to in the Auditors'' Report on standalone fnancial statements :

Due to the then prevailing adverse economic conditions during the year under review, the Company faced diffculties in making timely payments of its dues to the debentureholders. The Company has initiated steps for resolving the matter with the debentureholders.

CONSOLIDATED ACCOUNTS :

In terms of Clause 41 of the Listing Agreement executed with the Stock Exchanges, the Consolidated Financial Statements which have been prepared in accordance with Accounting Standards - AS-21, AS-23 and AS-27 as issued by the Institute of Chartered Accountants of India, are annexed to and form part of the Annual Report.

FIXED DEPOSITS :

Total amount of deposits outstanding as on March 31, 2013 was Rs. 1163.83 lacs. There were no unclaimed / unpaid deposits as at the year end.

INSURANCE :

All the insurable interests of your Company including inventories, buildings are adequately insured.

INFORMATION TECHNOLOGY :

The Company uses Information Technology to provide reliable, contemporary and integrated business processes which enables it to improve all round operational effciencies.

During the year under review, your Company initiated steps to implement Oracle ERP across its various Group Companies including subsidiaries, associates and joint ventures. This will result in the Company''s processes integrating into one single system, avoidance of duplication of work, increased effciency, improved management information systems and better management control of operations and activities. The Company''s IT systems are periodically audited to ensure the adequacy of the information systems control, information security and privacy aspects.

During the current fscal, the Company plans to undertake a major exercise of upgrading Oracle ERP to latest version.

CORPORATE SOCIAL RESPONSIBILITY :

As part of corporate social responsibility, your Company has wholeheartedly supported the circulars on Green Initiative in the Corporate Governance issued by the Ministry of Corporate Affairs allowing paperless compliances by companies by service of notices /documents to the members through electronic mode. Recognising the spirit of the said circular, the Company has forwarded this annual report in electronic form to those members who have registered their e-mail addresses with the Depositories through their respective Depository Participants.

CORPORATE GOVERNANCE :

A separate section on Corporate Governance, forming part of the Directors'' Report and a certifcate from a company secretary in wholetime practice confrming compliance with Corporate Governance norms, as prescribed under Clause 49 of the Listing Agreement has been annexed hereto as part of this Annual Report.

In terms of sub-clause (v) of Clause 49 of the Listing Agreement, a certifcate from the Managing Director and the Chief Financial Offcer, inter alia, confrming the correctness of the fnancial statements, adequacy of internal control measures and reporting of matters to the Audit and Compliance Committee in terms of the said Clause, is also annexed as a part of this Annual Report.

CORPORATE GOVERNANCE – VOLUNTARY GUIDELINES 2009

The Ministry of Corporate Affairs has issued a set of Voluntary Guidelines on ‘Corporate Governance'' and ‘Corporate Social Responsibility'' in December 2009. These guidelines are expected to serve as a benchmark for the Corporate Sector and also help them in achieving the highest standard of corporate governance. Although these guidelines are recommendatory in nature, the Board recognizes the importance and need to constantly assess governance practices thereby ensuring a sustainable business environment that generates long-term value to all key stakeholders. The Board has adopted several provisions of the said guidelines.

SUBSIDIARIES :

During the year under review, Joynest Premises Private Limited became a subsidiary and Holiac Realty Private Limited and Pushpak Healthcare Services Private Limited ceased to be subsidiaries of your Company. Holiac Realty Private Limited has instead, become an associate. The total number of subsidiaries as on March 31, 2013 were 25.

There has been no material change in the nature of the business of the subsidiaries. All the subsidiary companies are non-material, non-listed subsidiary companies as defned under Clause 49 of the Listing Agreements entered into with the Stock Exchanges.

In terms of the general exemption under Section 212 (8) of the Companies Act, 1956 granted by the Ministry of Corporate Affairs (MCA) vide it General Circular No.2/2011 dated February 8, 2011 and in compliance with the conditions enlisted therein, the Audited Statement of Accounts and the Auditors'' Report thereon for the fnancial year ended March 31, 2013 along with the Reports of the Board of Directors of the subsidiary companies have not been annexed to this Annual Report. However, as directed by the aforesaid MCA Circular, the summarized fnancials of the subsidiary companies have been disclosed in the consolidated balance sheet under the heading ‘Summary of Financial Statements of Subsidiary Companies'' which forms part of this Annual Report.

The annual accounts and the related detailed information of the subsidiary companies will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and will also be kept for inspection by any member of the Company/its subsidiaries at the registered offce of the Company and that of the respective subsidiary companies during working hours between 11.00 a.m. and 1.00 p.m. upto the date of the Annual General Meeting.

DIRECTORS :

Mr. Madhukar B. Chobe ceased to be an Executive Director of the Company upon expiry of his term of offce on December 31, 2012. Subsequently, Mr. Chobe stepped down from the Board of Directors of the Company effective January 1, 2013. Mr. P. H. Ravikumar who was appointed as an Additional Director of the Company effective March 8, 2013 stepped down from the Board effective April 18, 2013 in view of his prior professional commitments. Mr. D. R. Kaarthikeyan stepped down from the Board effective April 17, 2013. Mr. Shailesh H. Bathiya who retires by rotation has expressed his desire not to seek reappointment due to prior professional commitments.

The Board places on record its sincere appreciation of the invaluable and mature guidance and advice contributed by Mr. Madhukar B. Chobe, Mr. D. R. Kaarthikeyan, Mr. P. H. Ravikumar and Mr. Shailesh H. Bathiya during their tenure.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Arvind Kumar Joshi retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for reappointment.

The brief profle of Mr. Arvind Kumar Joshi as required by Clause 49 of the Listing Agreement has been detailed in the Section on ‘Corporate Governance''.

All the Directors of the Company have confrmed that they are not disqualifed from being appointed as Directors in terms of Section 274 (1) (g) of the Companies Act, 1956.

DIRECTORS'' RESPONSIBILITY STATEMENT :

Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, the Directors of the Company, to the best of their knowledge and belief and on the basis of the information and explanations received by them, hereby state and confrm that :

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

(ii) the accounting policies have been selected 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 as at March 31, 2013 and of the proft on Standalone basis and loss on Consolidated basis of the Company for the year ended on that date;

(iii) proper and suffcient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the annual accounts have been prepared on a going concern basis.

STATUTORY INFORMATION :

Since the Company is not engaged in any manufacturing activity, the other particulars relating to conservation of energy and technology absorption as stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1998 are not applicable. Expenditure incurred in foreign currency amounted to Rs. 252.74 lacs. There was no earning in foreign exchange.

PARTICULARS OF EMPLOYEES :

During the year under review, 3 (three) employees employed throughout the year were in receipt of remuneration of Rs. 60 lacs or more per annum. 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 the employees are set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Offce of the Company.

APPRECIATION :

Your Directors would like to express their grateful appreciation and thanks for the valuable co-operation and support received from the Company''s bankers, fnancial institutions, business associates, suppliers, consultants, customers, contractors and shareholders at large during the year under review and look forward to the same in greater measure in the coming years.

The Directors also wish to place on record their appreciation of the unstinted efforts and contributions made by the Management Team and the employees of the Company at all levels.

CAUTIONARY STATEMENT

Certain statements made in the Directors'' Report and the Management Discussion and Analysis may constitute ‘forward looking statements'' within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Several factors could make signifcant difference to the Company''s operations that include labour and material availability, and prices, cyclical demand and pricing in the Company''s principal markets, changes in interest rates, changes in government regulations, tax regimes, economic development within India and other incidental factors. The Company does not undertake any obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise.

For and on behalf of the Board

Hemant M. Shah

Executive Chairman

Mumbai, May 29, 2013


Mar 31, 2011

The Directors have pleasure in presenting their Twenty Third Annual Report of the Company together with the Audited Accounts for the year ended March 31, 2011.

FINANCIAL RESULTS :

The salient features of the Companys standalone and consolidated financial results for the year under review are as follows:

(Rs. in lac)

STANDALONE CONSOLIDATED March March March March 31,2011 31,2010 31,2011 31,2010

Net Sales / Income from Operations 42594 48202 67676 57963

Other Income 4942 3204 3655 3846

Total Income 47536 51406 71331 61809

Operating Expenditure 15216 15265 31967 19526

Profit before Depreciation / Interest / Tax 32320 36141 39364 42283

Depreciation 484 311 1285 714

Interest and Finance Charges 16246 11968 20923 16800

Profit before Tax 15590 23862 17156 24769

Provision for Tax 470 6208 2402 8166

(Add) / Less : (Excess) / Short provision for taxation for previous year (2028) 275 (3827) 275

Minority Interest / Share of Profit / (Loss) of Subsidiaries 8c Associates / Others -- -- (963) 163

Net Profit for the Year 17148 17379 17618 16491

Balance Profit brought forward from Previous Year 59707 50832 59478 51491

Amount available for appropriation 76855 68211 77096 67982

APPROPRIATIONS

Proposed Dividend 1818 3636 1818 3636

Dividend Distribution Tax 302 618 302 618

General Reserves 1890 1750 1890 1750

Debenture Redemption Reserve 7475 2500 7475 2500

Balance carried to Balance Sheet 65370 59707 65611 59478

Earning per Share (Rs.) (EPS) 23.58 24.81 24.22 23.54

OPERATIONAL HIGHLIGHTS :

The Company has adopted an unique growth oriented and pragmatic business model of development of real estate projects through its subsidiaries, joint ventures, associates, partnership firms and public private partnership with strategic investors. The benefits accruing from this business model are :

- highly capital efficient and allows the Company to grow the business without tying up large amount of capital in land purchases.

- for any given amount of capital it allows the Company to do more projects than would otherwise have been possible.

- leveraging of development capabilities and resources.

- creation of enhanced pool of construction and marketing expertise.

- greater profitability and significantly reduces the exposure to risks in any one project.

- facilitates expansion in additional geographical areas.

- stable source of revenue during tough economic times.

The merits of the business model is reflected in the consolidated results of the Company for the year under review, which witnessed a growth of 15.41 % at Rs. 71331 lac as against Rs. 61809 lac in the previous year. The consolidated net profit stood at Rs. 17618 lac as against Rs. 16491 lac in the previous year.

On a standalone basis the total income of the Company was lower by 7.53% at Rs. 47536 lac as against Rs. 51406 lac in the previous year A significant increase in cost of construction has had the impact on Profit before Tax which stood at Rs. 15590 lac as against Rs. 23862 lac in the previous year, The net profit was Rs. 17148 lac as against Rs. 17379 lac in the previous year.

Further, based on the business model adopted by the Company, the increase in loans and advances represents substantial investments by your Company in its subsidiaries, associates, joint ventures, partnerships and other entities towards growing the business to drive higher profits in future and reflects the managements confidence towards strong business growth. The management has always endeavoured to time the real estate cycle during downturn, which has resulted in acquisition of land bank at lower valuation, which will provide stable pipeline of projects in the near future.

Your Company has initiated steps for sustaining growth through cost optimization, process improvement and efficient management of working capital. Your Company is also consolidating on the initiatives taken in previous few quarters.

APPROPRIATIONS :

An amount of Rs. 1890 lac (Rs. 1750 lac) is credited to General Reserves and Rs. 7475 lac (Rs. 2500 lac) is credited to Debenture Redemption Reserve. Out of the amount available for appropriation, your Directors have recommended a dividend of Rs. 2.50/- (25 %) (Previous Year : Rs. 5 per share - 50 %) per equity share of the face value of Rs. 10 each for the year ended March 31, 2011, aggregating Rs. 1818 lac (Previous Year : Rs. 3636 lac). The dividend distribution tax amounts to Rs. 302 lac (Previous Year : Rs. 618 lac),

The dividend payout for the year under review has been formulated in accordance with the Companys policy of striving to maintain a stable dividend payout linked to performance and keeping in view the Companys need for capital to finance its growth plans through internal accruals to the maximum. Your Directors believe that this will subsequently lead to an increase in shareholders value in the long term.

FINANCE :

Issue of Debentures :

During the year under review, the Company issued 2 series of Secured, Redeemable, Non-convertible Debentures amounting to Rs. 200 crores on private placement basis as per details given below :

a. 1,000 - 17 % Secured Redeemable Non-convertible Debentures having face value of Rs. 10,00,000 per debenture aggregating Rs. 100 crores; and

b. 10,000 - 12 % Secured Redeemable Non-convertible Debentures having face value of Rs. 1,00,000 per debenture aggregating Rs. 100 crores, which are redeemable at a premium.

The Company has created Debenture Redemption Reserve in accordance with the applicable provisions of the Companies Act, 1956.

AUDITORS :

M/s. Sudit K, Parekh & Co., Chartered Accountants, the retiring Auditors, have by their letter dated May 28,2011 informed the Company of their decision not to seek reappointment as Joint Auditors of the Company in view of their heavy professional pre-occupation. The Board of Directors, based on the recommendation of the Audit and Compliance Committee, propose the reappointment of M/s. Doshi Doshi & Associates, Chartered Accountants and the appointment of M/s. Haribhakti & Co., Chartered Accountants in place of M/s. Sudit K. Parekh & Co. as Joint Auditors to conduct the audit of the accounts of the Company for the year ending March 31,2012.

M/s. Doshi Doshi & Associates and M/s. Haribhakti & Co. have forwarded their certificates to the Company, stating that their respective reappointment/appointment if made, would be within the limits specified in that behalf under Section 224 (1) (b) of the Companies Act, 1956. The necessary resolution is included in the Notice of the ensuing Annual General Meeting.

AUDITORS REPORT :

In respect of Auditors observations regarding delays in payment of undisputed Works Contract Tax, Income Tax deducted at source and Service Tax, it is hereby clarified that the delays were temporary in nature and all of the outstanding dues have been paid subsequent to the close of the year.

CONSOLIDATED ACCOUNTS :

In terms of Clause 41 of the Listing Agreement executed with the Stock Exchanges, the Consolidated Financial Statements which have been prepared in accordance with Accounting Standards - AS-21, AS-23 and AS-27 as issued by the Institute of Chartered Accountants of India, are annexed to and form part of the Annual Report.

FIXED DEPOSITS :

Total amount of deposits outstanding as on March 31,2011 was Rs. 1134.33 lac. There were no unclaimed/unpaid deposits as at the year end.

INSURANCE:

All the insurable interests of your Company including inventories, buildings are adequately insured.

INFORMATION TECHNOLOGY :

As reported last year, the implementation of ERP package - Oracle e Business Suite 12.0, one of the best ERP worldwide, across the organization, has been completed. This will result in most of the Companys processes integrating into a single system, avoidance of duplication of work, increased efficiency, improved management information systems and better management control of operations and activities. The Project was initiated in January 2010,

During the year under review, the Company initiated measures to integrate the ERP package with external systems such as Customer Relationship Management, Document Management System, Project Management & Execution and E-Recruitment. The Company has also intiated steps to connect all its Nodal site offices to Corporate Office in order to speed up transaction processing, The Company is continuously working and concentrating on IT to get maximum benefit for the organization.

The Companys IT systems are periodically audited to ensure the adequacy of Information Systems control. Information Security and privacy aspects.

SUSTAINABLE DEVELOPMENT AND CARBON FOOTPRINTS :

Your Company is the recipient of Leading the Green Building Movement Award awarded in October 2010 by Indian Green Building Council (IGBC).

The Company shares information pertaining to sustainability-related issues - carbon footprint, green building initiatives, and renewable energy usages in buildings with Carbon Disclosure Project (CDP), a London based international organisation, on an annual basis.

CORPORATE SOCIAL RESPONSIBILITY :

As part of corporate social responsibility, your Company has wholeheartedly supported the circulars on Green Initiative in the Corporate Governance issued by the Ministry of Corporate Affairs allowing paperless compliances by companies by service of notices /documents to the members through electronic mode. Recognising the spirit of the said circular, the Company has forwarded this annual report in electronic form to those members who have consented to the same and have registered their e-mail addresses with the Depositories through their respective Depository Participants.

CORPORATE GOVERNANCE :

Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improve investors protection and maximize long term shareholder value. Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a compliance report on Corporate Governance has been annexed hereto as part of this Annual Report. The Company is in compliance with the requirements and disclosures that have to be made in this regard. The Auditors Certificate on compliance with Corporate Governance requirements by the Company forms part of this Annual Report,

In terms of sub-clause (v) of Clause 49 of the Listing Agreement, a certificate from CEO/CFO, inter alia, confirming the correctness of the financial statements, adequacy of internal control measures and reporting of matters to the Audit and Compliance Committee in terms of the said Clause, is also annexed as a part of this Annual Report.

CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009

The Ministry of Corporate Affairs has issued a set of Voluntary Guidelines on "Corporate Governance and "Corporate Social Responsibility in December 2009. These guidelines are expected to serve as a benchmark for the Corporate Sector and also help them in achieving the highest standard of corporate governance. The guidelines broadly focus on areas such as Board of Directors, responsibilities of the Board, Audit Committee functions, roles and responsibilities, appointment of auditors, mechanism for whistle blower support and compliance with Secretarial Standards.

The Company is substantially in compliance with some of the provisions of these guidelines as reported in the section on Corporate Governance in this Annual Report. The other provisions of these guidelines are being evaluated and your Company will strive to adopt the same in a phased manner.

SUBSIDIARIES :

During the year under review :

1. The following companies became subsidiaries of your Company :

- Ackruti City Magnum Limited

- Merrygold Buildcon Private Limited

- Vega Developers Private Limited (formerly Pure Gold Developers Private Limited)

- Pushpak Healthcare Services Private Limited

2. The following companies ceased to be subsidiaries of your Company :

- Ackruti Center Infotech Limited

- E Commerce Magnum Solution Limited

The total number of subsidiaries as on March 31, 2011 was 33.

There has been no material change in the nature of the business of the subsidiaries. All the subsidiary companies are non- material, non-listed subsidiary companies as defined under Clause 49 of the Listing Agreements entered into with the Stock Exchanges.

The Ministry of Corporate Affairs (MCA) has, vide General Circular No.2/2011 dated February 8, 2011, granted general exemption under Section 212 (8) of the Companies Act, 1956 from attaching the Balance Sheet, the Profit and Loss Account and other documents of the subsidiary companies to the Balance Sheet of the Company. Accordingly, the Audited Statements of Account and the Auditors Report thereon along with the Reports of the Board of Directors of the subsidiary companies are not attached to this Annual Report. As directed in the aforesaid MCA Circular, the summarized financials of all the subsidiary companies have been disclosed in the Consolidated Balance Sheet under the heading "Summary of Financial Statements of Subsidiary Companies which forms part of this Annual Report.

The annual accounts and the related detailed information of these subsidiary companies will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company/its subsidiaries at the registered office of the Company and also at the respective registered offices of the subsidiary companies during working hours between 11.00 a.m. and 1.00 p.m. upto the date of the Annual General Meeting.

DIRECTORS :

Mr. Shailesh V. Haribhakti and Mr. R H. Ravikumar resigned from the Board of Directors of the Company effective March 11,2011 due to their other business commitments.

The Board places on record its sincere appreciation of the invaluable contribution and mature advice provided by Mr. Haribhakti and Mr. Ravikumar during their tenure as Directors of the Company,

At the meeting of the Board of Directors of the Company held on May 16,2011, Mr. Abhijit Datta and Mr. Arvind Kumar Joshi were appointed as Non-Executive Independent Directors to fill the casual vacancies caused by the resignations of Mr. Haribhakti and Mr, Ravikumar respectively.

Pursuant to Section 262 of the Companies Act, 1956 read with Article 140 of the Articles of Association of the Company, Mr. Arvind Kumar Joshi holds office upto the date of the ensuing Annual General Meeting as Mr. P. H. Ravikumar in whose place he has been appointed, would have retired by rotation at the ensuing Annual General Meeting had he not resigned. The Company has received notice from a member under Section 257 of the Companies Act, 1956 along with requisite deposit proposing his appointment as a Director of the Company.

Mr. D. R. Kaarthikeyan and Mr. Shailesh H. Bathiya, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for reappointment.

The brief profiles of Mr. Arvind Kumar Joshi, Mr. D. R. Kaarthikeyan and Mr. Shailesh H. Bathiya as required by Clause 49 of the Listing Agreements have been detailed in the Section on Corporate Governance. Your Directors recommend the appointment of Mr. Arvind Kumar Joshi and reappointment of Mr. D. R. Kaarthikeyan and Mr. Shailesh H. Bathiya as Directors of your Company.

DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, the Directors of the Company, to the best of their knowledge and belief and on the basis of the information and explanations received by them, hereby state and confirm that :

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

(ii) the accounting policies have been selected 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 as at March 31,2011 and of the profit of the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the annual accounts have been prepared on a going concern basis.

AWARDS :

Your Company has been the proud recipient of the following awards and recognition :

a. "Leading the Green Building Movement" awarded by Indian Green Building Council;

b. "Ackruti Gold"- the commercial project of the Company at Bandra Kurla complex has been awarded three management systems certificates by British Standards Institute (BSI) in the following categories :

- Environmental Management System - ISO 14001:2004.

- Occupational Health & Safety Management System - BS OHSAS 18001:2007.

- Integrated Management System - PAS 99 : 2006.

STATUTORY INFORMATION :

Since the Company is not engaged in any manufacturing activity, the other particulars relating to conservation of energy and technology absorption as stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1998 are not applicable. Expenditure incurred in foreign currency amounted to Rs. 132.75 lac. There was no earning in foreign exchange.

Statement pursuant to Section 217 (2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975 as amended is annexed hereto as Annexure - I and forms part of this Annual Report.

GROUP FOR INTER-SE TRANSFER OF SHARES :

As required under Clause 3(i)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, persons constituting "Group" (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from the applicability of the provisions of Regulations 10 to 12 of the aforesaid SEBI Regulations are given in the Statement annexed to and forming part of this Annual Report.

APPRECIATION :

Your Directors would like to express their grateful appreciation and thanks for the valuable co-operation and support received from the Companys bankers,financial institutions,business associates,suppliers,consultants,customers and contractors and shareholders at large during the year under review and look forward to the same in greater measure in the coming years.

The Directors also wish to place on record their appreciation of the unstinted efforts and contributions made by the Management Team and the employees of the Company at all levels.

For and on behalf of the Board

Hemant M. Shah Executive Chairman

Mumbai, May 30, 2011



(Source : World Economic Outlook : Recovery, Risk, and Rebalancing - International Monetary Fund Report)

2Cushman & Wakefield (C&W) India Real estate Investment report 2010 : Riding the Wave - Re-emergence of Indian realty sector,

 
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