and
#MDStart#
Management Discussion and Analysis
To
The Members,
The Directors are pleased to present herewith the Thirty-Sixth Annual Report of Hubtown Limited ("the Company") along with the Audited Financial Statements (Standalone and Consolidated) for the Financial Year ended March 31, 2024.
1. FINANCIAL RESULTS:
The standalone and consolidated financial highlights of your Company for the financial year ended March 31, 2024 are summarized below:
(Rs. in lakh)
2. FINANCIAL PERFORMANCE:
The consolidated and standalone financial statements of the Company for the year ended March 31, 2024 have been prepared in accordance with Indian Accounting Standards (IND-AS), the relevant provisions of sections 129 and 133 of Companies Act, 2013 (hereinafter referred to as "the Act"), Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "SEBI Listing Regulations"), which have been reviewed by the Statutory Auditors of the Company.
Standalone Financials:
• Income from operations stood at Rs. 21058 lakh as against Rs. 21903 lakh in the previous year representing an decrease of 3.86 %;
• Total Income stood at Rs. 23716 lakh, increased by 0.99 % as against Rs. 23483 lakh in the previous year;
• Total Expenses stood at Rs. 23074 lakh as against Rs. 25591 lakh in the previous year;
• Profit before Tax was Rs. 642 lakh as against loss of Rs. (2108) lakh in the previous year;
• Profit for the year was Rs. 616 lakh as against profit of Rs. 1081 lakh in the previous year;
• Earning per Share before and after Extraordinary Item was Rs. 0.80 as against Rs. 1.47 in the previous year; and
• Networth of the Company stood at Rs. 1,45,953 lakh as against Rs. 1,43,740 lakh in the previous year.
Consolidated Financials:
• Income from operations stood at Rs. 25,772 lakh as against Rs. 31909 lakh in the previous year representing an decrease of 19.23 %;
• Total income stood at Rs. 36,203 lakh as against Rs. 33,600 lakh in the previous year representing an increase of 7.75 %;
• Total Expenses stood at Rs. 43730 lakh as against Rs. 34,206 lakh in the previous year;
• Loss before Tax was Rs. (7,572) lakh as against loss of Rs. (606) lakh in the previous year;
• Loss after Tax and Other Items was Rs. (8,617) lakh as against profit of Rs. 3050 lakh in the previous year;
• Earning per Share before and after Extraordinary Item was Rs. (11.17) as against Rs. 4.16 in the previous year ; and
• Networth of the Company stood at Rs. 1,31,280 lakh as against Rs. 1,32,873 lakh in the previous year.
3. DIVIDEND:
With a view to conserve the resources for funding future business requirements, the Directors have not recommended any dividend on the equity shares for the Financial Year ended March 31, 2024.
4. DIVIDEND DISTRIBUTION POLICY:
The provisions of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 relating to framing of 'Dividend Distribution Policy' are presently not applicable to the Company.
5. TRANSFER TO RESERVES:
No amount is proposed to be transferred to General Reserves during the Financial Year 2023-2024.
6. PREFERENTIAL ISSUE:
Pursuant to the approval by the Board of Directors at its meeting held on June 23, 2022 and approval by the members of the Company at their Extra-Ordinary General Meeting held on July 21, 2022 ('EGM'), the Company, on August 3, 2022, has allotted 72,00,000 warrants, each convertible into one equity share, on preferential basis at an issue price of Rs. 57/- each, upon receipt of 25% of the issue price as warrant subscription money. Balance 75% of the issue price is payable within 18 months from the allotment date.
As on March 31, 2024, all the warrants issued and allotted by the Company were converted into equal number of fully paid up equity shares.
7. SHARE CAPITAL:
The paid-up equity share capital of the Company as on March 31, 2024 was Rs. 79,93,58,710/-. Presently, the Company does not have any stock option scheme for its employees.
During the year under review:
• The Company has not issued any shares with differential rights and hence no information as per provisions of section 43(a)(ii) of the Act, read with rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.
• The Company has not granted employee stock options as per provisions of section 62(1)(b) of the Act, read with rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014.
• The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of section 54(1) (d) of the Act read with rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.
• During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to section 67(3) of the Act, read with rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014;
8. DEBENTURES:
During the year under review, the Company has issued 700 Secured Non-Convertible Debentures at face value of Rs. 10 Lakh on a private placement basis on January 25, 2024. As on March 31, 2024 Company has not received subscription amount for the allotment of said Non-Convertible Debentures. After closure of financial year 2023-2024, the Company has allotted 228 Non-Convertible Debentures upon receipt of subscription amount.
9. REVISION OF FINANCIAL STATEMENTS OR BOARD'S REPORT:
During the year under review, no revision was made in the previous financial statements or the Board's Reports in respect of any of the three preceding financial years.
10. DETAILS OF DEMAT SUSPENSE ACCOUNT:
Pursuant to Regulation 39 (4) read with Schedule VI to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), the Company has opened a separate demat suspense account in the name and style of "Hubtown Limited - Unclaimed Shares Suspense Account" and credited the shares of the Company which are remaining unclaimed by the shareholders under the Initial Public Offering (IPO). The details of such unclaimed shares as on March 31, 2024 are set out hereinunder::
The voting rights on the outstanding unclaimed shares as on March 31, 2024 shall remain frozen as long as the shares remain in the Suspense Account till the rightful owner of such shares claims the shares by submitting the requisite documentary proof of their identity to the Company's Registrar and Transfer Agent, M/s. Link Intime India Private Limited.
11. CHANGE IN THE NATURE OF BUSINESS:
There has been no change in the nature of business of the Company during the year under review.
12. REGISTERED OFFICE:
During the year under review, there is no change in the address of Registered Office of the Company.
13. BUSINESS OVERVIEW:
Your Company is one of India's leading real estate company, engaged in the business of execution and development of real estate projects and currently operates both - on its own and through its subsidiaries / joint ventures / associate companies, partnerships firms and public private partnerships encompassing the construction and development of Residential and Commercial Premises, and Build Operate Transfer (BOT) Projects.
The Company has a Western India focus with presence in major cities such as Mumbai, Thane, Pune, Ahmedabad, Surat, Vadodara and Mehsana.
OVERVIEW OF THE COMPANY'S PROJECTS
(Includes projects being developed / to be developed through subsidiaries / associates / joint ventures / public-private partnerships)
RESIDENTIAL Completed Projects:
Ongoing Projects:
Future Projects:
COMMERCIAL: Completed Projects:
Ongoing Projects
14. MANAGEMENT DISCUSSION AND ANALYSIS:
ECONOMIC REVIEW Global Economy
According to the latest projections by the International Monetary Fund (IMF), the world economy is expected to continue growing at 3.2% during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies-where growth is expected to rise from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025-will be offset by a modest slowdown in emerging market and developing economies from 4.3% in 2023 to 4.2% in both 2024 and 2025.
I nflation is forecast to decline steadily, from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, with advanced economies returning to their inflation targets sooner than emerging markets and developing economies. Core inflation is generally projected to decline more gradually. The global economy has been surprisingly resilient, despite significant central bank interest rate hikes to restore price stability. The global economy witnessed a blend of opportunities and challenges. It persisted with challenges and uncertainties arising on account of inflation dynamics, rising geopolitical tensions leading to supply-chain disruptions and pace of post pandemic recovery.
Indian Economy
India's economic performance has remained robust despite global challenges and geopolitical concerns. As per the First Advance Estimates (FAE) released by the National Statistical Office (NSO), real Gross Domestic Product (GDP) is expected to grow by 7.3%, in FY2023-24, underpinned by strong investment activity. This can be attributed to strong domestic demand, rural demand pickup, robust investment and sustained manufacturing momentum. Despite the global challenges, India stands out with its strong economic performance, highlighting broad based growth across sectors and asserting its pivotal role in supporting the global growth trajectory.
The government and the RBI's efforts to combat inflation, including calibrated policy rates, strengthening food buffers and easing imports, have ensured effective inflation management. Consequently, retail inflation in FY 2023-24 witnessed a significant decline, with core inflation dropping to 3.3% in March 2024.
Slowing global trade, presents a challenging landscape for economies worldwide. Despite these headwinds, India's trade deficit is expected to decline in the coming years as the PLI scheme deepens its coverage and extends to other sectors. Driven by strong exports and resilient remittances, various international agencies and RBI expect the CAD to GDP ratio to have moderated below 1% in FY 2023-24.
The resilient growth demonstrated by the economy has led to expectations that the Indian economy may become the third largest in the next few years. Further, India's inclusion in the Emerging Markets bond index is also poised to draw significant foreign capital into the country, which would further act as a booster.
INDUSTRY REVIEW
The Indian real estate sector witnessed a strong growth in the past couple of years and is poised for an assuring growth in the future. The Indian real estate sector is a key player in the nation's economic development. With promising projections in market size, GDP contribution and employment generation, the sector stands as a beacon of growth and opportunity. Nurturing this growth requires a balanced approach, addressing challenges while embracing innovation, ultimately shaping a real estate landscape that is not just expansive but also sustainable.
Indian real estate has seen diverging trends as compared to global peers. Higher interest rates dented housing sales, layoffs and weak consumer sentiment impacted office and retail space leasing in advanced economies. India on the other hand witnessed surge in housing demand, accompanied by recovery in office leasing despite global slowdown in IT/ITes spending. Retail real estate continues to perform well driven by upbeat consumer spending.
REAL ESTATE SECTOR
In FY2024, the real estate sector saw remarkable growth, driven by strong housing demand, stable interest rates, and a robust economy. Real estate investments in India reached $5.1 billion, with a substantial portion allocated to land acquisitions, representing 40% of total investments. This trend expanded to tier 2 and tier 3 cities, highlighting real estate's attractiveness as an investment avenue, including options like direct purchases, Real-Estate-Investment-Trusts (REITs), and Mortgage-backed-Securities (MBS).
FY2024 was a milestone year for India's real estate sector, with record-breaking sales and sustained growth. Despite a notable increase in new launches, inventory levels remained stable or decreased in tier-1 cities, highlighting strong demand. The residential segment excelled, driven by stable interest rates, a robust economy, and evolving consumer preferences. The demand for Commercial office space recovered from slowdown induced by remote work trends and global economic slowdown, while the retail real estate sector experienced a robust revival, surpassing prepandemic consumption levels.
MUMBAI REAL ESTATE
Mumbai Metropolitan Region (MMR) continues to remain the largest residential market by a margin. Mumbai emerged as the top performer in the luxury segment, witnessing a 15% year-on-year surge in sales. The city boasts over 40% of the country's total luxury housing inventory, attracting highnet-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) with its premium locations like Altamount Road, Nepean Sea Road, Bandra and Worli. These areas command high prices, with average property values ranging from ' 20 crore to over ' 60 crore. Occasionally, apartments priced above ' 100 crore are also recorded.
MMR housing industry is going to benefit immensely as new avenue of growth opens up. MMR has emerged as a preferred destination for offshoring by international banks owing to its thriving financial ecosystem and a large pool of high quality BFSI talent. A prominent global bank recently secured ~ 2 Mn sq ft office space in the MMR. This trend is likely to continue and is expected to generate a significant number of high- paying job opportunities. This, in turn, will lead to a surge in demand for housing in MMR.
The enduring confidence of homebuyers in the Mumbai market has maintained a positive outlook. This optimism has driven Mumbai's property registrations consistently exceeding 10,000 mark for the fourth consecutive month in 2024.
PUNE HOUSING MARKET
Pune has emerged as India's second largest housing market after MMR in terms of absorption in number of units. This growth can be attributed to Pune's status as a hub for manufacturing facilities in various industries, including automobiles, defense, and engineering goods, as well as the presence of a significant number of IT services companies. The diversified nature of job providers has made Pune an attractive and steadily growing residential market. Its share in absorption and new launches stood at 18% and 19% respectively of overall top -7 cities in India. New projects launches also rose by 10% YoY to 42,437 units, indicating a preference for larger homes with dedicated workspaces.
The city of Pune has evolved from primarily serving as a manufacturing base for multinational corporations to now attracting these companies to establish their centers for innovation. This shift has resulted in a rise in demand for housing and this trend is expected to continue, further boosting the real estate sector in Pune.
SEGMENT WISE PERFORMANCE:
Commercial:
The commercial sector is important because it has a direct impact on the economic cycle. Commercial infrastructure, such as malls and offices, is critical for economic growth. The recent selling of commercial properties indicates that investors and buyers recognize the value of this sector to the well-being of citizens and the economy.
There are many factors that influence the development of the commercial real estate sector. Commercial real estate is closely connected to the economy and the performance of different sectors. There are various types of companies operating in the sector, such as real estate investors, developers, brokers, managers, and media portals, all facing different challenges and opportunities as industry trends evolve. During the coronavirus pandemic, the need for social distancing led to offices worldwide transitioning to a hybrid working model and demand for office space falling. The boost in e-commerce spending in many countries, on the other hand, resulted in the need for more warehouses, fulfillment centers, and the growth of the industry and logistics real estate sector which facilitates it. Some of the most important themes in the future of the industry are the increasing importance of technological innovation and environmental, social, and governance sustainability (ESG).
Residential:
The residential segment continued with its momentum during the fiscal and exhibited a marked improvement over the last year. The strong demand in the housing segment was well supported by rising affordability, decadal low mortgage rates and surge in the desire of owning a home. The segment saw an unexpected recovery coming out of the pandemic and it turned out to be a strong catalyst for consumers to return to the market. The pandemic also made people realize the importance of need for quality housing and in a number of cases a need to own a bigger house with better amenities and infrastructure. Low-interest rates, the best affordability levels, healthy wage growth, and a waning pandemic with less risk of further disruptions have created a favorable environment for homebuyers who have rediscovered the need for new and better housing.
While financial stress remains a significant factor for developers across markets, healthy and sustained homebuyer activity should pave the way for gradual price increases, allowing them to weather increases in critical input costs such as cement and steel.
Retail:
The retail segment outperformed with sustained growth momentum continuing across the country. Retailing as a business is seasonal, highly dependent on consumer spending and during the current year's vacation season. There has been a significant rebound of improved footfall and increased consumption. This resurgence is primarily supported by the recovery of the luxury segment and expansion of international brands. Investing in retail real estate has long been a way to take advantage of consumption, which forms a large part of any economy. Retail leases tend to be shorter than those in office buildings, allowing for more frequent mark-to-market rental increases. Because retail consumption is local, retail landlords are able to build in more markets than offices, which tend to be concentrated in large cities.
The luxury segment continued to experience rising resurgence, primarily driven by rising income levels, aspirational lifestyle and growing consumption trends in the country. Realising the notable growth in the luxury segment, numerous foreign retailers have entered and continue to explore the country to capitalise on this growth.
OPPORTUNITIES AND CHALLENGES
Opportunities
As India awaits policy reforms to pick up speed, your Company firmly believes that the demand for Real Estate in a country like India will remain strong in the medium to long term. Your Company's well accepted brand, contemporary architecture, well designed projects in strategic locations, strong balance sheet and stable financial performance even in testing times make it a preferred choice for customers and shareholders. Your Company is ideally placed to further strengthen its development potential by acquiring new land parcels.
Challenges
While the management of your Company is confident of creating and exploiting the opportunities, it also finds the following challenges:
• Unanticipated delays in project approvals;
• Availability of accomplished and trained labour force;
• Increased cost of manpower;
• Rising cost of construction lead by increase in commodity prices;
• Growth in auxiliary infrastructure facilities; and
• Over regulated environment.
COMPANY STRENGTHS
Your Company continues to capitalize on the market opportunities by leveraging its key strengths.
These include:
1. Brand Reputation: Enjoys higher recall and influences the buying decision of the customer. Strong customer connects further results in higher premium realizations.
2. Execution: Possesses a successful track record of quality execution of projects with contemporary architecture.
3. Transparency: Follows a strong culture of corporate governance and ensures transparency and high levels of business ethics.
4. Highly qualified execution team: Employs experienced, capable and highly qualified design and project management teams who oversee and execute all aspects of project development.
RISKS AND CONCERNS
Market price fluctuation
The performance of your Company may be affected by the sales of its projects. These prices are driven by prevailing market conditions, the nature and location of the projects and other factors such as brand, reputation and the design of the projects. Your Company follows a prudent business model and tries to ensure steady cash flow even during adverse pricing scenario.
Sales volume
The volume of bookings depends on the ability to design projects that will meet customer preferences, getting various approvals in time, general market factors, project launch and customer trust in entering into sale agreements well in advance of receiving possession of the projects. Your Company sells its projects in phases from the time it launches the project, based on the type and scale of the project and depending on market conditions.
Execution
Execution depends on several factors which include labour availability, raw material prices, receipt of approvals and regulatory clearances, access to utilities such as electricity and water, weather conditions and the absence of contingencies such as litigation. Your Company manages the adversities with cautious approach, meticulous planning and by engaging established and reputed contractors. As your Company imports various materials, at times execution is also dependent upon timely shipment and clearance of the material.
Regulatory Hurdles
The real estate industry is subject to extensive regulation, and any negative adjustments in governmental policies or the regulatory framework can negatively influence the sector's performance. Significant delays in procedures related to acquiring land, determining land use, initiating projects, and obtaining construction approvals are common. Changes in policy applied retrospectively, along with regulatory obstacles, could affect profitability and diminish the appeal of both the sector and the companies' active within it.
Monetary Tightening and Funding Issues
In recent years, the landscape of real estate financing has shown a marked divergence. Well-established developers with lower debt levels have continued to secure funding with relative ease, benefiting from the selective approach of lenders, while those with weaker financial standings have encountered challenges in accessing capital. The performance of the real estate sector is intricately connected to the broader economic recovery and the prevailing monetary policies. The RBI has maintained an accommodative stance to bolster economic growth. Higher housing loan costs and an escalation in financing costs for developers, who are already contending with margin pressures due to the rising prices of commodities, could have implications.
Shortage of Manpower & Technology
As the country's second-largest employment provider, the real estate sector relies significantly on manual labour. The pandemic severely impacted this sector due to labour shortages, disrupting project completion schedules. Consequently, there's a pressing need for the adoption of alternative construction methods that are less dependent on manual labour and more on technology.
OUTLOOK
In 2024, we anticipate an opportunity for the Indian economy to become a world leader. The real estate sector is likely to continue on its journey of long term growth as we see a continuous rise in GDP per capita, larger disposable incomes, growing urbanization and most of all a larger focus of the world on us as the next big economy. FY 2023-2024 was an exciting year for the real estate sector.
An increase in earning potential, a need for a better standard of living and the growing base of aspirational consumers and their lifestyle changes have led to substantial growth in the sector. With suited economic growth, the premium housing segment will also witness higher demand in the years to come.
Strengthen relationships with key service providers and develop multiple vendors:
In order to continue delivering landmark offerings to our customer, we shall further strengthen our relationship with our key service providers, i.e. architects, designer and contractors. Your Company is also working on strategy to develop more and more vendors who can deliver product and services in line with Company's philosophy and product offerings.
HUMAN RESOURCES:
The Company recognizes that its people are the key to the success of the organization and in meeting its business objectives. The Human Resources function endeavours to create a congenial work environment and synchronizes the working of all the departments of the organization to accomplish their respective objectives, which in turn helps the Company to build and achieve its goals and strategies. Employee relations during the year remained cordial. The Company had 61 employees on its payroll as on March 31,2024.
Your Company has a robust Career Development framework that gives employees the power to define aspirations and take charge of their career. They can discuss their development needs and aspirations with their managers and carve a development plan for the future. Your Company extends the required assistance to employees and provide them with opportunities that can facilitate employees to grow both personally and professionally. This enables employees to achieve their career goals and in turn creates a set of motivated, valuable and skilled workforce.
Health and Safety:
Your Company is always committed to the health and safety of its employees. Your Company provides a clean, hygienic and conducive work environment to all employees and doubled these efforts during the pandemic.
INTERNAL CONTROL SYSTEMS
The Company has adequate internal control systems, commensurate with the size and nature of its business. Well documented policies and procedures to monitor business and operational performance are supported by IT systems, all of which are aimed at ensuring business integrity and promoting operational efficiency. Your Company has also focused on upgrading the IT infrastructure - both in terms of hardware and
software. In addition to the existing ERP platform, the Company is presently reviewing the process documentation to ensure effectiveness of the controls in all the critical functional areas of the Company. A firm of internal auditors appointed by the Company conducts periodical audits to ensure adequacy of internal control systems, adherence to management policies and compliance with laws and regulations. Their scope of work includes internal controls on accounting, efficiency and economy of operations. The internal auditors also report on the implementation of their recommendations.
Reports of the Internal Auditors are regularly reviewed at the Audit and Compliance Committee meetings. The Audit and Compliance Committee also reviews the adequacy and effectiveness of the internal control systems and suggests improvements, when so required.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:
In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios.
Reason for change in 25% or more in key financial ratios as compared to the immediately previous financial year:
CAUTIONARY STATEMENT
This management discussion and analysis contain forward looking statements that reflects your Company's current views with respect to future events and financial performance. The actual results may differ materially from those anticipated in the forward looking statements as a result of many factors.
15. DIRECTORS AND KEY MANAGERIAL PERSONNEL'S:
Following changes took place in the Board during the Financial Year 2023-24:
Mr. Jignesh Hansraj Gala (DIN: 07463896), was appointed as a Non-Executive - Independent Director by the Board of Directors w.e.f. May 29, 2023. Further, the appointment was approved by the Members of the Company vide a Special Resolution passed through Postal Ballot on July 01, 2023.
Mr. Sunil Chandrakant Shah (DIN: 06947244), Non-Executive - Independent Director stepped down from the Board of Directors of the Company owing to his pre-occupation and other personal commitments, with effect from October 16, 2023. The Board places on record its sincere appreciation for the invaluable contribution by Mr. Sunil Chandrakant Shah to the deliberations of the meetings of the Board and the Committee of the Board of which he was a member during his tenure as Director of the Company.
In accordance with the provisions of Section 152 (6) of the Act and the Company's Articles of Association, Mr. Vyomesh M. Shah, Executive Non-Independent Director retires by rotation at the ensuring Annual General Meeting and, being eligible, offers himself for re-appointment. Mr. Vyomesh M. Shah is not disqualified from being re-appointed as a Director by virtue of the provisions of Section 164 of the Companies Act, 2013. The proposal for his re-appointment has been included in the Notice convening the ensuing Annual General Meeting.
Based on the recommendations of the Nomination and Remuneration Committee, Mr. Hemant M. Shah and Mr. Vyomesh M. Shah, were reappointed as Executive Chairman and Managing Director respectively for a period of three years, effective from January 01, 2025 to December 31, 2027, by the Board of Directors in its meeting held on May 24, 2024, subject to the approval of the shareholders in the ensuing Annual General Meeting of the Company.
Brief resumes of Mr. Hemant M. Shah and Vyomesh M. Shah, nature of his expertise in specific functional areas, names of companies in which he is a director and member of Board committees and shareholding in the Company as required under Regulation 36 (3) of the SEBI Listing Regulations read with clause 1.2.5 of Secretarial Standards SS-2 on general meeting, is furnished in the annexure to the Notice convening the Annual General Meeting.
The Notice convening the ensuing Annual General Meeting includes the proposals for appointment / re-appointment of Director / Executive Chairman / Managing Director.
During the year under review, the Independent Directors and Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company.
None of the Directors are disqualified for being appointed as the Director of the Company in terms of Section 164 of the Act.
Except for Executive Chairman and the Managing Director who are related to each other being brothers, none of the other Directors of the Company are inter-se related to each other.
Key Managerial Personnel's:
During the year under review, there is no change in the Key Managerial personnel's of the Company.
16. DECLARATION BY INDEPENDENT DIRECTORS:
All the Independent Directors on the Board have given a declaration of their independence to the Company as required under Section 149(7) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations. In the opinion of the Board, all the Independent Directors possess the integrity, expertise and experience including the proficiency required to be Independent Directors of the Company, fulfill the conditions of independence as specified in the Act and the SEBI Listing Regulations and are independent of the management and have also complied with the Code for Independent Directors as prescribed in Schedule IV to the Act.
17. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS:
Pursuant to Regulation 25(7) of SEBI Listing Regulations, the Company imparted various familiarization programmes for its Independent Directors including, Industry Outlook at the Board Meetings, Regulatory updates at Board Meetings and Audit and Compliance Committee Meetings covering changes with respect to the Companies Act, SEBI Listing Regulations, Taxation and other matters, Prevention of Insider Trading Regulations, SEBI Takeover Regulations, meeting with Senior Executive(s) of the Company, etc.
The details of familiarization programme for Independent Directors held during the year 2023-2024 have been disclosed on the website of the Company and are available at the link http://hubtown.co.in/investors.
18. PAYMENT OF REMUNERATION / COMMISSION TO EXECUTIVE DIRECTORS FROM SUBSIDIARY COMPANIES:
During the year under review, neither the Executive Chairman nor the Managing Director was in receipt of any remuneration/commission from any of the subsidiary companies of the Company. The Company has no holding company.
19. MEETINGS OF THE BOARD OF DIRECTORS:
The Board of Directors met 7 (Seven) times during the year ended March 31, 2024 in accordance with the provisions of the Companies Act, 2013 and the Rules made there under and Regulation 17 (2) of the SEBI Listing Regulations. Additionally, during the year ended March 31, 2024, the Independent Directors held a separate meeting in compliance with the requirements of Schedule IV of the Companies Act, 2013. For further details, kindly refer to the section on 'Corporate Governance Report' forming part of this Annual Report.
20. COMMITTEES OF THE BOARD:
There are currently four (4) Committees of the Board, which are as under:
• Audit and Compliance Committee
• Nomination and Remuneration Committee
• Stakeholders' Relationship Committee
• Committee of Directors.
Details of the aforesaid Committees including their composition, terms of reference and meetings held during the year under review, are provided in the section on 'Corporate Governance Report', which forms part of this Annual Report.
During the year under review, all the recommendations put forth by the Audit and Compliance Committee, Nomination and Remuneration Committee and Stakeholders' Relationship Committee, were duly considered and accepted by the Board of Directors.
21. INTERNAL FINANCIAL CONTROLS:
The Company has in place an adequate system of internal controls commensurate with the size and nature of its business, which ensures that transactions are recorded, authorized and reported correctly apart from safeguarding its assets against loss from wastage, unauthorized use and removal. Significant audit observations and follow-up action thereon are reported to the Audit and Compliance Committee.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory and Secretarial Auditors and the reviews performed by the Management, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the Financial Year 2023-2024.
22. ANNUAL PERFORMANCE EVALUATION:
Pursuant to the provisions of the Companies Act, 2013 and Part 'D' of Schedule II to the SEBI Listing Regulations, the Board has carried out an annual evaluation of its own performance and that of its Committees as well as performance of the Directors individually. Feedback was sought by way of a structured questionnaire covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance and the evaluation was carried out based on responses received from the Directors.
The performance evaluation of Committees was based on criteria such as structure and composition of Committees, attendance and participation of member of the Committees, fulfillment of the functions assigned to Committees by the Board and applicable regulatory framework, frequency and adequacy of time allocated at the Committee meetings to fulfill duties assigned to it, adequacy and timeliness of the agenda and minutes circulated, comprehensiveness of the discussions and constructive functioning of the Committees, effectiveness of the Committee's recommendation for the decisions of the Board, etc.
A separate exercise was carried out by the Nomination and Remuneration Committee of the Board to evaluate the performance of individual Directors. The performance evaluation of the Non-Independent Directors and the Board as a whole was carried out by the Independent Directors at their separate meeting. The performance evaluation of the Executive Chairman of the Company was also carried out by the Independent Directors, taking into account the views of the Managing Director and Non-Executive Directors. The Directors expressed their satisfaction with the evaluation process. The Independent Directors and Executive Chairman also carried out performance evaluation of the Managing Director of the Company.
In addition, the Independent Directors were also evaluated on the basis of fulfillment of independence criteria and independence from the management.
23. NOMINATION AND REMUNERATION POLICY:
The Nomination and Remuneration Policy for selection and appointment of Directors, Key Managerial Personnel's and Senior Management and the remuneration payable to them as provided under Section 178 (3) of the Companies Act, 2013 and Regulation 19 (4) (Part 'D' of Schedule II) of the SEBI Listing Regulations is hosted on the website of the Company at http://hubtown.co.in/investors/74.
24. DIRECTORS' RESPONSIBILITY STATEMENT:
In terms of Section 134 (5) of the Companies Act, 2013, in relation to the annual financial statements of the Company for the year ended March 31, 2024, the Board of Directors hereby confirms that:
(i) in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanations relating to material departures, wherever applicable;
(ii) such accounting policies have been selected and applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2024, and of the profit of the Company for the financial year ended on that date;
(iii) proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the annual accounts of the Company have been prepared on a 'going concern' basis;
(v) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(vi) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
25. CONSOLIDATED FINANCIAL STATEMENTS:
The Audited Consolidated Financial Statements prepared in accordance with the applicable Ind AS and Regulation 33 of the SEBI Listing Regulations and Section 129 (3) of the Companies Act, 2013 forms part of this Annual Report.
26. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:
As on March 31, 2024, the Company had 13 subsidiaries, 4 associates and 5 joint venture companies.
During the year Vinca Developer Private Limited and Rare Townships Private Limited became the subsidiary of the Company and SHK Hotels and Hospitality Private Limited and Rare Townships Private Limited ceased to be Associates of the Company.
The Company has four (4) material subsidiaries as on March 31, 2024, viz.
There has been no change in the nature of business of any of the said subsidiaries, associates and joint venture companies.
The Policy for determining 'material subsidiary' under Explanation to Regulation 16 (1) (c) of SEBI Listing Regulations as approved by the Board of Directors is posted on the Company's website at the link: http://hubtown.co.in/investors.
In accordance with the third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company at the link: http://hubtown.co.in/investors. Further, as per fourth proviso of the said Section, the audited annual accounts of the subsidiaries have also been placed on the website of the Company at the link: http://hubtown.co.in/investors.
The Company will make available the financial statements of its subsidiaries, joint venture companies and associates (collectively referred to as 'Subsidiaries') and the related information to any member of the Company who may be interested in obtaining the same. The financial statements of the Subsidiaries will also be available for inspection through electronic mode.
Additional information as required under Schedule III to the Companies Act, 2013 in respect of entities consolidated as subsidiaries/associates/ jointly controlled entities is furnished in Note 3.1 to the consolidated financial statements.
27. REPORT ON THE PERFORMANCE AND THE FINANCIAL POSITION OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES:
The statement pursuant to Section 129 (3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, containing the salient features of the performance and the financial statements of the subsidiaries, associates and joint venture companies for the financial year ended March 31, 2024 in the prescribed Form AOC-1 forms part of the notes to the financial statements.
28. AUDITORS:
Statutory Auditors:
In accordance with the provisions of Section 139 of the Companies, Act, 2013 and the Rules made there under, M/s. J B T M & Associates LLP, Chartered Accountants (Firm Registration No.: W100365) were appointed as the Statutory Auditors of the Company for a period of five consecutive years from the conclusion of the 32nd Annual General Meeting till the conclusion of 37th Annual General Meeting of the Company to be held for the year 2025.
M/s. J B T M & Associates LLP, Chartered Accountants have also confirmed that they meet the criteria for independence, eligibility and qualification as prescribed in Section 141 of the said Act and do not have any pecuniary interest in the Company or its subsidiaries, associates and joint venture companies.
Qualification by Auditors:
The Company has not having provided for Interest expense amounting to Rs. 7637.86 lakhs on certain Inter-corporate deposits. Consequent to above, finance cost for the year ended 31st March, 2024 has been understated by Rs. 7637.86 Lakhs resulting in a consequential increase in the profit for the year ended 31st March, 2024 to that extent.
Management Response:
The Company has not provided interest on certain inter-corporate deposits, as the company is in process of re-negotiating the terms / waiver of interest by respective lenders.
Fraud Reporting:
The Directors of the Company confirm that during the year under review, no instances of fraud were reported by the Auditors under Section 143 (12) of the Companies Act, 2013 and the Rules made there under either to the Company or to the Central Government.
Cost Records:
As required under Rule 8(5)(ix) of the Companies (Accounts) Rules, 2014, the Company confirms that it has prepared and maintained cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 for the year ended March 31, 2024.
Cost Auditors:
Based on the recommendation of the Audit and Compliance Committee, the Board has appointed M/s. Shekhar Joshi & Co., Cost Accountants (Firm Registration No. : 100448) as Cost Auditors to conduct the audit of the cost records of the Company for the year ending March 31, 2024 at a fee of Rs. 1,50,000/- (Rupees One Lakh Fifty Thousand Only) plus applicable taxes and reimbursement of out-of-pocket expenses, subject to ratification of the said fees by the members in the Annual General Meeting pursuant to Section 148 of the Companies Act, 2013. Accordingly, the resolution pertaining to ratification of the remuneration payable to the Cost Auditor was approved by the members at the 35th AGM held on Thursday, September 21, 2023.
In respect of Financial Year 2024-25, the Board based on the recommendation of the Audit Committee has approved the appointment of M/s. Shekhar Joshi & Co., Cost Accountants, as the Cost Auditors of the Company. The resolution for ratification of the remuneration to be paid for the said appointment for Financial Year 2024-25 is included in the notice of the ensuing Annual General Meeting.
Cost Audit Report:
The Cost Audit Report for the year ended March 31, 2024 pursuant to the Companies (Cost Accounting Records) Rules, 2011 will be filed within the period stipulated under the Companies Act, 2013 or such other period as may be prescribed.
Secretarial Auditors:
Pursuant to the provisions of section 204 of the Companies Act, 2013 read with corresponding Rules framed thereunder, the Board of Directors of the Company has appointed M/s. Mihen Halani & Associates, Practicing Company Secretaries to conduct the secretarial audit of the Company.
Secretarial Audit Report:
In terms of Section 204 of the Companies Act, 2013 and Regulation 24A of the SEBI Listing Regulations, a Secretarial Audit Report given by the Secretarial Auditors in the Form No. MR-3 is annexed with this Report as Annexure - A. Also the Secretarial Audit Reports for FY 2023-24 in Form No. MR-3 in respect of the material unlisted subsidiaries of your company, form part of thei report.
Replies to Secretarial Auditor's Qualifications/ Observations:
There were no observations identified of the Secretarial Auditors and do not call for any further clarification /elaboration.
Annual Secretarial Compliance Report:
A Secretarial Compliance Report for the financial year ended March 31, 2024 on compliance of all applicable SEBI Regulations and circulars / guidelines issued thereunder, was obtained from M/s. Mihen Halani & Associates, Secretarial Auditors of the Company, and the same is filed with the Stock Exchanges within prescribed timeline.
29. ANNUAL RETURN:
Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Companies Act, 2013, the Annual return will be available on the website of the Company at the link http://hubtown.co.in/investors.
30. MATERIAL CHANGES AND COMMITMENTS:
There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this Report.
31. DEPOSITS:
During the year under review, your Company neither accepted any deposits nor there were any amounts outstanding at the beginning of the year which were classified as 'Deposits' in terms of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Companies Act, 2013 is not applicable.
32. VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES:
Pursuant to Section 177 (9) and (10) of the Companies Act, 2013 and Regulation 22 read with Regulation 4 (2) (d) (iv) of the SEBI Listing Regulations, the Company has framed a Whistle Blower Policy as the vigil mechanism for Directors and employees of the Company to report their genuine concerns in the prescribed manner, to freely communicate their concerns / grievances about illegal or unethical practices in the Company, actual or suspected, fraud or violation of the Company's Codes or Policies. The vigil mechanism is overseen by the Audit and Compliance Committee. During the year under review, no such incidence was reported and no personnel were denied access to the Chairman of the Audit and Compliance Committee.
The Whistle Blower Policy has been uploaded on the Company website at the link: http://hubtown.co.in/investors.
33. RISK MANAGEMENT:
Presently, the provisions of Regulation 21 of the SEBI Listing Regulations relating to the 'Risk Management Committee' are not applicable to the Company. The Board of Directors had constituted a 'Risk Management Committee' under Clause 49 of the erstwhile Listing Agreement and framed a 'Risk Management Policy' to identify, assess, monitor and mitigate various risks to key business objectives. However, the same was dissolved during the year due to non-applicability. Major risks identified by the functions are systematically addressed through mitigating actions on a continuing basis.
34. PARTICULARS OF LOANS, INVESTMENTS OR GUARANTEES UNDER SECTION 186 OF THE COMPANIES ACT, 2013:
As the Company is engaged in the business of 'real estate development' included in the term 'Infrastructure Facilities' as defined in Clause (8) (a) of Schedule VI to the Companies Act, 2013, the provisions of Section 186 of the said Act related to loans made, guarantees given or securities provided are not applicable to the Company. Kindly refer the financial statements for the loans, guarantees and investments given/made by the Company as on March 31, 2024.
35. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:
All contracts / arrangements / transactions with related parties as defined under the Companies Act, 2013 and SEBI Listing Regulations that were entered into by the Company during the year under review were in the ordinary course of business and on an arm's length basis. There were no contracts / arrangements / transactions with related parties, as defined under Section 188 of the Companies Act, 2013, which could be considered material under the SEBI Listing Regulations. Accordingly, the disclosure of related party transactions as required under Section 134 (3) of the Companies Act, 2013 in Form AOC -2 is not applicable. There were no materially significant related party transactions with the Company's Promoters, Directors, Key Managerial Personnel's or their relatives which could have a potential conflict with the interest of the Company at large.
The Policy for determining the materiality of related party transactions and dealing with related party transactions as approved by the Board pursuant to Regulation 23 of SEBI Listing Regulations is uploaded on the Company's website at the link: http://hubtown.co.in/investors/codeandpolicies.
Attention of members is drawn to the disclosure of transactions with related parties as set out in Notes to Accounts - Note 34 forming part of the standalone financial statements.
The transactions with person or entity belonging to the promoter/promoter group which holds 10 per cent or more shareholding in the Company as required under Schedule V, Part A (2A) of the SEBI Listing Regulations is given in Note 34 (on related party transactions) forming part of the standalone financial statements.
36. DISCLOSURE OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL:
No significant and material orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company's operations in future.
Further, detail pertaining to proceeding initiated / pending under the Insolvency and Bankruptcy Code, 2016 ('IBC') during the year under review is as under:
• A petition under Section 7 of Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 was filed by the Company against Tin Time Consultancy Private Limited and as on end of the financial year it was under process.
Other than aforesaid petition there are no proceedings initiated/pending against the Company under the Insolvency and Bankruptcy Code, 2016. Further, during the year, the Company has not undergone any one-time settlement and therefore the disclosure in this regard is not applicable.
37. CORPORATE SOCIAL RESPONSIBILITY (CSR):
The Corporate Social Responsibility Committee has formulated the policy on Corporate Social Responsibility (CSR) indicating the activities to be undertaken by the Company. During the financial year 2023-2024, the Company was not required to spend towards corporate social activities in view of loss incurred by the Company. Further, due to Non-Applicability, the CSR Committee was dissolved during the year.
The annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure 'B' appended to this Report.
38. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:
The Company has put in place a 'Policy on Prevention of Sexual Harassment at Workplace' in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. The Company affirms that during the year under review, no such complaints were received by the Committee for redressal and that adequate access was provided to any complainant who wished to register a complaint under the Policy. The said Policy is available on the website of the Company at http://hubtown.co.in/investors.
The details required to be given under the aforesaid Act forms part of the report on Corporate Governance.
39. CORPORATE GOVERNANCE:
The Company has devised proper systems to ensure compliance with all the applicable provisions and that such systems are adequate and operating effectively. Pursuant to Regulation 34(3) read with Schedule V (E) of the SEBI Listing Regulations, a separate section on Corporate Governance practices followed by the Company, together with a Certificate from Practicing Company Secretary confirming compliance, forms an integral part of this Report.
40. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The nature of operations of the Company does not require disclosure of particulars relating to conservation of energy and technology absorption, as prescribed under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014.
During the year under review, the Company had 'Nil' foreign exchange earnings and had incurred expenditure of Rs. Nil in foreign exchange.
41. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The disclosure required under Section 197(12) of the Companies Act, 2013 read with the Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure - 'C' to this Report.
The statement containing names of top ten employees in terms of the remuneration drawn and the particulars of employees as required pursuant to Section 197 (12) of the Companies Act, 2013 read with Rules 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to and forms part of this Report. However, having regard to the provisions to the first proviso of Section 136 (1) of the Companies Act, 2013, the Annual Report is being sent to all the members of the Company excluding this information. The aforesaid statement is available for inspection by the members through electronic mode 21 days before the AGM, during business hours on working days of the Company upto the date of the ensuing AGM.
Any member, who is interested in obtaining a copy thereof, may write to the Company Secretary at the Registered Office of the Company. The said information is also available on the website of the Company. None of the employees listed in the aforesaid statement is a relative of any Director of the Company. None of the employees of the Company is covered under Rule 5 (3) (viii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
42. CODE OF CONDUCT:
The Board of Directors has adopted Code of Conduct and Ethics for the Board of Directors and Senior Management Personnel of the Company in terms of Regulation 17 (5) of the SEBI Listing Regulations. All Board members and Senior Management Personnel have affirmed their compliance with the said Code for the financial year ended March 31, 2024.
A declaration to this effect signed by the Managing Director is appended as Annexure II to the Corporate Governance Report.
The said Code of Conduct can be viewed on the Company's website at http://hubtown.co.in/investors.
43. INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY:
The details in respect of internal financial control and their adequacy are included in the Management and Discussion & Analysis, which forms part of this report.
44. AFFIRMATION REGARDING COMPLIANCE WITH APPLICABLE SECRETARIAL STANDARD:
The Board affirms compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India namely SS-1 and SS-2 relating to the Meetings of the Board and its Committees and General Meetings respectively.
45. CEO AND CFO CERTIFICATION:
A certificate from the Managing Director and the Chief Financial Officer, pursuant to Regulation 17 (8) of SEBI Listing Regulations for the year under review was placed before the Board of Directors of the Company at its meeting held on May 24, 2024 which is appended to and forms part of the Corporate Governance Report.
46. CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS:
A certificate from a company secretary in practice that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority as stipulated under Regulation 34 (3) read with clause 10 (i) of para C of Schedule V to the SEBI Listing Regulations is appended to and forms part of the Corporate Governance Report.
47. APPRECIATION AND ACKNOWLEDGEMENTS:
Your Directors take this opportunity to thank the employees, customers, suppliers, bankers, business partners / associates, financial institutions and various regulatory authorities for their consistent support / encouragement to the Company.
Your Directors would also like to thank the Members for reposing their confidence and faith in the Company and its Management.
DISCLAIMER:
Certain statements made in the Directors' Report and the Management Discussion and Analysis may constitute 'forward looking statements' within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Several factors could make significant difference to the Company's operations that include labour and material availability, and prices, cyclical demand and pricing in the Company's principal markets, changes in interest rates, changes in government regulations, tax regimes, economic development within India and other incidental factors. The Company does not undertake any obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise.
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