OBEROI REALTY LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR`S REPORT
Dear Members,
Your Directors have pleasure in presenting the Fourteenth Annual Report
together with the audited accounts for the year ended March 31, 2012.
FINANCIAL HIGHLIGHTS: Rs. in Lakh
Particulars Consolidated Standalone
2011-12 2010-11 2011-12 2010-11
Revenue from
operations 82,468.67 99,602.40 39,138.75 38,982.48
Other Income 15,009.88 6,275.16 15,886.56 4,969.64
Total Revenue 97,478.55 1,05,877.56 55,025.31 43,952.12
Expenses 34,119.72 41,896.72 18,436.77 17,631.64
Profit before
interest, 63,358.83 63,980.84 36,588.54 26,320.48
depreciation,
amortization
and taxes
(EBITDA)
Depreciation
and
amortization 2,694.04 2,368.31 2,234.87 1,844.64
Interest and
finance charges 30.53 19.44 26.33 19.02
Profit before
prior period 60,634.26 61,593.09 34,327.34 24,456.82
items,
extra-ordinary
items and taxes
Prior period
income/ (42.73) (46.22) (42.73) 49.39
(expenses)
Profit Before Tax 60,591.53 61,546.87 34,284.61 24,506.21
Less:Tax expenses 14,304.27 9,828.64 8,791.16 7,449.64
Profit After Tax 46,287.26 51,718.23 25,493.45 17,056.57
FINANCIAL PERFORMANCE;
Consolidated Financial:
During the year under review, your Company`s consolidated Total Revenue
stood at Rs. 97,478.55 Lakh as compared to Rs. 1,05,877.56 Lakh for the
previous year, representing a decline of 7.93%. Profit Before Tax stood at
Rs. 60,591.53 Lakh for the year under review as compared to Rs. 61,546.87
Lakh for the previous year, representing a marginal decline of 1.55%.
Profit After Tax stood at Rs. 46,287.26 Lakh as compared to Rs. 51,718.23
Lakh for the previous year, representing a decline of 10.50%.
Standalone Financial:
During the year under review, the Total Revenue stood at Rs. 55,025.31 Lakh
as compared to Rs. 43,952.12 Lakh for the previous year, representing an
increase of 25.19%. Profit Before Tax stood at Rs. 34,284.61 Lakh for the
year under review as compared to Rs. 24,506.21 Lakh for the previous year,
representing an increase of 39.90%. Profit After Tax stood at Rs. 25,493.45
Lakh as compared to Rs. 17,056.57 Lakh for the previous year, representing
an increase of 49.46%.
UTILIZATION OF IPO PROCEEDS:
During FY2011, your Company had come up with an Initial Public Offering of
3,95,62,000 equity shares of face value of Rs. 10 each at an issue price of
Rs. 260 per equity share (including securities premium of Rs. 250 per
equity share) aggregating to Rs. 1,02,861.20 Lakh.
The status of utilization of IPO proceeds as on March 31, 2012 is as under
and the same has been taken on record by the Audit Committee and the Board
of Directors of the Company.
Particular Rs. in Lakh
Construction of Projects 50,233.45
Acquisition of land or
land development rights 36,260.00
General Corporate Purposes 4,397.73
Share Issue Expenses 4,060.53
Total 94,951.71
The interim utilization of balance IPO proceeds of Rs. 7,909.49 Lakh is as
under:
Particular Rs. in Lakh
Fixed deposits with banks 7,885.31
Balance with banks in current
accounts 24.18
Total 7,909.49
The Members at the Annual General Meeting held on June 30, 2011 gave
authority to the Board (which includes any committee authorized to exercise
its powers including the powers conferred by that resolution) to, inter
alia, vary the utilization of the IPO proceeds. Pursuant to the said
authorization, the IPO proceeds had been utilized in additional projects
and there had been changes in allocation of the issue proceeds from that
stated in Prospectus.
The use of issue proceeds are being monitored by the Monitoring Agency
appointed as per the requirement of Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009, as
amended.
DIVIDEND:
Despite challenging business environment, sluggish industry volume numbers
and increased cost taking into consideration the stable performance of your
Company and in recognition of the trust in the management by the Members of
the Company, your Directors are pleased to recommend dividend at the rate
of Rs. 2 per equity share, i.e. 20% of the paid up equity share value for
the year ended March 31, 2012 (Previous Year: Rs. 1 per equity share, i.e.
10% of the paid up equity share value). The proposed dividend together with
the dividend distribution tax will absorb Rs. 7,629.62 Lakh.
REDEMPTION OF PREFERENCE SHARES:
During the year under review, 359 Redeemable Non-Convertible Cumulative
Preference shares of Rs. 10,00,000 (Rupees Ten Lakh) each, fully paid up,
aggregating to Rs. 3,590 Lakh were redeemed for Rs. 1 in accordance with
the terms of the issue.
SUBSIDIARY COMPANIES/JOINT VENTURES:
As on March 31, 2012, the Company has six subsidiaries, namely Oberoi
Constructions Limited, Oberoi Mall Limited, Kingston Property Services
Limited, Kingston Hospitality and Developers Private Limited, Expressions
Realty Private Limited and Perspective Realty Private Limited.
Triumph Realty Private Limited, a subsidiary, was sold during the year.
During the year under review, your Company has acquired 50% stake in the
equity shares of I-Ven Realty Limited.
Further, during the year under review, a limited liability partnership
namely, Astir Realty LLP` has been incorporated in which your Company holds
10% stake in the capital and profit/loss. The balance 90% stake is held by
Oberoi Constructions Limited, a wholly owned subsidiary of the Company.
FINANCIAL OF SUBSIDIARY COMPANIES:
The Ministry of Corporate Affairs vide General Circular No. 2/2011 dated
February 8, 2011 has issued directions under Section 212(8)of the Companies
Act, 1956 granting general exemption from applicability of the provisions
of Section 212 of the Companies Act, 1956 in relation to the subsidiary
companies, subject to fulfillment of the conditions specified in the said
circular.
Your Company has availed the benefit of general exemption provided by the
aforesaid circular and accordingly, the documents mentioned in Section
212(1) (a) to (d) of the Companies Act, 1956 relating to Company`s
subsidiaries are not attached to the Balance Sheet of your Company. In
terms of the said circular, your Directors undertake that the annual
accounts of the subsidiary companies and the related detailed information
shall be made available to Members of the Company and its subsidiary
companies seeking such information at any point of time. Further, the
annual accounts of the subsidiary companies shall also be kept for
inspection by any Members at the registered office of the Company and of
the respective subsidiary company concerned. The statement as required
under clause(iv)of the aforesaid circular is also attached to the financial
statements hereto.
STATEMENT UNDER SECTION 212(1)(e) OF THE COMPANIES ACT, 1956 FOR SUBSIDIARY
COMPANIES:
A statement pursuant to Section 212(1)(e) read with Sub-Section (3) of
Section 212 of the Companies Act, 1956 for the FY2012 for the subsidiary
companies, namely Oberoi Constructions Limited, Oberoi Mall Limited,
Kingston Property Services Limited, Kingston Hospitality and Developers
Private Limited, Expressions Realty Private Limited and Perspective Realty
Private Limited, is attached to the Balance Sheet of your Company.
DIRECTOR`S RESPONSIBILITY STATEMENT:
As required by the provisions of Section 217(2AA) of the Companies Act,
1956, your Directors confirm that:
* In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanations relating to
material departures;
* 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;
* The Directors took proper and sufficient care to maintain adequate
accounting records in accordance with the provisions of the Companies Act,
1956 to safeguard the assets of the Company and for preventing and
detecting fraud and other irregularities; and
* The Directors have prepared the Annual Accounts on a going concern basis.
DIRECTORS:
Mr. Anil Harish, an Independent No Executive Director and Ms. Bindu Oberoi,
a Non-independent Non-Executive Director shall retire by rotation in the
ensuing Annual General Meeting and being eligible have offered themselves
for reappointment. The resolution seeking approval of the Members for
re-appointment of Mr. Anil Harish and Ms. Bindu Oberoi has been
incorporated in the Notice of the Annual General Meeting.
Mr. Venkatesh Mysore was appointed as an Additional Director of the Company
w.e.f. July 26, 2011 pursuant to Section 260 of the Companies Act, 1956. In
accordance with the said section, Mr. Venkatesh Mysore shall hold office
only up to the date of ensuing Annual General Meeting of the Company. Mr.
Venkatesh Mysore has expressed his willingness to be appointed as a
Director of the Company. The resolution seeking approval of the Members for
appointment of Mr. Venkatesh Mysore has been incorporated in the Notice of
the Annual General Meeting.
As required under clause 49(IV)(G) of the Listing Agreement, the requisite
information of Mr. Anil Harish, Ms. Bindu Oberoi and Mr. Venkatesh Mysore,
inter alia, in the nature of brief resume, nature of expertise companies in
which they hold directorship/membership of Board Committees, share holding
in the Company is annexed to the Notice of the Annual General Meeting.
AUDITORS:
M/s P. Raj & Co., Chartered Accountants, Statutory Auditor of the Company
hold office till the conclusion of the ensuing Annual General Meeting and
being eligible, offer themselves for reappointment. Your Company has
received necessary certificate from the Statutory Auditor to this effect
and that their reappointment, if made, will be in accordance with the
provisions of Section 224(1B) of the Companies Act, 1956.
As per the recommendation of the Audit Committee, the Board of Directors
proposes the reappointment of M/s P. Raj & Co., Chartered Accountants as
Statutory Auditor of the Company.
AUDITOR`S REPORT:
The Auditor`s Report does not contain any reservation, qualification or
adverse remark.
CORPORATE GOVERNANCE:
The Report on Corporate Governance and the certificate from the Statutory
Auditors regarding compliance with the conditions of Corporate Governance
have been furnished in the Annual Report and 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 the compliance of Code of Conduct by the
Directors and senior management personnel for the year under review is
annexed to and forms part of the Corporate Governance Report.
MANAGING DIRECTOR AND CHIEF FINANCIAL OFFICER CERTIFICATION:
The certificate from the Managing Director and the Chief Financial Officer
in accordance with Clause 49(V) of the Listing Agreement is annexed to and
forms part of the Corporate Governance Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
The Management Discussion and Analysis Report has been separately furnished
in the Annual Report and forms part of the Annual Report.
EMPLOYEE STOC. OPTION PLAN (ESOP):
In recognition of the role played by the employees in the growth of the
organization and the belief that the employees deserve a stake in the value
created and enhanced by them, employee stock option plan `ESOP 2009` had
been instituted by your Company approving issue of up to 14,43,356 options,
each option conferring a right upon the eligible employee to apply for one
equity share of Rs. 10 each of the Company.
The vesting of first 20% trenches of options granted under ESOP 2009
occurred on May 4, 2011 and the vesting of second 20% trenches of options
will occur on May 4, 2012. The Exercise Price is Rs. 260 per option.
The information in terms of Clause 12 of the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 is annexed to this report
The certificate from the Statutory Auditors as required under Clause 14 of
the said Guidelines, with respect to the implementation of the Company`s
ESOP Scheme shall be placed at the Annual General Meeting for inspection by
the Members.
PUBLIC DEPOSITS:
During the year under review, your Company has not accepted any deposits in
terms of Section 58A of the Companies Act, 1956 read with the Companies
(Acceptance of Deposit) Rules, 1975 and also no amount was outstanding on
account of principal or interest thereon, as of the date of the Balance
Sheet.
UNCLAIMED SHARES:
Out of the equity shares allotted to the successful applicants in the IPO
concluded in the month of October 2010, 200 unclaimed shares are pending
for credit to the de mat accounts of the respective allot tees.
In accordance with Clause 5A(I)(a) of the Listing Agreement, the Registrar
to the Issue (Link In time India Private Limited) had issued third reminder
notices at the addresses of such allotter and no response having been
received from the concerned allot tees, the said 200 shares had been
transferred to the unclaimed shares de mat suspense account during the year
under review.
The requisite disclosures under Clause 5A(I)(g) of the Listing Agreement
are as under:
Particulars No. of No. of
shareholders shares
Aggregate number of shareholders and
the outstanding N.A. N.A.
shares in the suspense account lying
at the beginning of the year
Number of shares transferred to the
suspense account 2 200
during the year
Number of shareholders who approached
issued for transfer Nil Nil
of shares from suspense account during
the year
Number of shareholders to whom shares
were transferred Nil Nil
from suspense account during the year
Aggregate number of shareholders and
the outstanding 2 200
shares in the suspense account lying
at the end of the year
The voting rights in respect of the above 200 shares are frozen. No
corporate benefits in the nature of bonus, split, rights had accrued on the
aforesaid 200 shares.
UNCLAIMED AND UNPAID DIVIDENDS:
An amount of Rs. 30,173 is lying in the unpaid equity dividend account of
the Company in respect of the dividend for the FY2011. Members who have not
yet received/claimed their dividend entitlements are requested to contact
the Company or the registrar and transfer agent of the Company.
PARTICULARS OF EMPLOYEES:
In accordance with the provisions of Section 217 (2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975, as
amended, the names and other particulars of the employees are set out in
annexure forming part of this report. However, in accordance with the
provisions contained in the proviso to Section 219(1) the aforesaid
particulars of the employees are not being sent as a part of this Annual
Report. Any Member interested in obtaining a copy of the same, may write to
the Company Secretary at the registered office of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN E;CHANGE EARNINGS
AND OUTGO:
As the Company is not engaged in manufacturing activities, the Board of
Directors have nothing to report pursuant to 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.
FOREIGN ExCHANGE EARNINGS AND OUTGO:
1.VALUE OF IMPORTS C.I.F. BASIS Rs. in Lakh
Particulars 2011-12 2010-11
Materials 28.67 -
Capital goods 928.76 95.81
2. EXPENDITURE IN FOREIGN CURRENCY (ON PAYMENT Rs. in Lakh
BASIS)
Particulars 2011-12 2010-11
On Foreign travel 73.36 85.66
Professional fees 1,192.42 649.00
Others 1,281.12 73.33
3. REMITTANCE IN FOREIGN CURRENCY ON ACCOUNT Rs. in Lakh
OF DIVIDENDS
Particulars 2011-12 2010-11
Equity shares 310.55 62.11
Preference shares - 31.97
4. EARNINGS IN FOREIGN CURRENCY (ON RECEIPTS Rs. in Lakh
Particulars 2011-12 2010-11
Sale of residential units 1,152.28 587.69
Hospitality services 4,379.53 3,196.81
ACKNOWLEDGMENT:
Your Directors take the opportunity to express their deep sense of
gratitude to bankers, government authorities, employees, customers, vendors
and suppliers.
Your Directors would also like to thank the Members for reposing their
confidence and faith in the Company and its Management.
For and on behalf of the Board of Directors
Vikas Oberoi
Mumbai, April 25, 2012 Chairman & Managing Director
STATEMENT PURSUANT TO CLAUSE 12 OF SEBI (EMPLOYEE STOC. OPTION SCHEME AND
EMPLOYEE STOC. PURCHASE SCHEME) GUIDELINES, 1999 AS ON MARCH 31, 2012:
Sr. Particulars ESOP 2009 (Grant 1)
1. Total number of options granted 13,49,553
2. Pricing formula IPO Price(A) i.e. Rs. 260
3. Options vested 2,25,913
4. Options exercised Nil
5. Total number of equity shares
arising as a result of exercise of Nil
options
6. Options lapsed/canceled/
forfeited 2,23,317
7. Variation of terms of options None during the year
8. Money released by exercise of options Nil
9. Total number of options in force
as on March 31, 2012 11,26,236(B)
10. Employee-wise detail of options
granted during FY2012
A. Senior Managerial Employee N.A.
B. Any other employee receiving 5% or
more of the total number na of
options granted during the year
C. Employees granted options equal
to or exceeding 1% of the N.A.
issued capital of
the Company at the time of grant
11. Diluted Earnings Per Share(EPS)
pursuant to issue of shares on
exercise of option calculated in
accordance with Accounting Rs. 7.77
Standard AS-20 (Earnings Per
Share)
12. Where the company To calculate the employee
has the employee compensation cost, the
compensation cost using Company use the Intrinsic
the intrinsic value of Value Method for
the stock options, the valuation of the options
difference between the granted.
employee compensation
cost so calculated using Had the Company used fair
intrinsic value of stock value method of valuing
options and the employee stock options, the
compensation cost that employee compensation
would have been recognized cost would have been
if the fair value of higher by Rs. 368.25
options had been used and Lakh, profit before tax
the impact of this would have been lower by
difference on profits Rs. 368.25 Lakh and basic
and EPS of the Company. and diluted EPS would
have been lower by
Rs. 0.11.
13. Weighted average exercise Weighted average exercise
price and weighted average price: Rs. 260.
fair value of options whose Weighted average fair
exercise price equals or value of options:
exceeds or is less than Rs. 126.97
market price of the stock.
14. Description of method and
significant assumptions used
to estimate fair value of
options at the time of grant.
A. Risk Free Interest Rate 7.06%
B. Expected Life 4.2 years
C. Expected Volatility 51.85%
D. Dividend Yield -
E. Price of the underlying share
in market at the time of the Rs. 260.00
option grant
Notes:
A. `IPO Price` means the final price per equity share at which shares were
issued and allotted in the Initial Public Offer of equity shares of the
Company i.e. Rs. 260 per equity share of Rs. 10 each;
B. The options outstanding as on March 31, 2012 are under Grant 1 of ESOP
2009, and are net of the options lapsed/canceled/forfeited during the
FY2012.
`Grant 1` means grant of options to those Employees of the Group who were
in employment on the date two years prior to date of the meeting of the
Compensation Committee which had considered and approved grant of options.
ECONOMIC REVIEW:
Global economy:
FY2012 was a challenging year for the economies across the world. It
witnessed numerous events-starting from USA`s debt and unemployment issues
to political instability and unrest in MENA to Euro zone crisis-impacting
growth. The developing nations on the other hand showed signs of stability
and emerged as a ray of hope to the rest of the world. The US also started
witnessing first hint of growth after prolonged stagnation. However,
recently, concerns have reunited over the unraveling of the Euro zone.
Indian economy:
The Indian economy had its own sets of challenges during the year. It dealt
with issues like high inflation, tightening monetary policy, weakening
industrial growth and investments, lack of direction in government
policies, depreciating Rupees and high crude oil prices. This led to a
slowdown in the overall growth of the economy. According to CSO estimates,
the economy grew by 6.9% during the year. However, India is expected to
gain back its growth momentum in the medium term owing to higher savings
and easing inflationary pressures which would lead to capital formation and
fresh investments.
INDUSTRY REVIEW:
Real Estate:
Real Estate is one of the three primary needs of mankind with food and
clothing being the other two. The demand for Real Estate though un-question
able is driven by many factors including afford ability, cyclicality,
market sentiment, availability of loans etc. The supply side is influenced
by regulatory policies, liquidity, availability of skilled and unskilled
resources etc.
Owing to the impact of the challenging macro economic factors, FY2012 was
quite challenging for the sector. It faced difficulties in terms of
funding, rising costs. labor shortages and regulatory issues, hampering
project execution.
Mumbai Real Estate:
The Mumbai Real Estate began the year with heightened activity of policy
inaction. However the later part of the year saw unprecedented amendments
in local real estate regulation. The Maharashtra State Government amended
the Development Control Regulation (DCR) of Greater Mumbai, 1991 with a
view to bring in transparency and reduce arbitrary and discretionary
decision making. The efforts of the government in creating a level-playing
field for all players in the real estate industry are truly commendable.
There might be hiccups in the short term but your company believes that it
would help inculcate good practices in the sector and help the long term
prospects of the sector.
OPPORTUNITIES AND CHALLENGES:
Opportunities:
The recent amendments in Mumbai`s real estate regulations have given your
company a huge opportunity. While many other real estate developers in the
city are facing liquidity pressures or are in the process of still
repairing their over-leveraged balance sheet, the cash positive status and
process oriented approach of doing business has given your Company a
distinctive advantage over competition.
Challenges:
While the management of your Company continue to leverage the opportunities
it also foresees the following challenges:
* Availability of skilled resources and acquisition and retention of highly
talented workforce which would ensure quality execution.
* Frequent amendments in regulations which makes it difficult to plan and
execute.
* Lack of supporting infrastructure such as road, highway electricity, etc.
that can hamper the growth of real estate as it thrives on availability of
good infrastructure.
* Inflationary pressures which would increase raw material/labor cost.
COMPANY STRENGTHS:
Your Company continues to capitalize on the market opportunities by
leveraging its key strengths. These include:
1. Reputation:
Enjoys higher recall and influences the buying decision of the customer.
Strong customer connect further results in higher realizations.
2. Execution:
Possesses a successful track record of quality execution of projects with
contemporary architecture.
3. Strong cash flows:
Has built a business model that ensures continuous cash flows from its
investment and development properties ensuring a steady cash flow even
during the adverse business cycles.
4. Significant leveraging opportunity:
Follows prudent debt practice coupled with higher cash balance which
provides a significant leveraging opportunity for further expansions.
5. Outsourcing:
Operates an outsourcing model of appointing globally renowned architects/
contractors that allows scalability and emphasizes contemporary design and
quality construction - a key factor of success.
6. Transparency:
Follows a strong culture of corporate governance and ensures transparency
and high levels of business ethics.
7. Highly qualified execution team:
Employs experienced, capable and highly qualified design and project
management teams who oversee and execute all aspects of project
development.
BUSINESS OVERVIEW:
The management of your Company is satisfied with the FY2012 performance
despite challenging environment. Your Company was able to sell
approximately the same area in FY2012 as compared to FY2011, at higher
realizations. A brief description on the development across each project is
provided below:
1. Oberoi Garden City (Goregaon):
Oberoi Garden City is the flagship mixed-use development of your Company.
It is an integrated development on approximately 83 acres of land in
Goregaon (East), in the western suburbs of Mumbai, adjacent to the arterial
Western Express Highway and overlooking Aarey Milk Colony. The development
is approximately eight kilometers from Mumbai`s domestic airport and
approximately five kilometers from the international airport. Key FY2012
highlights of the projects in Oberoi Garden City are given below:
A. Oberoi Mall (Retail):
Revenues : Rs. 8,145.07 Lakh
(Rs. 6,674.94 Lakh in FY2011)
Occupancy : 94.22% (91.33% in FY2011)
Foot fall : Approximately 10 million people
B. Commerce (Office Space):
Revenues : Rs. 4,370.29 Lakh (Rs. 4,767.85 Lakh in FY2011)
Occupancy : 76.49% (76.71% in FY2011)
C. The West in Mumbai Garden City (Hospitality):
Revenues : Rs. 9,405.67 Lakh (Rs. 6,986.94 Lakh in FY2011)
Occupancy : 65.00% (54.00% in FY2011)
D. Oberoi Exquisite (Residential):
Cumulative units sold : 464 units.
Total sales value : Rs. 1,02,041.73 Lakh, of which Rs. 48,039.76 Lakh
has been recognized as revenue
E. Oberoi Esquire (Residential):
Cumulative units sold : 295 units.
Total sales value : Rs. 85,368.61 Lakh. There is no revenue
recognition from this project as it is yet
to reach the requisite threshold limit
2. Oberoi Splendor (Andheri):
Oberoi Splendor is a mixed-use development comprising residential, office
space and social infrastructure projects, on approximately 21.50 acres of
land on the arterial Jogeshwari Vikroli Link Road in the western suburbs of
Mumbai. The development is conveniently located near the arterial Western
Express Highway and overlooking Aarey Milk Colony. Key FY2012 highlights of
the projects in Oberoi Splendor are given below:
A. Oberoi Splendor (Residential):
Cumulative units sold : 1,246 units.
Total sales value : Rs. 1,45,335.99 Lakh, which has been
fully recognized as revenue.
B. Oberoi Splendor Grande (Residential):
Cumulative units sold : 115 units.
Total sales value : Rs. 28,766.79 Lakh, of which Rs. 17,922.52
Lakh has been recognized as revenue.
3. Oasis (World):
This is a joint venture to develop a mixed-use project in World, located on
the arterial Annie Besant Road. Your Company is contemplating the
development of residential complex, office space, hotel and a small retail
component. Samsung C&T has been appointed as a general contractor for this
project during FY2012. The management is currently in discussion with the
hotel operator and is confident of launching the project in FY2013.
FINANCIAL PERFORMANCE OVERVIEW:
Analysis of consolidated financial statements for FY2012 is provided below.
1. Balance sheet analysis:
A comparative table showing synopsis of FY2012 vs. FY2011 Balance Sheet is
provided below:
Rs. in Lakh
CONSOLIDATED BALANCE 2012 2011 Increase/ % Increase/
SHEET AS AT MARCH 31, (Decrease) (Decrease)
EQUITY AND LIABILITIES:
Shareholders` funds
Share capital 32823.33 36413.33 (3590.00) (9.86)%
Reserves and surplus 340591.61 298344.00 42247.61 14.16%
Net worth 373414.94 334757.33 38657.61 11.55%
Non-current liabilities 7767.45 7664.09 103.36 1.35%
Current liabilities 97270.67 56632.96 40637.71 71.76%
Total 478453.06 399054.38 79398.68 19.90%
ASSETS:
Non-current assets 224443.44 151098.83 73344.60 48.54%
Current assets 254009.62 247955.55 6054.07 2.44%
Total 478453.06 399054.38 79398.68 19.90%
A. Non-Current Liabilities:
Rs. in Lakh
2012 2011 Increase/ % Increase/
(Decrease) (Decrease)
Deferred tax liabilities/ 782.44 (87.08) 869.52 998.48%
(assets)
Trade payable 145.57 468.66 (323.09) (68.94)%
Other long term
liabilities 6750.86 7195.32 (444.46) (6.18)%
Long-term provisions 88.58 87.19 1.39 1.60%
Total 7767.45 7664.09 103.36 1.35%
B. Current Liabilities:
Rs. in Lakh
2012 2011 Increase/ % Increase/
(Decrease) (Decrease)
Trade payable 3030.14 3234.19 (204.05) (6.3J.)%
Other current
liabilities 86495.39 49389.45 37105.94 75.13%
Short-term provisions 7745.14 4009.32 3735.82 93.18%
Total 97270.67 56632.96 40637.71 71.76%
C. Non-Current Assets:
Rs. in Lakh
2012 2011 Increase/ % Increase/
(Decrease) (Decrease)
Fixed Assets including
CWIP 98501.02 93087.27 5413.75 5.82%
Goodwill on
consolidation 26537.18 - 26537.18 NA
Non-current
investments 0.96 0.90 0.06 6.72%
Long-term loans and 99373.84 57797.65 41576.19 71.93%
advances
Other non-current
assets 30.44 213.01 (182.57) (85.71)%
Total 224443.44 151098.83 73344.61 48.54%
D. Current Assets:
Rs. in Lakh
2012 2011 Increase/ % Increase/
(Decrease) (Decrease)
Current investments - 6500.00 (6500.00) (100.00)%
Inventories 101962.43 77471.79 24490.64 31.61%
Trade receivables 6791.87 4675.41 2116.45 45.27%
Cash and bank balance 129339.47 139898.52 (10559.05) (7.55)%
Short-term loans and 14307.50 18031.51 (3724.01) (20.65)%
advances Other current
assets 1608.36 1378.32 230.04 16.69%
Total 254009.63 247955.56 6054.07 2.44%
2. Profit and Loss Analysis:
A comparative table showing synopsis of FY2012 vs. FY2011 of statement of
Profit and Loss is provided below:
Rs. in Lakh
2012 2011 Increase/ % Increase/
(Decrease) (Decrease)
Revenue From Operations 82468.67 99602.40 (17133.73) (17.20)%
Other Income 15009.88 6275.16 8734.73 139.20%
Total Revenue 97478.55 105877.56 (8399.01) (7.93)%
Total Expenses 36887.02 44330.69 (7443.67) (16.79)%
Profit Before Tax 60591.53 61546.87 (955.34) (1.55)%
Profit After Tax 46287.26 51718.23 (5430.97) (10.50)%
Basic and diluted
EPS (Rs. ) 14.10 16.88 (2.78) (16.48)%
A. Revenue from Operations:
Rs. in Lakh
2012 2011 Increase/ % Increase/
(Decrease) (Decrease)
Revenue from projects 57684.38 78680.37 (D09e9.99) (26.69)%
Revenue from hospitality 8973.00 6714.08 2258.92 33.64%
Rent and other related 12891.35 11195.53 1695.82 15.15%
revenue
Property and project 2288.47 1842.82 445.65 24.18%
management revenue
Other operating revenue 631.47 1169.60 (538.13) (46.01)%
Total 82468.67 99602.40 (17133.73) (17.20)%
B. Expenses:
Rs. in Lakh
2012 2011 Increase/ % Increase/
(Decrease) (Decrease)
Operating costs 29596.17 38103.78 (8507.62) (22.33)%
Employee benefits expense 3291.63 2703.98 587.66 21.73%
Other expenses 1231.92 1088.96 142.96 13.13%
Depreciation and 2694.04 2368.31 325.73 13.75%
amortization
Interest and finance 30.53 19.44 11.08 57.00%
charges
Prior period income/ (42.73) (46.22) 3.48 (7.54)%
(expenses)
Total 36887.02 44330.69 (7443.67) (16.79)%
3. Cash Flow Analysis:
A comparative table of FY2012 vs. FY2011 Cash Flows is provided below:
Rs. in Lakh
2012 2011
Opening Cash and Cash Equivalents 140239.53 16945.76
Net Cash In flow from Operating activities 32629.70 27929.05
Net Cash Out flow for investing activities (58256.64) (3093.62)
Net Cash Inflow/(Outflow) from Financing
activities (3822.26) 98458.34
Closing Cash and Cash Equivalents 110790.33 140239.53
HUMAN RESOURCES:
Overview:
The total manpower strength for the real estate business at the end of
FY2012 is 516 up from 438 in FY2011 with an average age of 33 years and for
hospitality business total employee strength is 375 as compared to 394 in
FY2011. Your company has been recruiting from best of technical and
management campuses for its fresher/middle management roles and consciously
focusing on hiring returning Indian talent including hiring of expiates for
critical senior roles. During the financial year your company added over
193 full time employees under the real estate business at various levels of
management.
Training and Career Development:
As part of continuous learning and development process your company ensures
its employees are exposed to important behavioral/technical training
interventions. For FY 2012 your company has imparted more than 700 man days
of training including management programs at prestigious domestic and
international institutes.
Based on business imperatives a detailed training calendar with behavioral
technical and managerial programs is prepared. Employees are meticulously
selected based for the training intervention based on his/her role and
future potential. Employees with people responsibilities are nominated for
managerial skill development programs and individual contributors are
exposed to productivity enhancement training interventions.
Employee Welfare:
Your company conducts regular employee welfare initiatives and provides
ample opportunities for employee bonding. Some of the welfare initiatives
in the year included `Oberoi Fun Cricket League` a new initiative called
`Saturday Smiled` with one event on every last Saturday of the month to
enable employees to get together and celebrate the spirit of oneness.
Your company has started a unique program called `health-o-meter` with
primary objective of managing the health scorecard of every employee. The
employees will undergo series of consultations and health check-ups all
through the year followed by detailed health enhancement plan with regular
and measurable updates.
Market price fluctuation:
The performance of your Company may be affected by the sales and rental
prices of its projects. The prices are driven by prevailing market
conditions the nature and location of its projects and other factors such
as brand and reputation and the design of the projects. Your company
follows a prudent business model that ensures 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 general market factors project launch and
customer trust in entering into sale agreements well in advance of
receiving possession of the projects. Your Company markets and sells its
projects in phases from the time it launches the project until the time it
completes the project depending on market conditions.
Execution:
Execution depends on several factors which include labor 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 execution
risk through meticulous planning and by engaging established and reputed
contractors.
Rental realizations:
The rental realizations on the space leased depends upon the project
location, design, tenant mix (this is relevant in the case of shopping
malls), prevailing economic conditions and competition. Your Company has
set up its property in prime location and maintains a fresh ambience
resulting in crowd pull and attracting leading global and domestic
retailers.
Land/Development Rights-cost and availability:
The cost of land forms a substantial part of the project cost, particularly
in Mumbai. It includes amounts paid for freehold rights, leasehold rights,
registration and stamp duty Your Company acquires land and land development
rights from the government and private parties. It ensures that the
consideration paid for the land is reasonable and market timed.
Financing costs:
The land acquisition and development activity requires a substantial
capital outflow. Inadequate funding resources and high interest costs may
impact regular business and operations. Your Company has built sufficient
reserves resulting out of operating cash flows to take advantage of any
land acquisition opportunity.
OUTLOOK:
Macro-economic factors-both global and local-are likely to be the key
influences for growth in FY2013. At the global level, concerns around
Euro zone, US economy and the response of the governments worldwide to
address these situations will drive the sentiments in the emerging markets.
At the local level, the country is grappling with a coalition government,
issues around inflation, depreciating Rupees as well as overall fiscal
deficit. Many industry stalwarts have through various fore spelled out the
need for the government to overcome the policy paralysis in various areas
of governance and business. Liberalizing the FDI regime in various sectors
(including retail), industry status for real estate, appointment of a
regulator for the sector and certainty in the tax regime are likely factors
that will provide clarity, boost business confidence and drive fresh
investments.
However, one of the critical determinants for many of the players in the
real estate sector is likely to be their own financial health and
discipline. The 2008 downturn as well various earlier downturns have always
extracted a heavy price from highly leveraged balance sheets and any
adverse macro-economic development in FY2013 will also in all likelihood do
so, especially considering that not all players have fully recovered from
the 2008 meltdown.
Specifically looking at the real estate sector in Mumbai, the recent
modifications to the development control regulations should result in
faster approvals. However, the overall volumes and pricing in the physical
markets in Mumbai will be driven by the sentiments of the economy as well
as the expected demand and supply.
Your Company will continue to remain alert and adapt to the evolving market
realities and will like to remain proactive in scheduling the construction
and sales based on these market realities. The key strategies of your
Company going forward would be:
Glocalising business:
We shall continue to partner with the leading global players in the area of
design, architecture and construction to bring the best international
practices into the local markets and give the customers greater value
through premium products. Our innovative offerings combined with an
emphasis on contemporary architecture, strong execution and quality will
not only transform destinations but will enhance the quality of life of our
customers.
Enhancing customer centrist:
We are constantly driven by the thought of coming up with superior living
environments that enrich one`s individual, social and recreational
requirements. We recognize that real estate is one of the most emotional
and cherished purchases in our customer`s life and therefore, we handhold
them through the entire project lifecycle and beyond to fulfill their
growing aspirations. Continuous engagement with customers and our financial
prudence will enhance customer confidence in our products and services and
help us become the developer of choice.
Enriching relationships with key stockholders:
In our journey towards creating an institution, we will continue to
strengthen our bonds with all key stockholders. With an aim to be the most
preferred employer in the industry, we are investing in the acquisition,
training and development of our global and local talent pool and provide a
platform to the employees to realize their true potential. We would
continue to ensure the highest levels of fairness and honesty in our every
action to deliver and maximize the shareholder value through our financial
prudence, outsourcing business model and transparent practices. We are
aware of our responsibility to the society at large by ensuring that all
our developments are based on the best environmental practices to make our
society cleaner and greener.
INTERNAL CONTROL SYSTEMS:
Your Company has always believed in being a knowledge based organization
and has continued to keep focus on processes and controls. The accounts
team continues to streamline the process and manage risk and comprises top-
notch professionals such as Chartered Accountants, Cost Accountants,
Company Secretaries, MBAs and Lawyers. The internal audit of the Company is
conducted by KPMG, who directly reports to the Board/Audit Committee. The
statutory audit of the Company is conducted by P. Raj & Co. Chartered
Accountants, who submit their reports to the Board/Audit Committee.
The Company was amongst the earliest real estate companies to implement SAP
R3 in 2007. Company has also implemented Microsoft Share Point for
enhancement of employee engagement. All the major subsidiaries run on SAP
and have robust processes in place. This helps the Company to build a model
which is easily scalable. The Company believes in leveraging the power of
Information Technology to the full extent and would continue to strive in
being the first mover in implementation of new technologies.
CAUTIONARY STATEMENT:
This management discussion and analysis contains forward looking statements
that reflects our current views with respect to future events and financial
performance. Our actual result may differ materially from those anticipated
in the forward looking statements as a result of many factors. |