Mar 31, 2023
Your Directors have pleasure in presenting the 28th Annual Report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2023.
FINANCIAL HIGHLIGHTS |
(Rs. In million) |
|||
Particulars |
Standalone |
Consolidated |
||
2022-23 |
2021-22* |
2022-23 |
2021-22* |
|
Total Revenue |
34,258.65 |
26,352.24 |
34,024.33 |
26,452.27 |
Operating Expenditure |
29,879.04 |
20,369.65 |
29,405.97 |
20,284.50 |
Earnings before Interest, Depreciation and Amortisation |
4,379.61 |
5,982.59 |
4,618.36 |
6,167.77 |
Depreciation and Amortisation |
638.71 |
678.16 |
678.37 |
718.27 |
Finance Cost |
2,423.80 |
2,993.70 |
2,490.24 |
3,083.25 |
Profit Before Tax |
1,317.10 |
2,310.73 |
1,449.75 |
2,366.25 |
Tax Expenses |
364.21 |
619.25 |
407.70 |
634.35 |
Profit after Tax |
952.89 |
1,691.48 |
1,042.05 |
1,731.90 |
â¢Pursuant to Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, the financial statements for the previous reporting periods were restated. |
BUSINESS AND OPERATIONS
SOBHA primarily operates across the following business verticals:
⢠Real Estate - Development of residential and commercial properties under SOBHA brand name.
⢠Contractual - EPC (Engineering, procurement and construction) contracts catering to external institutional clients.
⢠Manufacturing - Construction sector related production capabilities like Concrete, Glazing, Interiors etc., supporting in-house projects as well servicing external clients.
A summary of completed and ongoing projects as on March 31, 2023 has been provided in the Management Discussion and Analysis Report titled ''Management Report'' which forms a part of the Annual Report.
B. FINANCIAL OVERVIEW Standalone
During financial year 2022-23, the Company had on a standalone basis, earned total revenues of ^34,258.65 million as compared to ^26,352.24 million in the previous year, an increase of 30% y-o-y. The Profit before Tax during the year was ^1,317.10 million as against ?2,310.73 million in the previous year, decreased by 43.03% and Profit after Tax during the year was ^952.89 million as against ^1,691.48 million in the previous year, that is, decreased by 43.67%.
The consolidated revenues of the Company during the financial year 2022-23 were ^34,024.33 million, an increase of 28.62% from the previous year. The Profit before Tax decreased by 38.73% and Profit after
Tax (after considering minority interest) decreased by 39.83% as compared to the financial year 2021-22.
Your Directors propose to transfer ?95.29 million of the current profits to the General Reserve.
The Company aims to follow a consistent dividend pay-out while striving to achieve a trade-off between deployment of internal accruals for growth and the payment of dividend.
The Board of Directors, subject to the approval of the shareholders at the ensuing Annual General Meeting are pleased to recommend a dividend of ? 3.00 per equity share of ? 10 each.
The Dividend Distribution Policy is available on the Company''s website at https://www.sobha.com/wp-content/ uploads/2020/10/153630151720180907.pdf
C. OPERATIONAL OVERVIEW Completed Projects
During the year under review, the Company executed and handed over 5.78 million square feet real estate projects and 0.62 million square feet of contractual projects resulting in an aggregate development of 6.40 million square feet.
The Company has completed construction of 128 million square feet of area since its inception.
Ongoing Projects
The Company currently has real estate projects aggregating 30.60 million square feet of developable area. It has 5.24 million square feet of ongoing contractual projects which are in various stages of construction.
The Company has a geographic footprint in 27 cities across 14 states in India.
SHARE CAPITAL RELATED MATTERS
The authorized share capital of the Company
is ^2,000,000,000 divided into 150,000,000 equity shares of ?10 each and 5,000,000 preference shares of ?100 each. At the beginning of the year under review, the issued, subscribed and fully paid up capital was ^948,458,530 divided into 94,845,853 equity shares of ?10 each. There was no change in the issued, subscribed and fully paid up share capital of the Company during the year under review. Sobha Limited is a public limited company and its equity shares are listed on the National Stock Exchange of India Limited and BSE Limited.
B. CHANGES IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
As on date, the Company has six direct subsidiaries and five step-down subsidiaries. The Company also has an economic interest in a partnership firm which has 6 subsidiaries. During the year under review, there is no change in Subsidiaries, Joint Ventures and Associates of the Company.
BOARD OF DIRECTORS AND ITS COMMITTEES
A. COMPOSITION OF THE BOARD OF DIRECTORS
As on March 31, 2023, the Board of Directors of the Company comprised six Directors of which, four are Non-executive Independent Directors and two are Executive Directors. The composition of the Board of Directors is in compliance with Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and Section 149 of the Companies Act, 2013.
The Company has received necessary declarations from the Independent Directors stating that they meet the criteria of independence as specified in Section 149(6) of the Companies Act, 2013 and Regulation 25(8) of the Listing Regulations.
B. CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Jagadish Nangineni, was appointed as an Additional Director in the capacity of Whole-time Director designated as Managing Director effective April 01, 2022. His appointment was approved by the
shareholders by passing resolutions through postal ballot on June 09, 2022.
Mr. Raman Mangalorkar, was appointed as an Additional Director in the capacity of Non-executive Independent Director effective April 01, 2022. His appointment was approved by the shareholders by passing a resolution through postal ballot on June 09, 2022.
Mr. Ravi PNC Menon, resigned from the position of Whole-time (Executive) Director effective close of March 31, 2023 and would continue as Non-Executive Director and Chairman of the Company with effect from April 01, 2023.
During the year under review, the Board of Directors met five times on the following dates:
1. May 20, 2022
2. August 09, 2022
3. November 14, 2022
4. February 07, 2023
5. March 06, 2023
In accordance with the provisions of the Companies Act, 2013, a separate meeting of the Independent Directors of the Company was held on March 31, 2023.
D. RE-APPOINTMENT OF DIRECTORS RETIRING BY ROTATION
Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Jagadish Nangineni, Director and Managing Director (DIN: 01871780) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The Board of Directors based on the recommendation of Nomination, Remuneration and Governance Committee, has recommended the re-appointment of Mr. Jagadish Nangineni, Director designated as Managing Director, retiring by rotation.
The Notice convening the Annual General Meeting includes the proposal for re-appointment of Mr. Jagadish Nangineni as a Director of the Company. A brief resume of Mr. Jagadish Nangineni has been provided
as an Annexure to the Notice convening the Annual General Meeting. Specific information about the nature of Mr. Jagadish Nangineni''s expertise in specific functional areas and the names of the companies in which he holds directorship and membership/chairmanship of the Board Committees has also been provided in the Notice convening the Annual General Meeting.
In terms of Section 134 (3) (p) read with Articles VII and VIII of Schedule IV of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance and that of its statutory committees - the Audit Committee, Stakeholders'' Relationship Committee, Nomination, Remuneration and Governance Committee and that of the Individual Directors.
The Board assessed the performance and the potential of each of the Independent Directors with a view to maximizing their contribution to the Board. As envisaged by the Act, the Independent Directors reviewed the performance of the Chairman of the Board at a Meeting especially called for that purpose. At the same Meeting, a review of the Executive Directors was also carried out.
F. DIRECTORSâ RESPONSIBILITY STATEMENT
According to the information and explanations obtained, pursuant to Section 134(5) of the Companies Act, 2013, your Directors hereby confirm, that:
a. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;
b. the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c. proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the annual accounts have been prepared on a going concern basis;
e. internal financial controls to be followed by the Company have been laid down and such internal financial controls are adequate and operating effectively; and
f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
AUDIT RELATED MATTERS
The composition of the Audit Committee as on March 31, 2023 was:
1. Mr. Raman Mangalorkar (Independent Director) - Chairman
2. Mr. Jagadish Nangineni (Managing Director) - Member
3. Mr. R V S Rao (Independent Director) -Member
4. Ms. Srivathsala K N (Independent Director) - Member
The Audit Committee was reconstituted at the Board meeting held on November 14, 2022. Mr. RVS Rao ceased to be Chairman of the Audit Committee w.e.f. November 14, 2022 and continued as member of the Committee. Mr. Raman Mangalorkar was appointed as a Member of Audit Committee w.e.f. April 01, 2022 and was appointed as Chairman of the Audit Committee w.e.f. November 14, 2022.
The terms of reference, the powers, roles and responsibilities of the Audit Committee are in accordance with the requirements mandated under Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations.
During the period under review, the advice and suggestions by the Audit Committee
were duly considered and accepted by the Board of Directors. There were no instances of non-acceptance of such recommendations.
At the Twenty Seventh Annual General Meeting held on August 10, 2022 the members appointed M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. 001076N/N500013) as Statutory Auditors of the Company in place of BSR & Co. LLP, retiring statutory auditors, for a period of 5 years from the conclusion of 27th Annual General Meeting till the conclusion of the 32nd Annual General Meeting.
The Statutory Auditors expressed an unmodified opinion in the audit reports with respect to audited financial statements for the financial year ended March 31, 2023. There are no qualifications or adverse remarks in the Statutory Auditors'' Report which require any explanation from the Board of Directors.
Secretarial Audit of the Company for the year ended March 31, 2023 was conducted by Mr. Nagendra D Rao, Practicing Company Secretary. The Secretarial Audit Report issued by Mr. Nagendra D Rao, in accordance with the provisions of Section 204 of the Companies Act, 2013 is provided separately in the Annual Report (Annexure A).
There are no qualifications or adverse remarks in the Secretarial Audit Report which require any explanation from the Board of Directors.
The Cost Audit Report for the financial year 2021-22 was filed with the Ministry of Corporate Affairs, New Delhi within the due date prescribed under the Companies (Cost Records and Audit) Rules, 2014. There are no qualifications or adverse remarks in the Cost Audit Report which require any explanation from the Board of Directors.
The Board of Directors, based on the recommendation of the Audit Committee,
have appointed M/s. Srinivas and Co, Cost Accountants (Firm Registration No: 000278) as the Cost Auditors of the Company for the financial year 2022-23. In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors for financial year 2022-23 is subject to ratification by the shareholders of the Company. The Notice convening the Annual General Meeting contains the proposal for ratification of the remuneration payable to the Cost Auditors.
E. INTERNAL AUDIT AND INTERNAL FINANCIAL CONTROLS
The Internal Audit Team is responsible for assurance with regard to the effectiveness, accuracy and efficiency of the internal control systems and processes in the Company. The Internal Audit Team is independent, designed to add value and empowered to improve the Company''s processes. It helps the Company accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management and control and governance processes.
There are adequate internal financial controls in place with reference to the financial statements. During the year under review, the Internal Audit Team and the Statutory Auditors tested these controls and no significant weakness was identified either in the design or operations of the controls. A report issued by the Statutory Auditors, M/s. Walker Chandiok & Co LLP, on the Internal Financial Controls forms a part of the Annual Report.
POLICY MATTERS
A. NOMINATION AND REMUNERATION POLICY
The Nomination, Remuneration and Governance Committee of the Board of Directors is responsible for recommending the appointment of the Directors and senior management to the Board of Directors of the Company. The Company has in place a Nomination and Remuneration Policy containing the criteria for determining qualifications, positive attributes and independence of a Director and policy
relating to the remuneration for the Directors, Key Managerial Personnel and senior management personnel of the Company. The committee also postulates the methodology for effective evaluation of the performance of Individual Directors, committees of the Board and the Board as a whole which should be carried out by the Board, committee or by an independent external agency and review its implementation and compliance. Nomination and Remuneration Policy is reproduced in Annexure B to this report. The Nomination and Remuneration Policy is also available on the Company''s website at https://www. sobha.com/wp-content/uploads/2022/03/ amended-Nomination-and-Remuneration-Policy.pdf.
B. THE RISK MANAGEMENT FRAMEWORK
The Company has developed and implemented a risk management framework detailing the various internal and external risks faced by the Company and methods and procedures for identifying, monitoring and mitigating such risks. The Board of Directors of the Company has constituted a Risk Management Committee which is entrusted with the task of evaluating, monitoring and reviewing the risk management plan and procedures of the Company. The risk management function is supporting the internal control mechanism of the Company and supplements the internal and statutory audit functions.
There was no offence or fraud that needs to be reported by the Statutory Auditors as per Section 143 (12) of the Companies Act, 2013.
C. CORPORATE SOCIAL RESPONSIBILITY POLICY
Over the past decades, the Company has been actively engaged in delivering maximum value to the society. The Company lays significant emphasis on the economic, social empowerment and sustainable development of the communities around which it operates. The Company believes that its achievements do not refer only to its growth but also spread to society. Accordingly, the Company through Sri Kurumba Educational & Charitable Trust, a public charitable trust, has adopted three village panchayats -Vadakkencherry, Kizhakkencherry and Kannambra in Palakkad district of Kerala, each consisting of two villages, to improve the lifestyle of the people at the grassroots level.
The Corporate Social Responsibility Policy, as formulated by the Corporate Social Responsibility Committee and approved by the Board of Directors is available on the Company''s website at https://www.sobha. com/wp-content/uploads/2023/06/CSR-Policy.pdf
In terms of Section 134 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on the Corporate Social Responsibility activities of the Company is given in Annexure C to this report.
The Company has established a vigil mechanism to promote ethical behaviour in all its business activities. It has in place a mechanism for employees and directors to report any genuine grievances, illegal and unethical behaviour, suspected fraud or violation of laws, rules and regulations or conduct to the Vigilance Officer and the Audit Committee of the Board of Directors. The policy also provides for adequate protection to whistle blower against victimization or discriminatory practices. The policy is available on the Company''s website at https://www.sobha.com/wp-content/ uploads/2020/10/153630159420180907.pdf
During the year under review, the Company did not receive any complaints relating to unethical behaviour, actual or suspected fraud, or violation of the Company''s Code of Conduct from any employee or Directors.
OTHER MATTERS
There were no outstanding debentures as on March 31, 2023.
The Company has not accepted any deposits
in terms of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014, during the year under review. As such, no amount of principal or interest was outstanding as on date of this report.
C. TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND
In compliance with Section 124 of the Companies Act, 2013, the dividends pertaining to financial year 2014-15 which were lying unclaimed with the Company were transferred to the Investor Education and Protection Fund during financial year 2022-23. The details of unclaimed dividends transferred to the Investor Education and Protection Fund has been detailed in the Corporate Governance Report which forms a part of the Annual Report.
As required under Section 124 of the Companies Act, 2013 and the Rules made thereunder, 3,087 equity shares, in respect of which dividend had not been claimed by the shareholders for seven consecutive years or more, were transferred to the Investor Education and Protection Fund during the year under review. The details of the shares and shareholders are available on the Company''s website.
D. SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS/COURTS
During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.
Employee relations continue to be cordial at all levels and in all divisions of the Company. The Board of Directors would like to express its sincere appreciation to all the employees for their continued hard work and steadfast dedication.
As on March 31, 2023, the Company had an organizational strength of 3,406 employees.
Details about the employees are provided in a separate section in the Annual Report.
F. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has adopted a policy on prevention and redressal of sexual harassment at the workplace. Pursuant to the provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has in place an Internal Complaints Committee for prevention and redressal of complaints of sexual harassment of women at the workplace. No complaints were received by the Company during the year under review.
During financial year 2022-23, the Company was conferred with various awards and recognitions, the details of which are given in a separate section in the Annual Report.
In accordance with Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report on corporate governance forms part of this report.
A certificate from Mr. Nagendra D Rao, Practicing Company Secretary affirming compliance with the various conditions of corporate governance in terms of the Listing Regulations is given in Annexure D to this report.
The Company has laid down a Code of Conduct for the Directors as well as for all senior management of the Company. As prescribed under Regulation 17 of the Listing Regulations, 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 financial year 2022-23 forms part of the Corporate Governance Report.
J. DISCLOSURE ON CONFIRMATION WITH SECRETARIAL STANDARDS
The Directors confirm that the Secretarial
Standards issued by the Institute of Company Secretaries of India have been complied with pursuant to the Companies Act, 2013 and the rules made thereunder.
K. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with the requirements of the Listing Regulations, the Management Discussion and Analysis Report titled ''Management Report'' is presented in a separate section in the Annual Report.
In accordance with the Companies Act, 2013, the annual returns in the prescribed format are available under the link https://www.sobha. com/wp-content/uploads/2023/07/2022-2023-Annual-Return-MGT-7.pdf
M. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
In terms of Section 134 of the Companies Act, 2013, the particulars of loans, guarantees and investments made by the Company under Section 186 of the Companies Act, 2013 are detailed in Notes to Accounts of the Financial Statements.
During the year, the Company did not enter into any contract/arrangement/ transaction with a related party which can be considered as material in terms of the policy on related party transactions laid down by the Board of Directors. Related party transactions, if any, pursuant to the Listing Regulations were approved by the Audit Committee from time to time prior to entering into the transactions. The related party transactions undertaken during financial year 2022-23 are detailed in the Notes to Accounts of the Financial Statements.
Further, during the year under review, there were no contracts or arrangements entered with related parties referred to the criteria mentioned in Sub-section (1) of Section 188 of the Companies Act, 2013. Therefore, there is no requirement to report any transaction in Form AOC-2.
O. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
In terms of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the details of energy conservation, technology absorption, foreign exchange earnings and outgoings are given as Annexure E to this report.
P. REMUNERATION DETAILS OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES
Details of remunerations of Directors, Key Managerial Personnel and the statement of employees in receipt of remuneration exceeding the limits prescribed under Section 134 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in Annexure F to this report.
Q. FINANCIAL POSITION AND PERFORMANCE OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
In terms of Section 134 of the Act and Rule 8(1) of the Companies (Accounts) Rules, 2014, the financial position and performance of the subsidiaries is given as an annexure to the Consolidated Financial Statements.
R. MATERIAL CHANGES AND COMMITMENTS
In terms of Section 134(3) (I) of the
Companies Act, 2013, except as disclosed elsewhere in this report, no material changes and commitments which could effect the companies financial position have occurred.
S. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
As required under Regulation 34 of the Listing Regulations, the Business Responsibility and Sustainability Report is given in Annexure G to this report.
T. ADDITIONAL INFORMATION TO SHAREHOLDERS
All important and pertinent investor information such as financial results, investor presentations, press releases, new launches and project updates are made available on the Company''s website (www.sobha.com) on a regular basis.
ACKNOWLEDGEMENTS
The Directors would like to place on record their sincere appreciation of the Company''s customers, vendors and bankers for their continued support to the Company during the year. The Directors also wish to acknowledge the contribution made by employees at all levels for steering the growth of the organization. We thank the Government of India, the state governments and other government agencies for their assistance and cooperation and look forward to their continued support in the future. Finally, the Board would like to express its gratitude to the members for their continued trust, cooperation and support.
Mar 31, 2022
Your Directors have pleasure in presenting the 27th Annual Report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2022.
FINANCIAL HIGHLIGHTS |
(^ In million) |
|||
Particulars |
Standalone |
Consolidated |
||
2021-22 |
2020-21 |
2021-22 |
2020-21 |
|
Total Revenue |
28,089.59 |
21,911.51 |
28,215.75 |
21,904.00 |
Operating Expenditure |
18,599,30 |
14,650,33 |
18,416,06 |
14,346,34 |
Earnings before Interest, Depreciation and Amortisation |
9,490,29 |
7,261,18 |
9,799,69 |
7,557,66 |
Depreciation and Amortisation |
680,42 |
754,96 |
721,09 |
793,67 |
Finance Cost |
7,283.26* |
5,759,58* |
7,496,581 |
6,012,141 |
Profit Before Tax |
1,526.61 |
746.64 |
1,582.02 |
751.85 |
Tax Expenses |
398,09 |
91,25 |
413,19 |
129,09 |
Profit after Tax |
1,128.52 |
655.39 |
1,168.83 |
622.76 |
* On a standalone basis, the Finance cost includes notional interest accrued on advance from customers as per IND AS 115 amounting to ?4,475 million and ?2,515 million, for the year ended 31st March, 2022 and 31st March, 2021 respectively,
There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which the balance sheet relates and the date of this report,
BUSINESS AND OPERATIONS
The Company is operating in the following two segments:
⢠Construction and development of residential and commercial projects
⢠Contractual projects
A summary of completed and ongoing projects as on March 31, 2022 has been detailed in the Management Discussion and
Analysis Report titled ''Management Report'' which forms a part of the Annual Report,
B. FINANCIAL OVERVIEW Standalone
During financial year 2021-22, the Company had on a standalone basis, earned total revenues of ^28,089,59 million as compared to ^21,911.51 million in the previous year, an increase of 28,20 per cent y-o-y, The Profit before Tax during the year was ?1,526,61 million as against ^746,64 million in the previous year, increased by 104,46 per cent and Profit after Tax during the year was ^1,128,52 million as against ^655,39 million in the previous year, that is, increased by 72,19 per cent,
The consolidated revenues of the Company during the financial year 2021-22 were ^28,215.75 million, an increase of 28.82 per cent from the previous year. The Profit before Tax increased by 110.42 per cent and Profit after Tax (after considering minority interest) increased by 87.69 per cent as compared to the financial year 2020-21.
Your Directors propose to transfer ^112.85 million of the current profits to the General Reserve.
The Company aims to follow a consistent dividend pay-out while striving to achieve a trade-off between deployment of internal accruals for growth and the payment of dividend.
The Board of Directors, subject to the approval of the shareholders at the ensuing Annual General Meeting are pleased to recommend a dividend of ^3.00 per equity share of ?10 each.
The Dividend Distribution Policy is available on the Company''s website at: https://www.sobha.com/wp-content/ uploads/2020/10/153630151720180907.pdf
C. OPERATIONAL OVERVIEWCompleted Projects
During the year under review, the Company executed and handed over 4.07 million square feet real estate projects and 3.71 million square feet of contractual projects resulting in an aggregate development of 7.78 million square feet.
The Company has completed construction of 120.08 million square feet of area since its inception.
The Company currently has real estate projects aggregating 29.33 million square feet of developable area. It has 3.29 million square feet of ongoing contractual projects which are in various stages of construction.
The Company has a geographic presence in 27 cities across 14 states in India.
SHARE CAPITAL RELATED MATTERS
The authorized share capital of the Company is ^2,000,000,000 divided into 150,000,000 equity shares of ?10 each and 5,000,000 preference shares of ?100 each. At the beginning of the year under review, the issued, subscribed and fully paid up capital was ^948,458,530 divided into 94,845,853 equity shares of ?10 each. There was no change in the issued, subscribed and fully paid up share capital of the Company during the year under review. Sobha Limited is a public limited company and its equity shares are listed on the National Stock Exchange of India Limited and BSE Limited.
B. CHANGES IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
During the year under review, Sobha Highrise Ventures Private Limited, a wholly owned subsidiary of the Company, disposed off the entire shares of Annalakshmi Land Developers Private Limited (wholly owned subsidiary of Sobha Highrise Ventures Private Limited). With this disposal, the Company has six direct subsidiaries and five step-down subsidiaries. The Company also has economic interest in a partnership firm.
BOARD OF DIRECTORS AND ITS COMMITTEES
A. COMPOSITION OF THE BOARD OF DIRECTORS
As on March 31, 2022, the Board of Directors of the Company comprised six Directors of which, three were Non-Executive Independent Directors and three were Executive Directors. The composition of the Board of Directors is in compliance with Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and Section 149 of the Companies Act, 2013.
The Company has received necessary declarations from the Independent Directors
stating that they meet the criteria of independence as specified in Section 149(6) of the Companies Act, 2013 and Regulation 25(8) of the Listing Regulations.
B. CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review, Mr. Sumeet Jagdish Puri, Non-Executive Independent Director resigned with effect from October 7, 2021.
Mr. Jagdish Chandra Sharma resigned from the position of Director, Vice Chairman and Managing Director and Key Managerial Personnel (KMP) of the Company and ceased holding the said position with effect from April 1, 2022. Mr. T P Seetharam, retired from the position of Director and Whole-time Director effective close of March 31, 2022 and ceased holding the said position effective April 1, 2022. Mr. Jagadish Nangineni was appointed as an Additional Director and Whole-time Director designated as Managing Director and Key Managerial Personnel (KMP) with effect from April 1, 2022. Mr. Raman Mangalorkar was appointed as an Additional Director in the capacity of Non-Executive Independent Director with effect from April 1, 2022.
During the year under review, the Board of Directors met seven times on the following dates:
1. June 12, 2021
2. June 22, 2021
3. August 14, 2021
4. September 18, 2021
5. November 8, 2021
6. February 11, 2022
7. March 14, 2022
In accordance with the provisions of the Companies Act, 2013, a separate meeting of the Independent Directors of the Company was held on March 30, 2022.
D. RE-APPOINTMENT OF DIRECTORS RETIRING BY ROTATION
Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Ravi PNC Menon, Chairman (DIN: 02070036) is liable
to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The Board of Directors based on the recommendation of Nomination, Remuneration and Governance Committee, has recommended the
re-appointment of Mr. Ravi PNC Menon, Director, retiring by rotation.
The Notice convening the Annual General Meeting includes the proposal for
re-appointment of Mr. Ravi PNC Menon as a Director of the Company. A brief resume of Mr. Ravi PNC Menon has been provided as an Annexure to the Notice convening the Annual General Meeting. Specific information about the nature of Mr. Ravi PNC Menon''s expertise in specific functional areas and the name of the companies in which he holds directorship and membership/chairmanship of the Board Committees has also been provided in the Notice convening the Annual General Meeting.
In terms of Section 134 (3) (p) read with Articles VII and VIII of Schedule IV of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance and that of its statutory committees - the Audit Committee, Stakeholders'' Relationship Committee, Nomination, Remuneration and Governance Committee and that of the Individual Directors.
The Board assessed the performance and the potential of each of the Independent Directors with a view to maximizing their contribution to the Board. As envisaged by the Act, the Independent Directors reviewed the performance of the Chairman of the Board at a Meeting especially called for that purpose. At the same Meeting, a review of the Executive Directors was also carried out.
F. DIRECTORSâ RESPONSIBILITY STATEMENT
According to the information and explanations obtained, pursuant to Section 134(5) of the Companies Act, 2013, your Directors hereby confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed along
with proper explanations relating to material departures;
b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) internal financial controls to be followed by the Company have been laid down and such internal financial controls are adequate and operating effectively; and
f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
AUDIT RELATED MATTERS
The composition of the Audit Committee as
on 31st March, 2022 was:
1. Mr. R V S Rao (Independent Director) -Chairman
2. Ms. Srivathsala K N (Independent Director) - Member
3. Mr. J C Sharma (Vice Chairman and Managing Director) - Member
Due to changes in Board of Directors of
the Company, the composition of the Audit
Committee with effect from April 1, 2022 is:
1. Mr. R V S Rao (Independent Director) -Chairman
2. Mr. Jagadish Nangineni (Managing Director)- Member
3. Ms. Srivathsala K N (Independent Director) - Member
4. Mr. Raman Mangalorkar (Independent Director) - Member
The terms of reference, the powers, roles and responsibilities of the Audit Committee are in accordance with the requirements mandated under Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations.
During the period under review, the advice and suggestions by the Audit Committee were duly considered and accepted by the Board of Directors. There were no instances of non-acceptance of such recommendations.
The present Statutory Auditors, Messrs B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), will hold office up to the conclusion of the 27th Annual General Meeting and have not expressed willingness for re-appointment as Statutory Auditors of the Company. The Board of Directors have recommended the appointment of Messrs Walker Chandiok & Co. LLP, Chartered Accountants (Firm registration No. 001076N/N500013), as the Statutory Auditors of the Company for a period of five years from the conclusion of 27th Annual General Meeting till the conclusion of the 32nd Annual General Meeting, subject to approval of the members at the Annual General Meeting.
A resolution seeking approval of appointment of Messrs Walker Chandiok & Co. LLP, Chartered Accountants (Firm registration No. 001076N/N500013), as Statutory Auditors of the Company forms part of the Notice convening the ensuing Annual General Meeting.
The Statutory Auditors expressed an unmodified opinion in the audit reports with respect to audited financial statements for the financial year ended March 31, 2022. There are no qualifications or adverse remarks in the Statutory Auditors'' Report which require any explanation from the Board of Directors.
Secretarial Audit of the Company for the year ended March 31, 2022 was conducted by Mr. Nagendra D Rao, Practicing Company Secretary. The Secretarial Audit Report issued by Mr. Nagendra D Rao, in accordance with the provisions of Section 204 of the Companies Act, 2013 is provided separately in the Annual Report (Annexure A).
There are no qualifications or adverse remarks in the Secretarial Audit Report which require any explanation from the Board of Directors.
The Cost Audit Report for the financial year 2020-21 was filed with the Ministry of Corporate Affairs, New Delhi within the due date prescribed under the Companies (Cost Records and Audit) Rules, 2014. There are no qualifications or adverse remarks in the Cost Audit Report which require any explanation from the Board of Directors.
Based on the recommendations of the Audit Committee, the Board of Directors has re-appointed M/s. Srinivas and Co, Cost Accountants (Firm Registration No: 000278), as the Cost Auditors of the Company for the financial year 2021-22. In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors for financial year 2021-22 is subject to ratification by the shareholders of the Company. The Notice convening the Annual General Meeting contains the proposal for ratification of the remuneration payable to the Cost Auditors.
E. INTERNAL AUDIT AND INTERNAL FINANCIAL CONTROLS
The Internal Audit Team is responsible for assurance with regard to the effectiveness, accuracy and efficiency of the internal control systems and processes in the Company. The Company''s Audit Team is independent, designed to add value and empowered to improve the Company''s processes. It helps the Company accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve
the effectiveness of risk management, control and governance processes.
There are adequate internal financial controls in place with reference to the financial statements. During the year under review, the Internal Audit Department and the Statutory Auditors tested these controls and no significant weakness was identified either in the design or operations of the controls. A report issued by the Statutory Auditors, M/s. B S R & Co. LLP, on the Internal Financial Controls forms a part of the Annual Report.
POLICY MATTERS
A. NOMINATION AND REMUNERATION POLICY
The Nomination, Remuneration and Governance Committee of the Board of Directors is responsible for recommending the appointment of the directors and senior management to the Board of Directors of the Company. The Company has in place a Nomination and Remuneration Policy containing the criteria for determining qualifications, positive attributes and independence of a director and policy relating to the remuneration for the directors, key managerial personnel and senior management personnel of the Company. The Committee also postulates the methodology for effective evaluation of the performance of individual directors, committees of the Board and the Board as a whole which should be carried out by the Board, committee or by an independent external agency and review its implementation and compliance. The Nomination and Remuneration Policy is available on the Company''s website at: https://www.sobha.com/wp-content/ uploads/2022/03/amended-Nomination-and-Remuneration-Policy.pdf Extracts from the policy are reproduced in Annexure B to this report.
B. THE RISK MANAGEMENT FRAMEWORK
The Company has developed and implemented a risk management framework detailing the various internal and external risks faced by the Company and methods and procedures for identifying, monitoring and mitigating such risks. The Board of Directors of the Company has constituted a Risk Management Committee which is entrusted with the task of evaluating, monitoring and reviewing the risk management plan and procedures of the Company. The risk management function is supporting the internal control mechanism of the Company and supplements the internal and statutory audit functions.
There were no offences or fraud that needs to be reported by the Statutory Auditors as per Section 143 (12) of the Companies Act, 2013.
C. CORPORATE SOCIAL RESPONSIBILITY POLICY
The Company believes that its achievements do not refer only to its growth but are also spread to society. Accordingly, under the aegis of its CSR arm, Sri Kurumba Educational and Charitable Trust, it has adopted three village panchayats - Vadakkenchery, Kizhakkenchery and Kannambra in Palakkad district of Kerala, each consisting of two villages, to improve the lifestyle of the people at the grassroots level.
The Corporate Social Responsibility Policy, as formulated by the Corporate Social Responsibility Committee and approved by the Board of Directors is available on the Company''s website at: https://www.sobha. com/wp-content/uploads/2021/07/CSR-Policy.pdf
In terms of Section 134 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on the Corporate Social Responsibility activities of the Company is given in Annexure C to this report.
The Company has established a vigil mechanism to promote ethical behaviour in all its business activities. It has in place a mechanism for employees and directors to report any genuine grievances, illegal and unethical behaviour, suspected fraud or violation of laws, rules and regulations or conduct to the Vigilance Officer and the Audit Committee of the Board of Directors. The policy also provides for adequate
protection to whistle blower against victimization or discriminatory practices. The policy is available on the Company''s website at: https://www.sobha.com/wp-content/ uploads/2020/10/153630159420180907.pdf
During the year under review, the Company did not receive any complaints relating to unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct from any employee or Directors.
OTHER MATTERS
During the year, the Company has issued 500 secured, unlisted, rated Non-convertible Debentures of ^10,00,000 (Rupees ten lakh only) each aggregating to ^50,00,00,000 (Rupees fifty crore only) on a private placement basis.
The Company has not accepted any deposits in terms of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014, during the year under review. As such, no amount of principal or interest was outstanding as on date of this report.
C. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
In compliance with Section 124 of the Companies Act, 2013, the dividends pertaining to financial year 2013-14 which were lying unclaimed with the Company were transferred to the Investor Education and Protection Fund during financial year 2021-22. The details of unclaimed dividends transferred to the Investor Education and Protection Fund has been detailed in the Corporate Governance Report which forms a part of the Annual Report.
As required under Section 124 of the Companies Act, 2013 and the Rules made thereunder, 827 equity shares, in respect of which dividend had not been claimed by the shareholders for seven consecutive years or more, were transferred to the Investor Education and Protection Fund during the year under review. The details of
the shares and shareholders are available on the Company''s website.
D. SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS / COURTS
During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.
Employee relations continue to be cordial at all levels and in all divisions of the Company. The Board of Directors would like to express its sincere appreciation to all the employees for their continued hard work and steadfast dedication.
As on March 31, 2022, the Company had an organizational strength of 3,007 employees.
Details about the employees are provided in a separate section in the Annual Report.
F. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT, 2013
The Company has adopted a policy on prevention and redressal of sexual harassment at the workplace. Pursuant to the provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has in place an Internal Complaints Committee for prevention and redressal of complaints of sexual harassment of women at the workplace. No complaints were received by the Company during the year under review.
During financial year 2021-22, the Company was conferred with various awards and recognitions, the details of which are given in a separate section in the Annual Report.
In accordance with Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,
a separate report on corporate governance forms part of this report.
A certificate from Mr. Nagendra D Rao, Practicing Company Secretary affirming compliance with the various conditions of corporate governance in terms of the Listing Regulations is given in Annexure D to this report.
The Company has laid down a Code of Conduct for the Directors as well as for all senior management of the Company. As prescribed under Regulation 17 of the Listing Regulations, 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 financial year 2021-22 forms part of the Corporate Governance Report.
J. DISCLOSURE ON CONFIRMATION WITH SECRETARIAL STANDARDS
The Directors confirm that the Secretarial Standards issued by the Institute of Company Secretaries of India have been complied with pursuant to the Companies Act, 2013 and the Rules made thereunder.
K. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with the requirements of the Listing Regulations, the Management Discussion and Analysis Report titled ''Management Report'' is presented in a separate section in the Annual Report.
In accordance with the Companies Act, 2013, the annual returns in the prescribed format are available under the link https://www.sobha.com/wp-content/ uploads/2022/07/2021-2022-Annual-Return-MGT-7.pdf
M. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
In terms of Section 134 of the Companies Act, 2013, the particulars of loans, guarantees and investments made by the Company under Section 186 of the
Companies Act, 2013 are detailed in Notes to Accounts of the Financial Statements.
During the year, the Company did not enter into any contract/arrangement/transaction with a related party which can be considered as material in terms of the policy on related party transactions laid down by the Board of Directors. Related party transactions, if any, pursuant to the Listing Regulations were approved by the Audit Committee from time to time prior to entering into the transactions. The related party transactions undertaken during financial year 2021-22 are detailed in the Notes to Accounts of the Financial Statements.
Further, during the year under review, there were no contracts or arrangements entered with related parties referred to the criteria mentioned in Sub-section (1) of Section 188 of the Companies Act, 2013. Therefore, there is no requirement to report any transaction in Form AOC-2.
O. CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
In terms of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the details of energy conservation, technology absorption, foreign exchange earnings and outgoings are given as Annexure E to this report.
P. REMUNERATION DETAILS OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES
Details of remunerations of Directors, Key Managerial Personnel and the statement of employees in receipt of remuneration exceeding the limits prescribed under Section 134 of the Companies Act, 2013 read
with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in Annexure F to this report.
Q. FINANCIAL POSITION AND PERFORMANCE OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
In terms of Section 134 of the Act and Rule 8(1) of the Companies (Accounts) Rules, 2014, the financial position and performance of the subsidiaries is given as an annexure to the Consolidated Financial Statements.
R. BUSINESS RESPONSIBILITY REPORT
As required under Regulation 34 of the Listing Regulations, the Business Responsibility Report is given in Annexure G to this report.
S. ADDITIONAL INFORMATION TO SHAREHOLDERS
All important and pertinent investor information such as financial results, investor presentations, press releases, new launches and project updates are made available on the Company''s website (www.sobha.com) on a regular basis.
ACKNOWLEDGEMENTS
The Directors would like to place on record their sincere appreciation of the Company''s customers, vendors and bankers for their continued support to the Company during the year. The Directors also wish to acknowledge the contribution made by employees at all levels for steering the growth of the organization. We thank the Government of India, the state governments and other government agencies for their assistance and co-operation and look forward to their continued support in the future. Finally, the Board would like to express its gratitude to the members for their continued trust, co-operation and support.
Similarly, on a consolidated basis, the Finance cost includes notional interest accrued on advance from customers as per IND AS 115 amounting to ?4,599 million and ?2,650 million, for the year ended 31st March, 2022 and 31st March, 2021 respectively,
Mar 31, 2018
Dear Members,
The Directors have pleasure in presenting the Twenty Third Annual Report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2018.
Financial Highlights
(Rs. in million)
Particulars |
Standalone |
Consolidated |
||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Total Revenue |
26,496.88 |
22,273.72 |
28,365.81 |
22,847.52 |
Operating Expenditure |
21,220.41 |
17,945.67 |
22,672.81 |
18,264.09 |
Earnings before Interest, Depreciation and Amortisation |
5,276.47 |
4,328.05 |
5,693.00 |
4,583.43 |
Depreciation and Amortisation |
503.95 |
599.88 |
544.00 |
638.23 |
Finance Cost |
1,948.35 |
1,478.62 |
1,977.60 |
1,496.70 |
Profit Before Tax |
2,824.17 |
2,249.55 |
3,171.40 |
2,577.75 |
Tax Expenses |
||||
- Current Tax |
638.05 |
866.45 |
764.46 |
961.16 |
- Deferred Tax Charge / (credit) |
246.71 |
(19.04) |
238.24 |
9.06 |
Profit after Tax |
1,939.41 |
1,402.14 |
2,168.70 |
1,607.53 |
There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which the balance sheet relates and the date of this report.
BUSINESS AND OPERATIONS
A. Business Overview
The Company is operating in the following two segments:
- Construction and development of residential and commercial projects
- Contractual projects
A summary of completed and ongoing projects as on March 31, 2018 has been detailed in the Management Discussion and Analysis Report titled âManagement Reportâforming part of the Annual Report.
B. Financial Overview Standalone
During the Financial Year 2017-18, the Company, has on a standalone basis earned total revenues of Rs.26,496.88 million as compared to Rs.22,273.72 million in the previous year, with an increase of 18.96% y-o-y. The Profit before Tax was Rs.2,824.17 million as against Rs.2,249.55 million during the year, increasing by 25.54% and Profit after Tax was Rs.1,939.41 million as against Rs.1,402.14 million, that is, it increased by 38.32%.
Consolidated
The consolidated revenues of the Company during the financial year 2017-18 were Rs.28,365.81 million, an increase of 24.15% from the previous year. The Profit before Tax increased by 29.52% and Profit after Tax (after considering minority interest) increased by 34.91% as compared to the financial year 2016-17.
Transfer to Reserves
Your Directors proposed to transfer Rs.193.99 million out of the current profits to the General Reserve.
Dividend
The Board of Directors, subject to the approval of the shareholders at the ensuing Annual General Meeting are pleased to recommend a dividend of Rs.7 per equity share of Rs.10 each.
C. Operational Overview Completed Projects
During the year under review, the Company has executed and handed over 2.58 million square feet and 3.22 million square feet of contractual projects resulting in an aggregate development of 5.80 million square feet.
The Company has completed 92.53 million square feet of area since inception.
Ongoing Projects
The Company currently has real estate projects aggregating to 41.90 million square feet of developable area. It has 6.35 million square feet of ongoing contractual projects which are under various stages of construction.
The Company has a geographic presence in 26 cities across 13 states in India.
SHARE CAPITAL RELATED MATTERS
A. Share Capital
The authorized share capital of the Company is Rs.2,000,000,000 divided into 150,000,000 equity shares of Rs.10 each and 5,000,000 preference shares of Rs.100 each. At the beginning of the year under review, the Issued, subscribed and fully paid up capital was Rs.963,046,760 divided into 96,304,676 equity shares of Rs.10 each. Consequent to buy-back of 1,458,823 equity shares during the year, the issued, subscribed and paid-up capital of the Company as on 31st March, 2018 was Rs.948,458,530 divided into 94,845,853 equity shares of Rs.10 each.
Sobha Limited is a public limited Company and its equity shares are listed on National Stock Exchange of India Limited and BSE Limited.
B. Buyback of Equity Shares
The Board, at its meeting held on August 04, 2017 approved the buyback proposal for purchase of upto 1,458,823 equity shares of Rs.10 each (representing 1.5 % of total equity capital) from shareholders of the Company on a proportionate basis by way of tender offer route at a price of Rs.425 per equity share aggregating to an amount not exceeding Rs.62 crore in accordance with the provision of the Companies Act, 2013 and SEBI (Buy Back of Securities) Regulations, 1998. Accordingly, the buy-back of the shares was carried out. 1,458,823 equity shares were bought back with a total cost of Rs.62 crores.
C. Changes in Subsidiaries, Joint Ventures and Associates
Sobha Highrise Ventures Private Limited, a wholly owned subsidiary of the Company, acquired the entire equity shares of Sobha Contracting Private Limited, a private limited company during the year, making Sobha Contracting Private Limited a wholly owned subsidiary of Sobha Highrise Ventures Private Limited. With this acquisition, as on the date of this report, the Company has five direct subsidiaries and one stepdown subsidiary.
BOARD OF DIRECTORS AND ITS COMMITTEES
A. Composition of the Board of Directors
As on 31st March, 2018, the Board of Directors of the Company comprises six Directors of which, four are Non-Executive Independent Directors and two are Executive Directors. The composition of the Board of Directors is in compliance with Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and Section 149 of the Companies Act, 2013.
The Company has received necessary declarations from the Independent Directors stating that they meet the criteria of independence as specified in Section 149(6) of the Companies Act, 2013 and Regulation 16 of the Listing Regulations.
B. Changes in Directors and Key Managerial Personnel
During the year 2017-18, Mr. P Ramakrishnan, Deputy Managing Director resigned from the Board of Directors with effect from April 07, 2017.
During the year under review, there were no changes in the Key Managerial Personnel of the Company.
C. Meetings
During the year under review, the Board of Directors met 4 times on the following dates:
- May 16, 2017
- August 04, 2017
- November 10, 2017
- February 09, 2018
In accordance with the provisions of the Companies Act, 2013, a separate meeting of the Independent Directors of the Company was held on 16th May 2017.
D. Re-appointment of Directors Retiring by Rotation
Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Ravi PNC Menon, Director designated as Chairman (DIN: 02070036) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment. The Board of Directors based on the recommendation of Nomination, Remuneration and Governance Committee, have recommended the re-appointment of
Mr. Ravi PNC Menon, Director designated as Chairman retiring by rotation.
The Notice convening the Annual General Meeting includes the proposal for re-appointment of Mr. Ravi PNC Menon as a Director. A brief resume of Mr. Ravi PNC Menon has been provided as an Annexure to the Notice convening the Annual General Meeting. Specific information about the nature of Mr. Ravi PNC Menonâs expertise in specific functional areas and the names of the companies in which he holds directorship and membership /chairmanship of the Board committees have also been provided in the Notice convening the Annual General Meeting.
E. Performance Evaluation
In terms of Section 134 (3) (p) read with Articles VII and VIII of Schedule IV of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance and that of its statutory committees viz. Audit Committee, Stakeholder Relationship Committee, Nomination, Remuneration and Governance Committee and that of the Individual Directors.
The Board assessed the performance and the potential of each of the Independent Directors with a view to maximise their contribution to the Board. As envisaged by the Act, the Independent Directors reviewed the performance of the Chairman of the Board at a meeting that was convened. At the same meeting, a review of the Executive Directors was also carried out.
F. Directorsâ Responsibility Statement
According to the information and explanations obtained, your Directors hereby confirm pursuant to Section 134(5) of the Companies Act, 2013, that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;
b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) internal financial controls to be followed by the Company have been laid down and such internal financial controls are adequate and were operating effectively; and
f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
AUDIT RELATED MATTERS
A. Audit Committee
The Company has a duly constituted Audit Committee. The composition of the Committee as on 31st March, 2018 was:
1. Mr. R V S Rao (Independent Director) -Chairman
2. Dr. S K Gupta (Independent Director) -Member
3. Mr. Anup Shah (Independent Director) -Member
4. Mr. J C Sharma (Vice Chairman and Managing Director) - Member
The terms of reference, powers, role and responsibilities of the Audit Committee are in accordance with the requirements mandated under Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations.
During the period under review, the advice and suggestions recommended by the Audit Committee were duly considered and accepted by the Board of Directors. There were no instances of non-acceptance of such recommendations.
B. Statutory Auditors
At the Twenty Second Annual General Meeting held on August 04, 2017, members appointed Messrs B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022), as Statutory Auditors of the Company for a period of 5 years from the conclusion of the Twenty Second Annual General Meeting until the conclusion of the Twenty Seventh Annual General Meeting.
The requirement to place the matter relating to appointment of Statutory Auditors for ratification by members at every Annual General Meeting is done away with vide notification dated May 7, 2018 issued by the Ministry of corporate Affairs, Government of India. Accordingly, no resolution is proposed for ratification of appointment of Statutory Auditors, who were appointed in the Annual General Meeting held on August 04, 2017 for a period of 5 years.
The Statutory Auditors expressed an unmodified opinion in the audit reports in respect of the audited financial statements for the financial year ended March 31, 2018. There are no qualifications or adverse remarks in the Statutory Auditorsâ Report which require any explanation from the Board of Directors.
C. Secretarial Audit
Secretarial Audit of the Company for the year ended March 31, 2018 was conducted by Mr. Nagendra D Rao, Practicing Company Secretary. The Secretarial Audit Report issued by Mr. Nagendra D Rao, in accordance with the provisions of Section 204 of the Companies Act, 2013 is provided separately in the Annual Report (Annexure A). There are no qualifications or adverse remarks in the Secretarial Audit Report which require any explanation from the Board of Directors.
D. Cost Audit
The Cost Audit Report for the financial year 2016-17 was filed with the Ministry of Corporate Affairs, New Delhi within the due date prescribed under the Companies (Cost Records and Audit) Rules, 2014. There are no qualifications or adverse remarks in the Cost Audit Report which require any explanation from the Board of Directors.
Based on the recommendations of the Audit Committee, the Board of Directors have re-appointed M/s. Srinivas and Co, Cost Accountants (Firm Registration No: 000278) as the Cost Auditors of the Company for the financial year 2017-18. In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors for the financial year 2017-18 is subject to ratification by the shareholders of the Company. The Notice convening the Annual General Meeting contains the proposal for ratification of the remuneration payable to the Cost Auditors.
E. Internal Audit and Internal Financial Controls
The in-house internal Audit team is responsible for assurance with regard to the effectiveness, accuracy and efficiency of the internal control systems and processes in the Company. The Companyâs Audit team is independent, designed to add value and empowered to improve the Companyâs processes. It helps the Company accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.
There are adequate internal financial controls in place with reference to the financial statements. During the year under review, the Internal Audit Department and the Statutory Auditors tested these controls and no significant weakness was identified either in the design or operations of the controls. A report issued by the Statutory Auditors, M/s. B S R & Co LLP, on the Internal Financial Controls forms part of the Annual Report.
POLICY MATTERS
A. Nomination and Remuneration Policy
The Nomination, Remuneration and Governance Committee of the Board of Directors is responsible for recommending the appointment of the Directors and Senior Management to the Board of Directors of the Company. The Company has in place a Nomination and Remuneration Policy containing the criteria for determining qualifications, positive attributes and independence of a Director and policy relating to the remuneration for the Directors, Key Managerial Personnel and Senior Management Personnel of the Company. The Committee also postulates the methodology for effective evaluation of the performance of Individual Directors, committees of the Board and the Board as a whole which should be carried out by the Board, by the Committee or by an independent external agency and reviews its implementation and compliance. The Nomination and Remuneration Policy is available on the Companyâs website: http://www.sobha.com/investor-relations-downloads-pol.php. Extracts from the policy are reproduced in Annexure B to this report.
B. The Risk Management Framework
The Company has developed and implemented a risk management framework, detailing the various internal and external risks faced by the Company and methods and procedures for identifying, monitoring and mitigation of such risks. The Board of Directors of the Company have constituted a Risk Management Committee, which is entrusted with the task of evaluating, monitoring and reviewing the risk management plan and procedures of the Company. The risk management function is supporting the internal control mechanism of the Company and supplements the internal and statutory audit functions.
C. Corporate Social Responsibility Policy
The Company believes that its achievements do not just refer only to its growth but are also spread to society. Accordingly, under the aegis of its CSR arm, Sri Kurumba Educational & Charitable Trust, it has adopted three village panchayats - Vadakkenchery, Kizhakkenchery and Kannambra in Palakkad district of Kerala, to improve the lifestyle of the people at the grass root level.
The Corporate Social Responsibility Policy, as formulated by the Corporate Social Responsibility Committee and approved by the Board of Directors is available on the Companyâs website at: http://www.sobha.com/investor-relations-downloads-pol.php.
In terms of Section 134 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on the Corporate Social Responsibility activities of the Company is given in Annexure C to this report.
D. Vigil Mechanism
The Company has established a vigil mechanism to promote ethical behaviour in all its business activities. It has in place a mechanism for employees and directors to report any genuine grievances, illegal, unethical behaviour, suspected fraud or violation of laws, rules and regulations or conduct to the Vigilance Officer and the Audit Committee of the Board of Directors. The policy also provides for adequate protection to the whistle blower against victimisation or discriminatory practices. The policy is available on the Companyâs website at: http://www.sobha. com/investor-relations-downloads-pol.php.
During the year under review, the Company did not receive any complaints relating to unethical behaviour, actual or suspected fraud or violation of the Companyâs code of conduct from any employee or Directors.
OTHER MATTERS
A. Debentures
As on 31st March, 2018, the Company has various series of outstanding Secured Redeemable Non-Convertible Debentures aggregating to Rs.2,550,000,000 (Rupees two hundred and fifty five crore). The Company redeemed the debentures to the tune of Rs.700,000,000 (Rupees seventy crore) during the financial year 2017-18. The debentures are listed on BSE Limited. Interest on the said debentures was paid on time as per the relevant provisions of the Companies Act, 2013 and the Listing Regulations. The Company has complied with all the applicable provisions of the Listing Regulations with respect to the said listed debentures.
B. Deposits
The Company has not accepted any deposits in terms of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014, during the year under review. As such, no amount of principal or interest was outstanding as on date of this report.
C. Transfer to Investor Education and Protection Fund
In compliance with Section 124 of the Companies Act, 2013, dividend pertaining to the financial year 2009-10 which was lying unclaimed with the Company was transferred to the Investor Education and Protection Fund during the financial year 2017-18. The details of unclaimed dividend transferred to the Investor Education and Protection Fund are provided in the Corporate Governance Report which forms part of the Annual Report.
As required under Section 124 of the Companies Act, 2013 and the Rules made thereunder, 2,470 equity shares, in respect of which dividend had not been claimed by the shareholders for seven consecutive years or more, were transferred to the Investor Education and Protection Fund during the year under review. The details of the shares and shareholders are available on the Companyâs website.
D. Significant or material orders passed by Regulators / Courts
During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Companyâs operations in future.
E. Human Resources
Employee relations continued to be cordial at all levels and in all divisions of the Company. The Board of Directors would like to express their sincere appreciation to all the employees for their continued hard work and steadfast dedication.
As on March 31, 2018, the Company has an organisational strength of 2,857 employees.
Details of the employees are provided in a separate section of the Annual Report.
F. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has adopted a policy on prevention and redressal of Sexual Harassment at workplace. Pursuant to the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has in place an Internal Complaints Committee for prevention and redressal of complaints of sexual harassment of women at the workplace. No complaints were received by the Company during the year under review.
G. Awards and Recognitions
During the financial year 2017-18, the Company was conferred with various awards and recognitions, the details of which are given in a separate section of the Annual Report.
H. Corporate Governance
In accordance with the Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 201 5, a separate report on corporate governance forms part of this report.
A certificate from Mr. Nagendra D Rao, Practicing Company Secretary affirming compliance with various conditions of Corporate Governance in terms of the Listing Regulations is given in Annexure D to this report.
I. Code of Conduct
The Company has laid down a Code of Conduct for the Directors as well as for senior management of the Company. As prescribed under Regulation 17 of the Listing Regulations, a declaration signed by the Vice Chairman and Managing Director affirming compliance with the Code of Conduct by the Directors and senior management personnel of the Company for financial year 2017-18 forms part of the Corporate Governance Report.
J. Disclosure on Confirmation with Secretarial Standards
The Directors confirm that the Secretarial Standards issued by the Institute of Company Secretaries of India, to be complied pursuant to the Companies Act, 2013 and rules made thereunder, have been duly complied with.
K. Management Discussion and Analysis Report
In accordance with the requirements of the Listing Regulations, the Management Discussion and Analysis Report titled âManagement Reportâis presented in a separate section of the Annual Report.
L. Extract of Annual Return
Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the annual return for the financial year ended March 31, 2018 in MGT 9 is attached as Annexure E to this report.
M. Particulars of Loans, Guarantees and Investments
In terms of Section 134 of the Companies Act, 2013, the particulars of loans, guarantees and investments made by the Company under Section 186 of the Companies Act, 2013 is detailed in Notes to Accounts of the Financial Statements.
N. Related Party Transactions
During the year, the Company did not enter into any contract/arrangement/transaction with a related party which can be considered as material in terms of the policy on related party transactions laid down by the Board of Directors. Related party transactions, if any, pursuant to the Listing Regulations were approved by the Audit Committee from time to time prior to entering into the transactions. The related party transactions undertaken during the financial year 2017-18 are detailed in the Notes to Accounts of the Financial Statements.
Further during the year under review, there were no contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013. Therefore, there is no requirement to report any transaction in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 and the rules made thereunder.
O. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
In terms of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the details of energy conservation, technology absorption, foreign exchange earnings and outgoings are given as Annexure F to this report.
P. Remuneration Details of Directors, Key Managerial Personnel and Employees
Details of remuneration of Directors, Key Managerial Personnel and the statement of employees in receipt of remuneration exceeding the limits prescribed under Section 134 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in Annexure G to this report.
Q. Financial Position and Performance of Subsidiaries, Joint Ventures and Associates
I n terms of Section 134 of the Act and Rule 8(1) of the Companies (Accounts) Rules, 2014, the financial position and performance of the subsidiaries are given as an annexure to the Consolidated Financial Statements.
R. Business Responsibility Report
As required under Regulation 34 of the Listing Regulations, the Business Responsibility Report is given in Annexure H to this report.
S. Additional Information to Shareholders
All important and pertinent investor information such as financial results, investor presentations, press releases, new launches and project updates are made available on the Companyâs website (www.sobha.com) on a regular basis.
ACKNOWLEDGEMENTS
The Directors would like to place on record their sincere appreciation to the Companyâs customers, vendors, and bankers for their continued support to the Company during the year. The Directors also wish to acknowledge the contribution made by employees at all levels for steering the growth of the organisation. We thank the Government of India, the State Governments and other Government agencies for their assistance and cooperation and look forward to their continued support in future. Finally, the Board would like to express its gratitude to the members for their continued trust, co-operation and support.
For and on behalf of the Board of Directors of
Sobha Limited
Place: Bangalore Ravi PNC Menon J C Sharma
Date: May 19, 2018 Chairman Vice Chairman & Managing Director
Mar 31, 2017
Dear Member(s),
We have pleasure in presenting the Twenty Second Annual Report on the business and operations of the Company together with the audited results for the financial year ended March 31, 2017.
Financial Highlights
(Rs. in millions)
Standalone |
Consolidated |
|||
Particulars |
2016-17 |
2015-16 |
2016-17 |
2015-16 |
Total Revenue |
22,273.72 |
19,521.40 |
22,847.52 |
19,908.38 |
Operating Expenditure |
17,945.67 |
15,095.31 |
18,264.09 |
15,136.30 |
Earnings before Interest, Depreciation and Amortization |
4,328.05 |
4,426.09 |
4,583.43 |
4,772.08 |
Depreciation and Amortization |
599.88 |
585.84 |
638.23 |
596.89 |
Finance Cost |
1,478.62 |
1,529.22 |
1,496.70 |
1,636.57 |
Profit Before Tax |
2,249.55 |
2,311.03 |
2,577.75 |
2,568.91 |
Tax Expenses- |
||||
-Current Tax |
866.45 |
255.03 |
961.16 |
360.55 |
-Deferred tax charge / (credit) |
(19.04) |
808.33 |
9.06 |
827.71 |
Profit after Tax |
1,402.14 |
1,247.67 |
1,607.53 |
1,380.65 |
Pursuant to the Listing Regulations, the provisions of the IND-AS Accounting System are applicable to the Company effective Q1 of 2016-17. To that extent, the accounting methods are changed and adjustments have been carried-out wherever necessary. There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the audited results relates to the date of this report.
BUSINESS AND OPERATIONS
A. Business Overview
The Company is operating in the following two segments.
- Construction and development of residential and commercial projects
- Contractual projects
A summary of completed and ongoing projects as on March 31, 2017 has been detailed in the Management Discussion and Analysis Report titled Management Report forming part of the Annual Report.
B. Financial Overview Standalone
During the financial year 2016-17, the Company on a standalone basis, earned total revenues of Rs. 22,273.72 million as compared to Rs. 19,521.40 million in the previous year, an increase of 14.10 percent y-o-y. The Profit before Tax was Rs. 2,249.55 million as against Rs. 2,311.03 million during the year (decreased by 2.66 percent) and Profit after Tax was Rs. 1,402.14 million as against Rs. 1,247.67 i.e. increased by 12.38 percent.
Consolidated
The consolidated revenues of the Company during financial year 2016-17 were Rs. 22,847.52 million, an increase of 14.76 percent from the previous year. The Profit before Tax increased by 0.34 percent and Profit after Tax (after considering minority interest) increased by 16.43 percent as compared to the financial year 2015-16.
Transfer to Reserves
An amount of Rs. 140.21 million is proposed to be transferred out of the current profits to the General Reserve.
Dividend
The Board of Directors, subject to the approval of the shareholders at the ensuing Annual General Meeting are pleased to recommend a dividend of Rs. 2.50 per equity share of Rs. 10 each.
C. Operational Overview Completed Projects
During the year under review, the Company executed and handed over seven real estate projects covering 3.21 Million Square Feet of developable area and 10 contractual projects covering an area of 1.88 million square feet resulting in an aggregate development of 5.09 million square feet.
The Company has completed 118 real estate projects and 288 contractual projects covering about 86.73 million square feet of area since its inception.
Ongoing Projects
The Company currently has 37 ongoing residential projects aggregating 40.55 million square feet of developable area. It has 30 ongoing contractual projects aggregating 8.81 million square feet under various stages of construction.
The Company has a geographic presence in 26 cities and 13 states across India.
Share Capital
The authorized share capital of the Company is Rs. 2,000,000,000 divided into 150,000,000 equity shares of Rs. 10 each and 5,000,000 preference shares of Rs. 100 each. At the beginning of the year under review, the issued, subscribed and fully paid up capital was Rs. 980,638,680 divided into 98,063,868 equity shares of Rs. 10 each. Consequent to buyback of 1,759,192 equity shares during the year under review, the issued, subscribed and paid-up capital of the Company as on 31st March, 2017 was Rs. 963,046,760 divided into 96,304 676 equity shares of Rs. 10 each.
Sobha Limited is a public limited company and its equity shares are listed on the National Stock Exchange of India Limited and on BSE Limited.
Buyback of Equity Shares
The Board, at its meeting held on 19th May, 2016 approved the buyback proposal for purchase of up to 2,275,000 shares of Rs. 10 each (representing 2.32 percent of the total equity capital) by the Company from shareholders on a proportionate basis by way of a tender offer route at a price of Rs. 330 per equity share amounting to an aggregate amount not exceeding Rs. 750.75 million in accordance with the provision of the Companies Act, 2013 and SEBI (Buy Back of Securities) Regulations, 1998. Accordingly, the buy-back of the shares was carried out. In response to the offer given by the Company, 1,759,192 equity shares were tendered and the said shares were bought back with a total cost of Rs. 58.05 crores.
Changes in Directors and Key Managerial Personnel
During the year under review, Mr. M Damodaran, Independent Director resigned from the Board of Directors effective 12th September, 2016. As on 31st March, 2017, the Board comprised of seven Directors of which, three were Executive Directors and four were Non-Executive Independent Directors.
Further, Mr. Kishore Kayarat, Company Secretary and Compliance Officer and a Key Managerial Personnel of the Company resigned from his position effective 10th September, 2016. Mr. Vighneshwar G Bhat joined as Company Secretary and Compliance Officer and Key Managerial Personnel in the position vacated by Mr. Kishore Kayarat.
Changes in Subsidiaries, Joint Ventures and Associates
The shareholders are aware that Sobha Highrise Ventures Private Limited, a joint venture was setup with a private equity player for execution of a specific project âSOBHA Palladianâ at Yamlur, Bangalore. During the year under review, the joint venture partner expressed its willingness to exit from the joint-venture. Accordingly, a valuation of the said joint venture was carried out by a competent independent valuer. Based on the valuation report, 10,300,000 shares of different classes held by the joint venture partner were purchased by Sobha Limited for a total consideration of Rs. 346,780,000/-(Rupees Thirty Four Crores Sixty Seven Lakhs and Eighty Thousand only). Upon purchase of the said shares, Sobha Highrise Ventures Private Limited has become a wholly owned subsidiary of Sobha Limited.
Significant or Material Orders passed by Regulators / Courts
During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in the future.
BOARD OF DIRECTORS AND ITS COMMITTEES
A. Composition of the Board of Directors
As on 31st March, 2017, the Board of Directors of the Company comprised of seven Directors of which four were Non-Executive Independent Directors and three were Executive Directors. The composition of the Board of Directors is in compliance with Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and Section 149 of the Companies Act, 2013.
The Company has received necessary declarations from the Independent Directors stating that they meet the criteria of independence as specified in Section 149(6) of the Companies Act, 2013 and Regulation 16 of the Listing Regulations.
B. Meetings:
During the year under review, the Board of Directors met five times on the following dates:
- May 19, 2016
- August 03, 2016
- September 10, 2016
- November 21, 2016
- February 08, 2017
In accordance with the provisions of the Companies Act, 2013, a separate meeting of the Independent Directors of the Company was held on May 19, 2016.
C. Re-appointment of Director Retiring by Rotation
Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. J C Sharma, Vice Chairman and Managing Director (DIN: 01191608) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The Board, based on the recommendations of the Nomination, Remuneration and Governance Committee, has recommended the re-appointment of Mr. J C Sharma, Vice Chairman and Managing Director, retiring by rotation.
The Notice convening the Annual General Meeting includes the proposal for re-appointment of Mr. J C Sharma as a Director. A brief resume of Mr. J C Sharma has been provided as an Annexure to the Notice convening the Annual General Meeting. Specific information about the nature of Mr. J C Sharma''s expertise in specific functional areas and the names of the companies in which he holds directorship and membership / chairmanship of the Board committees have also been provided in the Notice convening the Annual General Meeting.
D. Re-constitution of Committees of the Board
Consequent to resignation of Mr. M Damodaran, a Member of the Audit Committee, the Audit Committee was re-constituted during the year under review. A detailed note on the Committees of the Board of Directors is given in the Corporate Governance Report forming part of the Annual Report.
E. Performance Evaluation
In terms of Section 134 (3) (p) read with Articles VII and VIII of Schedule IV of the Companies Act, 2013, the Board carried out an annual evaluation of its own performance and that of its statutory committees viz. Audit Committee, Stakeholders Relationship Committee, Nomination, Remuneration and Governance Committee and that of individual Directors.
The Board also assessed the performance and the potential of each of the Independent Directors with a view to maximizing their contribution to the Board. As envisaged by the Act, the Independent Directors at a meeting conducted, reviewed the performance of the Chairman of the Board. At the same meeting, the review of the Executive Directors was also carried out.
F. Directorsâ Responsibility Statement
According to the information and explanations obtained, your Directors hereby confirm pursuant to Section 134(5) of the Companies Act, 2013, that:
a) i n the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) internal financial controls to be followed by the company has been laid down and such internal financial controls are adequate and were operating effectively; and
f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
AUDIT RELATED MATTERS
A. Audit Committee
The Company has a duly constituted Audit Committee. The composition of the Committee as on 31st March, 2017 was:
1. Mr. R V S Rao (Independent Director) - Chairman
2. Dr. S K Gupta (Independent Director) - Member
3. Mr. Anup Shah (Independent Director) - Member
4. Mr. J C Sharma (Vice Chairman and Managing Director) - Member
The terms of reference, powers, role and responsibilities of the Audit Committee are in accordance with the requirements mandated under Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations.
During the period under review, the advice and suggestions recommended by the Audit Committee were duly considered and accepted by the Board of Directors. There were no instances of no acceptance of such recommendations.
B. Statutory Auditors
The Statutory Auditors expressed an unmodified opinion in the Audit Reports in respect of the audited financial statements for the financial year ended March 31, 2017. There are no qualifications or adverse remarks in the Statutory Auditors'' Report which require any explanation from the Board of Directors.
The present Statutory Auditors, Messrs S R BATLIBOI & ASSOCIATES LLP (Firm Registration No. 101049W/E300004) will hold office up to the conclusion of the ensuing Annual General Meeting and are not eligible for re-appointment as Statutory
Auditors of the Company as they are completing the maximum permissible period under the Companies Act, 2013 and the Rules made there under, as the Statutory Auditors of the Company. The Board of Directors have recommended the appointment of Messrs B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022), as new Statutory Auditors of the Company for a period of five years from the conclusion of this Annual General Meeting until the conclusion of the 27th Annual General Meeting, subject to ratification of their appointment by the Members at every Annual General Meeting.
A resolution seeking approval of appointment of Messrs B S R & Co. LLP, Chartered Accountants as Statutory Auditors of the Company forms part of the Notice convening the ensuing Annual General Meeting.
C. Secretarial Audit
Secretarial Audit of the Company for the year ended March 31, 2017 was conducted by Mr. Nagendra D Rao, Practicing Company Secretary. The Secretarial Audit Report issued by Mr. Nagendra D Rao, in accordance with the provisions of Section 204 of the Companies Act, 2013 is provided separately in the Annual Report (Annexure A). There are no qualifications or adverse remarks in the Secretarial Audit Report which require any explanation from the Board of Directors.
D. Cost Audit
The Cost Audit Report for the financial year 201516 was filed with the Ministry of Corporate Affairs, New Delhi within the due date prescribed under the Companies (Cost Records and Audit) Rules, 2014. There are no qualifications or adverse remarks in the Cost Audit Report which require any explanation from the Board of Directors.
Based on the recommendations of the Audit Committee, the Board of Directors re-appointed M/s. Srinivas and Co, Cost Accountants (Firm Registration No: 000278) as the Cost Auditors of the Company for the financial year 2016-17. In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors for financial year 2016-17 is subject to ratification by the shareholders of the Company. The Notice convening the Annual General Meeting contains the proposal for ratification of the remuneration payable to the Cost Auditors.
E. Internal Audit and Internal Financial Controls
The in-house internal audit team is responsible for assurance with regard to the effectiveness and efficiency of internal control systems and processes. The audit team in your Company is independent, designed to add value and improve the Company''s processes. It helps the Company to accomplish its objective by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and the governance process.
There are adequate internal financial controls in place with reference to the financial statements. During the year under review, these controls were tested and no significant weakness was identified either in the design or operation of the controls. A report issued by the Statutory Auditors, M/s. S R Batliboi & Associates LLP, on internal financial controls forms part of the Annual Report.
POLICY MATTERS
A. Nomination and Remuneration Policy
The Nomination, Remuneration and Governance Committee of the Board of Directors is responsible for recommending the appointment of Directors and Senior Management to the Board of Directors of the Company. The Company has in place a Nomination and Remuneration Policy containing the criteria for determining qualifications, positive attributes and independence of a Director and a policy relating to the remuneration for Directors, key managerial personnel and senior management personnel of the Company. The Nomination and Remuneration Policy is available on the website of the Company at http://www.sobha.com/ investor-relations-downloads-pol.php. Extracts from the policy are reproduced in Annexure B to this report.
B. Risk Management Framework
The Company has developed and implemented a risk management framework detailing the various risks faced by the Company and methods and procedures for identification, monitoring and mitigation of such risks. The Board of Directors of the Company have constituted a Risk Management Committee which is entrusted with the task of monitoring and reviewing the risk management plan and procedures of the Company. The risk management function is complimentary to the internal control mechanism of the Company and supplements the audit function.
C. Corporate Social Responsibility Policy
The Corporate Social Responsibility Policy, as formulated by the Corporate Social Responsibility Committee and approved by the Board of Directors is available on the website of the Company at http:// www.sobha.com/investor-relations-downloads-pol.
In terms of Section 1 34 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Annual Report on Corporate Social Responsibility activities of the Company is given in Annexure C to this report.
D. Vigil Mechanism
The Company has established a vigil mechanism to promote ethical behaviour in all its business activities and has in place a mechanism for employees to report any genuine grievances, illegal, unethical behaviour, suspected fraud or violation of laws, rules and regulation or conduct to the Chief Vigilance Officer and the Audit Committee of the Board of Directors. The policy also provides for adequate protection to whistle blower against victimization or discriminatory practices. The Policy is available on the website of the Company at http://www.sobha. com/investor-relations-downloads-pol.php.
During the year under review, the Company did not receive any complaints relating to unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct from any employee or directors.
OTHER MATTERS
A. Debentures
As on 31st March, 2017, the Company had various series of outstanding Secured Redeemable Non-Convertible Debentures aggregating Rs. 3,250,000,000 (Rupees Three Hundred and Twenty Five Crore). The debentures are listed on BSE Limited. Interest on the said debentures was paid on time as per the relevant provisions of the Companies Act, 2013 and Listing Regulations. The Company complied with all the applicable provisions of the Listing Regulations in respect of the said listed debentures.
B. Deposits
The Company did not accept any deposits in terms of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014, during the year under review and there are no outstanding deposits as on date.
C. Transfer to Investor Education and Protection Fund
In compliance with Section 124 of the Companies Act, 2013, the dividends pertaining to financial year 2008-09 which was lying unclaimed with the Company was transferred to the Investor Education and Protection Fund during the financial year 201617. The details of unclaimed dividend transferred to the Investor Education and Protection Fund are detailed in the Corporate Governance Report forming part of the Annual Report.
D. Human Resources
Employee relations continue to be cordial at all levels and in all divisions of the Company. The Board of Directors would like to express their sincere appreciation to all the employees for their continued hard work and steadfast dedication.
As on March 31, 2017, the Company had an organizational strength of 2,698 employees.
Details of the employees are provided in a separate section of the Annual Report.
E. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal ) Act, 2013
Pursuant to the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has in place an Internal Complaints Committee for prevention and redressal of complaints of sexual harassment of women at the work place. There was no case of sexual harassment reported during the year under review.
F. Awards and Recognition
During financial year 2016-17, the Company was conferred with various awards and recognitions, the details of which are given in a separate section of the Annual Report.
G. Corporate Governance
In accordance with Schedule V of the Listing Regulations, a separate report on corporate governance is provided in the Annual Report.
A certificate from Mr. Nagendra D Rao, Practicing Company Secretary affirming compliance with the various conditions of corporate governance in terms of the Listing Regulations is given in Annexure D to this report.
H. Code of Conduct
The Company has laid down a Code of Conduct for the Directors as well as for all employees of the Company. As prescribed under Regulation 17 of the Listing Regulations, a declaration signed by the Vice Chairman and Managing Director affirming compliance with the Code of Conduct by the Directors and senior management personnel of the Company for the financial year 2016-17 forms part of the Corporate Governance Report.
I. Management Discussion and Analysis Report
In accordance with the requirements of the Listing Regulations, the Management Discussion and Analysis Report titled Management Report is presented in a separate section of the Annual Report.
J. Extract of the Annual Return
As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the annual return for the financial year ended March 31, 2017 in MGT 9 is enclosed as Annexure E to this report.
K. Particulars of Loans, Guarantees and Investments
In terms of Section 1 34 of the Companies Act, 2013, the particulars of loans, guarantees and investments made by the Company under Section 186 of the Companies Act, 2013 is detailed in Notes to Accounts of the Financial Statements.
L. Related Party Transactions
During the year, the Company did not enter into any contract / arrangement / transaction with a related party which can be considered as material in terms of the policy on related party transactions laid down by the Board of Directors. Related party transactions, if any, pursuant to the Listing Regulations were approved by the Audit Committee from time to time prior to entering into the transactions. The related party transactions undertaken during the financial year 2016 - 17 are detailed in the Notes to Accounts of the Financial Statements.
M. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
In terms of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the details of energy conservation, technology absorption, foreign exchange earnings and outgoings are given as Annexure F to this Report.
N. Remuneration Details of Directors, Key Managerial Personnel and Employees
The details of the remuneration of Directors, key managerial personnel and the statement of employees in receipt of remuneration exceeding the limits prescribed under Section 134 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in Annexure G to this report.
O. Business Responsibility Report
As required under Regulation 34 of the Listing Regulations, the Business Responsibility Report is given in Annexure H to this report.
P. Financial Position and Performance of Subsidiaries, Joint Ventures and Associates
In terms of Section 134 of the Act and Rule 8(1) of the Companies (Accounts) Rules, 2014, the financial position and performance of subsidiaries are given as an annexure to the Consolidated Financial Statements.
Q. Additional Information to Shareholders
All important and pertinent investor information such as financial results, investor presentations, press releases, new launches and project updates are made available on the Company''s website (www. sobha.com) on a regular basis.
ACKNOWLEDGEMENTS
The Directors would like to place on record their sincere appreciation for the Company''s customers, vendors, and bankers for their continued support to the Company during the year. The Directors also wish to acknowledge the contribution made by employees at all levels for steering the growth of the organization.
We thank the Government of India, the State Governments and other Government Agencies for their assistance and cooperation and look forward to their continued support in the future. Finally, the Board would like to express its gratitude to the members for their continued trust, co-operation and support.
For and on behalf of the Board of Directors of
Sobha Limited
Place: Bangalore Ravi PNC Menon J C Sharma
Date: May 16, 2017 Chairman Vice Chairman & Managing Director
Mar 31, 2016
Dear Member(s),
The have pleasure in presenting the Twenty First Annual Report on the
business and operations of the Company together with the audited
results for the financial year ended March 31, 2016.
(Rs. in million)
Standalone Consolidated
Particulars 2015-16 2014-15 2015-16 2014-15
Total Revenue 18,184.97 24,016.47 18,784.38 24,554.78
Operating
Expenditure 13,554.80 18,811.19 13,616.90 18,232.56
Earnings before
Interest,
Depreciation and
Amortisation 4,630.17 5,205.28 5,167.48 6,322.22
Depreciation and
Amortisation 585.84 688.60 634.01 722.68
Finance Cost 1,529.22 1,522.86 1,724.87 1,883.42
Profit Before Tax 2,515.11 2,993.82 2,808.60 3,716.12
Tax Expenses
-Current Tax 255.03 624.28 359.59 843.46
- Deferred tax
charge / (credit) 890.89 571.89 907.61 626.45
- MAT Credit
Entitlement - (193.20) - (193.20)
Profit after Tax 1,369.19 1,990.85 1,541.40 2,439.41
There have been no material changes and commitments affecting the
financial position of the Company which have occurred between the end
of the financial year of the Company to which the balance sheet relates
and the date of this report.
BUSINESS AND OPERATIONS
A. Business Overview
Sobha Limited is a public limited company with its equity shares listed
on National Stock Exchange of India Limited and BSE Limited. The
authorized share capital of the Company is Rs. 2,000,000,000 divided
into 150,000,000 equity shares of Rs. 10 each and 5,000,000 preference
shares of Rs. 100 each. The issued, subscribed and paid-up capital of
the Company is Rs. 980,638,680 divided into 98,063,868 equity shares of
Rs. 10 each. During the year under review, there was no change in the
capital structure of the Company.
The operations of the Company can be categorised into two main
verticals:
- Construction and development of residential and commercial projects
- Contractual projects
A summary of completed and ongoing projects as on March 31, 2016 has
been detailed in the Management Discussion and Analysis Report titled
as Management Report forming part of the Annual Report.
B. Financial Overview
Standalone
During the financial year 2015-16, the Company has on a standalone
basis, registered total revenues of Rs. 18,184.97 million as compared
to Rs. 24,016.47 million in the previous year, a decrease of 24.28 %
y-o-y. The Profit before Tax and Profit after Tax have declined by
15.99 % and 31.23 % respectively.
Consolidated
The consolidated revenues of the Company during the financial year
2015-16 was Rs. 18,784.38 million, a decrease of 23.50 % from the
previous year. The Profit before Tax was lower by 24.42% and Profit
after Tax (after considering minority interest) by 35.60% as compared
to the financial year 2014-15.
Transfer to Reserves
An amount of Rs. 136.92 million is proposed to be transferred out of
the current profits to the General Reserve.
Dividend
The Board of Directors has, subject to the approval of the shareholders
in the ensuing Annual General Meeting, recommended a dividend of Rs. 2
per equity share of Rs. 10 each.
C. Operational Overview
Completed Projects
During the year under review, the Company has executed and handed over
9 real estate projects covering an area of 5.59 Million Square Feet of
developable area and 16 contractual projects covering an area of 5.51
Million Square Feet resulting in an aggregate development of 11.10
million square feet.
The Company has completed 111 real estate projects and 278 contractual
projects covering about 81.64 million square feet of area since
inception.
Ongoing Projects
The Company currently has 40 ongoing residential projects aggregating
to 41.20 million square feet of developable area. It has 27 ongoing
contractual projects aggregating to 8.07 million square feet under
various stages of construction.
The Company has a geographic presence in 25 cities and 13 states across
India.
BUYBACK OF EQUITY SHARES
The Board of Directors at their meeting held on May 19, 2016, have
approved a buyback proposal for purchase by the Company of up to
2,275,000 shares of Rs. 10 each (representing 2.32% of total equity
capital) from shareholders of the Company on a proportionate basis by
way of a tender offer route at a price of Rs. 330 per equity share for
an aggregate amount not exceeding Rs. 750.75 million in accordance with
the provision of the Companies Act, 2013 and SEBI (Buy Back of
Securities) Regulations, 1998.
CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review, there were no changes in the directors
and key managerial personnel of the Company.
CHANGES IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
During the year under review, there were no changes in subsidiaries,
joint ventures and associates of the Company.
SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS / COURTS
During the year under review, there were no significant or material
orders passed by the regulators or courts or tribunals impacting the
going concern status and Company''s operations in future.
BOARD OF DIRECTORS AND ITS COMMITTEES
A. Composition of the Board of Directors
As on date, the Board of Directors of the Company comprises of eight
Directors of which five are Non- Executive Independent Directors. The
composition of the Board of Directors is in compliance with Clause 49
of the Listing Agreement / Regulation 17 of SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 and Section 149 of the
Companies Act, 2013.
The Company has received necessary declarations from the Independent
Directors stating that they meet the criteria of independence as
specified in Section 149(6) of the Companies Act, 2013 and Clause 49 of
the Listing Agreement / Regulation 16 of Listing Regulations.
B. Meetings:
During the year under review, the Board of Directors met 4 times on the
following dates
- May 12, 2015
- August 07, 2015
- November 13, 2015
- February 05, 2016
In accordance with the provisions of the Companies Act, 2013, a
separate meeting of the Independent Directors of the Company was held
on May 11, 2015.
C. Appointment of Director
The term of office of Mr. Ravi PNC Menon, Chairman (DIN: 02070036) will
cease at the close of the financial year 2016-17 and he is eligible for
re-appointment. The Board of Directors based on the recommendation of
Nomination, Remuneration and Governance Committee, have approved the
reappointment of Mr. Ravi PNC Menon as Chairman of the Company for a
further period of five years subject to the approval of the members in
the ensuing Annual General Meeting.
D. Re-appointment of Director Retiring by Rotation
In terms of Section 152 of the Companies Act, 2013, Mr. J C Sharma,
Vice Chairman and Managing Director (DIN: 01191608) is liable to retire
by rotation at the ensuing Annual General Meeting and being eligible
offers himself for re-appointment. The Board of Directors based on the
recommendation of Nomination, Remuneration and Governance Committee,
have recommended the re-appointment of Mr. J C Sharma, Vice Chairman
and Managing Director, retiring by rotation.
The Notice convening the Annual General Meeting includes the proposals
for appointment / re- appointment of the Directors. Brief resumes of
the Directors proposed to be appointed / re-appointed have been
provided as an Annexure to the Notice convening the Annual General
Meeting. Specific information about the nature of their expertise in
specific functional areas and the names of the companies in which they
hold directorship and membership / chairmanship of the Board Committees
have also been included.
E. Committees of the Board
During the year under review, there were no changes in the composition
of the Committees of the Board. A detailed note on the Committees of
the Board of Directors is given in the Corporate Governance Report
forming part of the Annual Report.
F. Performance Evaluation
Pursuant to the provisions of Section 134 (3) (p) read with Articles
VII and VIII of Schedule IV of the Companies Act, 2013, the Board
undertook an evaluation of itself and its committees. The Board,
excluding the independent director being evaluated, also assessed the
performance and the potential of each of the independent directors with
a view to maximising their contribution to the Board. As contemplated
by the Act, the independent directors at a meeting conducted a review
of the performance of the Chairman after taking into account the views
of the non-executive members of the Board. At the same meeting, the
review of the executive directors was also carried out.
The process put in place by the Board, in accordance with the Companies
Act, 2013 and the relevant provisions of the Listing Agreement /
Listing Regulations, is aimed at improving the performance of the
Board, its committees and its members.
G. Directors'' Responsibility Statement
In terms of the requirements of Section 134(5) of the Companies Act,
2013, we, on behalf of the Board of Directors, hereby confirm that:
a) In the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
b) the directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the company at the end of the financial year and of the profit of the
company for that period;
c) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the company and for preventing and
detecting fraud and other irregularities;
d) the annual accounts has been prepared on a going concern basis; and
e) internal financial controls to be followed by the company has been
laid down and such internal financial controls are adequate and were
operating effectively.
f) proper systems have been devised to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
AUDIT RELATED MATTERS
A. Audit Committee
The powers, role and terms of reference of the Audit Committee are in
consonance with the requirements mandated under Section 177 of the
Companies Act, 2013 and Clause 49 of the Listing Agreement / Regulation
18 of Listing Regulations. The Audit Committee comprises of the
following members:
1. Mr. R V S Rao (Independent Director) - Chairman
2. Mr. M Damodaran (Independent Director) - Member
3. Dr. S K Gupta (Independent Director) - Member
4. Mr. Anup Shah (Independent Director) - Member
5. Mr. J C Sharma (Vice Chairman and Managing Director) - Member
During the period under review, the suggestions 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.
B. Statutory Auditors
At the Annual General Meeting of the Company held on July 11, 2014,
S.R. Batliboi & Associates LLP (Firm Registration Number
101049W/E300004) were re-appointed as the Statutory Auditors of the
Company for a period of 3 years which is subject to annual ratification
by the members of the Company in terms of Section 139 of the Companies
Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014.
The members may ratify the appointment of S.R. Batliboi & Associates
LLP as the Statutory Auditors of the Company for the financial year
2016-17.
There are no qualifications or adverse remarks in the Statutory
Auditors'' Report which require any explanation from the Board of
Directors. The Statutory Auditors have expressed an unmodified opinion
in the audit reports in respect of the audited financial statements for
the financial year ended March 31, 2016.
C. Secretarial Audit
The Secretarial Audit Report for the year ended March 31, 2016 issued
by Mr. Nagendra D Rao, Practicing Company Secretary in accordance with
the provisions of Section 204 of the Companies Act, 2013 is provided
separately in the Annual Report. There are no qualifications or
adverse remarks in the Secretarial Audit Report which require any
explanation from the Board of Directors.
D. Cost Audit
The Cost Audit Report for the financial year 2014- 15 was filed with
the Ministry of Corporate Affairs, New Delhi within the due date
prescribed under The Companies (Cost Records and Audit) Rules, 2014.
There are no qualifications or adverse remarks in the Cost Audit Report
which require any explanation from the Board of Directors.
Based on the recommendations of the Audit Committee, the Board of
Directors have re- appointed M/s. Srinivas and Co, Cost Accountants
(Firm Registration No: 000278) as the Cost Auditors of the Company for
the financial year 2015-16. In terms of Rule 14 of the Companies (Audit
and Auditors) Rules, 2014, the remuneration payable to the Cost
Auditors for the financial year 2015-16 is subject to ratification by
the shareholders of the Company. The Notice convening the Annual
General Meeting contains the proposal for ratification of the
remuneration payable to the Cost Auditors.
E. Internal Financial Controls
There are adequate internal financial controls in place with reference
to the financial statements. During the year under review, these
controls were tested and no significant weakness was identified either
in the design or operation of the controls.
POLICY MATTERS
A. Nomination and Remuneration Policy
The Nomination, Remuneration and Governance Committee of the Board of
Directors has formulated a Nomination and Remuneration Policy
containing the criteria for determining qualifications, positive
attributes and independence of a director and policy relating to the
remuneration for the directors, key managerial personnel and senior
management personnel of the Company. The Nomination and Remuneration
Policy is available on the website of the Company at
http://www.sobha.com/investor- relations-downloads-pol.php and relevant
extracts from the Policy are reproduced in Annexure A to this report.
B. Risk Management Framework
The Company has developed and implemented a risk management framework
detailing the various risks faced by the Company and methods and
procedures for identification, monitoring and mitigation of such risks.
The Board of Directors of the Company have constituted a Risk
Management Committee which is entrusted with the task of monitoring and
reviewing the risk management plan and procedures of the Company. The
risk management function is complimentary to the internal control
mechanism of the Company and supplements the audit function.
C. Corporate Social Responsibility Policy
The Corporate Social Responsibility Policy, as formulated by the
Corporate Social Responsibility Committee and approved by the Board of
Directors is available on the website of the Company at http://www.
sobha.com/investor-relations-downloads-pol.php.
In terms of Section 134 of the Companies Act, 2013 read with The
Companies (Corporate Social Responsibility Policy) Rules, 2014, the
annual report on Corporate Social Responsibility activities of the
Company is given in Annexure B to this report.
D. Vigil Mechanism
The Company has established a vigil mechanism to promote ethical
behaviour in all its business activities and has in place a mechanism
for employees to report any genuine grievances, illegal, unethical
behaviour, suspected fraud or violation of laws, rules and regulation
or conduct to the Chief Vigilance Officer and the Audit Committee of
the Board of Directors. The Policy also provides for adequate
protection to the whistle blower against victimisation or
discriminatory practices. The Policy is available on the website of the
Company at http://www.sobha. com/investor-relations-downloads-pol.
php.
OTHER MATTERS
A. Debentures
During the year under review, the Company has issued various Secured
Redeemable Non-Convertible Debentures aggregating to Rs. 3,250,000,000
(Rupees Three Hundred and Twenty Five Crores) on private placement
basis in multiple tranches.
B. Deposits
The Company has not accepted any deposits in terms of Chapter V of the
Companies Act, 2013 read with the Companies (Acceptance of Deposit)
Rules, 2014, during the year under review and there are no outstanding
deposits as on date.
C. Transfer to Investor Education and Protection Fund
In compliance of Section 205C of the Companies Act, 1956, the dividends
pertaining to the financial year 2007-08 which were lying unclaimed
with the Company was transferred to the Investor Education and
Protection Fund during the financial year 2015- 16. The details of
unclaimed dividend transferred to the Investor Education and Protection
Fund has been detailed in the Corporate Governance Report forming part
of the Annual Report.
D. Human Resources
Employee relations continue to be cordial and harmonious at all levels
and in all divisions of the Company. The Board of Directors would like
to express their sincere appreciation to all the employees for their
continued hard work and steadfast dedication.
As a part of the policy for Prevention of Sexual Harassment in the
organisation, the Company has in place an Internal Complaints Committee
for prevention and redressal of complaints of sexual harassment of
women at work place in accordance with The Sexual Harassment of Women
at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 and
relevant rules thereunder. No complaints were received by the Committee
during the period under review.
As on March 31, 2016, the Company has an organisational strength of
2,724 employees.
A separate section on the Employees is provided in the Annual Report.
E. Awards and Recognition
During the financial year 2015-16, the Company was bestowed with
various awards and recognitions, the details of which are given in a
separate section of the Annual Report.
F. Corporate Governance
A certificate from Mr. Nagendra D Rao, Practicing Company Secretary
affirming compliance with the various conditions of Corporate
Governance in terms of the Listing Regulations is given in Annexure C
to this report.
A detailed report on Corporate Governance forms part of the Annual
Report.
G. Code of Conduct
As prescribed under Clause 49 of the Listing Agreement / Regulation 17
of the Listing Regulations, a declaration signed by the Vice Chairman
and Managing Director affirming compliance with the Code of Conduct by
the Directors and senior management personnel of the Company for the
financial year 2015-16 forms part of the Corporate Governance Report.
H. Management Discussion and Analysis Report
In accordance with the requirements of the Listing Agreement / Listing
Regulations, the Management Discussion and Analysis Report titled as
Management Report is presented in a separate section of the Annual
Report.
I. Extract of Annual Return
In terms of Section 134 of the Companies Act, 2013 read with Rules
12(1) of the Companies (Management and Administration) Rules, 2014, the
extract of the Annual Return of the Company for the financial year
2015-16 is provided in Annexure D to this report.
J. Particulars of Loans, Guarantees and Investments
In terms of Section 134 of the Companies Act, 2013, the particulars of
loans, guarantees and investments given by the Company under Section
186 of the Companies Act, 2013 is detailed in Notes to Accounts of the
Financial Statements.
K. Related Party Transactions
During the year, the Company has not entered into any contract /
arrangement / transaction with a related party which can be considered
as material in terms of the policy on related party transactions laid
down by the Board of Directors. The related party transactions
undertaken during the financial year 2015 - 16 are detailed in Notes to
Accounts of the Financial Statements.
L. Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
In terms of Section 134 of the Companies Act, 2013 read with Rule 8(3)
of the Companies (Accounts) Rules, 2014, the particulars of
conservation of energy, technology absorption, and foreign exchange
earnings and outgo are set out in Annexure E to this report.
M. Remuneration Details of Directors, Key Managerial Personnel and
Employees
The details of remuneration of directors, key managerial personnel and
the statement of employees in receipt of remuneration exceeding the
limits prescribed under Section 134 of the Companies Act, 2013 read
with Rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 has been provided in Annexure F to
this report.
N. Financial Position and Performance of Subsidiaries, Joint Ventures
and Associates
In terms of Section 134 of the Act and Rule 8(1) of the Companies
(Accounts) Rules, 2014, the financial position and performance of
subsidiaries are given as an Annexure to the Consolidated Financial
Statements.
O. Additional Information to Shareholders
All important and pertinent investor information such as financial
results, investor presentations, press releases, new launches and
project updates are made available on the Company''s website (www.
sobha.com) on a regular basis.
ACKNOWLEDGEMENTS
The Directors would like to place on record their sincere appreciation
to the Company''s customers, vendors, and bankers for their continued
support to the Company during the year. The Directors also wish to
acknowledge the contribution made by employees at all levels for
steering the growth of the organisation. We thank the Government of
India, the State Governments and other government agencies for their
assistance and cooperation and look forward to their continued support
in future. Finally, the Board would like to express its gratitude to
the members for their continued trust, co-operation and support.
For and on behalf of the Board of Directors of
Sobha Limited
Place: Bangalore Ravi PNC Menon J C Sharma
Date: May 19,2016 Chairman Vice Chairman & Managing Director
Mar 31, 2015
Dear Member(s),
We have pleasure in presenting the Twentieth Annual Report on the
business and operations of the Company together with the audited
results for the financial year ended March 31, 2015.
(Rs. in million)
Standalone Consolidated
Particulars 2014-15 2013-14 2014-15 2013-14
Total Revenue 24,016.47 21,287.66 24,554.78 21,837.63
Operating Expenditure 18,811.19 16,126.54 18,232.56 15,708.45
Earnings before Interest, 5,205.28 5,161.12 6,322.22 6,129.18
Depreciation and
Amortisation
Depreciation and 688.60 655.84 722.68 689.92
Amortisation
Finance Cost 1,522.86 1,368.65 1,883.42 1,734.44
Profit before tax 2,993.82 3,136.63 3,716.12 3,704.82
Tax Expenses
* Current Tax 624.28 699.55 843.46 996.28
* Deferred tax charge 571.89 371.66 626.45 371.66
/ (credit)
* MAT Credit Entitlement (193.20) - (193.20) -
profit after tax 1,990.85 2,065.42 2,439.41 2,336.88
There have been no material changes and commitments affecting the
financial position of the Company which have occurred between the end
of the financial year of the Company to which the balance sheet relates
and the date of this report.
Business and Operations
A. Business Overview
Sobha Limited is a public limited company with its equity shares listed
on National Stock Exchange of India Limited and the Bombay Stock
Exchange Limited. The authorized share capital of the Company is Rs.
2,000,000,000 divided into 150,000,000 equity shares of Rs. 10 each and
5,000,000 preference shares of Rs. 100 each. The issued, subscribed and
paid-up capital of the Company is Rs. 980,638,680 divided into
98,063,868 equity shares of Rs. 10 each. During the year under review,
there was no change in the capital structure of the Company.
The operations of the Company can be categorised into two main
verticals:
* Construction and development of residential and commercial projects
* Contractual projects
A summary of completed and ongoing projects as on March 31, 2015 has
been detailed in the Management Discussion and Analysis Report titled
as Management Report forming part of the Annual Report.
B. Financial Overview Standalone
During the financial year 2014-15, the Company has on a standalone
basis, registered total revenues of Rs. 24,016.47 million as compared
to Rs. 21,287.66 million in the previous year, an increase of 12.82%
y-o-y. The Profit before Tax and Profit after Tax have declined by
4.55% and 3.61% respectively.
Consolidated
The consolidated revenues of the Company during the financial year
2014-15 was Rs. 24,554.78 million, a growth of 12.44% from the previous
year. The Profit before Tax was higher by 0.31% and Profit after Tax
(after considering minority interest) by 1.26% as compared to the
financial year 2013-14.
Transfer to Reserves
An amount of Rs. 199 million is proposed to be transferred out of the
current profits to the General Reserve.
Dividend
The Board of Directors has, subject to the approval of the shareholders
in the ensuing Annual General Meeting, recommended a dividend of Rs.
7.00 per equity share of Rs. 10 each.
C. Operational Overview Completed Projects
During the year under review, the Company has executed and handed over
10 real estate projects covering an area of 4.36 million square feet
and 15 contractual projects covering an area of 3.25 million square
feet resulting in an aggregate development of 7.61 million square feet.
The Company has completed 102 real estate projects in 5 cities and 262
contractual projects in 24 cities covering overall 70.54 million square
feet of area since inception.
Ongoing Projects
The Company currently has 48 ongoing residential projects located in 8
cities aggregating to 41.81 million square feet of developable area. It
has 27 ongoing contractual projects located in 9 cities aggregating to
9.31 million square feet under various stages of construction.
The Company has a geographic presence in 24 cities and 13 states across
India.
Change in the name of the Company
The name of the Company was changed from ''Sobha Developers Limited'' to
''Sobha Limited'' with effect from August 18, 2014. There was no change
in the nature of business of the Company on account of the change in
name.
Changes in directors and Key Managerial Personnel
During the year under review, Dr. Punita Kumar-Sinha (DIN: 05229262)
was appointed as an Additional Director in the capacity of a Non -
Executive Independent Director for a consecutive term of five years
with effect from October 06, 2014.
During the year under review, Mr. Ganesh Venkataraman resigned from the
position of Chief Financial Officer of the Company. Mr. Subhash Mohan
Bhat was appointed as the Chief Financial Officer with effect from
February 16, 2015.
Changes in Subsidiaries, Joint Ventures and Associates
During the year under review, Sobha Nandambakkam Developers Limited
(Formerly Sobha Nandambakkam Developers Private Limited and Tirur
Cybercity Developers Private Limited) and Sobha Tambaram Developers
Limited (Formerly Sobha Tambaram Developers Private Limited and
Megatech Software Private Limited) became wholly-owned subsidiaries of
the Company within the meaning of Section 2(87) of the Companies Act,
2013 with effect from March 16, 2015.
Significant or Material Orders Passed by Regulators / Courts
During the year under review, there were no significant or material
orders passed by the regulators or courts or tribunals impacting the
going concern status and Company''s operations in future.
Board of directors and its Committees
A. Composition of the Board of directors
As on date, the Board of Directors of the Company comprises eight
Directors of which five are Non- Executive Independent Directors. The
composition of the Board of Directors is in compliance with Clause 49
of the Listing Agreement and Section 149 of the Companies Act, 2013.
The Company has received necessary declarations from the Independent
Directors stating that they meet the criteria of independence as
specified in Section 149(6) of the Companies Act, 2013 and Clause 49 of
the Listing Agreement.
B. Meetings
During the year under review, the Board of Directors met 4 times on the
following dates
* May 22, 2014
* August 08, 2014
* November 12, 2014
* February 12, 2015
In accordance with the provisions of the Companies Act, 2013, a
separate meeting of the Independent Directors of the Company was held
on February 12, 2015.
C. Appointment of Director
In terms of Section 152 of the Companies Act, 2013, Dr. Punita
Kumar-Sinha (DIN: 05229262) who was appointed as an Additional Director
in the capacity of a Non - Executive Independent Director for a
consecutive term of five years commencing from October 06, 2014 holds
office up to the ensuing Annual General Meeting. Being eligible, Dr.
Punita Kumar-Sinha offers herself for appointment as a Director of the
Company in the capacity of a Non - Executive Independent Director. The
Board of Directors based on the recommendation of Nomination,
Remuneration and Governance Committee, have recommended the appointment
of Dr. Punita Kumar-Sinha as a Non - Executive Independent Director of
the Company.
D. Re-appointment of Director Retiring by Rotation
In terms of Section 152 of the Companies Act, 2013, Mr. Ravi PNC Menon,
Chairman (DIN: 02070036) is liable to retire by rotation at the ensuing
Annual General Meeting and being eligible offers himself for
re-appointment. The Board of Directors based on the recommendation of
Nomination, Remuneration and Governance Committee, have recommended the
re-appointment of Mr. Ravi PNC Menon, Chairman, retiring by rotation.
The Notice convening the Annual General Meeting includes the proposals
for appointment / re-appointment of the Directors. Brief resumes of the
Directors proposed to be appointed / re-appointed have been provided as
an Annexure to the Notice convening the Annual General Meeting.
Specific information about the nature of their expertise in specific
functional areas and the names of the companies in which they hold
directorship and membership / chairmanship of the Board Committees, as
stipulated under Clause 49 of the Listing Agreement, have also been
included.
E. Committees of the Board
During the year under review, the Nomination, Remuneration and
Governance Committee of the Board of Directors was reconstituted. Dr. S
K Gupta, Independent Director and Mr. Ravi PNC Menon, Chairman were
inducted as members and Mr. J C Sharma resigned from the membership of
the Committee. The terms of reference of the Committee were aligned
with the requirements of Clause 49 of the Listing Agreement and Section
178 of the Companies Act, 2013.
The terms of reference of Audit Committee and Stakeholders Relationship
Committee were also aligned with the requirements of Clause 49 of the
Listing Agreement and the Companies Act, 2013.
A detailed note on the Committees of the Board of Directors is given in
the Corporate Governance Report forming part of the Annual Report.
F. Performance Evaluation
Pursuant to the provisions of Section 134 (3) (p) read with Articles
VII and VIII of Schedule IV of the Companies Act, 2013, the Board
undertook an evaluation of itself and its committees. The Board,
excluding the independent director being evaluated, also assessed the
performance and the potential of each of the independent directors with
a view to maximising their contribution to the Board. As contemplated
by the Act, the independent directors at a meeting conducted a review
of the performance of the Chairman after taking into account the views
of the non-executive members of the Board. At the same meeting, the
review of the executive directors was also carried out.
The process put in place by the Board, in accordance with the Companies
Act, 2013 and the relevant provisions of the Listing Agreement, is
aimed at improving the performance of the Board, its committees and its
members.
G. Directors'' Responsibility Statement
In terms of the requirements of Section 134(5) of the Companies Act,
2013, we, on behalf of the Board of Directors, hereby confirm that:
a) in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
b) the directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the company at the end of the financial year and of the profit of the
company for that period;
c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern
basis; and
e) the directors had laid down internal financial controls to be
followed by the company and such internal financial controls are
adequate and were operating effectively.
f) the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
Audit Related Matters
A. Audit Committee
The powers, role and terms of reference of the Audit Committee are in
consonance with the requirements mandated under Section 177 of the
Companies Act, 2013 and Clause 49 of the Listing Agreement. The Audit
Committee comprises of the following members:
1. Mr. R V S Rao (Independent Director) - Chairman
2. Mr. M Damodaran (Independent Director) - Member
3. Dr. S K Gupta (Independent Director) - Member
4. Mr. Anup Shah (Independent Director) - Member
5. Mr. J C Sharma (Vice Chairman and - Member
Managing Director)
During the period under review, the suggestions 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.
B. Statutory Auditors
At the Annual General Meeting of the Company held on July 11, 2014,
S.R. Batliboi & Associates LLP (Firm Registration Number 101049W) were
re- appointed as the Statutory Auditors of the Company for a period of
3 years which is subject to annual ratification by the members of the
Company in terms of Section 139 of the Companies Act, 2013 read with
the Companies (Audit and Auditors) Rules, 2014. The members may ratify
the appointment of S.R. Batliboi & Associates LLP as the Statutory
Auditors of the Company for the financial year 2015-16.
There are no qualifications or adverse remarks in the Statutory
Auditors'' Report which require any explanation from the Board of
Directors.
C. Secretarial Audit
The Secretarial Audit Report for the year ended March 31, 2015 issued
by Mr. Nagendra D Rao, Practicing Company Secretary in accordance with
the provisions of Section 204 of the Companies Act, 2013 is provided
separately in the Annual Report. There are no qualifications or
adverse remarks in the Secretarial Audit Report which require any
explanation from the Board of Directors.
D. Cost Audit
Based on the recommendations of the Audit Committee, the Board of
Directors have re- appointed M/s. Srinivas and Co, Cost Accountants
(Firm Registration No: 000278) as the Cost Auditors of the Company for
the financial year 2014-15. In terms of Rule 14 of the Companies (Audit
and Auditors) Rules, 2014, the remuneration payable to the Cost
Auditors for the financial year 2014-15 is subject to ratification by
the shareholders of the Company. The Notice convening the Annual
General Meeting contains the proposal for ratification of the
remuneration payable to the Cost Auditors.
The Cost Audit Report for the financial year 2013- 14 was filed with
the Ministry of Corporate Affairs, New Delhi on September 27, 2014
within the due date prescribed under The Companies (Cost Audit Report)
Rules, 2011.
E. internal Financial Controls
There are adequate internal financial controls in place with reference
to the financial statements. During the year under review, these
controls were evaluated and no significant weakness was identified
either in the design or operation of the controls.
Policy Matters
A. Nomination and Remuneration Policy
The Nomination, Remuneration and Governance Committee of the Board of
Directors has formulated a Nomination and Remuneration Policy
containing the criteria for determining qualifications, positive
attributes and independence of a director and policy relating to the
remuneration for the directors, key managerial personnel and senior
management personnel of the Company. The Nomination and Remuneration
Policy is available on the website of the Company at
http://www.sobha.com/investor- relations-downloads-pol.php and relevant
extracts from the Policy are reproduced in Annexure A to this report.
B. Risk Management Framework
The Company has developed and implemented a risk management framework
detailing the various risks faced by the Company and methods and
procedures for identification, monitoring and mitigation of such risks.
The Board of Directors of the Company have constituted a Risk
Management Committee which is entrusted with the task of monitoring and
reviewing the risk management plan and procedures of the Company. The
risk management function is complimentary to the internal control
mechanism of the Company and supplements the audit function.
C. Corporate Social Responsibility Policy
The Corporate Social Responsibility Policy, as formulated by the
Corporate Social Responsibility Committee and approved by the Board of
Directors is available on the website of the Company at http://
www.sobha.com/investor-relations-downloads-pol. php.
In terms of Section 134 of the Companies Act, 2013 read with The
Companies (Corporate Social Responsibility Policy) Rules, 2014, the
annual report on Corporate Social Responsibility activities of the
Company is given in Annexure B to this report.
D. Vigil Mechanism
The Company has established a vigil mechanism to promote ethical
behaviour in all its business activities and has in place a mechanism
for employees to report any genuine grievances, illegal, unethical
behaviour, suspected fraud or violation of laws, rules and regulation
or conduct to the Chief Vigilance Officer and the Audit Committee of
the Board of Directors. The Policy also provides for adequate
protection to the whistle blower against victimisation or
discriminatory practices. The Policy is available on the website of the
Company at http://www.sobha. com/investor-relations-downloads-pol.php.
Other Matters
A. Debentures
During the year under review, the Company has not issued any
debentures. As on date, the Company does not have any outstanding
debentures.
B. Deposits
The Company has not accepted any deposits in terms of Chapter V of the
Companies Act, 2013 read with the Companies (Acceptance of Deposit)
Rules, 2014, during the year under review.
C. Transfer to investor Education and Protection Fund
In compliance of Section 205C of the Companies Act, 1956, the dividends
pertaining to the financial year 2006-07 which were lying unclaimed
with the Company was transferred to the Investor Education and
Protection Fund during the financial year 2014- 15. The details of
unclaimed dividend transferred to the Investor Education and Protection
Fund has been detailed in the Corporate Governance Report forming part
of the Annual Report.
D. Human Resources
Employee relations continue to be cordial and harmonious at all levels
and in all divisions of the Company. The Board of Directors would like
to express their sincere appreciation to all the employees for their
continued hard work and steadfast dedication.
As a part of the policy for Prevention of Sexual Harassment in the
organisation, the Company has in place an Internal Complaints Committee
for prevention and redressal of complaints of sexual harassment of
women at work place in accordance with The Sexual Harassment of Women
at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 and
relevant rules thereunder. No complaints were received by the Committee
during the period under review.
As on March 31, 2015, the Company has an organisational strength of
3,046 employees.
A separate section on the Employees is provided in the Annual Report.
E. Awards and Recognition
During the financial year 2014-15, the Company was bestowed with
various awards and recognitions, the details of which are given in a
separate section of the Annual Report.
F. Corporate Governance
A detailed report on Corporate Governance and a certificate from Mr.
Nagendra D Rao, Practicing Company Secretary affirming compliance with
the various conditions of Corporate Governance as stipulated under
Clause 49 of the Listing Agreement forms part of the Annual Report.
G. Code of Conduct
As prescribed under Clause 49 of the Listing Agreement, a declaration
signed by the Vice Chairman and Managing Director affirming compliance
with the Code of Conduct by the Directors and senior management
personnel of the Company for the financial year 2014-15 forms part of
the Corporate Governance Report.
H. Management discussion and Analysis Report
In accordance with the requirements of the Listing Agreement, the
Management Discussion and Analysis Report titled as Management Report
is presented in a separate section of the Annual Report.
i. Extract of Annual Return
In terms of Section 134 of the Companies Act, 2013 read with Rules
12(1) of the Companies (Management and Administration) Rules, 2014, the
extract of the Annual Return of the Company for the financial year
2014-15 is provided in Annexure C to this report.
J. Particulars of Loans, Guarantees and investments
In terms of Section 134 of the Companies Act, 2013, the particulars of
loans, guarantees and investments given by the Company under Section
186 of the Companies Act, 2013 is detailed in Notes to Accounts of the
Financial Statements.
K. Related Party transactions
During the year, the Company has not entered into any contract /
arrangement / transaction with a related party which can be considered
as material in terms of the policy on related party transactions laid
down by the Board of Directors. The related party transactions
undertaken during the financial year 2014 - 15 are detailed in Notes to
Accounts of the Financial Statements.
L. Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
In terms of Section 134 of the Companies Act, 2013 read with Rule 8(3)
of the Companies (Accounts) Rules, 2014, the particulars of
conservation of energy, technology absorption, and foreign exchange
earnings and outgo are set out in Annexure D to this report.
M. Remuneration details of directors, Key Managerial Personnel and
Employees
The details of remuneration of directors, key managerial personnel and
the statement of employees in receipt of remuneration exceeding the
limits prescribed under Section 134 of the Companies Act, 2013 read
with Rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 has been provided in Annexure E to
this report.
N. Financial Position and Performance of Subsidiaries, Joint Ventures
and Associates
In terms of Section 134 of the Companies Act, 2013 and Rule 8(1) of the
Companies (Accounts) Rules, 2014, the financial position and
performance of subsidiaries are given as an Annexure to the
Consolidated Financial Statements.
O. Additional information to Shareholders
All important and pertinent investor information such as financial
results, investor presentations, press releases, new launches and
project updates are made available on the Company''s website (www.
sobha.com) on a regular basis.
Acknowledgements
The Directors would like to place on record their sincere appreciation
to the Company''s customers, vendors, and bankers for their continued
support to the Company during the year. The Directors also wish to
acknowledge the contribution made by employees at all levels for
steering the growth of the organisation. We thank the Government of
India, the state governments and other government agencies for their
assistance and cooperation and look forward to their continued support
in future. Finally, the Board would like to express its gratitude to
the members for their continued trust, cooperation and support.
For and on behalf of the Board of directors of
Sobha Limited
Place: Bangalore Ravi PNC Menon J C Sharma
date: May 12, 2015 Chairman ViceChairman & Managing director
Mar 31, 2013
Dear Member,
The have pleasure in presenting the Eighteenth Annual Report on the
business and operations of the Company together with the audited
results for the financial year ended March 31, 2013.
(Rs. in million)
Particulars Standalone Consolidated
2012-13 2011-12 2012-13 2011-12
Total Revenue 18,106.94 14,028.41 18,700.59 14,143.72
Operating Expenditure 13,240.76 9,626.56 13,162.89 9,413.47
Earnings before
Interest, Depreciation
and 4,866.18 4,401.85 5,537.70 4,730.25
Amortisation
Depreciation and
Amortisation 559.65 387.78 593.73 387.78
Finance Cost 1,428.66 1,061.71 1,70490 1,165.39
Profit Before Tax 2,877.87 2,952.36 3,239.07 3,177.08
Tax Expenses
- Current Tax 604.40 586.90 760.74 719.59
- Deferred tax
charge / (credit) 307.74 404.16 307.74 404.16
- MAT credit entitlement - (47.20) - (47.20)
Profit after Tax 1,965.73 2,008.50 2,170.59 2,100.53
Minority Interest - - (1.20) 40.99
Profit for the year 1,965.73 2,008.50 2,171.79 2,059.54
Financial Overview Performance
During the financial year 2012-13, the Company has on a standalone
basis, registered total revenue of Rs. 18,106.94 million as compared to
Rs. 14,028.41 million in the previous year, showing an increase of
29.07 % Y-O-Y. EBITDA has increased from Rs. 4,401.85 million in
2011-12 to Rs. 4,866.18 million, an increase of 10.55 %.
The consolidated revenue of the Company during the financial year
2012-13 was Rs. 18,700.59 million, a growth of 32.22 % from the
previous year. EBITDA has increased from Rs. 4,730.25 million in
2011-12 to Rs. 5,537.70 million, an increase of 17.07 %.
Transfer to Reserves
An amount ofRs. 200 million is proposed to be transferred out of the
current profits to the General Reserve.
Dividend
The Board of Directors has, subject to the approval of the shareholders
in the Annual General Meeting, recommended a dividend of Rs. 7 per
equity share of Rs. 10 each.
Debentures
During the year under review, the Company has not issued any
debentures. As on date, the Company does not have any outstanding
debentures.
Deposits
The Company has not accepted any deposits in terms of the provisions of
Section 58A of the Companies Act, 1956, during the year under review.
Operational Overview
Completed Projects
During the year under review, the Company has executed and handed over
6 residential projects covering an area of 1.48 million square feet and
19 contractual projects covering an area of 2.98 million square feet
resulting in an aggregate development of 4.46 million square feet.
The Company has completed 85 residential projects and 228 contractual
projects covering about 56.25 million square feet of area since
inception.
Ongoing Projects
The Company currently has 43 ongoing residential projects aggregating
to 25.83 million square feet of developable area and 38 ongoing
contractual projects aggregating to 10.65 million square feet under
various stages of construction.
Forthcoming Projects
During the financial year 2013-14, the Company proposes to launch
projects (residential and commercial) measuring about 12.02 million
square feet in which it has an economic interest of approximately 8.95
million square feet of developable area in various cities including
Bangalore, Thrissur, Kochi, Kozhikode and Chennai.
The Company has a geographic presence in 23 cities and 13 states across
India.
Business Overview
Sobha Developers Limited is a public limited company with its equity
shares listed on National Stock Exchange of India Limited and the
Bombay Stock Exchange Limited. The issued, subscribed and paid-up
capital of the Company is Rs. 980,638,680 (Rupees Ninety Eight Crores
Six Lakhs Thirty Eight Thousand Six Hundred and Eighty only) divided
into 98,063,868 (Nine Crores Eighty Lakhs Sixty Three Thousand Eight
Hundred and Sixty Eight only) equity shares ofRs. 10 each. During the
year under review, there was no change in the capital structure of the
Company.
The operations of the Company can be categorised into two main
verticals:
- Construction and development of residential and commercial projects
- Contractual projects
A summary of completed and ongoing projects as on March 31, 2013 has
been detailed in the Management Discussion and Analysis Report titled
as Management Report forming part of the Annual Report.
Divisions
The backward integration business model of the Company is ably
supported by its three divisions which act as the conduit of resources
and expertise required for the execution of projects.
Glazing Division
- The Glazing Division is engaged in the business of metal
fabrication such as aluminum windows and doors, structural and
architectural glazing.
- The division has facilities in Bangalore and Chennai.
Interiors Division
- The Interiors Division specialises in wood work and in
manufacturing wood and wood-based products.
- The division has facilities in Bangalore and Hosur.
Concrete Products Division
- The Concrete Products Division is engaged in the manufacture of a
wide range of concrete products such as hollow and solid concrete
blocks, medium and heavy duty concrete pavers and varieties of concrete
paving slabs.
- The division has facilities in Bangalore, Gurgaon and Pune.
Subsidiaries
As on date, the Company has four subsidiaries, the details of which are
enumerated below. Further, the financial statements of the subsidiaries
have been reviewed by the Audit Committee and the minutes of the same
have been placed before the Board of Directors as stipulated under
Clause 49 of the Listing Agreement. No subsidiary of the Company is a
material non-listed Indian subsidiary as defined under the Listing
Agreement.
A. Sobha Developers (Pune) Limited
Sobha Developers (Pune) Limited is a wholly- owned subsidiary of the
Company. It was incorporated on February 13, 2007 and became a
subsidiary of the Company with effect from July 01,2011.
Sobha Developers (Pune) Limited is presently executing a residential
project, "Sobha Forest View", situated at Hosahalli Village,
Uttarahalli Hobli, Bangalore South Taluk, Bangalore.
B. Sobha Assets Private Limited
Sobha Assets Private Limited was incorporated as a wholly-owned
subsidiary of the Company on March 13, 2012.
Sobha Assets Private Limited has been identified as a Special Purpose
Vehicle of the Company to develop a Modern Agricultural Market Complex
in Byatarayanapura, Bangalore on PPP (Public Private Partnership)
scheme between the APMC (Agriculture Produce Marketing Committee),
Government of Karnataka and the Company.
C. Sobha Highrise Ventures Private Limited
Sobha Highrise Ventures Private Limited is a subsidiary of the Company.
It was incorporated on May 28, 2012 and became a subsidiary of the
Company with effect from August 09, 2012. As on date, the Company holds
an economic interest in Sobha Highrise Ventures Private Limited to an
extent of 50.0003%.
Pursuant to a joint venture between the Company, Winona SA Investments
LLC and SA Winona Ventures Limited, Sobha Highrise Ventures Private
Limited has been identified as a Special Purpose Vehicle to develop a
proposed 100 % FDI (subject to performance conditions) Compliant
residential project situated at Doddanekkundi Village, Varthur Hobli,
Bangalore East Taluk, Bangalore.
D. Sobha City
The Company had earlier formed a Partnership Firm under the name and
style of "Sobha City" with Tree Hill Estates Private Limited for the
construction and development of Sobha City Project located in Thrissur,
Kerala with a profit sharing ratio of 70:30.
During the financial year 2012-13, Tree Hill Estates Private Limited
has retired as a Partner from "Sobha City" and Sobha Developers (Pune)
Limited has been inducted as a Partner. As on date, the Company holds
the entire economic interest in "Sobha City".
Statement relating to subsidiaries
Pursuant to the general exemption granted by the Ministry of Corporate
Affairs vide General Circular No. 2/2011 dated February 08, 2011, the
balance sheet, statement of profit and loss and other documents of
subsidiary companies as prescribed under Section 212 of the Companies
Act, 1956, have not been attached. As stipulated in the Circular, the
Company has disclosed the requisite financial information of the
subsidiaries in the Annual Report. Further, the annual accounts and the
related detailed information of the subsidiaries shall be provided to
the Members upon request and the same shall also be available for
inspection on any working day during business hours at the registered
office of the Company and the respective subsidiary companies.
Governance Structure
Board of Directors
As on date, the Board of Directors of the Company comprises seven
Directors of which four are Non- Executive Independent Directors in
terms of Clause 49 of the Listing Agreement.
Cessation
Mr. P.N.C. Menon, the Founder Chairman, resigned from the directorship
of the Company with effect from June 30, 2012. As part of the
succession planning, Mr. P.N.C. Menon who had led the Company for 17
years, had expressed his desire to be relieved of the day-to-day
responsibilities of running the Company. In gratitude and
acknowledgement of his immense contribution to the Company and to
ensure that the Company continues to benefit from his wisdom and
guidance, the Board of Directors has conferred upon him the title of
Chairman Emeritus.
Appointment
Mr. Ravi PNC Menon was reappointed as a Whole- Time Director by the
members of the Company for a period of five years commencing from April
01, 2012 in the Annual General Meeting held on June 30, 2012.
In view of the significant contributions made by Mr. Ravi PNC Menon,
the Board of Directors based on the recommendation ofthe Nomination,
Remuneration and Governance Committee, has appointed Mr. Ravi PNC Menon
as the Chairman of the Company with effect from June 30, 2012.
Re-appointment
In terms of Sections 255 and 256 of the Companies Act, 1956 and
Articles 107, 108 and 109 of Articles of Association of the Company,
Dr. S.K Gupta and Mr. R.V.S. Rao, Independent Directors are liable to
retire by rotation at the ensuing Annual General Meeting and being
eligible offer themselves for re-appointment.
The Notice convening the Annual General Meeting includes the proposals
for re-appointment of the Directors. Brief resumes of the Directors
proposed to be appointed / re-appointed have been provided as an
Annexure to the Notice convening the Annual General Meeting. Specific
information about the nature of their expertise in specific functional
areas and the names of the companies in which they hold directorship
and membership / chairmanship of the Board Committees, as stipulated
under Clause 49 of the Listing Agreement, have also been included.
Board Committees
During the year under review, the scope of the Investors''Grievance
Committee was enhanced and the Committee was renamed as the Investor
Relations Committee with effect from August 07, 2012.
The Board of Directors, in its meeting held on January 31, 2013, had
constituted a Risk Management Committee which is entrusted with the
responsibility of establishing policies to monitor and evaluate the
risk management systems of the Company.
A detailed note on the Committees of the Board of Directors is given in
the Corporate Governance Report forming part of the Annual Report.
Internal Control and Internal Audit
The Company has in place well-defined internal control mechanisms and
comprehensive internal audit programmes with the activities of the
entire organisation under its ambit. The internal audit programme is
reviewed and approved by the Audit Committee at the beginning of each
financial year and progress reports are placed before the Committee on
a quarterly basis.
Audit Recommendations
During the period under review, the suggestions 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
S.R. Batliboi & Associates LLP, Statutory Auditors of the Company
retire at the ensuing Annual General Meeting and being eligible offer
themselves for re-appointment. The Board of Directors upon the
recommendation of the Audit Committee proposes the re-appointment of
SR. Batliboi & Associates LLP as the statutory auditors of the Company
subject to the approval of the members at the Annual General Meeting.
There are no qualifications or adverse remarks in the Auditors''Report
which require an explanation from the Board of Directors.
Secretarial Audit
The Secretarial Audit Report for the year ended March 31, 2013 issued
by Mr. Nagendra D Rao, Practicing Company Secretary confirming
compliance with all the applicable provisions of Corporate Laws and the
Listing Agreement is provided separately in the Annual Report.
Human Resources
Employees form the cornerstone of Sobha Developers Limited. With
well-established policies and employee- friendly measures, the Company
ensures the development and wellbeing of all its employees.
The Leadership, Development and Training Department of the Company
organises and conducts extensive training and motivational programmes
on myriad subjects. Cultivation of leadership abilities, augmentation
of occupational skills and enhancement of employee morale are the prime
focus of these programmes. They result in the overall development of
the employees which in turn contributes to the growth of the Company.
Innovation lies at the heart of every sustainable and viable business
model. The Company has a strong Value Engineering Department which
plays an active and key role in the development and implementation of
advanced and modern techniques of construction. At SOBHA, employees are
also given ample opportunities to suggest and develop new and
innovative ideas, methods and techniques which assist in improving the
efficiency levels of the Company. An organisation- wide event is
conducted on an annual basis wherein employees are given a platform to
exhibit their innovations. The most adaptable and inventive ideas are
recognised and aptly rewarded.
Employee relations continue to be cordial and harmonious at all levels
and in all divisions of the Company. The Board of Directors would like
to express their sincere appreciation to all the employees for their
continued hard work and dedication.
As on March 31, 2013, the Company has an organisational strength of
2,879 employees.
A separate section on the Employees is provided in the Annual Report.
Quality, Safety and Technology
The Company''s commitment to quality is reflected in its vision
''Transform the way people perceive Quality''. At SOBHA, emphasis is
laid on delivery of products which conform to international benchmarks
of quality.
The Department of Quality, Safety and Technology (QST) is entrusted
with the responsibility of ensuring adherence to established quality
and safety parameters. It meticulously monitors the working of various
project sites and periodically reports to the Board of Directors on the
safety performance of the Company. It is also responsible for inducting
the latest in construction technology thereby enabling project delivery
at par with relevant specifications, norms and standards.
The department predominantly focuses on quality of construction,
establishment and review of safety standards, infrastructure execution,
civil maintenance works, geo-technical aspects, drawing detail
development and import / implementation of new tools and materials for
process upgradation.
Corporate Social Responsibility
At SOBHA, being a responsible corporate citizen is given utmost
priority. The Corporate Social Responsibility of the Company is
discharged under the aegis of Sri Kurumba Trust, a public charitable
trust. A detailed report on the CSR initiatives and activities are
given in a separate section on Corporate Social Responsibility which
forms part of the Annual Report.
Awards and Recognitions
During the financial year 2012-13, the Company was bestowed with
various awards and recognitions, the details of which are given in a
separate section of the Annual Report.
Statutory Information
Directors'' Responsibility Statement
The Director''s Responsibility Statement, setting out compliance with
the accounting and financial reporting requirements specified under
Section 217(2AA) of the Companies Act, 1956, in respect of the
financial statements, is furnished below and on behalf of the Board of
Directors, it is hereby confirmed that:
i) In the preparation of annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures, if any.
ii) The Directors had selected the accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and the profit of the
Company for that period.
iii) The Directors had taken proper and sufficient 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 frauds and other
irregularities.
iv) The Directors had prepared the annual accounts on a "going concern"
basis.
Disclosure of Employees
The statement of employees in receipt of remuneration exceeding the
limits prescribed under Section 217(2A) of the Companies Act 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended
from time to time has been provided as an Annexure to this report.
Transfer to Investor Education and Protection Fund
During the financial year 2013-14, the Company will be required to
transfer to the Investor Education and Protection Fund, the share
application money received during the Initial Public Offer of the
Company which is due for refund and lying unclaimed with the Company in
terms of Section 205C of the Companies Act, 1956. The applicants are
requested to claim the share application money before transfer of the
amount to the said Fund. The details of the unclaimed share application
money together with the procedure for claiming the same has been
detailed in the Corporate Governance Report and the Notice convening
the Annual General Meeting forming part of the Annual Report.
Conservation of Energy, Research and Development, Technology
Absorption, Foreign Exchange Earnings and Outgo
In terms of Section 217 (1) (e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the report of Board of
Directors) Rules, 1988, the particulars of conservation of energy,
technology absorption, research and development, foreign exchange
earnings and outgo are set out as an Annexure to this report.
Corporate Governance
A detailed report on Corporate Governance and a certificate from Mr.
Nagendra D Rao, Practicing Company Secretary affirming compliance with
the various conditions of Corporate Governance as stipulated under
Clause 49 of the Listing Agreement forms part of the Annual Report.
Code of Conduct
As prescribed under Clause 49 of the Listing Agreement, a declaration
signed by the Vice Chairman and Managing Director affirming compliance
with the Code of Conduct by the Directors and senior management
personnel of the Company for the financial year 2012-13 forms part of
the Corporate Governance Report.
Management Discussion and Analysis Report
In accordance with the requirements of the Listing Agreement, the
Management Discussion and Analysis Report titled as Management Report
is presented in a separate section of the Annual Report.
Additional Information to Shareholders
All important and pertinent investor information such as financial
results, investor presentations, press releases, new launches and
project updates are made available on the Company''s website
(wwwsobha.com) on a regular basis.
Acknowledgements
The Directors would like to place on record their sincere appreciation
to the Company''s customers, vendors, and bankers for their continued
support to the Company during the year. The Directors also wish to
acknowledge the contribution made by employees at all levels for
sustaining and driving the growth of the organisation. We thank the
Government of India, the state governments and other government
agencies for their assistance and cooperation and look forward to their
continued support in future. Finally, the Board would like to express
its gratitude to the members for their continued trust, cooperation and
support.
For and on behalf of the Board of Directors of
Sobha Developers Limited
Place: Bangalore Ravi PNC Menon J.C. Sharma
Date: May10,2013 Chairman Vice Chairman & Managing Director
Mar 31, 2012
The have pleasure in presenting the seventeenth annual report on the
business and operations of the Company together with the audited
results for the financial year ended March 31, 2012.
Financial Highlights
(Rs in million)
Standalone Results Consolidated Results
Particulars 2011-12 2010-11 2011-12 2010-11
Total Revenue 14,028.41 13,825.96 14,143.72 13,996.13
Total Expenditure 9,626.56 10,266.78 9,413.47 10,344.55
Earnings before
Interest,
Depreciation and
Amortisation 4,401.85 3,559.18 4,730.25 3,651.58
Depreciation and
Amortisation 387.78 277.73 387.78 277.73
Finance Cost 1,061.71 845.49 1,165.39 859.67
Profit before Tax 2,952.36 2,435.96 3,177.08 2,514.18
Tax Expenses
- Current Tax 586.90 629.53 719.59 686.73
- Deferred tax
charge / (credit) 404.16 (22.27) 404.16 (22.27)
- MAT credit
utilisation /
(entitlement) (47.20) 4.10 (47.20) 4.10
Profit After Tax 2,008.50 1,824.60 2,100.53 1,845.62
Minority Interest - - 40.99 32.90
Share of (Profit)/
Loss of Associate - - - (0.20)
Profit for the year 2,008.50 1,824.60 2,059.54 1,812.92
Result of Operations
During the year under review, the Company has executed and handed over
9 residential projects covering an area of 3.14 million square feet and
18 contractual projects covering an area of 2.08 million square feet
resulting in an aggregate development of 5.22 million square feet. The
Company has completed 79 residential projects and 209 contractual
projects covering about 51.80 million square feet of area since
inception. The Company currently has 38 ongoing residential projects
aggregating to 23.04 million square feet of developable area and 47
ongoing contractual projects aggregating to 10.05 million square feet
under various stages of construction.
The Company has a geographic presence in 22 cities and 13 states across
India. During the year under review, the Company has expanded its
operations into three new locations, namely, Gurgaon, Mysore and
Chennai.
Transfer to Reserves
An amount of Rs 201 million is proposed to be transferred out of the
current profits to the General Reserve.
Dividend
The Board of Directors has, subject to the approval of the shareholders
in the Annual General Meeting, recommended a dividend at the rate of Rs5
per equity share of Rs10 each resulting in a dividend rate of 50 % for
the financial year 2011-2012.
Debentures
During the year under review, the Company has not issued any
debentures. The Company has redeemed various series of non-convertible
debentures aggregating Rs 750 million. As on date, there are no
debentures due for redemption.
Deposits
The Company has not accepted any deposits in terms of the provisions of
Section 58A of the Companies Act, 1956, during the year under review.
Business
The Company's main operations can be bifurcated into:
- Development and construction of residential and commercial projects
- Contractual projects
A summary of completed and ongoing projects as on March 31, 2012 has
been detailed in the Management Report forming part of the annual
report.
Manufacturing Divisions The Company follows a backward integration
business model wherein the resources and expertise required for
executing a project from conceptualisation to completion are sourced
from the following divisions
A. Glazing Division
The Glazing Division is engaged in the business of metal fabrication
such as aluminum windows and doors, structural and architectural
glazing. The division has factories in Bangalore and Chennai.
B. Interiors Division
The Interiors Division of the Company, located at Bangalore,
specialises in woodwork and in manufacturing wood and wood-based
products. It has also established a factory which is engaged in the
manufacture of mattresses under the brand name "Sobha Restoplus".
C. Concrete Products Division
The Concrete Products Division of the Company is engaged in the
manufacture of a wide range of concrete products such as hollow and
solid concrete blocks, medium and heavy duty concrete pavers and
varieties of concrete paving slabs. The division has factories in
Bangalore, Gurgaon and Pune.
Shifting of Registered Office
During the year under review, the registered office of the Company was
shifted from E-106, Sunrise Chambers, #22, Ulsoor Road, Bangalore - 560
042 to a self-owned premises situated at 'Sobha', Sarjapur-Marathahalli
Outer Ring Road (ORR), Devarabisanahalli, Bellandur Post, Bangalore -
560 103 with effect from December 19, 2011.
Board of Directors
As on date, the Board of Directors of the Company comprise of eight
Directors of which four are Independent Directors.
In view of the significant contributions made by Mr. Ravi Menon and Mr.
J.C. Sharma, the Board of Directors, based on the recommendations of
the Nomination, Remuneration and Governance Committee, has appointed
Mr. Ravi Menon as the Co-Chairman and Mr. J.C. Sharma as Vice Chairman
and Managing Director of the Company with effect from May 06, 2012.
In terms of Section 255 and 256 of the Companies Act, 1956 and Article
107, 108 and 109 of Articles of Association of the Company, Mr. M.
Damodaran and Mr. Anup Shah, both Independent Directors, are liable to
retire by rotation at the ensuing Annual General Meeting and being
eligible offer themselves for re-appointment.
The Notice convening the Annual General Meeting also includes the
proposals for the re-appointment of the Directors. Brief resumes of the
Directors proposed to be appointed/ re-appointed have been provided as
an Annexure to the Notice convening the Annual General Meeting.
Specific information about the nature of their expertise in specific
functional areas and the names of the companies in which they hold
Directorship and Membership/ Chairmanship of the Board Committees, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges, has also been included.
Board Committees
During the year under review, the Company has reconstituted the Share
Transfer Committee of the Board of Directors on two occasions.
Mr. P. Ramakrishnan, Deputy Managing Director, was co-opted as a member
of the Committee with effect from August 09, 2011. Mr. PN.C. Menon,
Chairman, stepped down from the membership of the Committee due to his
inability to attend the meetings with effect from May 06, 2012.
The Company had reconstituted the Executive Selection and Remuneration
Committee as Nomination, Remuneration and Governance Committee with
effect from May 06, 2012.
Auditors
M/s S.R. Batliboi & Associates, Chartered Accountants, statutory
auditors of the Company retired at the ensuing Annual General Meeting
and being eligible offer themselves for re-appointment. The Board of
Directors upon the recommendation of the Audit Committee proposes the
re-appointment of M/s S.R. Batliboi & Associates, Chartered Accountants
as the statutory auditors of the Company.
There are no observations or adverse remarks in the Auditors' Report,
which require any explanation by the Board of Directors.
Subsidiaries
A. Sobha Developers (Pune) Private Limited The Company had earlier
entered into a joint venture agreement with Pan Atlantic Investments
Limited, a Limited Liability Company registered in Dubai, for the
purpose of construction and development of residential townships in
India. Sobha Developers (Pune) Private Limited, a company incorporated
under the Companies Act, 1956, was identified as a Special Purpose
Vehicle (SPV) for the aforesaid purpose.
Pan Atlantic Investments Limited, which initially held 81% of the
equity interest in the SPV, expressed its desire to exit from the
investment. After negotiations, the Company agreed to buy the
investment in accordance with the applicable laws, rules, and
guidelines.
As per the Exit Agreement entered into with Pan Atlantic Investments
Limited, the Company has, during the year under review, purchased the
entire shareholding of Sobha Developers (Pune) Private Limited and it
has consequently become a subsidiary of the Company within the meaning
of Section 4 (1) (b) of the Companies Act, 1956, with effect from July
01, 2011.
Sobha Developers (Pune) Private Limited is presently executing a
residential project, "Sobha Forest View", situated at Hosahalli
Village, Uttarahalli Hobli, Bangalore South Taluk, Bangalore.
B. Sobha Assets Private Limited
During the year under review, Sobha Assets Private Limited was
incorporated as a wholly owned subsidiary on March 13, 2012.
The financial statements of the subsidiaries have been reviewed by the
Audit Committee and the minutes of the same have been placed before the
Board of Directors as stipulated under Clause 49 of the Listing
Agreement. None of the aforesaid subsidiary is a material non-listed
Indian subsidiary as defined under the Listing Agreement.
Pursuant to the general exemption granted by the Ministry of Corporate
Affairs vide General Circular No. 2/2011, dated February 08, 2011, the
balance sheet, statement of profit and loss and other documents of
subsidiary companies as prescribed under Section 212 (8) of the
Companies Act, 1956, have not been attached. As stipulated in the
circular, the Company has disclosed the requisite financial information
of the subsidiaries in the annual report. Further, the annual accounts
and the related detailed information of the subsidiaries shall be
provided to the Members upon request and the same shall also be
available for inspection on any working day during the business hours
at the registered office of the Company and the respective subsidiary
companies.
Human Resources
Sobha Developers Limited, one of the leading companies in the Real
Estate and construction sector in India, has an organisational strength
of 2,502 employees as on March 31, 2012.
The Company has an in-house training and learning department which
specialises in organising and conducting extensive training and
motivational programmes on varied topics. Primarily focusing on the
augmentation of occupational skills and enhancement of employee morale,
these programmes contribute to the overall development of the employees
and in turn contribute to the growth of the Company.
Employees are given ample opportunities to suggest and develop new and
innovative ideas, methods and techniques which assist in improving the
efficiency levels of the Company.
Employee relations continue to be cordial and harmonious at all levels
and in all divisions of the Company. The Board of Directors would like
to express their sincere appreciation to all the employees for their
continued hard work and dedication.
A separate section on Employees is provided in the Annual Report.
Quality, Safety and Technology In line with our vision, 'Transform the
way people perceive Quality1, the Company gives utmost importance to
delivery of products conforming to international standards of quality.
The Department of Quality, Safety and Technology (QST), which is
responsible for this function, monitors the working of various project
sites, ensures adherence to established quality and safety parameters
and is also responsible for inducting the latest in construction
technology thereby enabling project delivery at par with relevant
specifications, norms and standards.
The department gives prominence to the quality of construction, safety
standards, infrastructure execution, civil maintenance works,
geo-technical aspects, drawing detail development and importing/
implementing new tools and materials for process upgradation.
Corporate Governance
A detailed report on Corporate Governance and a certificate from a
Practicing Company Secretary affirming compliance with the various
conditions of Corporate Governance as stipulated under Clause 49 of the
Listing Agreement forms part of the annual report.
Responsibility Statement of the Board of Directors The Director's
Responsibility Statement, setting out compliance with the accounting
and financial reporting requirements specified under Section 217 (2AA)
of the Companies Act, 1956, in respect of the financial statements, is
furnished below and on behalf of the Board of Directors, it is hereby
confirmed that
i. In the preparation of the annual accounts, the applicable
accounting standards had been followed along with the proper
explanation relating to material departures, if any.
ii. The Directors had selected the accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and the profit of the
Company for that period.
iii. The Directors had taken proper and sufficient 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 frauds and other
irregularities.
iv. The Directors had prepared the annual account on a "going concern"
basis.
Corporate Social Responsibility
Sobha Developers Limited is a responsible corporate citizen and
conscientiously works towards fulfiling its Corporate Social
Responsibility. A separate section on Corporate Social Responsibility
forms part of the annual report.
Code of Conduct
As prescribed under Clause 49 of the Listing Agreement, a declaration
signed by the Vice Chairman and Managing Director affirming compliance
with the Code of Conduct by the Directors and senior management
personnel of the Company for the financial year 2011-12 is annexed and
forms part of Corporate Governance Report.
Disclosure of Employees The statement of employees in receipt of
remuneration exceeding the limits prescribed under Section 217 (2A) of
the Companies Act 1956, read with the Companies (Particulars of
Employees) Rules, 1975 as amended from time to time is attached
herewith as an Annexure to this report.
Secretarial Audit Report
The Secretarial Audit Report for the year ended March 31, 2012, issued
by a Practicing Company Secretary confirming compliance with all the
applicable provisions of Corporate Laws and the Listing Agreement is
provided separately in the Annual Report.
Conservation of Energy, Research and Development, Technology
Absorption, Foreign Exchange Earnings and Outgo In terms of Section 217
(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure
of Particulars in the report of the Board of Directors) Rules, 1988,
the particulars of conservation of energy, technology absorption,
research and development, foreign exchange earnings and outgo are set
out as an Annexure to this report.
Additional Information to Shareholders All important and pertinent
investor information such as financial results, investor presentations,
press releases, new launches and project updates are made available on
the Company's website(www.sobha.com) and it is updated on a regular
basis.
Management Discussion and Analysis Report In accordance with the
requirements of the Listing Agreement, the Management Discussion and
Analysis Report titled as Management Report is presented in a separate
section of the Annual Report.
Acknowledgments
The Directors would like to place on record their sincere appreciation
to the Company's customers, vendors, and bankers for their continued
support to the Company during the year. The Directors also wish to
place on record their appreciation for the contribution made by the
employees at all levels for sustaining and spurring the organisation's
growth. We thank the Government of India, the state governments and
other government agencies for their assistance and cooperation and look
forward to their continued support in future. Finally, the Board would
like to express its gratitude to the members for their continued trust,
cooperation, and support.
For and on behalf of the Board of Directors of
Sobha Developers Limited
Place: Dubai Ravi Menon J.C. Sharma
Date: May 06, 2012 Co-Chairman vice Chairman & Managing Director
Mar 31, 2011
We have pleasure in presenting the Sixteenth Annual Report on the
business and operations of the Company together with the audited
results for the financial year ended March 31, 2011.
FINANCIAL HIGHLIGHTS
(Rs. in Million)
Stand Alone Results Consolidated Results
Particulars 2010-11 2009-10 2010-11 2009-10
Net sales and
other income 14,643.15 11,192.83 14,813.32 11,337.23
Profit before
interest,
depreciation
and tax 3,143.03 2,424.63 3,235.42 2,501.85
Finance charges 429.33 498.82 443.51 520.84
Depreciation 277.73 323.10 277.73 323.10
Profit before Tax 2,435.97 1,602.71 2,514.18 1,657.91
Provision for Tax
- Current 629.53 261.00 686.73 299.69
- Deferred tax
credit (22.27) (20.83) (22.27) (20.83)
- MAT Credit
Utilisation/
Entitlement 4.10 (4.10) 4.10 (410)
Wealth tax - 0.02 - 0.02
Net profit after
tax 1,824.61 1,366.62 1,845.62 1,383.13
Less: Minority
Interest - - 32.90 42.15
Share of Profit/
(Loss) of
Associate - - (0.20) 0.01
Profit available
for
appropriations 1,824.61 1,366.62 1,812.92 1,340.97
Appropriations
Proposed dividend
(Includes tax
on dividend) 343.05 286.81 343.05 286.81
Transfer to
General Reserve 183.00 140.00 183.00 140.00
Balance carried
to Balance Sheet 1,298.56 939.81 1,286.87 914.16
RESULT OF OPERATIONS
During the year under review, our Company has executed and handed over
11 residential projects covering an area of 4.12 million square feet
and 25 contractual projects covering an area of 2.20 million square
feet resulting in an aggregate development of 6.32 million square feet.
Since inception, the Company has completed 71 residential projects and
191 contractual projects covering about 42.68 million square feet of
area. The Company currently has 23 ongoing residential projects
aggregating to 6.99 million square feet and 38 ongoing contractual
projects aggregating to 7.42 million square feet under various stages
of construction. The company has a geographic presence in 20 cities and
12 states across India.
TRANSFER TO RESERVES
An amount of Rs.183.00 million is proposed to be transferred out of the
current profits to the General Reserve.
DIVIDEND
The Board of Directors recommend dividend at the rate of Rs. 3.00 for
every equity share of Rs. 10 each resulting in a dividend rate of 30%
for the financial year 2010 - 2011.
BUSINESS
The CompanyÃs main operations can be divided into
1. Development and construction of residential and commercial projects
2. Contractual projects
The summary of the completed and ongoing projects as on March 31, 2011
have been detailed in the Management Discussion Analysis Report.
DEBENTURES
During the year under review, the Company has not issued any
Debentures. The Company has redeemed various series of Non- Convertible
Debentures aggregating Rs. 250 million.
DEPOSITS
The Company has not accepted any deposits in terms of provisions of
Section 58A of the Companies Act, 1956, during the year under review.
DIRECTORS
As on date, the Board of Directors of the Company comprise of eight
directors of which four are independent directors.
During the year, the shareholders in the fifteenth Annual General
Meeting of the Company had reappointed Mr. P. N. C. Menon as a
Wholetime Director designated as Chairman, Mr. Ravi Menon as a
Wholetime Director designated as Vice Chairman and Mr. J. C. Sharma as
Managing Director for a period of five years effective from April 01,
2010. Mr. P. Ramakrishnan who was earlier appointed as an Additional
Director was appointed as a Wholetime Director for a period of five
years and designated as Deputy Managing Director of the Company with
effect from April 01, 2010.
In terms of Article 107, 108 and 109 of Articles of Association, Dr.
S.K. Gupta and Mr. R.V. S. Rao, Independent Directors are liable to
retire by rotation at the ensuing Annual General Meeting and being
eligible offer themselves for re-appointment.
The Notice convening the Annual General Meeting includes the proposals
for the re-appointment of the Directors. Brief resumes of the Directors
proposed to be re-appointed, nature of their expertise in specific
functional areas and names of the companies in which they hold
directorship/ membership/ chairmanship of the Board Committees, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges have been provided as an annexure to the Notice convening the
Annual General Meeting.
AUDITORS
M/s S. R. Batliboi & Associates, Chartered Accountants, statutory
auditors of the Company retire at the ensuing Annual General Meeting
and being eligible, offer themselves for re-appointment. The Board of
Directors upon the recommendation of the Audit Committee proposes the
re-appointment of M/s S. R. Batliboi & Associates, Chartered
Accountants as the statutory auditors of the Company.
The Auditors had given certain observations in their Paragraph 4 of
their report and the Board feels it expedient to address the same as
follows:
The Registrar of Companies, Karnataka during the course of technical
scrutiny conducted in the year 2007 had observed that the Company
during the earlier years has undertaken certain transactions without
the prior approval of the Central Government required under Section 297
of the Companies Act, 1956. These transactions were done on an arms
length basis and in the normal course of business. The Company has
filed an application for composition under Section 621A of the
Companies Act, 1956 earlier and the same is pending before the HonÃble
Company Law Board, Chennai Bench, Chennai. However the Company has
obtained necessary approvals for transactions covered under Section 297
of the Companies Act, 1956 undertaken during the year.
SUBSIDIARIES
There are no subsidiaries of the Company within the meaning of Section
4 of the Companies Act 1956 except investments as detailed in the
financial statements forming part of the Annual Report.
HUMAN RESOURCES
Sobha Developers Limited is one of the leading real estate companies in
India with a total workforce of 2,224 as on March 31, 2011. The Company
aims to contribute to the overall development of its employees through
extensive training and motivational programmes. It also strives to
create an atmosphere of creativity by encouraging the employees to take
initiative and further the CompanyÃs growth through innovative ideas
and techniques.
Employee relations continue to be cordial and harmonious at all levels
and in all divisions of the Company. The Board of Directors would like
to express their appreciation to employees for their hard work and
dedication.
However during the year there was an illegal stoppage of work by
certain contractual workmen for a period of 71 days in the Interiors
Division of the Company. The Department of Labour, Government of
Karnataka ruled that this strike by such contractual workmen is illegal
and based on this the operations were resumed in the Interiors Division
of the Company. The impact of the strike was minimal on the operations
of the Company as a whole and the Interiors Division is confident of
meeting its delivery milestones.
A separate section on the Employees function is provided in the Annual
Report.
QUALITY, SAFETY AND TECHNOLOGY
The Company gives paramount importance to deliver products conforming
to world class quality standards. The Department of Quality, Safety and
Technology (QST) is entrusted with the responsibility of monitoring the
qualitative and safety aspects of works in our various projects. It is
also responsible for inducting the latest construction technology
thereby enabling project delivery on par with relevant specifications,
norms and standards.
The department lays emphasis on the quality of construction, safety
standards, infrastructure execution, civil maintenance works,
geotechnical aspects, drawing detail development and importing/
implementing new tools and material for process up gradation.
CORPORATE GOVERNANCE
A detailed report on Corporate Governance and a Certificate from the
Practicing Company Secretary regarding compliance with conditions of
Corporate Governance have been furnished in the Annual Report.
RESPONSIBILITY STATEMENT OF THE BOARD OF DIRECTORS
The DirectorÃs Responsibility Statement, setting out compliance with
the accounting and financial reporting requirements specified under
Section 217(2AA) of the Companies Act, 1956, in respect of the
financial statements, is furnished below and on behalf of the Board of
Directors, it is hereby confirmed that:
i. In the preparation of the annual accounts, the applicable accounting
standards had been followed along with the proper explanation relating
to material departures, if any.
ii The Directors had selected the accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period.
iii. The Directors had taken proper and sufficient 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 frauds and other
irregularities.
iv. The Directors had prepared the annual account on a Ãgoing concernÃ
basis.
CORPORATE SOCIAL RESPONSIBILITY
Sobha Developers is a responsible corporate citizen and is committed to
Corporate Social Responsibility. A separate section on Corporate Social
Responsibility forms part of the Annual Report.
CODE OF CONDUCT
Pursuant to Clause 49 of the Listing Agreement, the declaration signed
by the Managing Director affirming compliance of the Code of Conduct by
the Directors and senior management personnel of the Company for the
financial year 2010-11 is annexed and forms part of the Directorsà and
Corporate Governance Report
DISCLOSURE OF EMPLOYEES
The statement of employees in receipt of remuneration exceeding the
limits prescribed under Section 217(2A) of the Companies Act 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended
from time to time is attached herewith as an annexure to this report.
SECRETARIAL AUDIT REPORT
The Company has appointed Mr. Nagendra D Rao, Practicing Company
Secretary to conduct the Secretarial Audit for the year ended March 31,
2011. The Secretarial Audit Report confirming compliance with all the
applicable provisions of corporate laws and the Listing Agreement is
provided separately in the Annual Report.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
In terms of Section 217 (1) (e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the report of Board of
Directors) Rules,1988, the particulars of conservation of energy,
technology absorption, foreign exchange earnings and outgo are set out
as an annexure to this report.
ADDITIONAL INFORMATION TO SHAREHOLDERS
The Company ensures prompt and timely dissemination of all the latest
information on the CompanyÃs projects and matters of interest to the
investors such as financial results, investor presentations, press
releases etc through the CompanyÃs website www.sobha.com.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with the requirements of the Listing Agreement, the
Management Discussion and Analysis Report is presented in a separate
section forming part of the Annual Report.
ACKNOWLEDGMENTS
The Directors would like to place on record their sincere appreciation
to the CompanyÃs customers, vendors, and bankers for their continued
support to the Company during the year. The Directors also wish to
place on record their appreciation for the contribution made by
employees at all levels for sustaining the organizational growth
especially during the challenging times. We thank the Government of
India, state governments and other government agencies for their
assistance and cooperation and look forward to their continued support
in future. Finally, the Board expresses its gratitude to the members
for their continued trust, cooperation and support.
For and on behalf of the Board of Directors
Ravi Menon J C Sharma
Vice Chairman Managing Director
Place: Bangalore
Date : May 10, 2011
Mar 31, 2010
We have pleasure in presenting the fifteenth annual report on the
business and operations of the Company together with the audited
results for the financial year ended March 31, 2010.
Financial Highlights
(Rs. in Million)
Particulars 2009-10 2008-09
Net sales and other income 11,192.83 9,917.05
Profit before interest, 2,597.21 2,867.70
depreciation
and tax
Finance charges 671.40 1,052.14
Depreciation 323.10 360.33
Profit before Tax 1,602.71 1,455.23
Provision for Tax - Current 261.00 374.00
- Fringe benefit - 4.00
- Deferred (20.83) (20.00)
- MAT Credit (4.10) -
Entitlement
Wealth tax 0.02 0.45
Net profit after tax 1,366.62 1,096.78
Add: Balance of profit brought 3,259.23 2,418.74
forward
Profit available for 4,625.85 3,515.52
appropriations
Appropriations -
Proposed dividend 286.81 85.29
(Includes tax on dividend)
Transfer to General Reserve 140.00 -
Transfer to Debenture - 171.00
Redemption Reserve
Balance carried to Balance 4,199.04 3,259.23
Sheet
Result of Operations
After the unprecedented and dramatic changes in the macro economic
environment during the last financial year, there has been significant
improvement in the economic situation and general outlook especially
during the later part of the financial year under review.
We have successfully overcome the challenges of the economic downturn
through a series of measures like further capital infusion,
monetization of land parcels, product innovation, aggressive marketing
strategy and ensuring better control over costs.
We can see the benefits of the above measures in terms of higher sales,
improved cash flows and significant reduction in debt.
During the year under review, our Company has executed and handed over
10 residential projects covering an area of 1.82 million square feet
and 26 contractual projects covering an area of 3.75 million square
feet resulting in aggregate development of 5.57 million square feet.
Transfer to Reserves
An amount of Rs. 140.00 million is proposed to be transferred out of
the current profit and Rs. 276.35 million from the Debenture Redemption
Reserve to the General Reserve aggregating the total transfer to
reserves at Rs. 416.35 million.
Dividend
The Directors propose to recommend dividend at the rate of Rs. 2.50
for every equity share of Rs. 10 each resulting in a dividend rate of
25% for the financial year 2009 Ã 2010.
Business
The CompanyÃs main operations can be divided into
1. Development and construction of residential and commercial projects
2. Contractual projects
The summary of the projects completed and ongoing as on March 31, 2010
have been detailed in the Management Discussion Analysis Report.
Qualified Institutional Placement
During the year, the Company has issued 25,162,135 equity shares of Rs.
10 each at a premium of Rs. 199.40 per equity share to Qualified
Institutional Buyers in terms of Chapter XIII A of the erstwhile
Securities and Exchange Board of India (Disclosure and Investor
Protection) Guidelines, 2000. Consequently, the paid up share capital
of the Company has increased from 72,901,733 equity shares of Rs. 10
each to 98,063,868 equity shares of Rs. 10 each.
Utilization of QIP Proceeds
The Audit Committee and the Board of Directors of the Company have
taken on record the following statement of utilization of the proceeds
of the amounts raised by the Company consequent to the issue of
25,162,135 equity shares of Rs. 10 each at a premium of Rs. 199.40 per
equity share to Qualified Institutional Buyers in terms of Chapter XIII
A of the erstwhile Securities and Exchange Board of India (Disclosure
and Investor Protection) Guidelines, 2000.
(Rs. in Million)
Gross proceeds 5,269
Less: Expenses incurred
(gross of service tax) 175
Net proceeds 5,094
Utilization
Loan repayments 3,995
Working capital 935
Interest payments 144
Refund of share application
money 20
Total Utilization 5,094
Debentures
During the year under review, the Company has not issued any
Debentures. The Company has redeemed various series of Non- Convertible
Debentures aggregating Rs. 1,630.10 million.
Deposits
The Company has not accepted any deposits in terms of provisions of
Section 58A of the Companies Act, 1956, during the year under review.
Directors
There are eight directors on the Board of Directors of the Company.
Mr. M Damodaran who was appointed as an Additional Director effective
from January 29, 2010, holds office up to the date of the forthcoming
annual general meeting and is eligible for re- appointment.
Mr. P Ramakrishnan who was appointed as an Additional and Wholetime
Director effective from January 29, 2010 and designated as Deputy
Managing Director from April 01, 2010 holds office up to the date of
the forthcoming annual general meeting and is eligible for
re-appointment.
In terms of Article 107, 108 and 109 of Articles of Association, Mr.
Anup Shah and Mr. R V S Rao, Independent Directors are liable to retire
by rotation at the ensuing Annual General Meeting and being eligible
offer themselves for re-appointment.
The term of office of Mr. P N C Menon, Mr. Ravi Menon and Mr. J C
Sharma ceases during the financial year 2010 Ã 11 and the proposals for
re-appointment are included in the notice convening the Annual General
Meeting.
The Notice convening the Annual General Meeting includes the proposals
for the re-appointment of Directors. Brief resumes of the Directors
proposed to be re-appointed, nature of their expertise in specific
functional areas and names of the companies in which they hold
directorship / membership / chairmanship of the Board Committees, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges have been provided as an annexure to the Notice convening the
Annual General Meeting.
Auditors
M/s S R Batliboi & Associates, Chartered Accountants, statutory
auditors retire at the ensuing Annual General Meeting and being
eligible, offer themselves for re-appointment. The Board of Directors
upon the recommendation of the Audit Committee proposes the
re-appointment of M/s S R Batliboi & Associates, Chartered Accountants
as the statutory auditors of the Company.
The Auditors had given certain observations in their report and the
Board feels it expedient to address the same as follows:
1. Paragraph 4 of the Auditors Report:
The Registrar of Companies, Karnataka during the course of Technical
Scrutiny had observed that the Company during the earlier years has
undertaken certain transactions without the prior approval of the
Central Government required under Section 297 of the Companies Act,
1956. These transactions were done on an arms length basis and in the
normal course of business. The Company has fled an application for
composition under Section 621A of the Companies Act, 1956 and the
outcome of the application is awaited. However the Company has obtained
the necessary approvals for such transactions undertaken during the
year under review
2. Clause iii(a) and iii(b) of the Annexure referred to in Paragraph 3
of the Audit Report:
The transactions in the nature of loans referred were undertaken by the
Company when the status of the Company was a Private Company. These
transactions were done within the framework of applicable laws and in
the normal course of business. These transactions are not prejudicial
to the interests of the Company. The Company has been making adequate
disclosures for these transactions at appropriate places.
3. Clause xi of the Annexure referred to in Paragraph 3 of the Audit
Report:
Due to slowdown in the market in which the Company is operating,
requests were made to the lenders to reschedule or roll over its near
term obligations. The Company had made these requests before the due
dates of repayment and in accordance with the applicable monetary
policies initiated by the Reserve Bank of India. However the said delay
was during the first quarter of the financial year under review and
prior to the Company raising further capital by way of Qualified
Institutional Placement. The Company post issue of equity shares has
not delayed the repayments and there is no overdue outstanding in
respect of debenture holders and banks as at close of the financial
year.
Subsidiaries
There are no subsidiaries of the Company within the meaning of Section
4 of the Companies Act 1956 except investments as detailed in the
financial statements forming part of the Annual Report.
Human Resources
Sobha Developers aims to align HR practices with business goals,
motivate people for higher performance and build a world class working
environment. We continue to develop and retain the best available
talent through training and motivational programs. Our Company strives
to implement the best of HR practices so as to ensure that talent
retention is ensured at all levels. Employee relations continued to be
cordial and harmonious at all levels and in all divisions of the
Company during the year. A separate section on the Human Resources
function is provided in the Annual Report.
Quality
The Department of Quality, Safety and Technology (QST) holds the
responsibility to monitor all quality and safety works in our various
projects and to introduce the latest construction technology so as to
enable project delivery on par with relevant specifications, norms and
standards. The department focuses on construction quality and safety
aspects, infrastructure execution, civil maintenance works,
geotechnical aspects, drawing detail development and importing /
implementing new tools and material for process up gradation.
Corporate Governance
A detailed report on Corporate Governance and a Certificate from the
Practicing Company Secretary regarding compliance with conditions of
Corporate Governance has been furnished in the Annual Report.
Responsibility Statement of the Board of Directors
The DirectorÃs Responsibility Statement, setting out compliance with
the accounting and financial reporting requirements specified under
Section 217(2AA) of the Companies Act, 1956, in respect of the
financial statements, is furnished below and on behalf of the Board of
Directors, it is hereby confirmed that:
i. In the preparation of the annual accounts, the applicable accounting
standards had been followed along with the proper explanation relating
to material departures, if any.
ii. The directors had selected the accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period.
iii. The Directors had taken proper and sufficient 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.
iv. The Directors had prepared the annual accounts on a Ãgoing concernÃ
basis.
Corporate Social Responsibility
Sobha Developers is a responsible corporate citizen and is committed to
Corporate Social Responsibility. A separate section on Corporate Social
Responsibility forms part of the Annual Report.
Awards & Recognitions
We are glad to report the following awards and recognition received
during the financial year 2009-10
i. Prof. Vasanth Rao Trophy in recognition of being the second best
company practicing Value Engineering in India by the Indian Value
Engineering Society for the year 2008Ã2009.
ii. Special Mention for ÃTe Terminal Building - Bangalore Infosys Food
Courtà project in the Recreational Architecture category of
Architecture + Design & Spectrum Foundation Architecture Awards 2009.
iii. Bayer Technology has recognized the Company as ÃTe Best
Contractor, working with safe practices at the siteà for their
contractual project being executed by the Company.
Code of Conduct
Pursuant to Clause 49 of the Listing Agreement, the declaration signed
by the Managing Director affirming the compliance of Code of Conduct by
the Directors and senior management personnel for the financial year
2009-10 is annexed and forms part of the Directors and Corporate
Governance Report.
Disclosure of Employees
The statement of employees in receipt of remuneration exceeding the
limits prescribed under Section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975 is
attached herewith as an annexure to this report.
Secretarial Audit Report
The Company has appointed Mr. Nagendra D Rao, Practicing Company
Secretary to conduct the Secretarial Audit for the financial year ended
March 31, 2010. The Secretarial Audit Report confirming compliance with
all the applicable provisions of corporate laws and the Listing
Agreement is provided separately in the Annual Report.
Implementation of IFRS
Consequent to the issue of the road map for implementation of
International Financial Reporting Standards (IFRS) in India, the
Company has constituted a core team to ensure a smooth transition. The
Company has also engaged consultants for this purpose and is committed
to meeting the time lines for implementation. Training sessions for the
members of the Audit Committee were conducted to understand the impact
and implications of the new accounting standards.
Conservation of energy, research and development, technology
absorption, foreign exchange earnings and outgo
In terms of Section 217 (1) (e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the report of Board of
Directors) Rules, 1988, the particulars of conservation of energy,
technology absorption, foreign exchange earnings and outgo are set out
as an annexure to this report.
Additional information to Shareholders
We provide all the latest information on the CompanyÃs projects,
matters of interest to the investors like financial information,
investor presentations, press releases, etc., on our website
www.sobha.com
Management Discussion and Analysis Report
In accordance with the requirements of the Listing Agreement, the
Management Discussion and Analysis Report is presented in a separate
section forming part of the Annual Report.
Acknowledgements
The Directors would like to place on record their sincere appreciation
to the CompanyÃs customers, vendors, and bankers for their continued
support to the Company during the year. The Directors also wish to
place on record their appreciation to the contribution made by
employees at all levels for sustaining the organizational growth
especially during the challenging times. We thank the Government of
India, state governments and other government agencies for their
assistance and cooperation and look forward to their continued support
in future. Finally, the Board expresses its gratitude to the members
for their continued trust, cooperation and support.
For and on behalf of the Board of Directors
Place: Bangalore Ravi Menon J C Sharma
Date: April 27, 2010 Vice Chairman Managing Director