BEYOND THE REALM OF REAL ESTATE, WE CREATE ONE THING, EXCELLENCE. ANNUAL REPORT 2017 ANNUAL REPORT 2017 1 ACHIEVING NEW HEIGHTS We aspire to be nation’s most premium and trusted brand, by adhering to the highest standards of ethical business practices & ensuring excellent quality of product. We believe this is just the beginning of a phenomenal success, now as we expand and diversify our business into various luxury segments, we look forward to achieving new heights. BRAND POSITIONING Ultra Luxury Residences aimed at Premium & mid-level residences in high- net worth individuals select suburban micro markets Large Formats and Mixed Commercial Use Developments Developments Kamal Khetan Chairman & Managing Director Sunteck Realty Ltd. “EXPANDING TO ACHIEVE GREAT HEIGHTS: BUSINESS AT AN INFLECTION POINT” CAPTURES SUNTECK’S CURRENT STANDING. increased confidence to home credit rating being re-affirmed CHAIRMAN’S MESSAGE buyers and provide by multiple credit rating consolidation opportunities for agencies. the organized players. The Union Dear Shareholders, Budget 2017 came across as a The main contributor to the very balanced and progressive strong P&L was recognition of India has experienced multiple budget with a record high our third residential project in structural reforms in recent years allocation towards infrastructure Bandra-Kurla Complex (BKC), and remains one of the fastest and measures to encourage Mumbai called Signia Pearl, growing emerging market housing growth. The provisions which also obtained Occupation economies. Weakness in global to encourage affordable housing Certificate (OC) during the year. commodity prices, controlled like deduction on profits for With this, all three of our inflation, and increased public developers, lower interest rates residential projects in BKC are spending supported economic for the borrower, and now operational, with Signature growth. Beyond the temporary infrastructure status from a Island and Signia Isles already hurdle arising out of the lenders’ perspective further seeing a lot of South Mumbai government’s demonetization underline the government’s families shifting their base to initiatives, and global events like sincerity about their housing for BKC. With the entire complex the US presidential elections and all scheme. seeing more habitation, we the UK vote in favor of Brexit; witnessed good traction in sales policy actions continued in the Through this dynamic business and also concluded multiple right direction. environment, FY2017 has been a lease deals for our customers at very strong year for Sunteck both amongst the highest rentals in The year gone by has been an operationally and financially. We the country. The new upcoming eventful one for India’s real posted revenue of ` 952cr, an flyovers connecting BKC to the estate sector with a lot of increase of 291% y-o-y and entire city, two new five-star positive changes and initiatives record PAT of ` 208cr. We also hotels and hi-end malls coming being introduced by the made multi-fold progress on up, and a Convention Centre government. Reform measures further strengthening our getting operational in the next like implementation of RERA and balance sheet, with reduction in 18 to 24 months, augur well for clarity on GST are structural average cost of debt, decrease the potential monetization of our changes, which are likely to give in absolute debt levels and A+ balance inventory. 4 The second biggest capital Signia brand like Signia High at strength of both Sunteck and its allocation for Sunteck has Borivali and Signia Waterfront at partners for selectively exploring happened towards our ‘Sunteck Airoli (Navi Mumbai) are also new acquisitions. City’ project at Oshiwara District moving well. Centre (ODC), Goregaon West. The Company today has an There have been some very Looking ahead, interest rates are established brand and presence significant developments in this already on its descend should act across the MMR region, with a location during the year. Apart as a building block for a recovery track record of quality execution from one East-west flyover (which in the residential segment. This and a proven ability to identify is an extension of the JVLR), will be well supported by the growth areas and establish another flyover got operational arrival of RERA and increasing presence ahead of the curve. We during the year, which connects transparency in the sector, which have delivered several landmark ODC to the IT hubs of Nirlon and will increase the confidence of projects, which have changed the Nesco in Goregaon East, which home buyers who had been profile of the entire locale. We are the main target audience for waiting on the sidelines in recent enjoy a premium positioning our residential developments. years. The government’s impetus across our products and The past year also saw the Ram on affordability has the potential micro-markets. I truly believe that Mandir station becoming to drive the next leg of growth for your company is on the path of operational on Mumbai’s western the residential segment and lead creating value for the society as railway line. The next two years to a broad-based recovery in the well as its stakeholders. Our will see further developments like coming years. We at Sunteck also commitment towards delivering completion of several ninety feet aspire to be present across the best possible homes for our roads in the notified zone of ODC pricing spectrums within the customers remains at the core of and two or more metro stations in MMR to ensure the long - term our business philosophy and we a radius of around three sustainable growth of the are confident of achieving new kilometers. These infrastructure company. Thus we are selectively heights in the coming year. developments will further enhance evaluating opportunities in the the value of ODC spread over mid-income value homes I would like to thank, our Board of 160 acres, and of our project segment as well, under a new Directors, customers, partners, Sunteck City - the largest brand, where using the benefits associates and shareholders, for mixed-use development in the available under the affordable your confidence in us, which helps area – spread over 23 acres. The housing regulations, we will fuel the momentum towards a way Sunteck saw an early maintain our profitability levels. brighter future for Sunteck. opportunity in the CBDs of BKC Our prudent cash flow and Navi Mumbai ahead of the management and balance sheet curve; ODC is a similar strength has facilitated us to opportunity which can take your attract strategic partners over the Warm Regards, company to a new level of growth. years. We will leverage our brand Kamal Khetan Our other Projects under the positioning and execution Chairman and Managing Director 5 CORPORATE INFORMATION BOARD OF DIRECTORS AUDITORS Mr. Kamal Khetan Statutory: Chairman & Managing Director • Lodha & Company (Chartered Accountants) Mr. Atul Poopal Internal: Executive Director • PricewaterhouseCoopers (PWC) Mr. Kishore Vussonji SOLICITORS & LEGAL ADVISORS Independent Director • Kanga & Company Mr. Ramakant Nayak Independent Director BANKERS • SBI Bank Mr. Mahadevan Kalahasthi • HDFC Ltd. Independent Director • Kotak Mahindra Bank • ICICI Bank Mrs. Rachana Hingarajia • Deutsche Bank Woman Director • HDFC Bank ADDRESS OF REGISTERED OFFICE REGISTRAR AND TRANSFER AGENTS 5th Floor, Sunteck Centre, Link Intime India Private Limited, Subhash Road, Vile Parle (E), C-101, 247 Park, L.B.S. Marg, Mumbai - 400 057. Vikhroli (W), Cin: L32100MH1981PLC025346 Mumbai - 400 083. Tel: +91 22 4287 7800 Fax: +91 22 4287 7890 Tel No: 022-49186000 Website: www.sunteckindia.com Fax No: 022-49186060 Email: [email protected] Email: [email protected] 6 CONTENTS Chairman’s Message ……………………………………….……………………………………...... 04 Key Highlights ............……………………………………………………………………………...... 09 Director’s Report ……………………………….......……………………………………………...... 28 Annexures to Director’s Report …………………..……………………………………………...... 36 Report on Corporate Governance ……………........…………………………………………...... 57 Certificate by CEO and CFO ……………………......…………………………………………...... 72 Auditor’s Certificate on Corporate Governance ........………………………………………...... 73 Secretarial Audit Report ......…………………………...………………………………………...... 74 Management Discussion and Analysis ……………….………………………………………...... 76 Independent Auditors Report (Standalone) ………..………………………....……………...... 86 Standalone Balance Sheet …………………………….……………..........…………………...... 93 Standalone Profit and Loss Statement …………………...……………………………………...... 95 Standalone Cash Flow Statement …......………......…………………………………………...... 98 Notes to Standalone Financial Statements ……………………………........……………...... 100 Independent Auditors Report (Consolidated) ………...…………………………………...... 156 Consolidated Balance Sheet ...............…………………..……………………………………..... 161 Consolidated Profit and Loss Statement ……………...……………………………………...... 163 Consolidated Cash Flow Statement …......………......……………………………..………...... 165 Consolidated Notes to Policies ……….......……………..……………………………………..... 169 Details of Subsidiaries/Joint Ventures/Associates …...…………………………………...... 236 7 MOVING TOGETHER TOWARDS MAXIMUM GROWTH & STABILITY 8 REVENUE ` 9,522 MN FROM V/S OPERATIONS ` 2,434 MN ` 2,080 MN PAT** V/S KEY ` 163 MN HIGHLIGHTS `6,468 MN PRE-SALES V/S ` 5,505 MN ` 5,423 MN COLLECTIONS V/S ` 4,832 MN • Put together, a robust strategic leadership team across hierarchy • Processes formulated, implemented and is being constantly evaluated by 4 leading consultants • Recognised