Dear Members,
Your Directors have pleasure in presenting the 28th Annual Report on the
business and operations of the Company together with the audited results for the financial
year ended March 31, 2023.
FINANCIAL HIGHLIGHTS |
( In million) |
Particulars |
Standalone |
Consolidated |
|
2022-23 |
2021-22* |
2022-23 |
2021-22* |
Total Revenue |
34,258.65 |
26,352.24 |
34,024.33 |
26,452.27 |
Operating Expenditure |
29,879.04 |
20,369.65 |
29,405.97 |
20,284.50 |
Earnings before Interest, Depreciation and Amortisation |
4,379.61 |
5,982.59 |
4,618.36 |
6,167.77 |
Depreciation and Amortisation |
638.71 |
678.16 |
678.37 |
718.27 |
Finance Cost |
2,423.80 |
2,993.70 |
2,490.24 |
3,083.25 |
Profit Before Tax |
1,317.10 |
2,310.73 |
1,449.75 |
2,366.25 |
Tax Expenses |
364.21 |
619.25 |
407.70 |
634.35 |
Profit after Tax |
952.89 |
1,691.48 |
1,042.05 |
1,731.90 |
*Pursuant to Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and
Errors, the financial statements for the previous reporting periods were restated.
BUSINESS AND OPERATIONS
A. BUSINESS OVERVIEW
SOBHA primarily operates across the following business verticals:
Real Estate Development of residential and commercial properties under
SOBHA brand name.
Contractual EPC (Engineering, procurement and construction) contracts
catering to external institutional clients.
Manufacturing Construction sector related production capabilities like
Concrete, Glazing, Interiors etc., supporting in-house projects as well servicing external
clients.
A summary of completed and ongoing projects as on March 31, 2023 has been provided in
the Management Discussion and Analysis Report titled Management Report' which forms
a part of the Annual Report.
B. FINANCIAL OVERVIEW
Standalone
During financial year 2022-23, the Company had on a standalone basis, earned total
revenues of 34,258.65 million as compared to 26,352.24 million in the previous year, an
increase of 30% y-o-y. The Profit before Tax during the year was 1,317.10 million as
against 2,310.73 million in the previous year, decreased by 43.03% and Profit after Tax
during the year was 952.89 million as against 1,691.48 million in the previous year, that
is, decreased by 43.67%.
Consolidated
The consolidated revenues of the Company during the financial year 2022-23 were
34,024.33 million, an increase of 28.62% from the previous year. The Profit before Tax
decreased by 38.73% and Profit after Tax (after considering minority interest) decreased
by 39.83% as compared to the financial year 2021-22.
Transfer to Reserves
Your Directors propose to transfer 95.29 million of the current profits to the General
Reserve.
Dividend
The Company aims to follow a consistent dividend pay-out while striving to achieve a
trade-off between deployment of internal accruals for growth and the payment of dividend.
The Board of Directors, subject to the approval of the shareholders at the ensuing Annual
General Meeting are pleased to recommend a dividend of 3.00 per equity share of 10 each.
The Dividend Distribution Policy is available on the Company's website at https: //w w
w.sobha.com /wp - content / uploads/2020/10/153630151720180907.pdf
C. OPERATIONAL OVERVIEW Completed Projects
During the year under review, the Company executed and handed over 5.78 million square
feet real estate projects and 0.62 million square feet of contractual projects resulting
in an aggregate development of 6.40 million square feet.
The Company has completed construction of 128 million square feet of area since its
inception.
Ongoing Projects
The Company currently has real estate projects aggregating 30.60 million square feet of
developable area. It has 5.24 million square feet of ongoing contractual projects which
are in various stages of construction. The Company has a geographic footprint in 27 cities
across 14 states in India.
SHARE CAPITAL RELATED MATTERS
A. SHARE CAPITAL
The authorized share capital of the Company is 2,000,000,000 divided into 150,000,000
equity shares of 10 each and 5,000,000 preference shares of 100 each. At the beginning of
the year under review, the issued, subscribed and fully paid up capital was 948,458,530
divided into 94,845,853 equity shares of 10 each. There was no change in the issued,
subscribed and fully paid up share capital of the Company during the year under review.
Sobha Limited is a public limited company and its equity shares are listed on the National
Stock Exchange of India Limited and BSE Limited.
B. CHANGES IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
As on date, the Company has six direct subsidiaries and five step-down subsidiaries.
The Company also has an economic interest in a partnership firm which has 6 subsidiaries.
During the year under review, there is no change in Subsidiaries, Joint Ventures and
Associates of the Company.
BOARD OF DIRECTORS AND ITS COMMITTEES
A. COMPOSITION OF THE BOARD OF DIRECTORS
As on March 31, 2023, the Board of Directors of the Company comprised six Directors of
which, four are Non-executive Independent Directors and two are Executive Directors. The
composition of the Board of Directors is in compliance with Regulation 17 of SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and
Section 149 of the Companies Act, 2013.
The Company has received necessary declarations from the Independent Directors stating
that they meet the criteria of independence as specified in Section 149(6) of the
Companies Act, 2013 and Regulation 25(8) of the Listing Regulations.
B. CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Jagadish Nangineni, was appointed as an Additional Director in the capacity
of Whole-time Director designated as Managing Director effective April 01, 2022. His
appointment was approved by the shareholders by passing resolutions through postal ballot
on June 09, 2022. Mr. Raman Mangalorkar, was appointed as an Additional Director in the
capacity of Non-executive Independent Director effective April 01, 2022. His appointment
was approved by the shareholders by passing a resolution through postal ballot on June 09,
2022.
Mr. Ravi PNC Menon, resigned from the position of Whole-time (Executive) Director
effective close of March 31, 2023 and would continue as Non-Executive Director and
Chairman of the Company with effect from April 01, 2023.
C. MEETINGS
During the year under review, the Board of Directors met five times on the following
dates:
1. May 20, 2022
2. August 09, 2022
3. November 14, 2022
4. February 07, 2023
5. March 06, 2023
In accordance with the provisions of the Companies Act, 2013, a separate meeting of the
Independent Directors of the Company was held on March 31, 2023.
D. RE-APPOINTMENT OF DIRECTORS RETIRING BY ROTATION
Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Jagadish
Nangineni, Director and Managing Director (DIN: 01871780) is liable to retire by rotation
at the ensuing Annual General Meeting and being eligible offers himself for
re-appointment. The Board of Directors basedontherecommendationofNomination, Remuneration
and Governance Committee, has recommended the re-appointment of Mr. Jagadish Nangineni,
Director designated as Managing Director, retiring by rotation. The Notice convening the
Annual General Meeting includes the proposal for re-appointment of Mr. Jagadish Nangineni
as a Director of the Company. A brief resume of Mr. Jagadish Nangineni has been provided
as an Annexure to the Notice convening the Annual General Meeting. Specific information
about the nature of Mr. Jagadish Nangineni's expertise in specific functional areas and
the names of the companies in which he holds directorship and membership/chairmanship of
the Board Committees has also been provided in the Notice convening the Annual General
Meeting.
E. PERFORMANCE EVALUATION
In terms of Section 134 (3) (p) read with Articles VII and VIII of Schedule IV of the
Companies Act, 2013, the Board has carried out an annual performance evaluation of its own
performance and that of its statutory committees - the Audit Committee, Stakeholders'
Relationship Committee, Nomination, Remuneration and Governance Committee and that of the
Individual Directors.
The Board assessed the performance and the potential of each of the Independent
Directors with a view to maximizing their contribution to the Board. As envisaged by the
Act, the Independent Directors reviewed the performance of the Chairman of the Board at a
Meeting especially called for that purpose. At the same Meeting, a review of the Executive
Directors was also carried out.
F. DIRECTORS' RESPONSIBILITY STATEMENT
According to the information and explanations obtained, pursuant to Section 134(5) of
the Companies Act, 2013, your Directors hereby confirm, that: a. In the preparation of the
annual accounts, the applicable accounting standards have been followed along with proper
explanations relating to material departures; b. the directors have selected such
accounting policies and applied them consistently and made judgments and estimates that
are reasonable and prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the Company for that
period; c. proper and sufficient care was taken for the maintenance of adequate accounting
records in accordance with the provisions of this Act for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities; d. the annual
accounts have been prepared on a going concern basis; e. internal financial controls to be
followed by the Company have been laid down and such internal financial controls are
adequate and operating effectively; and f. proper systems have been devised to ensure
compliance with the provisions of all applicable laws and that such systems were adequate
and operating effectively.
AUDIT RELATED MATTERS
A. AUDIT COMMITTEE
The composition of the Audit Committee as on March 31, 2023 was:
1. Mr. Raman Mangalorkar (Independent Director) Chairman
2. Mr. Jagadish Nangineni (Managing Director) Member
3. Mr. R V S Rao (Independent Director) - Member
4. Ms. Srivathsala K N (Independent Director) - Member
TheAuditCommitteewasreconstitutedatthe Board meeting held on November 14, 2022. Mr. RVS
Rao ceased to be Chairman of the Audit Committee w.e.f. November 14, 2022 and continued as
member of the Committee. Mr. Raman Mangalorkar was appointed as a Member of Audit
Committee w.e.f. April 01, 2022 and was appointed as Chairman of the Audit Committee
w.e.f. November 14, 2022.
The terms of reference, the powers, roles and responsibilities of the Audit Committee
are in accordance with the requirements mandated under Section 177 of the Companies Act,
2013 and Regulation 18 of the Listing Regulations. During the period under review, the
advice and suggestions by the Audit Committee were duly considered and accepted by the
Board of Directors. There were no instances of non-acceptance of such recommendations.
B. STATUTORY AUDITORS
At the Twenty Seventh Annual General Meeting held on August 10, 2022 the members
appointed M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No.
001076N/N500013) as Statutory Auditors of the Company in place of BSR & Co. LLP,
retiring statutory auditors, for a period of 5 years from the conclusion of 27th
Annual General Meeting till the conclusion of the 32nd Annual General Meeting.
The Statutory Auditors expressed an unmodified opinion in the audit reports with
respect to audited financial statements for the financial year ended March 31, 2023. There
are no qualifications or adverse remarks in the Statutory Auditors' Report which require
any explanation from the Board of Directors.
C. SECRETARIAL AUDIT
Secretarial Audit of the Company for the year ended March 31, 2023 was conducted by Mr.
Nagendra D Rao, Practicing Company Secretary. The Secretarial Audit Report issued by Mr.
Nagendra D Rao, in accordance with the provisions of Section 204 of the Companies Act,
2013 is provided separately in the Annual Report (Annexure A). There are no
qualifications or adverse remarks in the Secretarial Audit Report which require any
explanation from the Board of Directors.
D. COST AUDIT
The Cost Audit Report for the financial year 2021-22 was filed with the Ministry of
Corporate Affairs, New Delhi within the due date prescribed under the Companies (Cost
Records and Audit) Rules, 2014. There are no qualifications or adverse remarks in the Cost
Audit Report which require any explanation from the Board of Directors.
The Board of Directors, based on the recommendation of the Audit Committee, have
appointed M/s. Srinivas and Co, Cost Accountants (Firm Registration No: 000278) as the
Cost Auditors of the Company for the financial year 2022-23. In terms of Rule 14 of the
Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors
for financial year 2022-23 is subject to ratification by the shareholders of the Company.
The Notice convening the Annual General Meeting contains the proposal for ratification of
the remuneration payable to the Cost Auditors.
E. INTERNAL AUDIT AND INTERNAL FINANCIAL CONTROLS
The Internal Audit Team is responsible for assurance with regard to the effectiveness,
accuracy and efficiency of the internal control systems and processes in the Company. The
Internal Audit Team is independent, designed to add value and empowered to improve the
Company's processes. It helps the Company accomplish its objectives by bringing a
systematic, disciplined approach to evaluate and improve the effectiveness of risk
management and control and governance processes. There are adequate internal financial
controls in place with reference to the financial statements. During the year under
review, the Internal Audit Team and the Statutory Auditors tested these controls and no
significant weakness was identified either in the design or operations of the controls. A
report issued by the Statutory Auditors, M/s. Walker Chandiok & Co LLP, on the
Internal Financial Controls forms a part of the Annual Report.
POLICY MATTERS
A. NOMINATION AND REMUNERATION POLICY
The Nomination, Remuneration and Governance Committee of the Board of Directors is
responsible for recommending the appointment of the Directors and senior management to the
Board of Directors of the Company. The Company has in place a Nomination and Remuneration
Policy containing the criteria for determining qualifications, positive attributes and
independence of a Director and policy relating to the remuneration for the Directors, Key
Managerial Personnel and senior management personnel of the Company. The committee also
postulates the methodology for effective evaluation of the performance of Individual
Directors, committees of the Board and the Board as a whole which should be carried out by
the Board, committee or by an independent external agency and review its implementation
and compliance. Nomination and Remuneration Policy is reproduced in Annexure B to
this report. The Nomination and Remuneration Policy is also available on the Company's
website at https://www. sobha.com/wp-content/uploads/2022/03/
amended-Nomination-and-Remuneration-Policy.pdf.
B. THE RISK MANAGEMENT FRAMEWORK
The Company has developed and implemented a risk management framework detailing the
various internal and external risks faced by the Company and methods and procedures for
identifying, monitoring and mitigating such risks. The Board of Directors of the Company
has constituted a Risk Management Committee which is entrusted with the task of
evaluating, monitoring and reviewing the risk management plan and procedures of the
Company. The risk management function is supporting the internal control mechanism of the
Company and supplements the internal and statutory audit functions. There was no offence
or fraud that needs to be reported by the Statutory Auditors as per Section 143 (12) of
the Companies Act, 2013.
C. CORPORATE SOCIAL RESPONSIBILITY POLICY
Over the past decades, the Company has been actively engaged in delivering maximum
value to the society. The Company lays significant emphasis on the economic, social
empowerment and sustainable development of the communities around which it operates. The
Company believes that its achievements do not refer only to its growth but also spread to
society. Accordingly, the Company through Sri Kurumba Educational & Charitable Trust,
a public charitable trust, has adopted three village panchayats - Vadakkencherry,
Kizhakkencherry and Kannambra in Palakkad district of Kerala, each consisting of two
villages, to improve the lifestyle of the people at the grassroots level. The Corporate
Social Responsibility Policy, as formulated by the Corporate Social Responsibility
Committee and approved by the Board of Directors is available on the Company's website at
https://www.sobha. com/wp-content/uploads/2023/06/CSR-Policy.pdf In terms of Section 134
of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility
Policy) Rules, 2014, the annual report on the Corporate Social Responsibility activities
of the Company is given in Annexure C to this report.
D. VIGIL MECHANISM
The Company has established a vigil mechanism to promote ethical behaviour in all its
business activities. It has in place a mechanism for employees and directors to report any
genuine grievances, illegal and unethical behaviour, suspected fraud or violation of laws,
rules and regulations or conduct to the Vigilance Officer and the Audit Committee of the
Board of Directors. The policy also provides for adequate protection to whistle blower
against victimization or discriminatory practices. The policy is available on the
Company's website at https://www.sobha.com/wp-content/
uploads/2020/10/153630159420180907.pdf During the year under review, the Company
did not receive any complaints relating to unethical behaviour, actual or suspected fraud,
or violation of the Company's Code of Conduct from any employee or Directors.
OTHER MATTERS
A. DEBENTURES
There were no outstanding debentures as on March 31, 2023.
B. DEPOSITS
The Company has not accepted any deposits in terms of Chapter V of the Companies Act,
2013 read with the Companies (Acceptance of Deposit) Rules, 2014, during the year under
review. As such, no amount of principal or interest was outstanding as on date of this
report.
C. TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND
In compliance with Section 124 of the Companies Act, 2013, the dividends pertaining to
financial year 2014-15 which were lying unclaimed with the Company were transferred to the
Investor Education and Protection Fund during financial year 2022-23. The details of
unclaimed dividends transferred to the Investor Education and Protection Fund has been
detailed in the Corporate Governance Report which forms a part of the Annual Report.
As required under Section 124 of the Companies Act, 2013 and the Rules made thereunder,
3,087 equity shares, in respect of which dividend had not been claimed by the shareholders
for seven consecutive years or more, were transferred to the Investor Education and
Protection Fund during the year under review. The details of the shares and shareholders
are available on the Company's website.
D. SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS/COURTS
During the year under review, there were no significant or material orders passed by
the regulators or courts or tribunals impacting the going concern status and Company's
operations in future.
E. HUMAN RESOURCES
Employee relations continue to be cordial at all levels and in all divisions of the
Company. The Board of Directors would like to express its sincere appreciation to all the
employees for their continued hard work and steadfast dedication.
As on March 31, 2023, the Company had an organizational strength of 3,406 employees.
Details about the employees are provided in a separate section in the Annual Report.
F. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT, 2013
The Company has adopted a policy on prevention and redressal of sexual harassment at
the workplace. Pursuant to the provisions of the Sexual Harassment of Women at the
Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has in place an
Internal Complaints Committee for prevention and redressal of complaints of sexual
harassment of women at the workplace. No complaints were received by the Company during
the year under review.
G. AWARDS AND RECOGNITIONS
During financial year 2022-23, the Company was conferred with various awards and
recognitions, the details of which are given in a separate section in the Annual Report.
H. CORPORATE GOVERNANCE
In accordance with Regulation 34(3) read with Schedule V of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, a separate report on corporate
governance forms part of this report.
A certificate from Mr. Nagendra D Rao, Practicing Company Secretary affirming
compliance with the various conditions of corporate governance in terms of the Listing
Regulations is given in Annexure D to this report.
I. CODE OF CONDUCT
The Company has laid down a Code of Conduct for the Directors as well as for all senior
management of the Company. As prescribed under Regulation 17 of the Listing Regulations, a
declaration signed by the Managing Director affirming compliance with the Code of Conduct
by the Directors and senior management personnel of the Company for financial year 2022-23
forms part of the Corporate Governance Report.
J. DISCLOSURE ON CONFIRMATION WITH SECRETARIAL STANDARDS
The Directors confirm that the Secretarial
Standards issued by the Institute of Company Secretaries of India have been complied
with pursuant to the Companies Act, 2013 and the rules made thereunder.
K. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with the requirements of the Listing Regulations, the Management
Discussion and Analysis Report titled Management Report' is presented in a separate
section in the Annual Report.
L. ANNUAL RETURNS
In accordance with the Companies Act, 2013, theannualreturnsintheprescribedformatare
available under the link https://www.sobha.
com/wp-content/uploads/2023/07/2022-2023-Annual-Return-MGT-7.pdf
M. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
In terms of Section 134 of the Companies Act, 2013, the particulars of loans,
guarantees and investments made by the Company under Section 186 of the Companies Act,
2013 are detailed in Notes to Accounts of the Financial Statements.
N. RELATED PARTY TRANSACTIONS
During the year, the Company did not enter into any contract/arrangement/ transaction
with a related party which can be considered as material in terms of the policy on related
party transactions laid down by the Board of Directors. Related party transactions, if
any, pursuant to the Listing Regulations were approved by the Audit Committee from time to
time prior to entering into the transactions. The related party transactions undertaken
during financial year 2022-23 are detailed in the Notes to Accounts of the Financial
Statements.
Further, during the year under review, there were no contracts or arrangements entered
with related parties referred to the criteria mentioned in Sub-section (1) of Section 188
of the Companies Act, 2013. Therefore, there is no requirement to report any transaction
in Form AOC-2.
O. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND
OUTGO
In terms of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies
(Accounts) Rules, 2014, the details of energy conservation, technology absorption, foreign
exchange earnings and outgoings are given as Annexure E to this report.
P. REMUNERATION DETAILS OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES
Details of remunerations of Directors, Key Managerial Personnel and the statement of
employees in receipt of remuneration exceeding the limits prescribed under Section 134 of
the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 is provided in Annexure F to this report.
Q. FINANCIAL POSITION AND PERFORMANCE OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
In terms of Section 134 of the Act and Rule 8(1) of the Companies (Accounts) Rules,
2014, the financial position and performance of the subsidiaries is given as an annexure
to the Consolidated Financial Statements.
R. MATERIAL CHANGES AND COMMITMENTS
In terms of Section 134(3) (I) of the
Companies Act, 2013, except as disclosed elsewhere in this report, no material changes
and commitments which could effect the companies financial position have occurred.
S. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
As required under Regulation 34 of the Listing Regulations, the Business Responsibility
and Sustainability Report is given in Annexure G to this report.
T. ADDITIONAL INFORMATION TO SHAREHOLDERS
All important and pertinent investor information such as financial results, investor
presentations, press releases, new launches and project updates are made available on the
Company's website (www.sobha.com) on a regular basis.
ACKNOWLEDGEMENTS
The Directors would like to place on record their sincere appreciation of the Company's
customers, vendors and bankers for their continued support to the Company during the year.
The Directors also wish to acknowledge the contribution made by employees at all levels
for steering the growth of the organization. We thank the Government of India, the state
governments and other government agencies for their assistance and cooperation and look
forward to their continued support in the future. Finally, the Board would like to express
its gratitude to the members for their continued trust, cooperation and support.
|
For and on behalf of the Board of Directors of Sobha
Limited |
|
Sd/- |
Sd/- |
Place : Bangalore |
Ravi PNC Menon |
Jagadish Nangineni |
Date : May 29, 2023 |
Chairman |
Managing Director |
|