Prozone by Stockupdates

INFORMATION MEMORANDUM
PROZONE CAPITAL SHOPPING CENTRES LIMITED Prozone Capital Shopping Centres Limited was incorporated as "Castle Mall Private Limited", a private limited company under the Companies Act, 1956, and was issued a Certificate of Incorporation dated September 14, 2007 by the Registrar of Companies, Mumbai. With effect from September 28, 2011, the Company was converted into a public limited company and the name of the Company was changed to Castle Mall Limited, and subsequently on October 5, 2011, the name of the Company was further changed to Prozone Capital Shopping Centres Limited. The corporate identification number issued to the Company is U45200MH2007PLC174147. For further details, see the section titled History and Certain Corporate Matters on page 58 of this Information Memorandum. Registered Office: 105/106, Provogue House, Off New Link Road, Andheri (West), Mumbai 400 053; Telephone: (+9122) 3068 0111/222; Facsimile: (+9122) 3068 0570; Website: www.prozonecsc.com Contact Person and Compliance Officer: Ms. Snehal Bansode; Telephone: (+9122) 3068 0564; Facsimile: (+9122) 3068 0570; E-mail: snehal.bansode@prozonecsc.com Promoters of the Company: Provogue (India) Limited and the promoters of Provogue (India) Limited Prozone Capital Shopping Centres Limited is registered with the Registrar of Companies, Mumbai situated at Everest Building, 1st Floor, 100, Marine Lines, Mumbai - 400002. INFORMATION MEMORANDUM FOR LISTING 15,26,02,883 EQUITY SHARES OF RS. 2/- EACH NO EQUITY SHARES ARE PROPOSED TO BE OFFERED OR SOLD PURSUANT TO THIS INFORMATION MEMORANDUM FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF THE COMPANY GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds unless they can afford to take the risk of losing their entire investment. Investors are advised to read the risk factors carefully before taking any investment decision. For taking an investment decision, investors must rely on their own examination of Prozone Capital Shopping Centres Limited, including the risks involved. Specific attention of the investors is invited to the section titled Risk Factors on page vi of this Information Memorandum. ISSUERS ABSOLUTE RESPONSIBILITY The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Information Memorandum contains all information with regard to the Company, which is material, that the information contained in this Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions, misleading, in any material respect. LISTING ARRANGEMENT The Equity Shares of Prozone Capital Shopping Centres Limited are proposed to be listed on the NSE and the BSE. Our Company has submitted this Information Memorandum to the NSE and the BSE and the same is available on the Companys website. The Information Memorandum would also be made available on the websites of the NSE and the BSE, at www.nseindia.com and www.bseindia.com. REGISTRAR AND SHARE TRANSFER AGENT Link Intime India Private Limited C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai 400078 Tel.: 022-25963838, 25946970 Fax: 022-25946969 E-mail ID: helpdesk@linkintime.co.in Contact person: Mr. Mahadevan Iyer.
TABLE OF CONTENTS Particulars SECTION I GENERAL DEFINITIONS AND ABBREVIATIONS CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND CURRENCY OF PRESENTATION FORWARDLOOKING STATEMENTS SECTION I RISK FACTORS RISK FACTORS SECTION III INTRODUCTION GENERAL INFORMATION SALIENT FEATURES OF THE SCHEME CAPITAL STRUCTURE STATEMENT OF TAX BENEFITS SECTION IV ABOUT OUR COMPANY INDUSTRY OVERVIEW OUR BUSINESS HISTORY AND CERTAIN CORPORATE MATTERS OUR MANAGEMENT PROMOTERS AND GROUP ENTITIES DIVIDEND POLICY SECTION V - FINANCIAL INFORMATION FINANCIAL STATEMENTS MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION SECTION VI - LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS SECTION VII REGULATORY DISCLOSURES REGULATORY AND STATUTORY DISCLOSURES SECTION VIII ARTICLES OF ASSOCIATION MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION SECTION IX OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION DECLARATION Page i iv v Vi 18 21 25 37 43 52 58 60 66 80 81 82
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SECTION I GENERAL DEFINITIONS AND ABBREVIATIONS Unless the context otherwise indicates, requires or implies, the following terms shall have the meanings set forth below in this Information Memorandum. References to statutes, rules, regulations, guidelines and policies will be deemed to include all amendments and modifications notified thereto. Company related terms and abbreviations used in the Information Memorandum Term Explanation Articles/ Articles of Association/ AoA Articles of association of the Company Appointed Date April 1, 2011, as specified in the Composite Scheme of Arrangement and Amalgamation Board/ Board of Directors Board of Directors of Prozone Capital Shopping Centres Limited Composite Scheme of Arrangement The composite scheme of arrangement and amalgamation between Provogue and Prozone and Amalgamation/ Scheme and PCSCL and their respective shareholders and creditors under Sections 391 to 394 read with Section 78, 100 to 104 of the Companies Act, 1956, which was approved by the Bombay High Court vide its order dated February 10, 2012 Committee Any committee that may be constituted by the Board Company/ PCSCL/ Resulting Prozone Capital Shopping Centres Limited Company/ Transferee Company Demerged Undertaking The retail centric real estate development business of Provogue which was transferred to the Company as a going concern basis pursuant to the Scheme and as more particularly defined in the Scheme Depositories Act The Depositories Act, 1996 as amended from time to time Depository A Depository registered with SEBI under the SEBI (Depositories & Participants) Regulations, 1996 as amended from time to time Director A director on the Board of Directors of the Company Effective Date February 27, 2012, the date on which the order of the Honourable Bombay High Court was filed by Provogue, PEPL and PCSCL with the RoC Equity Share(s) Equity shares of the Company having face value of Rs. 2 each Equity Shareholder(s)/ Any equity Shareholder(s) of the Company Shareholder(s) Information Memorandum This information memorandum dated September 6, 2012 Memorandum / Memorandum of Memorandum of Association of the Company Association/ MoA Provogue/ PIL/ Demerged Company Provogue (India) Limited Prozone/ PEPL/ Transferor Prozone Enterprises Private Limited. On the coming into effect of the Scheme, Prozone Company stood dissolved without winding up Record Date March 9, 2012 Registrar and Share Transfer Agent Link Intime India Private Limited Remaining Undertaking All business activities and operations of Provogue, other than those comprised in the Demerged Undertaking and as more particularly defined in the Scheme We, or us and our Refers collectively to the Company and its subsidiaries/ joint ventures, based on the context Conventional or general terms and abbreviations Term Explanation A/c Account Act Companies Act, 1956 AGM Annual General Meeting AS Accounting Standards as issued by the Institute of Chartered Accountants of India AY Assessment Year BSE BSE Limited CAGR Compounded Annual Growth Rate CDSL Central Depository Services (India) Limited
Term CIN DIN DP DP ID EPS FDI FEMA FIPB FVCI FY GAAP GDP GIR Number GoI/Government HUF ICAI I.T. Act Indian GAAP IPR ISIN Mn / mn MOU NOC NEFT NR NRE Account NRO Account NSDL NSE P/E Ratio PAN PAT PBT RBI RoC RoNW RTGS SCRR SEBI SEBI Act Stock Exchanges TIN UIN VAT
Explanation Corporate Identity Number Director Identification Number Depository Participant Depository Participants Identity Earnings per Share Foreign Direct Investment Foreign Exchange Management Act, 1999 read with various rules and regulations issued thereunder and amendments thereto Foreign Investment Promotion Board Foreign Venture Capital Investor registered under the Securities and Exchange Board of India (Foreign Venture Capital Investor) Regulations, 2000 Financial Year Generally Accepted Accounting Principles Gross Domestic Product General Index Registry Number Government of India Hindu Undivided Family Institute of Chartered Accountants of India The Income Tax Act, 1961, as amended from time to time Generally Accepted Accounting Principles in India Intellectual Property Rights International Security identification Number Million Memorandum of Understanding No Objection Certificate National Electronic Fund Transfer Non-Resident Non Resident External Account Non Resident Ordinary Account National Securities Depository Limited National Stock Exchange of India Limited Price to Earnings Ratio Permanent Account Number Profit After Tax Profit Before Tax Reserve Bank of India The Registrar of Companies, Mumbai Return on Net Worth Real Time Gross Settlement Securities Contracts (Regulation) Rules 1956 as amended from time to time The Securities Exchange Board of India The Securities and Exchange Board of India Act, 1992 (as amended) NSE and BSE Tax Payers Identification Number Unique Identification Number Value Added Tax
Industry Related Terms, Definitions and Abbreviations Term CII FDI FSI Confederation of Indian Industry Foreign Direct Investment Floor Space Index Explanation
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Term GBP GLA IMF MIHAN MSF REIT REMF SPV Sq Ft. UK FTSE
Explanation Pound Sterling, official currency of the United Kingdom Gross Leasable Area International Monetary Fund Multimodal International Cargo Hub And Airport, Nagpur Million Square Feet Real Estate Investment Trust Real Estate Mutual Fund Special Purpose Vehicle Square Feet Benchmark Share Index of stocks listed on the London Stock Exchange
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CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND CURRENCY OF PRESENTATION Currency of Presentation All references to Rupees, Re. or Rs. are to Indian Rupees, the official currency of the Republic of India. Financial Data Unless stated otherwise, the financial information in this Information Memorandum is derived from our financial statements prepared in accordance with Indian GAAP and the Companies Act. Our Companys fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal are to the twelve month period ended March 31 of that year, unless otherwise specified. Any discrepancies in any table between the totals and the sum of the amounts listed are due to rounding off. Market and Industry Data Market and industry data used in this Information Memorandum has generally been obtained or derived from industry publications and sources. These publications typically state that the information contained therein has been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. Accordingly, no investment decision should be made based on such information. Although we believe that industry data used in this Information Memorandum is reliable, it has not been independently verified by us and may be subject to change. The extent to which the market and industry data used in this Information Memorandum is meaningful depends on the readers familiarity with and understanding of the methodologies used in compiling such data. The information included in this Information Memorandum about various other companies is based on their respective annual reports and information made available by the respective companies. In the section Promoters and Group Companies, the exchange rates applied for translation of foreign currencies of the respective companies into Indian currency for the respective financial years is as below: Currency Exchange Rate as on Exchange Rate as on Exchange Rate as on Exchange Rate as on March 31, 2009 March 31, 2010 March 31, 2011 March 31, 2012 1 USD 51.7601 45.004 45.2854 51.8521 1 SGD 34.0361 32.1645 35.8762 41.2385 1 HKD 6.6783 5.7959 5.8143 6.678 Source: www.oanda.com.
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FORWARD-LOOKING STATEMENTS This Information Memorandum contains certain forward-looking statements. These forward-looking statements can generally be identified by words or phrases such as will, aim, will likely result, believe, expect, will continue, anticipate, estimate, intend, plan, contemplate, seek to, future, objective, goal, project, should, will pursue and similar expressions or variations of such expressions. All statements contained in this Information Memorandum that are not statements of historical fact constitute forward-looking statements. All statements regarding our expected financial condition and results of operations, business, plans and prospects are forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. These statements are based on our management's beliefs and assumptions, which in turn are based on currently available information. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate, and the forward-looking statements based on these assumptions could be incorrect. Further, the actual results may differ materially from those suggested by the forward-looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, regulatory changes pertaining to the industry in which we operate and our ability to respond to them. By their nature, certain risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Our Company, our Directors or any of our affiliates or associates do not have any obligation to, and do not intend to, update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. Similarly, statements that describe our objectives, strategies, plans or goals are also forward looking statements. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause our actual results to differ materially from those contemplated by the relevant forward looking statement. For a further discussion of factors that could cause our actual results to differ, see the sections titled Risk Factors, Our Business and Managements Discussion and Analysis of Financial Condition and Results of Operations on pages vi, 52 and 82, respectively of this Information Memorandum. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated.
SECTION II RISK FACTORS INTERNAL RISK FACTORS 1. We may not be able to expand our business successfully or at all, which may have an adverse effect on our business, financial condition and results of operations.
We have a limited operating history as compared to the other real estate players in the markets in which we operate. Our real estate operations began in FY2006-07 and we have commenced or are in the process of commencing real estate development in various tier 2 and tier 3 cities in India. We are embarking on a growth strategy which involves significant expansion of our business. Such a growth strategy will place significant demands on our management and our financial and operating systems. Further, as we scale up and diversify our operations, we may not be able to execute our projects efficiently, which may result in delays, increased costs and affect the quality of our developments, and may adversely affect our reputation. We cannot assure you about our future performance or that our business strategy will be successful. Also, we may not be able to grow or sustain our growth effectively in the future due to a variety of reasons including a decline in the demand for quality real estate properties, increased prices or competition, nonavailability of raw materials, lack of management availability or a general slowdown in the economy. A failure to sustain our growth may have an adverse effect on our business, financial condition and results of operations. Additionally, the level of competition, regulatory practices, business practices and customs and consumer preferences in cities where we plan to expand our operations in the future may differ from those prevalent in the cities that we have experience in, and our experience in these cities may not be applicable to these new cities. Further, as we enter new markets, we are likely to compete with local real estate developers who have an established local presence, are more familiar with local regulations, business practices and customs, and have stronger relationships with local contractors and relevant government authorities, all of which may, collectively or individually, give them a competitive advantage over us. We can provide no assurance that we will be successful in expanding our business to include other regions. Any failure by us to successfully carry out our plan to geographically diversify our business may have an adverse effect on our business, financial condition and results of operations. 2. Our business is heavily dependent on the availability of real estate financing, which may not be available on terms acceptable to us or at all.
Our business is cyclical and highly capital intensive, requiring substantial capital to develop and market our projects. We expect that we will require additional funding to meet our capital expenditure needs, which could result in incurrence of indebtedness, which could require us to comply with certain restrictive covenants. Our ability to obtain financing on favourable commercial terms, if at all, will depend on a number of factors, including: our future financial condition, results of operations and cash flows; the amount and terms of any existing indebtedness; general market conditions and market conditions for financing activities by real estate companies; and economic, political and other conditions in India and, in particular, the regions that we operate. Challenging conditions such as the recent global financial conditions, including continued disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation of financial institutions, reduced alternatives or failures of significant financial institutions, may significantly diminish the availability of credit to us and our customers. This may require us to delay or abandon some or all of our planned projects, reduce planned expenditures and advances to obtain land or development rights, and reduce the scale of our operations, and may adversely affect the sales of, and market rates for, our projects, and, consequently, our profitability. In addition, Indian regulations on foreign investment in housing, built-up infrastructure and construction and development projects impose significant restrictions, which may impact the availability of financing for our business activities. Further, under current Indian regulations except for certain limited purposes, external commercial borrowings cannot be raised for investment in real estate, which may further restrict our ability to obtain necessary financing. In the event we are not able to
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raise additional financing on favourable terms, or at all, our planned capital expenditure, business, results of operations and prospects could be adversely affected. 3. The real estate industry has undergone a significant downturn recently, which has, and may continue to, adversely affect our business, liquidity and results of operations.
Economic developments within and outside India adversely affected the property market in India. The global credit markets experienced, and may continue to experience, significant volatility and may continue to have a significant adverse effect on the availability of credit and the confidence of the financial markets, globally as well as in India. In the recent past, the real estate industry experienced a significant downturn. It resulted in an industry-wide softening of demand for property due to a lack of consumer confidence, decreased affordability, decreased availability of mortgage financing, and large number of players engaging in real estate development. Even though the global credit and the Indian real estate markets have since shown signs of recovery, economic turmoil may continue to exacerbate industry conditions or have other unforeseen consequences, leading to uncertainty about future conditions in the real estate industry. These effects include, but are not limited to, a decrease in the sale of, or market rates for, our projects, delays in the rollout of certain of our projects in order to take advantage of future periods of stronger real estate demand, and the inability of our contractors to obtain working capital. Any significant downturn in future would have an adverse effect on our business, financial condition and results of operations. 4. Our operations are mostly across tier 2 and tier 3 cities in India; any adverse changes in the conditions affecting these markets can adversely impact our business, financial condition , results of operations and cash flows.
Our operations are mostly across tier 2 and tier 3 cities in India, and therefore remains heavily dependent on the performance of, and the conditions affecting the real estate market in these regions. In the event of any slowdown in construction activity in these regions, or any developments that make projects in these regions less economically beneficial, we may experience more pronounced effects on our financial condition, results of operations and cash flows, than if we had further diversified our portfolio across different sections in other geographical locations. The real estate markets in tier 2 and tier 3 cities may perform differently from, and be subject to, market and regulatory developments that may be different from the real estate markets in other parts of India. We cannot assure you that the demand for our properties in these cities will grow, or will not decrease, in the future. Real estate properties take a substantial amount of time to develop and we could incur losses if we purchase land during periods when land prices are high, and we are forced to sell or lease our developed properties when land prices are relatively lower. Further the markets for land and developed properties are relatively illiquid in that there may be high transaction costs as well as little or insufficient demand for land or developed properties at the expected rental or sale prices, as the case may be, which may limit our ability to respond promptly to market events. The real estate market is affected by changes in government policies, economic conditions, demographic trends, employment and income levels and interest rates among other factors, which may negatively affect the demand for and the valuation of our Projects in Progress and our Forthcoming Projects. These and other factors may negatively contribute to changes in real estate prices, the demand for and valuation of our current and future properties under development, may restrict the availability of land and may adversely affect our business, financial condition, results of operations and cash flows. 5. Our inability to acquire or obtain development rights over large parcels of land, or any irregularity in such agreements for acquisition of land or development rights may adversely affect our future development activities, which may have an adverse effect on our business, financial condition and results of operations.
We may be required to acquire parcels of land or development rights from various land owners, which are subsequently consolidated to form a contiguous property, upon which we undertake development. Real estate developers have often experienced difficulties in acquiring or obtaining development rights over large parcels of land. In the future, we may not be able to acquire or obtain development rights over such large parcels of land at all or on terms that are acceptable to us. In situations where we may have to pay premium amounts for acquiring or obtaining development rights over certain large parcels of lands owing to their size and location, such payments may limit our ability to fund other property developments and may adversely affect our business, financial condition and results of operations.
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Also, as part of our land acquisition process, we may enter into agreements to purchase or memoranda of understanding with third parties prior to the transfer of interest or conveyance of title of the land. Such agreements to purchase or memoranda of understanding are usually entered after paying certain advance payments to ensure that the sellers of the land or the land owner satisfy certain conditions within the time frames stipulated under these agreements. There can be no assurance that these sellers will be able to satisfy their conditions within the time frames stipulated or at all. In certain situations, agreements to purchase land or acquire development rights may expire or contain irregularities to the title or our interest in the land, at a later stage that may invalidate them or may force us from not proceeding with acquiring interests in such land parcels. If such irregularities exist, we may not be able to develop those properties for which we have entered into joint-development agreements. In the event that we are not able to acquire the land or development rights, we may not be able to recover all or part of the advance monies paid by us to these third parties. Further, in the event that these agreements are either invalid or have expired, we may lose the right to acquire the lands and may not be able to recover the advances made in relation to the land. Also, any failure on our part to perform our obligations or any delay in performing our obligations under these agreements, may lead to us being unable to acquire these lands as the agreements may also expire. Any failure to complete the purchases of land, renew these agreements on terms acceptable to us or recover the advance monies from the relevant counterparties may adversely affect our business, financial condition and results of operations. 6. The success of our real estate development business is dependent on our ability to anticipate and respond to consumer requirements.
We depend on our ability to understand the preferences of our customers and to accordingly develop projects that suit their tastes and preferences. The growing disposable income of Indias middle and upper income classes has led to a change in popular lifestyle resulting in substantial changes to the nature of their demands. The range of amenities now demanded by consumers include those that have historically been uncommon in Indias residential real estate market such as gardens, community space, security systems, playgrounds, swimming pools, fitness centres, tennis courts, squash courts and golf courses. As customers continue to seek better housing and better amenities as part of their residential needs, we are required to continue to focus on the development of quality residential accommodation with various amenities. Our inability to provide customers with certain amenities or our failure to continually anticipate and respond to customer needs may affect our business and prospects. Similarly, in the retail segment, we believe that in order to draw consumers away from traditional shopping environments such as small local retail stores or markets as well as from competing malls, we need to create demand for our shopping malls where customers can take advantage of a variety of consumer and retail options, such as large department stores, in addition to amenities such as designer stores, comprehensive entertainment facilities, including multiplexes, restaurants and bars, air conditioning and sufficient parking. Our success in the development of malls will also depend on our ability to forecast and respond to demand in industries in which we do not have any experience to date. To help ensure our malls success, we must secure suitable anchor tenants and other retailers as they play a key role in generating customer traffic and employ a professional mall-management team. A decline in consumer and retail spending or a decrease in the popularity of the retailers businesses may cause retailers to cease operations or experience significant financial difficulties, which in turn may harm our ability to continue to attract successful retailers and consumers to our malls, which may have an adverse effect on our business, financial condition and results of operations. 7. The launch of new projects that are unsuccessful may impact our growth plans and may adversely impact our business, financial condition and results of operations.
As part of our strategy, we may plan to introduce new project initiatives in the Indian market. Such project initiatives carry significant risks, as well as the possibility of unexpected consequences, including (i) acceptance by and sales of the new project initiatives to our customers may not be as high as we anticipate; (ii) our marketing strategies for the new projects may be less effective than planned and may fail to effectively reach the targeted consumer base or engender the desired demand; (iii) we may incur costs exceeding our expectations as a result of the continued development and launch of the new projects; (iv) we may experience a decrease in sales of certain of our existing projects as a result of the new projects in the same vicinity; and (v) any delays or other difficulties impacting our ability, or the ability of our third party contractors and developers, to develop and construct projects in a timely manner in connection with launching the new project initiatives. Each of the risks referred to above
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may delay or impede our ability to achieve our growth objectives or we may not be successful in achieving our growth objectives at all through these means, which may have an adverse effect on our business, financial condition and results of operations. Additionally, as part of our business, we provide property management services to our completed residential developments. These services include, among others, security management, building maintenance and the operation of leisure facilities such as swimming pools and fitness centres. If owners of the projects that we have developed elect to discontinue the services provided by us, our property management business would be negatively impacted, which in turn may adversely affect the attractiveness of our developments, which may have an adverse effect on our business, financial condition and results of operations. 8. Sales of our projects may be adversely affected by the ability of our prospective customers to purchase property and the availability of financing to potential customers.
In the past, lower interest rates on financing from Indias retail banks and housing finance companies, particularly for residential real estate, combined with the favourable tax treatment of loans, helped to fuel the growth of the Indian real estate market. More recently, on account of the prevailing conditions of the global and Indian credit markets, it is expected that the buyers of property will remain cautious, rentals of commercial properties are expected to continue to face downward pressure and consumer sentiment and market spending may turn more cautious in the near-term. Additionally, any changes in the tax treatment with respect to the repayment of principal on housing loans and interest paid on housing loans may further affect demand for residential real estate. There are various tax benefits under the Income Tax Act which are available to the purchasers of residential premises who utilise loans from banks or financial institutions. Changes in interest rates affect the ability and willingness of prospective real estate customers, particularly the customers of residential properties, to obtain financing for the purchase of our projects. The interest rate at which our real estate customers may borrow funds for the purchase of our properties affects the affordability of our real estate projects. Any changes in the home loans market, making home loans less attractive to our customers may adversely affect our business, future growth and results of operations. Similarly, in the event of a default by a tenant prior to the expiry of a lease, we will suffer a rental shortfall and incur additional costs, including legal expenses, in maintaining, insuring and re-letting the property. If we are unable to enter into lease agreements with new customers or renew lease contracts, promptly, or if the rentals upon such renewals or re-leasing are significantly lower than the expected value or if reserves, if any, for these purposes prove inadequate, our business, financial condition, results of operations and the value of our real estate may be adversely affected. 9. Increases in prices, shortages, or disruptions in the supply of key building materials or increases in transportation costs may adversely affect our business, financial condition and results of operations.
We procure building materials for our projects, such as steel, cement, flooring products, hardware, bitumen, sand and aggregates, doors and windows, bathroom fixtures and other interior fittings from third party suppliers. The prices and supply of such building materials and other raw materials depend on factors not under our control, including general economic conditions, competition, production levels, and import duties. Our ability to develop and construct properties profitably is dependent upon our ability to source adequate building supplies for use by our construction contractors. During periods of shortages in building materials, especially cement and steel, we may not be able to complete projects according to our construction schedules, at our estimated property development cost, or at all, which may adversely affect our business, financial condition and results of operations. Prices of certain building materials, such as cement and steel, in particular, are susceptible to rapid fluctuations. Currently, we do not have any long-term supply agreements for procuring these materials. In addition, during periods where the prices of building materials significantly increase, we may not be able to pass these price increases on to our customers, which may reduce or eliminate the profits we intend to attain with regard to our projects which may, in turn, have an adverse effect on our business, financial condition and results of operations. Additionally, our supply chain for these building supplies may be periodically interrupted by circumstances beyond our control, including work stoppages and labour disputes affecting our suppliers, their distributors, or the transporters of our supplies, including poor quality roads and other transportation related infrastructure problems, inclement weather, and road accidents. An increase in transportation costs or the lack of adequate infrastructure for the transportation of our raw materials to our projectsites may have an adverse effect on our business, financial condition and results of operations.
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10. Most of the agreements with our customers may require us to pay a penalty in case of delay of handover to our customers. The incurrence and payment of such penalties could have an adverse effect on our business, reputation, financial condition and results of operations. As is the prevalent practice, we may enter into agreements with our customers which require us to complete the property development by a certain date. Most of these agreements customarily include penalty clauses where we are liable to pay penalties to the customers for any delay in the completion of the property development. We cannot assure you that we will always finish the construction or development of our projects in accordance with the timelines specified in such agreements, and as a result we may be liable for penalties under such agreements. Our customers may also choose to initiate litigation proceedings against us if there are delays in the project completion schedule. Continued delays in the completion of the construction of our projects will adversely affect our reputation. Further, such penalties payable by us may have an adverse effect on our business, reputation, financial condition and results of operations. 11. We are subject to extensive statutory or governmental regulations, which may restrict our flexibility in operating our business and any non-compliance may have an adverse effect on our business, financial condition and results of operations. Acquisition of land and development rights in relation to immovable properties are governed by certain statutory and governmental regulations, which govern various aspects, including requirement of transaction documents, payment of stamp duty, registration of property documents, purchase of property for the benefit of others and limitation on land acquisition by an individual entity. These approvals may be required to be obtained before and/or after the commencement of construction in relation to the project. Development of real estate projects is subject to extensive local, state and central laws and regulations that govern the acquisition, construction on and development of land, including laws and regulations related to zoning, permitted land uses, proportion and use of open spaces, building designs, fire safety standards, height of the buildings, access to water and other utilities and water and waste disposal. In addition, we and our sub-contractors are subject to laws and regulations relating to, among others, environmental approvals in respect of the project, minimum wages, working hours, health and safety of our labourers and requirements of registration of contract labour. Although we believe that our contractual arrangements are substantially in compliance with such laws and regulations, statutory authorities may allege non-compliance and we cannot assure you that we will not be subject to any such regulatory action in the future, including penalties, seizure of land and other civil or criminal proceedings. Further, we cannot assure you that we will be able to obtain approvals in relation to our new projects, at such times or in such form as we may require, or at all. The laws and regulations under which we and our subcontractors operate, may result in delays in construction and development, causing us to incur substantial compliance costs and other increased costs, and prohibit or severely restrict our real estate and construction businesses. If we are unable to continue to acquire, construct and develop land and deliver products as a result of these restrictions or if our compliance costs increase substantially, our business, financial condition and results of operations may be adversely affected. 12. We have not made applications or received final approvals for some Projects thus exposing our business and future results of operations to time or cost overruns As on date, some of our Projects are in the initial stages of development. We are in the process of making applications to the appropriate regulatory authorities in connection with the development of these projects. As these projects are still in the initial stages of development, the proposed use and development plans for these projects may be subject to further changes, as may be decided by us, keeping in mind various factors including the economic conditions, the prevailing preferences of the consumers and those local and federal regulations, which may be applicable to us. We cannot assure you that we shall receive any of the underlying approvals in a timely manner or at all. Therefore, we may not be able to launch these projects in a timely manner. In the event that we do not receive these approvals, our business, prospects, financial condition and results of operations may be adversely affected.
13. Most of our projects require the services of third parties, which entails certain risks and as we expand geographically, we may be using contractors with whom we have not dealt with in the past, which may lead to cost overruns, construction defects and failure to meet scheduled completion dates. Most of our projects require the services of third parties. These third parties include architects, engineers, contractors and suppliers of labour and materials. The timing and quality of construction of the projects we develop depends on the availability and skill of those third parties, as well as contingencies affecting them, including labour and raw material shortages and industrial action such as strikes and lockouts. We cannot assure you that skilled third parties will continue to be available at reasonable rates and in the areas in which we conduct our projects. We contract out the construction of most of our projects to independent construction contractors. If a contractor fails to perform its obligations satisfactorily or within the prescribed time periods, we may be unable to develop the project within the intended timeframe, at the intended cost, or at all. If this occurs, we may be required to incur additional cost or time to develop the property to appropriate quality standards in a manner consistent with our development objective, which could result in reduced profits or in some cases, significant penalties and losses. As a result, we may be required to make additional investments or provide additional services to ensure the adequate performance and delivery of contracted services and any delay in project execution may adversely affect our profitability. Additionally, we rely on manufacturers and other suppliers and do not have direct control over the products they supply, which may adversely affect the construction quality of our developments. As we expand geographically, we will have to use contractors with whom we have no prior working relationship, which will increase the risk of cost overruns, construction defects and failures to meet scheduled completion dates, which may have an adverse effect on our business, financial condition and results of operations. 14. Certain lands forming part of our total land reserves are subject to litigation and an unfavourable outcome in any proceeding could have an adverse effect on our ability to develop those projects. A suit has been filed by Mrs. Nirmala Bum in the Court of 5 th Judge against the one of the predecessors in title of Omni Infrastructure Private Limited alleging that there was an agreement between them regarding an area admeasuring approximately 1.18 Acres. Interim Reliefs prayed for in the suit are rejected by the Honble Court and an appeal was preferred against this interim order, which was also dismissed. Pursuant to filing of the suit, the Plaintiff wanted to modify the scope of the suit and took out an application for modification of the plaint, which was rejected by the Court. An appeal was preferred before the Honble MP High Court against this order. The MP High Court dismissed this appeal. The Plaintiff has now approached the Honble Supreme Court challenging this order of the Honble MP High Court. In case the said case is decided against our favour, it could lead to an adverse effect on our business, financial condition and results of operations. 15. If the Government were to exercise the rights of compulsory purchase or eminent domain over land forming part of our current or proposed developments, our business, results of operations and financial condition may be adversely affected. The Land Acquisition Act, 1894 allows the central and state governments to exercise rights of compulsory purchase which, if used in respect of our land, may require us to relinquish land with minimal compensation and no right of appeal. The likelihood of such actions may increase as the central and state governments seek to acquire land for the development of infrastructure projects such as roads, airports and railways. Any such action in respect of one or more of our major current or proposed developments may adversely affect our business, financial condition and results of operations. 16. Fluctuations in market conditions between the time we acquire land or obtain development rights and sell developed projects on such land may affect our ability to sell our projects at expected prices, which may adversely affect our revenues and profit margins. We may be subject to significant fluctuations in the market value of our land and inventories. We may be adversely affected if market conditions deteriorate as we have been purchasing land or acquiring development rights during stronger economic periods. Moreover, real estate investments are relatively illiquid, which may limit our ability to vary our exposure in certain investments in order to respond to changes in economic or other conditions. Recently, real estate prices in India have declined after experiencing a period of significant increases. We cannot assure you that prices will increase or that the price of real estate in southern India or India as a whole will not continue to experience declines. These factors can negatively affect the demand for and pricing of our developed and undeveloped projects and, as a result, may negatively affect our revenues and profit margins.
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17. Certain lands developed by us are on a leasehold basis for a certain period. We may be unable to recover our costs of construction during the lease period or the landowners may not wish to renew the lease agreements, which may have an adverse effect on our business, results of operations and financial condition. We may carry on development activities on land by entering into lease agreements with the owners of the land. One of such lease agreements that has been executed by us is valid for a period of up to March 31, 2066, after which we are required to return the lands to the owners. We may not be able to recover the rent paid to the land owners or the costs incurred for construction on the land during the lease period. Further, these lease agreements typically have a clause where the lease may, but is not required, to be extended with the consent of the parties. In the event that the owners do not wish to renew the lease agreements, our business, financial condition and results of operations may be adversely affected. 18. Other ventures promoted by our Promoters are engaged in a similar line of business. Some of our Promoters and Promoter Group members are engaged in a similar line of business as us. For more details regarding our Promoters and Promoter Group members, see Promoters and Group Entities on page 66 of this Information Memorandum. We cannot assure you that our Promoters will not favour the interests of other Promoter Group members over our interests. The other Promoter Group members, including those in a similar line of business, may dilute our Promoters attention to our business, which could adversely affect our business, financial condition and results of operations. Commercial transactions in the future between us and related parties could result in conflicting interests. A conflict of interest may occur between our business and the business of our Promoter Group members which could have an adverse effect on our operations. 19. We are heavily dependent upon certain key management personnel, particularly our Promoters. Failure to retain our key managerial personnel may delay or prevent the development of our projects and adversely impact our business, financial condition and results operations. Our future growth is heavily dependent upon several of our Promoters, notably Mr. Nikhil Chaturvedi, Mr. Salil Chaturvedi and Mr. Nigam Patel. Together, they take an active role in supervising the day-to-day operations and provides expertise and direction with respect to our overall strategy and vision. Their business development efforts have enabled us to establish relationships with our clients, contractors, sub-contractors, architects and our other current partners and collaborators. We do not maintain key man insurance on the lives of our Promoters. The loss of any of our Promoters, whose relationships, knowledge, leadership and expertise upon which we heavily rely, would adversely affect our business operations. We are also dependent upon the performance of certain key managerial personnel. We believe that the unique combination of skills and experience possessed by these individuals may be difficult to replace, and the failure to retain any one of them may have an adverse effect on our business, financial condition and results of operations, including impairing our ability to execute our business strategy. We do not maintain key man insurance on the lives of these individuals. Competition among companies in the real estate development industry for qualified employees is intense. There can be no assurance that we will be able to retain our key managerial personnel. Such losses may adversely affect our business, financial condition and results of operations. 20. Some of our group companies are loss making entities in the last three years. Following are the group entities that have experienced financial losses in the last thee years: Name of Company Acme Hotels & Hospitality Private Limited Brightland Developers Private Limited Calendula Commerce Private Limited Classique Creators Limited Everest Plaza Private Limited Faridabad Festival City Private Limited Image Builders Private Limited Meerut Festival City LLP Millennium Accessories Ltd. Oasis Fashion Limited Profab Fashions (India) Limited Pronet Interactive Private Limited March 31, 2012 -11,236 -169,212 -18,854 -21,702 -190,45,940 -80,39,912 -23,636 -94,79,522 -29,98,976 -13,736 -22,06,757 March 31, 2011 -10,199 -15,913 -18,623 -2,66,46,454 -62,32,004 -11,205 -11,438 -17,47,989 -13,530 -14,197 -1,569 (Amount in Rs.) March 31, 2010 -1,27,470 -12,320 -22,524 -16,42,49,199 -97,477 -4,30,138 -13,093 -21,23,945 -20,142 -20,307 -12,735
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Name of Company Provogue Infrastructure Private Limited Provogue Holding Limited Prozone Infrastructure Limited Sporting and Outdoor Ad Agency Private Limited Standard Mall Private Limited Starlight City Commercial Developers Private Limited
March 31, 2012 27,915 3,33,962 -27,804 -2,64,18,517 -13,22,055 -13,956
March 31, 2011 -11,380 -2,96,764 -22,76,053 -13,938 -12,225
March 31, 2010 34,635 -2,61,175 -25,69,903 -21,797 -12,328
21. We recognise revenue based on the percentage of completion method of accounting on the basis of our managements estimates of revenues and development costs on a property by property basis. As a result, our revenues and development costs may fluctuate significantly from period to period. We recognise the revenue generated from our projects on the percentage of completion method of accounting. Under this method, revenue recognised with respect to a property development, is equal to the lower of (a) the percentage of completion of the property and (b) actual amount received on booking or sale of the property as a percentage of total estimated property sales. The percentage of completion of a property is determined on the basis of portion of the actual cost of the property incurred thereon, including cost of land, as against the total estimated cost of the property under execution. We estimate the total cost of project prior to its commencement based on, among other things, the size, specifications and location of the project. We re-evaluate project costs periodically, particularly when, in our opinion, there have been significant changes in market conditions, costs of labour and materials and other contingencies. Material re-evaluations will affect our revenues in the relevant fiscal periods. We cannot assure you that the estimates used under the percentage of completion method will equal either the actual cost incurred or revenue received with respect to these projects. The effect of such changes to estimates is recognised in the financial statements of the period in which such changes are determined. This may lead to significant fluctuations in our revenues and development costs and limit our ability to undertake new projects. Therefore, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indicative of our future performance. Such fluctuations in our revenues and costs could also cause our share price to fluctuate significantly. If in the future, our results of operations are below market expectations, the price of our Equity Shares could decline. 22. We have made an application for registration of our trademark and logo, which are yet to be registered. We have applied for registering the Prozone Capital Shopping Centres Limited logo with the Trademark Registry under classes 35, 36, 37, 41, 42, 43 and 44 of the Indian Trademarks Act, 1999. Until receiving the necessary registration, we would be unable to legally protect our trademark and logo from infringement or deceptive use by others. 23. Corrupt practices or improper conduct may delay the development of a project and affect our reputation, results and operations. The real estate development and construction industries are not immune to the risks of corrupt practices. Large construction projects provide opportunities for corruption. Such corruption may include bribery, deliberate poor workmanship or the deliberate supply of low quality materials. If we, or any other persons involved in any of the projects, are the victims of or are involved in any such corruption, our ability to complete the relevant projects as planned may be disrupted thereby adversely affecting our reputation, business, financial condition and results of operations. 24. Our insurance coverage may not adequately protect us against all material hazards. We are insured for a number of the risks associated with our business, such as fire, special perils concerning our construction operations and loss of certain assets. In addition, we have obtained separate insurance coverage for certain employee related risks. While we believe that the insurance coverage which we maintain directly or through our contractors, would be reasonably adequate to cover the normal risks associated with the operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will be honoured fully, in part or on time, nor that we have taken out sufficient insurance to cover all material losses.
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Moreover, currently, we do not have insurance for some of Forthcoming Projects, but may obtain insurance in the future based on our own assessment of risks associated with such properties. To the extent that we suffer loss or damage for which we or our sub-contractors did not obtain or maintain insurance, and which is not covered by insurance or exceeds our insurance coverage, the loss would have to be borne by us and our results of operations and financial performance may be adversely affected. 25. The Company and some of our Group Entities are party to certain legal proceedings and unfavourable outcomes in such proceedings may have an adverse effect on our business, reputation, financial condition and results of operations.
A brief summary of such legal proceedings is given below. It may be noted that as per the Scheme, all litigation that pertain to the Retail Centric Real Estate Business being demerged from Provogue to the Company, and litigation in the name of the erstwhile PEPL has been assumed by the Company. Case No. Case No. 5250 of 2008 before the Punjab and Haryana High Court. Arbitration Dispute with Ambience Commercial Developers Private Limited. Suit No. 1160 of 2011 filed by M/s. DCA Architects before the Additional District Judge, Dwarka, New Delhi Suit No. 1161 of 2011 filed by M/s. DCA Workshop before the Additional District Judge, Dwarka, New Delhi O.P. NO. 1556 OF 2011 before the Chief Judge of the City Civil Court at Hyderabad. Provogue India Limited Particulars Advance Magazine Publishers Inc., had filed a trademark violation suit against Provogue in the Gurgaon District Court. The suit was dismissed in favour of Provogue. Subsequently, Advance Magazine has filed an Appeal before the Punjab and Haryana High Court against this lower court order. However, no interim reliefs have been granted to Advance Magazine and the Appeal is pending. Arbitration is invoked by Ambience Commercial Developers Private Limited for pre-mature termination of the lease by Provogue. They have claimed certain amount as rent for the unexpired lock-in period and damages for breach of contract and we have filed a counter claim. The matter has been placed for a hearing before the Arbitrator Mrs. Justice (Retd.) Usha Mehra. This suit is filed for recovery of a sum of Rs. 3,28,435/- plus interest @ 24% p.a. as pending amounts towards designing and architects fees and attending various stores for inspection of sites from time to time. This suit is filed for recovery of a sum of Rs. 7,26,138/- plus interest @ 24% p.a. as pending amounts against the supply of goods at various locations and work done at various locations in respect of Provogue Stores.
Prozone Enterprises Private Limited (PEPL)* PEPL had invoked arbitration against Delara Tourism Corporation Limited (Delara) by termination of the Agreement and claiming refund of amounts paid by PEPL to Delara and also damages. Delara had also filed a counter claim Award was passed by the Arbitration in favour of PEPL awarding a sum of Rs.1.50 Crores to be paid by Delara to PEPL. Delara has now challenged this award before the District court by filing an Appeal. This appeal is pending. FIR filed by PEPL with the An FIR is filed by PEPL against Mr. Dinesh Jalalpara, Mr. Hemant Shah, Mr. Mayank Shah Amboli Police Station (through and others unknown for defrauding PEPL into parting with Rs.3.61 Crores by making false the Economic Offences Wing) representations to PEPL and also for impersonation etc. The investigation is presently on. Prozone Enterprises Private Limited* & Omni Infrastructure Private Limited Case No. 434 of 2007 in the One Mrs. Nirmala Bum has filed a suit against the predecessor in title of land in Indore Court of 5th Judge alleging that there was an agreement between them regarding an area admeasuring 1.18 Acres, and has made PEPL and Omni Infrastructure Private Limited (hereinafter referred to as Omni) parties to the suit. The suit was filed on 23 rd October, 2007. The plaintiff applied for interim relief which was rejected on 8th February, 2008. The plaintiff appealed against the said order on 3rd April, 2008, which was also disposed off on 8 th September, 2008. Hence, there is no interim order against PEPL and Omni, though the main suit is pending. Pursuant to filing of the suit, the plaintiff also wanted to modify the scope of the suit and took out an application for modification of the plaint. This application was rejected by the court. An appeal was preferred before the Honourable Madhya Pradesh High Court against this order. The Madhya Pradesh High Court dismissed this appeal. The Plaintiff has now approached the Honourable Supreme
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Court challenging this order of the Madhya Pradesh High Court. *kindly note that the said litigation has been assigned in the name of the Company pursuant to operation of the Scheme 26. Borrowings by the subsidiaries may be secured on subsidiarys assets and any failure to service such debts obligation may have an adverse impact on the Companys business, financial position and results of operations The subsidiaries of the Company do borrow from time to time to meet their working capital and term requirements to finance its development activities. Such borrowings may be secured over the relevant property or development activities. In the event any Subsidiary is unable to service its debts obligation, the lenders may force a sale of any of the secured assets of the subsidiary and invocation of any Corporate Guarantee that may be granted by the Company. The occurrence of any such event can significantly raise future borrowing costs and could have adverse impact on the Company and the subsidiarys business, financial condition and results of operations. EXTERNAL RISK FACTORS Risks relating to India 1. There could be political, economic or other factors that are beyond our control but may have a material adverse impact on our business and results of operations should they materialize
The following external risks may have a material adverse impact on our business and results of operations should any of them materialize: Political instability, a change in the Government or a change in the economic and deregulation policies could adversely affect economic conditions in India in general and our business in particular; Slowdown in economic growth in India could adversely affect our business and results of operations. The growth of our business and our performance is linked to the performance of the overall Indian economy. Civil unrest, acts of violence, terrorist attacks, regional conflicts or situations or war involving India or other countries could materially and adversely affect the financial markets which could impact our business. Such incidents could impact economic growth or create a perception that investment in Indian companies involves a higher degree in risk which could reduce the value of our Equity Shares Natural disasters in India may disrupt or adversely affect the Indian economy, the health of which our business depends on; Any downgrading of India's sovereign rating by international credit rating agencies may negatively impact our business and access to capital. In such event, our ability to grow our business and operate profitably would be severely constrained; Instances of corruption in India have the potential to discourage investors and derail the growth prospects of the Indian economy. Corruption creates economic and regulatory uncertainty and could have an adverse effect on our business, profitability and results of operations; and The Indian economy has had sustained periods of high inflation. Should inflation continue to increase sharply, our profitability and results of operations may be adversely impacted. 2. Significant differences exist between Indian GAAP and other accounting principles such as US GAAP and IFRS, which may be material to investors assessment of our financial condition. Our failure to successfully adopt IFRS could have a material adverse effect on our business and results of operations
Our financial statements are prepared in accordance with Indian GAAP, which differs in certain respects from IFRS. As a result, our financial statements and reported earnings could be different from those which would be reported under IFRS. Such differences may be material. We have not attempted to quantify the impact of IFRS on the financial data included in this Information Memorandum, nor do we provide a reconciliation of our financial statements to those of IFRS. Accordingly, the degree to which the Indian GAAP financial statements included in this Information Memorandum will provide meaningful information is entirely dependent on the reader's level of familiarity with Indian accounting practices. Because differences exist between Indian GAAP and IFRS, the financial information in respect of our Company contained in this Information Memorandum may not be an effective means to compare us with other companies that prepare their financial information in accordance with IFRS. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this
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Information Memorandum should accordingly be limited. Potential investors should consult their own professional advisers for an understanding of these differences between Indian GAAP and IFRS, and how such differences might affect the financial information contained herein. Because there is significant lack of clarity on the adoption of and convergence with IFRS we have not determined with any degree of certainty the impact that such adoption will have on our financial reporting. There can be no assurance that our financial condition, results of operations, cash flows or changes in shareholder's equity will not appear materially worse under IFRS than under Indian GAAP. As we transition to IFRS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing our management information systems and internal controls. Moreover, there is increasing competition for the small number of IFRS experienced accounting personnel available as more Indian companies begin to prepare IFRS financial statements. There can be no assurance that our adoption of IFRS and any failure to successfully adopt IFRS will not adversely affect our reported results of operations or financial condition. 3. Rights of shareholders under Indian law may be more limited than under the laws of other jurisdictions
Our Memorandum and Articles of Association, and Indian law govern our corporate affairs. Legal principles related to these matters and the validity of corporate procedures, directors fiduciary duties and liabilities, and shareholders rights may differ from those that would apply to a company in another jurisdiction. Shareholders rights under Indian law may not be as extensive as shareholders rights under the laws of other countries or jurisdictions. Investors may have more difficulty in asserting their rights under the laws of other countries or jurisdictions. Investors may have more difficulty in asserting their rights as shareholder than as shareholder of a corporation in another jurisdiction. 4. An active trading market for the Equity Shares may not develop and the price of the Equity Shares may be volatile.
There has been no public market for the Equity Shares of our Company. An active public trading market for the Equity Shares may not develop or, if it develops, may not be sustained. The trading price of the Equity Shares may be subject to significant fluctuations and be influenced by many factors, including: our financial results and the financial results of the companies in the businesses we operate in; the history of, and the prospects for, our business and the sectors and industries in which we compete; an assessment of our management, our past and present operations, and the prospects for, and timing of, our future revenues and cost structures; the present state of our development; the valuation of publicly traded companies that are engaged in business activities similar to ours, economic conditions in India; the volatility of the BSE, NSE and securities markets elsewhere in the world; the performance of our competitors and the perception in the market about investments in the real estate sector; adverse media reports on us or the real estate sector; changes in the estimates of our performance or recommendations by financial analysts; significant developments in India's economic liberalization and deregulation policies; and significant developments in India's fiscal and environmental regulations. There can be no assurances that the prices at which the Equity Shares are initially traded will correspond to the prices at which the Equity Shares will trade in the market subsequently. In addition, the Indian stock market has from time to time experienced significant price and volume fluctuations that have affected the market prices for the securities of Indian companies. As a result, investors in the Equity Shares may experience a decrease in the value of the Equity Shares regardless of our operating performance or prospects. 5. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder's ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.
Once listed, we will be subject to a daily circuit breaker imposed by all stock exchanges in India, which does not allow transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker operates
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independently of the index-based, market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The percentage limit on our circuit breakers will be set by the stock exchanges based on the historical volatility in the price and trading volume of the Equity Shares. The stock exchanges will not inform us of the percentage limit of the circuit breaker in effect from time to time and may change it without our knowledge. This circuit breaker will limit the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, no assurance can be given regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity Shares at any particular time. 6. Economic developments and volatility in securities markets in other countries may cause the price of the Equity Shares to decline
The Indian economy and its securities markets are influenced by economic developments and volatility in securities markets in other countries. Investor's reactions to developments in one country may have adverse effects on the market price of securities of companies situated in other countries, including India. For instance, the recent financial crisis in the United States and European countries lead to a global financial and economic crisis that adversely affected the market prices in the securities markets around the world, including Indian securities markets. Negative economic developments, such as rising fiscal or trade deficits, or a default on national debt, in other emerging market countries may affect investor confidence and cause increased volatility in Indian securities markets and indirectly affect the Indian economy in general. The Indian stock exchanges have experienced temporary exchange closures, broker defaults, settlement delays and strikes by brokerage firm employees. In addition, the governing bodies of the Indian stock exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements. Furthermore, from time to time, disputes have occurred between listed companies and stock exchanges and other regulatory bodies, which in some cases may have had a negative effect on market sentiment.
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SECTION III INTRODUCTION GENERAL INFORMATION Prozone Capital Shopping Centres Limited was incorporated under the Companies Act, 1956 as "Castle Mall Private Limited" as a private limited company and was issued a Certificate of Incorporation dated September 14, 2007 by the Registrar of Companies, Mumbai. With effect from September 28, 0211, our Company became a public limited company and the name of our Company was changed to Castle Mall Limited, and subsequently on October 5, 2011, the name of the Company was changed to Prozone Capital Shopping Centres Limited. Corporate Identification Number The Corporate Identification Number issued to our Company is U45200MH2007PLC174147. Registered Office Our registered office is located at 105/106, Provogue House, Off New Link Road, Andheri (West), Mumbai 400053, Maharashtra. There has been no change to our registered office since the incorporation of our Company. Address of the RoC The RoC is located at Everest Building, 100, Marine Lines, Mumbai - 400002 Board of Directors Our Board comprises the following: Name, Designation, Occupation and DIN Mr. Nikhil Chaturvedi Managing Director Occupation: Business DIN: 00004983 Mr. Salil Chaturvedi Deputy Managing Director Occupation: Business DIN: 00004768 Mr. Punit Goenka, Independent Director Occupation: Business DIN: 00031263 Mr. Rajiv Singh Independent Director Occupation: Business DIN: 01689209 Mr. David Fischel Executive Director Occupation: Business DIN: 01217574 Mr. John Abel Executive Director Occupation: Business DIN: 01217613 Age (Years) 43 years Address Unit No. - 8, Premium Tower CHS, Lokhandwala Complex, Andheri (West), Mumbai, 400053 Unit No. - 8, Premium Tower CHS, Lokhandwala Complex, Andheri (West), Mumbai, 400053 Bungalow No. 1, Jolly Maker Apartment No. 1, Cuffe Parade, Colaba, Mumbai, 400005, 401, 4th Floor, Goswami Towers, Jai Hind Society, 11 NS Road, Juhu, Mumbai 400 049 Sweethill Farm, School Lane, Ashurst, Nr. Steyning, West Sussex, BN44 3AY, United Kingdom 9, Hutton Gate, Brentwood 732XA, ESSEX, United Kingdom
41 years
37 years
39 years
54 years
68 years
For further details and profile of our Directors, please see the section titled Our Management on page 60 of this Information Memorandum.
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Company Secretary and Compliance Officer: Ms. Snehal Bansode 105/106, Provogue House, Off New Link Road, Andheri (West), Mumbai 400 053 Telephone: 022-30680564; Facsimile: 022-30680570 E-mail: snehal.bansode@prozonecsc.com Registrar and Share Transfer Agent: Link Intime India Private Limited C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai 400078 Tel.: 022-25963838, 25946970 Fax: 022-25946969 E-mail ID: helpdesk@linkintime.co.in Contact person: Mr. Mahadevan Iyer. Statutory Auditors: M/s. Singrodia Goyal & Company Chartered Accountants 4-A, Kaledonia HDIL, 2nd Floor, Sahar Road, Near Andheri Station, Andheri (East), Mumbai 400 069 Tel.: 022-66256363 Fax: 022-66256364 Banker of the Company HDFC Bank Limited G-1, Woodrose, Swami Samarth Nagar, Lokhandwala Complex, Andheri (West), Mumbai 400043
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Approvals with respect to the Scheme: Authority for Listing The NSE and BSE have already given their respective "in-principle" approval to the Composite Scheme of Arrangement and Amalgamation between Provogue, PEPL and PCSCL and their respective shareholders and creditors, as required by Clause 24(f) of the Listing Agreement. The Honourable Bombay High Court has vide its order dated February 10, 2012 approved the Composite Scheme of Arrangement and Amalgamation between Provogue, PEPL and PCSCL and their respective shareholders and creditors. In accordance with the Scheme, the retail centric real estate business of Provogue shall stand transferred to and vested with the PCSCL, w.e.f. April 1, 2011 (the Appointed Date under the Scheme), pursuant to sections 391 to 394 of the Companies Act, 1956. The aforesaid Order of the Honorable Bombay High Court was filed by Provogue, PEPL and PCSCL with the Registrar of Companies (ROC), Mumbai on February 27, 2012, which is the Effective Date of the Scheme. Subsequently, SEBI, vide its letter number CFD/DIL/SK/PM/5102/2012 dated August 31, 2012, has granted relaxation from the requirement of Rule 19(2)(b) of the Securities Contract Regulation (Rules), 1957 (SCRR) for the purpose of listing of shares of PCSCL without making an initial public offer. Eligibility Criterion There being no initial public offering or rights issue, the eligibility criteria in terms of Chapters III and IV of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 are not applicable. However, SEBI vide its letter number CFD/DIL/SK/PM/5102/2012 dated August 31, 2012, granted relaxation from the strict enforcement of Rule 19(2)(b) of the SCRR. Our Company has submitted this Information Memorandum, containing information about itself, to the stock exchanges for making this Information Memorandum available to the public through their websites, i.e., www.bseindia.com and www.nseindia.com. Our Company has made this Information Memorandum available on its website: www.prozonecsc.com. Our Company has made a public announcement in one English (Financial Express), one Hindi newspaper (Jansatta) and one Marathi newspaper (Navshakti) with nation-wide circulation containing its details in line with the requirements of the aforesaid circular. The advertisement will draw specific reference to the availability of this Information Memorandum on its website. Prohibition by SEBI Our Company, its Directors, Promoters and other companies promoted by the Promoters and companies with which our Companys Directors are associated as directors have not been prohibited from accessing the capital markets under any order or direction passed by SEBI. General Disclaimer by the Company Our Company accepts no responsibility for statements made otherwise than in the Information Memorandum or in the advertisement referred to above to be published in terms of the SEBI Circular SEBI/ CFD/ SCRR / 01/ 2009/ 03 / 09 or any other material issued by or at the instance of us and anyone placing reliance on any other source of information would be doing so at his or her own risk. All the information shall be made available by our Company to the public and shareholders at large and no selective or additional information would be available for a section of the investors in any manner.
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SALIENT FEATURES OF THE SCHEME
RATIONALE FOR THE SCHEME Provogues future plan is to inter-alia specialise and strengthen its existing apparel business activities. Since Provogues existing retail centric real estate development business promises prospective growth, it was intended to demerge this business to PCSCL in order to explore it to the fullest and to provide focused leadership and management attention. It is believed that the demerger of the retail centric real estate development business into a separate company with focused strategy on real estate would enhance shareholders value of both companies. The demerger and subsequent amalgamation proposed under the Composite Scheme of Arrangement and Amalgamation will enable the shareholders of PEPL and Provogue to hold shares directly in PCSCL. Additionally, this would provide financial flexibility to PCSCL and it will have various fund raising options available for its business. Vis--vis Provogue, the demerger would enhance the equity value of Provogues shareholders directly and reduce its liabilities due to the transfer of the entire liabilities and obligations pertaining to retail centric real estate development business, thereby resulting in lower debt servicing and better support for the Remaining Undertaking. Pursuant to the Composite Scheme of Arrangement and Amalgamation, there would be a synergy in terms of administration costs, as well as simplification and flexibility of operations, since the present independent set-up of the companies results in duplication of administrative efforts in terms of separate personnel, record keeping relating to accounts, income tax, sales tax, invoicing between the two entities, ROC records, etc.
DEMERGER OF THE RETAIL CENTRIC REAL ESTATE DEVELOPMENT BUSINESS OF PROVOGUE INTO THE COMPANY 1. TRANSFER AND VESTING OF THE DEMERGED UNDERTAKING With effect from the Appointed Date and subject to the provisions of the Scheme in relation to the mode of transfer and vesting, the Demerged Undertaking of Provogue shall, without any further act or deed, shall stand transferred to and vested in or deemed to have been transferred to or vested in PCSCL, as a going concern in accordance with Section 2(19AA) of the Income Tax Act, 1961, pursuant to the provisions of Sections 391 to 394 read with Sections 78, 100 to 104 and other applicable provisions of the Companies Act, 1956, and the provisions of the Scheme in relation to the mode of transfer and vesting of assets. The assets of the Demerged Undertaking shall upon the Scheme coming into effect, without any further act, instrument or deed, be transferred to and vested in and/or be deemed to be transferred and vested in PCSCL pursuant to the provisions of Sections 391 to 394 and other applicable provisions of the Companies Act, 1956 on the Appointed Date and the vesting of all such assets shall take place from the Effective Date. With effect from the Appointed Date, and subject to the provisions of the Scheme, the liabilities of the Demerged Undertaking shall also stand transferred or deemed to have been transferred without any further act, instrument or deed to PCSCL, so as to become as and from the Appointed Date, the liabilities of PCSCL without any consent of any third party or other person who is a party to the contract or arrangements by virtue of which such Liabilities have arisen, in order to give effect to the provisions of this Clause. With effect from the Appointed Date, all guarantees, indemnities and contingent liabilities, if any, of Provogue in relation to the Demerged Undertaking shall also be transferred to or be deemed to be transferred to PCSCL so as to become as and from the Appointed Date, the guarantees, indemnities and contingent liabilities of PCSCL and it shall not be necessary to obtain the consent of any third party or other person who is a party to any contract or arrangement by virtue of which such guarantees, indemnities and contingent liabilities have arisen or given, in order to give effect to the provisions of this Clause. All the loans, advances and other facilities sanctioned to Provogue in relation to the Demerged Undertaking by its bankers and financial institutions prior to the Appointed Date, shall be deemed to be the loans and advances sanctioned to PCSCL and and all the obligations of Provogue in relation to the Demerged Undertaking under any loan agreement shall be construed and shall become the obligation of PCSCL without any further act or deed on the part of PCSCL. ISSUE OF DEMERGER NEW EQUITY SHARES Upon the Scheme coming into effect and in consideration of the demerger of the Demerged Undertaking into PCSCL, PCSCL will issue and allot 11,43,57,095 (Eleven crore forty three lakh fifty seven thousand and ninety five) equity shares of Rs.2 each fully 21
2.
paid up (the "Demerger New Equity Shares"). The Demerger New Equity Shares will be issued to registered equity shareholders whose name is recorded in the register of members of Provogue on the Record Date in the ratio of 1:1, i.e. (1 (one) equity share of Rs.2 each in PCSCL for every 1 (one) equity share of Rs.2 each in Provogue) (the "Demerger Share Entitlement Ratio"). The issue and allotment of the Demerger New Equity Shares in PCSCL to the registered shareholders of Provogue as provided in the Scheme shall be carried without following the procedure laid down under section 81(1A) and any other applicable provisions of the Companies Act, 1956. The Demerger New Equity Shares to be issued and allotted by PCSCL in terms of the above shall rank pari passu in all respects with the existing shares of PCSCL. Subsequent to the sanction of the Scheme, PCSCL will make an application for listing of its shares, including, the Demerger New Equity Shares on all the stock exchanges in which the shares of Provogue are listed, in pursuance to the relevant regulations including, the circular SEBI/CFD/SCRR/01/2009/03/09 dated September 3, 2009 issued by the Securities and Exchange Board of India in relation to application under sub-rule (7) of Rule 19 of the Securities Contract Regulation Rules, 1957 for relaxing strict enforcement of clause (b) to sub-rule (2) of Rule 19 thereof. The shares allotted pursuant to the Scheme shall remain frozen in the depositories system until listing/ trading permission is given by the designated stock exchanges. REMAINING UNDERTAKING The Remaining Undertaking shall continue with Provogue, and all the assets, liabilities and obligations pertaining thereto shall continue to belong to, be vested in and be managed by Provogue. All legal, taxation or other proceedings whether civil or criminal (including before any statutory or quasi-judicial authority or tribunal), by or against Provogue under any statute, whether pending on the Appointed Date or which may be instituted at any time thereafter, and in each case, relating to the Remaining Undertaking (including those relating to any property, right, power, liability, obligation or duties of Remaining Undertaking) in respect of the Remaining Undertaking, shall be continued and enforced by or against Provogue after the Effective Date. With effect from the Appointed Date and up to and including the Effective Date: a) Provogue shall carry on and shall be deemed to have been carrying on all business and activities relating to the Remaining Undertaking for and on its own behalf; b) all profits accruing to Provogue thereon or losses arising or incurred by it (including the effect of taxes, if any, thereon) relating to the Remaining Undertaking shall, for all purposes, be treated as the profits or losses, as the case may be, of Provogue.
3.
AMALGAMATION OF PEPL WITH PCSCL 4. TRANSFER AND VESTING OF THE TRANSFEROR UNDERTAKING Pursuant to the demerger of the Demerged Undertaking of Provogue to PCSCL, which also includes the investment made by Provogue in PEPL, the entire business and undertaking of PEPL shall, with effect from the Appointed Date and without any further act or deed, be and the same shall stand transferred to and vested in or deemed to have been transferred to or vested in PCSCL, pursuant to the provisions of Sections 391 to 394 read with Sections 78, 100 to 104 and other applicable provisions of the Companies Act,1956 and the provisions of this Scheme in relation to the mode of transfer and vesting of assets. The assets of PEPL shall upon the Scheme coming into effect, without any further act, instrument or deed, be transferred to and vested in and/or be deemed to be transferred and vested in PCSCL pursuant to the provisions of Sections 391 to 394 read with Sections 78, 100 to 104 and other applicable provisions of the Companies Act,1956 on the Appointed Date and the vesting of all such assets shall take place on the date of the Order sanctioning the Scheme. For avoidance of doubt and without prejudice to the generality of the foregoing, it is clarified that upon the Scheme coming into effect, all consents, permissions, licences, certificates, clearances, authorities, powers of attorney given by, issued to or executed in favour of the Transferor Undertaking shall stand transferred to PCSCL as if the same were originally given by, issued to or executed in favour of PCSCL, and PCSCL shall be bound by the terms thereof, the obligations and duties thereunder, and the rights and benefits under the same shall be available to PCSCL. PCSCL shall make applications to any Governmental Authorities and any third party (as the case may be) as may be necessary in this behalf. With effect from the Appointed Date, and subject to the provisions of this Scheme, the Liabilities of the Transferor Undertaking shall also stand transferred or deemed to have been transferred without any further act, instrument or deed to PCSCL, so as to become as and from the Appointed Date, the Liabilities of PCSCL without any consent of any third party or other person who is a party to the contract or arrangements by virtue of which such Liabilities have arisen, in order to give effect to the provisions of this Clause.
22
All the loans, advances and other facilities sanctioned to PEPL by its bankers and financial institutions prior to the Appointed Date, which are partly drawn or utilised shall be deemed to be the loans and advances sanctioned to PCSCL and the said loans and advances shall be drawn and utilised either partly or fully by PEPL from the Appointed Date till the Effective Date and all the loans, advances and other facilities so drawn by PEPL (within the over all limits sanctioned by their bankers and financial institutions) shall on the Effective Date be treated as loans, advances and other facilities made available to PCSCL and all the obligations of PEPL under any loan agreement shall be construed and shall become the obligation of PCSCL without any further act or deed on the part of PCSCL. DISSOLUTION OF PEPL On the coming into effect of the Scheme, PEPL shall, without any further act or deed, stand dissolved without winding up. ISSUE OF MERGER NEW EQUITY SHARES Before the Scheme coming into effect, Provogue, legally and beneficially, holds 2,73,13,260 of Rs.10 each constituting seventyfour point nine nine percent (74.99%) of the paid-up equity share capital of PEPL and the balance 91,04,422 of Rs.10 each constituting twenty five point zero one percent (25.01%) of the paid-up equity share capital of PEPL is held by Nailsfield. Upon the Scheme coming into effect and as a part of the Demerged Undertaking, the investments of Provogue in PEPL would have been transferred in the name of PCSCL, whereupon PCSCL would then hold, legally and beneficially, seventy-four point nine nine percent (74.99%) of the paid-up equity share capital of PEPL and the balance twenty five point zero one percent (25.01%) of the paid-up equity share capital of PEPL will continue to be held by Nailsfield. Upon this Part IV of the Scheme coming into effect, all the shares of PEPL deemed to have been transferred by Provogue to PCSCL under Part III of this Scheme on the Effective Date, shall be cancelled and accordingly, the share certificates representing the shares in PEPL to be held by PCSCL shall be cancelled and shall be deemed to be cancelled without any further act or deed. Upon the Scheme coming into effect and in consideration of the merger of PEPL with PCSCL, without any further act or deed on the part of PCSCL, PCSCL will issue and allot 3,79,95,788 (three crore seventy nine lakh ninety five thousand seven hundred and eighty eight) equity shares of Rs.2 each fully paid up (the "Merger New Equity Shares") to all shareholders of PEPL other than PCSCL. The Merger New Equity Shares will be issued to the other shareholders of PEPL in the ratio of 313:75, i.e. (three hundred and thirteen (313) equity shares of Rs.2 each in PCSCL for every seventy five (75) equity shares of Rs.10 each in PEPL) (the "Merger Share Entitlement Ratio"). The Merger New Equity Shares to be issued by PCSCL to all shareholders of PEPL other than PCSCL pursuant to the above clause shall be issued in dematerialised form. The issue and allotment of the Merger New Equity Shares in PCSCL to all shareholders of PEPL other than PCSCL as provided in the Scheme shall be carried without following the procedure laid down under section 81(1A) and any other applicable provisions of the Companies Act, 1956. The Merger New Equity Shares to be issued and allotted by PCSCL in terms of the above clause shall rank pari passu in all respects with the existing shares of PCSCL. Subsequent to the sanction of the Scheme, PCSCL will make an application for listing of its shares including, the Merger New Equity Shares on all the stock exchanges in which the shares of Provogue are listed, in pursuance to the relevant regulations including, the circular SEBI/CFD/SCRR/01/2009/03/09 dated September 3, 2009 issued by the Securities and Exchange Board of India in relation to application under sub-rule (7) of Rule 19 of the Securities Contract Regulation Rules, 1957 for relaxing strict enforcement of clause (b) to sub-rule (2) of Rule 19 thereof. The shares allotted pursuant to the Scheme shall remain frozen in the depositories system until listing/ trading permission is given by the designated stock exchanges.
5. 6.
REORGANISATION OF PROVOGUE 7.
RE-ORGANISATION OF SHARE CAPITAL OF PROVOGUE Upon the Scheme coming into effect, the issued, subscribed and paid-up share capital of Provogue shall stand reduced from the present sum of Rs.22,87,14,190 (Rupees twenty two crore eighty seven lakh fourteen thousand one hundred and ninety only) divided into 11,43,57,095 equity shares of the face value of Rs.2 each fully paid to Rs.11,43,57,095 (Rupees eleven crore forty three lakh fifty seven thousand and ninety five only) divided into 11,43,57,095 equity shares of the face value of Re.1 each fully paid. The share certificates of the Demerged Company in relation to the equity shares held by its members shall, without any further application, act, instrument or deed, be deemed to have been automatically cancelled pursuant to this Scheme and new share certificates with the revised face value of Re.1, but with same number of equity shares will be issued by the Demerged Company to its members. For avoidance of confusion, the Company will, on the Record Date, issue new share certificates with Re.1 marked
23
fully paid-up (after taking into effect the reduction of share capital) on each such new share certificate and shall be delivered to its members on the Record Date along with the notice to its members requesting them to surrender the old share certificates. Likewise, on the Record Date, the face value of the equity shares held in de-materialised form will also be reduced automatically. The equity shares of the Demerged Company shall continue to be listed on the National Stock Exchange and Bombay Stock Exchange and the Demerged Company shall make necessary applications to these stock exchanges pursuant to the Scheme coming into effect to note consequential changes due to reorganisation of the share capital of the Demerged Company. The reduction in the issued, subscribed and paid-up share capital as above, shall be effected as an integral part of the Scheme itself and shall be deemed to be in accordance with the provisions of Sections 78, 100 to 104 of the Companies Act,1956 as the same does not involve either diminution of liability in respect of unpaid share capital or payment to any shareholder of any paid-up share capital. The order of the Court sanctioning the Scheme shall be deemed to be an order under Section 102 of the Companies Act,1956 confirming the reduction without imposing a condition on Provogue to add to its name "and reduced". The provisions of Section 101 of the Companies Act,1956 shall not be applicable.
24
CAPITAL STRUCTURE The share capital of our Company, as of the date of this Information Memorandum, before and after the Issue, is set forth below: (In Rs.) Aggregate nominal value A) B) C) D) AUTHORISED SHARE CAPITAL BEFORE THE SCHEME 2,50,000 Equity shares of Rs.2 each ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL BEFORE THE SCHEME 2,50,000 Equity shares of Rs.2 each AUTHORISED SHARE CAPITAL AFTER THE SCHEME 20,02,50,000 Equity shares of Rs.2 each ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL AFTER THE SCHEME 15,26,02,883 Equity Shares of RS. 2/- each 5,00,000 5,00,000 40,05,00,000 30,52,05,766
Changes in Authorised Share Capital Details of increase in our Authorised Capital from the date of incorporation until filing of the Information Memorandum is as below: The Company was incorporated as a private limited company on September 14, 2007 with authorised share capital of Rs. 1,00,000/- divided into 10,000 equity shares of Rs. 10/- per share. Subsequently the members of the company in their extra ordinary general meeting held on August 25, 2011 resolved to subdivide the authorised share capital from face value of share of Rs. 10/- each to face value of share of Rs. 2/- each and to increase the authorised share capital from Rs. 1,00,000/- to Rs. 5,00,000/-. Consequently, the authorised share capital of Company is Rs. 5,00,000/- divided into 2,50,000 equity share of Rs. 2/- each. Upon the Scheme coming into effect, the authorised share capital was automatically deemed to be increased to Rs. 40,05,00,000/- divided into 20,02,50,000 equity shares of Rs.2/- (Rupees two) each and post allotment of shares as provided in the Scheme, the paid up share capital increased to Rs.30,52,05,766/- divided into 15,26,02,883 equity shares of Rs. 2/- per share Notes to the Capital Structure I. Share capital history
The following table sets forth the history of equity share capital of our Company: Date of Number of Face Issue Considn. Reasons for Cumulative Cumulative Cumulative allotment Equity value price (Rs.) allotment number of Equity Share Equity Shares per per Equity capital Share share share Shares (Rs.) premium (Rs.) (Rs.) (Rs.) 14.09.07 10,000 10/10/- Cash Allotment to 10,000 100,000/Nil subscribers Sub-division of share Capital from share of face value Rs. 10/- each to share of face value of Rs. 2/- each, hence revised Share Capital became Rs. 1 lac divided into 50,000 equity shares of Rs. 2/- each with effect from 25th August 2011. 25.08.11 50,000 2/NA NA Sub-division 50,000 100,000/Nil 29.08.11 200,000 2/2/- Cash Conversion 250,000 500,000/Nil into public Company 12.03.12 15,23,52,883 2/NA NA Composite 15,26,02,883 30,52,05,776 Nil Scheme of Arrangement and Amalgamation
25
II.
Shareholding Pattern of the Company [Pre-Scheme]
The table below represents the shareholding pattern of our Company before the implementation of the Scheme:
Category Code (I) No. of shareholders (III) Total No. of shares (IV) Number of shares held in dematerialized form (V) Total shareholding as a % of total number of shares As a % of As a % of (A+B) (A+B+C) (VI) (VII) Shares pledged or otherwise encumbered No. of As a % Shares (VIII) (IX)= (VIII)/(IV)*100
Category of shareholder (II)
(A) (1) (a) (b) (c) (d) (e) (e-i) (e-ii) (2) (a) (b) (c) (d)
Promoter and Promoter's Group Indian Individuals/ Hindu Undivided Family Central Government/ State Government(s) Bodies Corporate Financial Institutions/ Banks Any Other Persons acting in concert Limited Liability Partnership Sub-Total (A)(1) Foreign Individuals (Non-Resident Individuals/ Foreign Individuals) Bodies Corporate Institutions Any Other (specify) Sub-Total (A)(2) Total Shareholding of Promoter and Promoter Group (A)= (A)(1)+(A)(2) Public Shareholding Institutions Mutual Funds/ UTI Financial Institutions/ Banks Central Government/ State Government(s) Venture Capital Funds Insurance Companies
6 0 1 0 0 0 7 0 0 0 0 0 7
6 0 249,994 0 0 0 250,000 0 0 0 0 0 250,000
0 0 0 0 0 0 0 0 0 0 0 0 0
0.00 0.00 100.00 0.00 0.00 0.00 100.00 0.00 0.00 0.00 0.00 0 100.00
0.00 0.00 100.00 0.00 0.00 0.00 100.00 0.00 0.00 0.00 0.00 0 100.00
0 0 0 0 0 0 0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00 0.00 NA 0 0 0 0 0 NA
(B) (1) (a) (b) (c) (d) (e)
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
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(f) (g) (h) (2) (a) (b)
Foreign Institutional Investors/ FFI Foreign Venture Capital Investors Any Other (specify) Sub-Total (B)(1) Non-institutions Bodies Corporate Individuals i. Individual shareholders holding nominal share capital up to Rs. 1 lakh. ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh. Any Other (specify) Clearing Members Non-resident Indians Foreign Companies Sub-Total (B)(2) Total Public Shareholding (B)= (B)(1)+(B)(2) TOTAL (A)+(B) Shares held by Custodians and against which Depository Receipts have been issued Promoter and Promoter Group Public GRAND TOTAL (A)+(B)+(C)
0 0 0 0 0 0 0 0 0 0 0 0 7 0 7
0 0 0 0 0 0 0 0 0 0 0 0 250,000 0 250,000
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 100.00 0 100.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 100.00 0 100.00
NA NA NA NA
NA NA NA NA
(c) (c-i) (c-ii) (c-iii)
(C) (1) (2)
Note (i): The Company is wholly owned subsidiary of Provogue (India) Limited, which holds the shares in its own name and through Nominees
27
(I) (b)
Statement showing holding of securities (including shares, warrants, convertible securities) of persons belonging to the category Promoter and Promoter Group
Details of Shares held As a % of Grand Total (A)+(B)+ (C) Encumbered shares As a % of Grand Total (A)+(B)+(C) of sub clause (I)(a) Details of warrants As a % of total number of warrants of the same class Details of convertible securities No. of convertible securities held As a % of total number of convertible securities of the same class (XI) Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a % of diluted share capital (XII)
Sr. No.
Name of the shareholder
Number of shares
No. of shares
As a %
No. of warrants held
(I)
(II)
(III)
(IV)
(V)
(VI) = (V)/(III) X100
(VII)
(VIII)
(IX)
(X)
1 2 3 4 5 6 7
Provogue (India) Limited NIKHIL ANUPENDRA CHATURVEDI, as nominee of PIL SALIL ANUPENDRA CHATURVEDI , as nominee of PIL DEEP SUBASH GUPTA, as nominee of PIL AKHIL ANUPENDRA CHATURVEDI, as nominee of PIL NIGAM PATEL, as nominee of PIL RAKESH RAWAT, as nominee of PIL Total
249,994 1 1 1 1 1 1 250,000
100.00 0.00 0.00 0.00 0.00 0.00 0.00 100.00
0 0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0 0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00
0 0 0 0 0
0.00 0.00 0.00 0.00 0.00
100.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00
0 0 0
0.00 0.00 0.00
0.00 0.00 100.00
Note
The Company is wholly owned subsidiary of Provogue (India) Limited. Individual shareholders hold the shares as nominees of Provogue (India) Limited
28
(I)(c)(i)
Statement showing holding of securities (including shares, warrants, convertible securities) of persons belonging to the category Public and holding more than 1% of the total number of shares
Details of warrants Details of convertible securities Number of convertible securities held % w.r.t. total number of convertible securities of the same class Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a % of diluted share capital
Sr. No.
Number of shares held
Shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}
Number of warrants held
As a % total number of warrants of the same class
NOT APPLICABLE Total (I)(c)(ii ) 0 0.00 0 0.00 0 0.00 0.00
Statement showing holding of securities (including shares, warrants, convertible securities) of persons (together with PAC) belonging to the category Public and holding more than 5% of the total number of shares of the company
Details of warrants Name(s) of the shareholder(s) and the Persons Acting in Concert (PAC) with them Shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}
Details of convertible securities
Sr. No.
Number of shares
Number of warrants held
As a % total number of warrants of the same class 0.00
Number of convertibl e securities held 0
% w.r.t total number of convertible securities of the same class 0.00
Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a % of diluted share capital
Not Applicable Total (I)(d)

Sr. No.
0.00
0.00
Statement showing details of locked-in shares

Name of the shareholder Number of locked-in shares Locked-in shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}
Not Applicable Total
NA
NA
29
(II)(a)
Sr. No.
Statement showing details of Depository Receipts (DRs)

Type of outstanding DR (ADRs, GDRs, SDRs, etc.) Number of outstanding DRs Number of shares underlying outstanding DRs Shares underlying outstanding DRs as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}
NA Total
NA 0
NA 0
NA 0
(II)(b)
Statement showing Holding of Depository Receipts (DRs), where underlying shares held by 'promoter/promoter group' are in excess of 1% of the total number of shares
Name of the DR Holder Type of outstanding DR (ADRs, GDRs, SDRs, etc.) Number of shares underlying outstanding DRs Shares underlying outstanding DRs as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}
Sr. No.
NA Total
NA
NA
NA
(III)(a)
Statement showing the voting pattern of shareholders, if more than one class of shares/ securities is issued by the issuer: (Give description of voting rights for each class of securities: Class X, Class Y, Class Z) Not Applicable, as Company has only one class of security.
30
III) Shareholding Pattern of the Company after Implementation of the Scheme (Post-Scheme) and as on date of this Information Memorandum
Total shareholding as a % of total number of shares As a % of As a % of (A+B) (A+B+C) (VI) (VII) Shares pledged or otherwise encumbered No. of Shares (VIII)
Category Code (I)
Category of shareholder (II)
No. of shareholders (III)
Total no. of shares (IV)
No. of shares held in dematerialized form (V)
As a %
(IX)= (VIII)/(IV)*100
(A) (1) (a) (b) (c) (d) (e) (e-i) (e-ii) (2) (a) (b) (c) (d)
Promoter and Promoter's Group Indian Individuals/ Hindu Undivided Family Central Government/ State Government(s) Bodies Corporate Financial Institutions/ Banks Any Other Persons acting in concert Limited Liability Partnership Sub-Total (A)(1) Foreign Individuals (Non-Resident Individuals/ Foreign Individuals) Bodies Corporate Institutions Any Other (specify) Sub-Total (A)(2) Total Shareholding of Promoter and Promoter Group (A)= (A)(1)+(A)(2) Public Shareholding Institutions Mutual Funds/ UTI Financial Institutions/ Banks Central Government/ State Government(s) Venture Capital Funds
12 0 3 0 3 1 19 0 0 0 0 0 19
36,812,871 0 11,290,000 0 559,600 4,864,778 53,527,249 0 0 0 0 0 53,527,249
36,812,871 0 11,040,000 0 559,600 4,864,778 53,277,249 0 0 0 0 0 53,277,249
24.12 0.00 7.40 0.00 0.37 3.19 35.08 0.00 0.00 0.00 0.00 0 35.08
24.12 0.00 7.40 0.00 0.37 3.19 35.08 0.00 0.00 0.00 0.00 0 35.08
0 0 0 0 0 0 0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00 0.00 NA 0 0 0 0 0 NA
(B) (1) (a) (b) (c) (d)
0 2 0 0
0 926,506 0 0
0 926,506 0 0
0.00 0.61 0.00 0.00
0.00 0.61 0.00 0.00
31
(e) (f) (g) (h) (2) (a) (b)
Insurance Companies Foreign Institutional Investors/ FFI Foreign Venture Capital Investors Any Other (specify) Sub-Total (B)(1) Non-institutions Bodies Corporate Individuals i. Individual shareholders holding nominal share capital up to Rs. 1 lakh. ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh. Any Other (specify) Clearing Members Non-resident Indians Foreign Companies Sub-Total (B)(2) Total Public Shareholding (B)= (B)(1)+(B)(2) TOTAL (A)+(B) Shares held by Custodians and against which Depository Receipts have been issued Promoter and Promoter Group Public GRAND TOTAL (A)+(B)+(C)
0 14 0 0 16 643 38,135 36 141 588 1 39,544 39,560 39,579 0 39,579
0 3,972,361 0 0 4,898,867 11,407,980 17,250,647 13,143,045 1,815,070 1,149,237 49,410,788 94,176,767 99,075,634 152,602,883 0 152,602,883
0 3,972,361 0 0 4,898,867 11,407,980 17,235,632 13,022,870 1,815,070 1,149,237 49,410,788 94,041,577 98,940,444 152,217,693 0 152,217,693
0.00 2.60 0.00 0.00 3.21 7.48 11.30 8.61 1.19 0.75 32.38 61.71 64.92 100.00 0 100.00
0.00 2.60 0.00 0.00 3.21 7.48 11.30 8.61 1.19 0.75 32.38 61.71 64.92 100.00 0 100.00
NA NA NA NA
NA NA NA NA
(c) (c-i) (c-ii) (c-iii)
(C) (1) (2) Notes: 1) 2)
Total Non-promoter holding is 64.92 % there are no ADR/GDR issues. Total Foreign Shareholding is 54,532,386 shares (35.73%) which includes investment made by NRI -1,149,237 shares (0.75%), Foreign Bodies Corporate- 49.410,788 shares (32.38%) and FII- 3,972,361 shares (2.60%)
32
(I)(b)
Statement showing holding of securities (including shares, warrants, convertible securities) of persons belonging to the category Promoter and Promoter Group
Details of Shares held As a % of Grand Total (A)+(B)+( C) Encumbered shares As a % of Grand Total (A)+(B)+(C ) of sub clause (I)(a) (VII) Details of warrants Details of convertible securities As a % of total number of convertible securities of the same class (XI) Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a % of diluted share capital (XII)
Sr. No.
Number of shares
No. of shares
As a %
No. of warrants held
As a % of total number of warrants of the same class
Number of convertible securities held
(I)
(II)
(III)
(IV)
(V)
(VI) = (V)/(III)X1 00
(VIII)
(IX)
(X)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
NIKHIL ANUPENDRA CHATURVEDI SALIL ANUPENDRA CHATURVEDI RAKESH RAWAT DEEP SUBASH GUPTA NIGAM PATEL AKHIL ANUPENDRA CHATURVEDI ANISHA CHATURVEDI VEENA GUPTA VANDANA VAIDH ANISHA CHHABRA GHANSHYAM RAWAT PUSHPLATA RAWAT BALA CHHABRA SUSHANT CHHABRA VIRENDRA CHHABRA MEERUT FESTIVAL CITY LLP1 FLORO MERCANTILE PVT. LTD. TOPSPEED TRADING CO. PVT. LTD. PROVOGUE (INDIA) LIMITED Total
10,611,995 10,295,135 4,111,750 5,673,445 2,912,830 2,912,830 144,225 70,005 1,620 22,035 20,500 36,501 100,000 67,300 392,300 4,864,778 6,240,000 4,800,000 2,50,000 53,527,248
6.95 6.75 2.69 3.72 1.91 1.91 0.09 0.05 0.00 0.01 0.01 0.02 0.07 0.04 0.26 3.19 4.09 3.15 0.16 35.08
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
6.95 6.75 2.69 3.72 1.91 1.91 0.09 0.05 0.00 0.01 0.01 0.02 0.07 0.04 0.26 3.19 4.09 3.15
33
(I)(c)( i)
Statement showing holding of securities (including shares, warrants, convertible securities) of persons belonging to the category Public and holding more than 1% of the total number of shares
Shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above} Details of warrants Number of warrants held As a % total number of warrants of the same class Details of convertible securities Number of convertible securities held % w.r.t. total number of convertible securities of the same class Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a % of diluted share capital
Sr. No.
Number of shares held
1 2 3 4 5 6
NAILSFIELD LIMITED SANDEEP G RAHEJA RAKESH JHUNJHUNWALA RAJESH R NARANG ACACIA PARTNERS, LP FAIRPRICE TRADERS ( INDIA) PVT LTD Total
49,410,788 4,489,600 2,500,000 2,324,160 2,243,375 1,525,195 62,493,118
32.38 2.94 1.64 1.52 1.47 1.00 40.95
0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00 0.00 0.0000
0.00 0.00 0.00 0.00 0.00 0.00 0.00
(I)(c)( ii)
Statement showing holding of securities (including shares, warrants, convertible securities) of persons (together with PAC) belonging to the category Public and holding more than 5% of the total number of shares of the company
Shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above} Details of warrants Number of warrants held As a % total number of warrants of the same class Details of convertible securities Number of convertible securities held % w.r.t total number of convertible securities of the same class Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a % of diluted share capital
Sr. No.
Name(s) of the shareholder(s) and the Persons Acting in Concert (PAC) with them
Number of shares
NAILSFIELD LIMITED Total
49,410,788 49,410,788
32.38 32.38
0 0
0.0000 0.0000
0 0
0.0000 0.0000
0.0000 0.0000
34
(I)(d)
Sr. No.
Statement showing details of locked-in shares

Name of the shareholder Number of locked-in shares Locked-in shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}
Nailsfield Limited* 3,79,95,788 24.90% Total 3,79,95,788 * As per the SEBI letter no. CFD/DIL/SK/PM/5102/2012 dated August 31, 2012 granting relaxation from the strict application of Rule 19(2)(b) of SCRR, the above shares have been lockedin for one year from the date of listing. (II)(a) Statement showing details of Depository Receipts (DRs)
Sr. No. Type of outstanding DR (ADRs, GDRs, SDRs, etc.) Number of outstanding DRs Number of shares underlying outstanding DRs Shares underlying outstanding DRs as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}
NA Total
NA 0
NA 0
NA 0
(II)(b)
Statement showing Holding of Depository Receipts (DRs), where underlying shares held by 'promoter/promoter group' are in excess of 1% of the total number of shares
Name of the DR Holder Type of outstanding DR (ADRs, GDRs, SDRs, etc.) Number of shares underlying outstanding DRs Shares underlying outstanding DRs as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}
Sr. No.
NA Total
NA
NA
NA
(iii) (a)
Statement showing the voting pattern of shareholders, if more than one class of shares/ securities is issued by the issuer: (Give description of voting rights for each class of securities: Class X, Class Y, Class Z) Not Applicable, as Company has only one class of security.
35
III. IV. V. VI. VII. VIII.
We have not issued any Equity Shares out of revaluation reserves or without accrual of cash resources. At any given point of time, there shall be only one denomination of shares in our Company and our Company shall comply with such disclosure and accounting norms specified by SEBI from time to time. The Equity Shareholders of our Company do not hold any warrants, options or convertible loans or debentures, which would entitle them to acquire further shares in our Company. Our Company has 39,579 shareholders as on the date of this Information Memorandum. Except as stated in the section titled Our Management on page 60 of this Information Memorandum, none of our Directors or our key management personnel hold any Equity Shares. As on date, there are no partly paid-up Equity Shares.
36
STATEMENT OF TAX BENEFITS To, The Board of Directors, Prozone Capital Shopping Centres Limited (Formerly known as Castle Mall Private Limited) 105/106 Provogue House, Off. New Link Road, Andheri (West), Mumbai - 400 053.
We hereby report that the enclosed annexure states the possible tax benefits available to Prozone Capital Shopping Centres Limited (the Company) and its shareholders under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependant upon fulfilling such conditions, which is based on business imperatives faced by the Company in the future which the Company may or may not choose to fulfil. The benefits discussed below are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences, the changing tax laws and the fact that the Company will not distinguish between the share offered for subscription and the shares offered for sale by the selling shareholders, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance as to whether: (i) the Company or its share holders will continue to obtain these benefits in future; or (ii) the condition prescribed for availing the benefits have been / would be met with. The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and interpretation of the current tax laws in force in India. For Singrodia Goyal & Co. Chartered Accountants
Shivratan Singrodia Partner Mem. No. 109271 Place: Mumbai Date: 6th April, 2012
37
Annexure: Statement of possible tax benefits available to Prozone Capital Shopping Centres Limited, and to its Shareholders. As per the existing provisions of the Income Tax Act, 1961 (the Act) and other laws as applicable for the time being in force, the following tax benefits and deductions are and will, inter-alia be available to the Company and its shareholders. I. Key benefits available to the Company A. Dividend Income As per section 10(34) of the Act, any income by way of dividends (both interim and final) referred to in Section 115-O of the Act received by the Company on its investment in the shares of any domestic company shall be exempt from tax. Income received in respect of units of a Mutual Fund specified under Section 10(23D) of the Act shall be exempt from tax under Section 10(35) of the Act. B. Interest Income The Company will be entitled to claim exemption for interest on tax-free bonds under section 10(15) of the Act. C. Income from House Property (i) As per section 24(a) of the Act, the company will be eligible for deduction of 30% of its income from house property. (ii) As per section 24(b) of the Act, the company will also be eligible for deduction of the interest paid or payable on the capital borrowed for acquiring, constructing or repairing the property from income from house property. D. Capital Gains (i) Capital Assets are to be categorized into short-term capital assets and long-term capital assets based on the period of holding. Shares held in a Company or any other securities listed on a recognized stock exchange in India or units of UTI and specified Mutual Fund/zero coupon Bonds are considered as long-term capital assets if these are held for a period exceeding 12 months. Capital gains arising on transfer of such long-term capital assets are considered as long-term capital gains. Capital gains arising on transfer of such assets held for a period of 12 months or less are considered as short-term capital gains. (ii) As per section 10(38) of the Act, long term capital gains arising to the Company from the transfer of long term capital asset being equity share in a company or unit of an equity oriented fund, where such transaction is chargeable to securities transaction tax, shall be exempt from tax in the hands of the Company. However, the company will not be able to claim the above exemption while computing the book profit and income-tax payable under section 115JB of the Act. For this purpose, equity oriented fund means a fund a) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than sixty five percent of the total proceeds of such funds; and b) which has been set up under a scheme of a Mutual Fund specified under section 10(23D) of the Act. (iii) As per section 112 of the Act, taxable long-term capital gains, if any, on sale of listed securities or units or zero coupon bonds (in cases not covered under section 10(38) of the Act) would be charged to tax at the rate of twenty percent (plus applicable surcharge and education cess) after considering indexation benefits in accordance with and subject to the provisions of section 48 of the Act. However, under the proviso to Section 112 (1), if the tax on long-term capital gains arising on transfer of listed securities or units or zero coupon bonds computed at the rate of twenty per cent (plus applicable surcharge on tax and education cess), after availing the benefit of indexation exceeds, the tax on the long-term capital gain computed at the rate of ten per cent (plus applicable surcharge on tax and education cess) without availing the benefit of indexation, then such excess tax is ignored for the purpose of computing the tax payable on the capital gains. (iv) As per section 111A of the Act, short term capital gains arising to the Company from the sale of equity share transacted through a recognized stock exchange or a unit of an equity oriented fund in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of fifteen percent (plus applicable surcharge and education cess). (v) Short-term capital loss suffered during the year is allowed to be set-off against short-term as well as long term capital gains of the said year. Balance loss, if any, can be carried forward for eight years for claiming set-off against subsequent years short-term as well as long-term capital gains.
38
(vi)
Long-term capital loss suffered during the year is allowed to be set-off against long-term capital gains only. Balance loss, if any, can be carried forward for eight years for claiming set-off against subsequent years longterm capital gains. As per section 54EC of the Act and subject to the conditions and limit specified therein, long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset will be exempt from capital gains tax if the capital gains are invested in a long term specified asset within a period of 6 months after the date of such transfer. The bonds presently specified under this Section are bonds issued by National Highway Authority of India (NHAI) and Rural Electrification Corporation Ltd. (REC). Investment in these bonds cannot exceed Rs. 50 lacs during any financial year.
E.
Depreciation / Business Loss (i) The Company shall be entitled to claim depreciation on tangible and intangible assets owned by it and used for the purposes of its business as provided in Section 32 of the Act. (ii) Unabsorbed depreciation can be carried forward to future years for set off against subsequent years income. (iii) Business losses can be carried forward for eight succeeding assessment years for set off against subsequent business profits. Preliminary Expenses The Company shall be eligible for amortization of preliminary expenditure as specified in section 35D of the Act being expenditure on public issue of shares, subject to meeting the conditions and limits specified in that section.
F.
G. Scientific Research Expenses (i) Subject to fulfillment of specified conditions, the Company will be eligible, inter alia, for deduction in respect of revenue expenditure under section 35(1)(i) and in respect of capital expenditure (other than expenditure on the acquisition of any land) under section 35(1) (iv) of the Act incurred on scientific research. (ii) As per section 35(2AB) of the Act, the Company will be entitled to claim deduction of 150% of the expenditure incurred on in-house research and development facility subject to fulfillment of certain conditions specified therein. H. Security Transaction Tax (STT) allowed as deductible expenditure In computing the business income, an amount equal to STT paid in respect of taxable securities transactions entered into in the course of business will be allowed as a deductible expense, if the income arising from such taxable securities transactions is included in the income computed under the head Profits and Gains of Business or Profession as per the provisions of section 36(1)(xv) of the Act. I. Minimum Alternate Tax As per provisions of section 115JB of the Act, the company will be required to pay Minimum Alternate Tax (MAT) at the rate of eighteen and half percent (as provided by Finance Act, 2011) (plus applicable surcharge and education cess) on the book profit determined, if the income-tax payable as per normal provisions of the Act is less than such amount. If the company has paid taxes under section 115JB of the Act, then in accordance with provisions of section 115JAA, the amount paid will be available as MAT credit to the Company for setting off against normal taxes in succeeding ten years subject to fulfillment of certain conditions prescribed in the said section.
II.
Key benefits available to the Resident Shareholders of the Company: A. Dividend Income As per section 10(34) of the Act, any income by way of dividends (both interim and final) referred to in Section 115-O of the Act, received on the shares of the Company shall be exempt from tax. B. Capital Gains Benefits outlined in paragraph I-(D) above, mutatis mutandis are also available to resident shareholders, in respect of capital gains derived from sale of shares of the Company. In addition to the same, the following benefits are also available to the resident shareholders: (i) In accordance with, and subject to the conditions and to the extent specified in section 54F of the Act, long-term capital gains arising on transfer of the shares of the Company (in cases not covered under section 10(38) of the
39
Act) held by an individual or Hindu Undivided Family shall be exempt from capital gains tax if the net sales consideration is utilized, within a period of one year before, or two years after the date of transfer, for the purchase of a new residential house, or is utilized for construction of a residential house within three years. (ii) In the event of Demerger of a company, transfer or issue of shares by the resulting company to the shareholders of the demerged company will not attract capital gain tax as per provisions of Section 47(vid) of the Act, subject to certain conditions specified therein. C. Security Transaction Tax (STT) allowed as deductible expenditure In computing the business income, an amount equal to STT paid in respect of taxable securities transactions entered into in the course of business will be allowed as a deductible expense, if the income arising from such taxable securities transactions is included in the income computed under the head Profits and Gains of Business or Profession as per the provisions of section 36(xv) of the Act. III. Key benefits available to Non-Resident Indians / Non Resident Shareholders (Other than FIIs and Foreign venture capital investors). A. Dividend Income: As per section 10(34) of the Act, any income by way of dividends (both interim and final) referred to in Section 115-O of the Act received on the shares of the Company shall be exempt from tax. B. Capital Gains: (i) Benefits outlined in Paragraph II (B) above mutatis mutandis are also available to a non-residents / non-resident Indian shareholder except that under first proviso to Section 48 of the Act, the capital gains arising on transfer of capital assets being shares of an Indian Company need to be computed by converting the cost of acquisition, expenditure in connection with such transfer and full value of the consideration received or accruing as a result of the transfer into the same foreign currency in which the shares were originally purchased. The resultant gains thereafter need to be reconverted into Indian currency. The conversion needs to be at the prescribed rates prevailing on dates stipulated. Further, the benefit of indexation is not available to non-resident shareholders. (ii) In accordance with, and subject to the conditions and to the extent specified in section 54F of the Act, long-term capital gains arising on transfer of the shares of the Company, not covered under section 10(38) of the Act, held by an individual or Hindu Undivided Family shall be exempt from capital gains tax if the net sales consideration is utilized, within a period of one year before, or two years after the date of transfer, for the purchase of a new residential house, or is utilized for construction of a residential house within three years. (iii) In the event of Demerger of a company, transfer or issue of shares by the resulting company to the shareholders of the demerged company will not attract capital gain tax as per provisions of Section 47(vid) of the Act, subject to fulfilment of certain conditions specified therein. (iv) In the event of amalgamations of companies, transfer of capital asset, being a share or shares in the amalgamating company held by a shareholder will not attract capital gain tax as per the provisions of Section 47(vii) of the Act, subject to fulfilment of certain conditions specified therein. C. Special Provisions relating to Certain Income of Non- Resident Indians: As per Section 115C (e) of the Act, a Non-Resident Indian means an individual, being a citizen of India or a person of Indian origin who is not a resident. As per the Explanation to the said section, a person shall be deemed to be of Indian origin if he, or either of his parents or any of his grandparents, was born in undivided India. Under section 115-I of the Act, the Non-Resident Indian shareholder has an option to be governed by the provisions of Chapter XIIA of the Act viz. Special Provisions Relating to Certain Incomes of Non-Residents which are as follows: (i) As per section 115E of the Act, where shares in the Company are acquired or subscribed to in convertible foreign exchange by a Non-Resident Indian, capital gains arising to the non resident on transfer of shares held for a period exceeding 12 months, shall (in cases not covered under section 10(38) of the Act) be taxed at the flat rate of ten percent (plus applicable surcharge and education cess) (without indexation benefit but with protection against foreign exchange fluctuation). (ii) As per section 115F of the Act, long-term capital gains (in cases not covered under section 10(38) of the Act) arising to a Non-Resident Indian from the transfer of shares of the company subscribed to in convertible foreign exchange shall be exempt from income tax, if the net consideration is reinvested in specified assets or savings
40
certificates referred to in section 10(4B) of the Act, within six months of the date of transfer. If only part of the net consideration is so reinvested, the exemption shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition. (iii) As per section 115G of the Act, Non-Resident Indians are not obliged to file a return of income under section 139(1) of the Act, if their only source of income is income from specified investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act. (iv) As per section 115H of the Act, where the Non-Resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income, for the assessment year in which he is first assessable as a Resident, under section 139 of the Act to the effect that the provisions of the Chapter XII A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money. D. Tax Treaty benefits: An investor has an option to be governed by the provisions of the Act or the provisions of a Tax Treaty that India has entered into with another country of which the investor is a tax resident, whichever is more beneficial. E. Security Transaction Tax (STT) allowed as deductible expenditure In computing the business income, an amount equal to STT paid in respect of taxable securities transactions entered into in the course of business will be allowed as a deductible expense, if the income arising from such taxable securities transactions is included in the income computed under the head Profits and Gains of Business or Profession as per the provisions of section 36(xv) of the Act. Key benefits available to Foreign Institutional Investors (FIIs) A. Dividend Income: As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O of the Act received on the shares of the Company shall be exempt from tax. B. Capital Gains: (i) As per section 10(38) of the Act, long term capital gains arising to the FIIs from the transfer of shares in the Company where such transaction is chargeable to securities transaction tax would not be liable to tax in the hands of the FIIs. (ii) As per section 115AD of the Act, FIIs will be taxed on the capital gains that are not exempt under the section 10(38) of the Act at the following rates: Nature of income Long term capital gains Short term capital gains covered in section 111A Short term capital gains not covered in section 111A Rate of tax (%) 10 15 30
IV.
The above tax rates will have to be increased by the applicable surcharge and education cess. In case of long term capital gains, (in cases not covered under section 10(38) of the Act), the tax is levied on the capital gains computed without considering the cost indexation and without considering foreign exchange fluctuation. (iii) As per section 54EC of the Act and subject to the conditions and limit specified therein, long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset will be exempt from capital gains tax if the capital gains are invested in a long term specified asset within a period of 6 months after the date of such transfer. The bonds presently specified under this Section are bonds issued by National Highway Authority of India (NHAI) and Rural Electrification Corporation Ltd. (REC). Investment in these bonds cannot exceed Rs. 50 lacs during any financial year. C. Tax Treaty benefits: An investor has an option to be governed by the provisions of the Act or the provisions of a Tax Treaty that India has entered into with another country of which the investor is a tax resident, whichever is more beneficial.
41
D. Security Transaction Tax (STT) allowed as deductible expenditure In computing the business income, an amount equal to STT paid in respect of taxable securities transactions entered into in the course of business will be allowed as a deductible expense, if the income arising from such taxable securities transactions is included in the income computed under the head Profits and Gains of Business or Profession as per the provisions of section 36(xv) of the Act. V. Key benefits to Mutual Funds As per section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made there under, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorized by the Reserve Bank of India would be exempt from income tax, subject to such conditions as the Central Government may by notification in the Official Gazette specify in this behalf.
VI. Benefits to shareholders of the Company under the Wealth Tax and Gift Tax Acts (i) Shares of the Company held by the shareholder will not be treated as an asset within the meaning of section 2(ea) of Wealth Tax Act, 1957. Hence the shares are not liable to Wealth Tax. (ii) Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares of the company is not liable to gift tax. However, as per the provisions of section 56(2)(vii) and 56(2)(viia) of the Act, the same will be treated as income in the hands of the donee unless the gift is covered by the situation enumerated in the proviso to respective sections. Notes: 1. 2. 3. 4. All the above benefits are as per the current tax laws as amended by Finance Act, 2011 and will be available only to the sole / first named holder in case the shares are held by joint holders. The Proposals made in Finance Bill, 2012 are not considered for this statement. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to any benefits available under the double taxation avoidance agreements, if any, between India and the country in which the non-resident has fiscal domicile. In view of the individual nature of tax consequences, each investor is advised to consult his / her own tax advisor with respect to specific tax consequences of his / her participation in the scheme. A shareholder is advised to consider in his / her / its own case, the tax implications of an investment in the Equity Shares, particularly in view of the fact that certain recently enacted legislations may not have direct legal precedent or may have a different interpretation on the benefits which an investor can avail.
42
SECTION IV ABOUT OUR COMPANY INDUSTRY OVERVIEW The information in this section has been derived from various sources including government publications and other industry sources. Neither we nor any other person connected with the compilation of this Information Memorandum or their respective legal, financial or other advisors have verified this information. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Industry and government publications are also prepared based on information as of specific dates and may no longer be current or reflect current trends. Industry and government sources may also base their information on estimates, forecasts and assumptions which may prove to be incorrect. Accordingly, investment decisions should not be based on such information. Additionally, the information contained in the section entitled The Indian Real Estate Sector has been referred from the report Embracing Change Scripting the Future of Indian Real Estate dated October 2011, published by Cushman & Wakefield ("C&W"). Though C&W would have used due care and caution in preparing this report and the relevant information would have been obtained by from sources which it considers reliable, there is no guarantee regarding the accuracy, adequacy or completeness of any information and neither C&W nor we nor any other person connected with the compilation of this Information Memorandum or their respective legal, financial or other advisors is responsible for any errors or omissions or for the results obtained from the use of such information. Specifically, C&W is not liable for investment decisions made by any party which may be based on the views expressed in this report. Overview of the Indian Economy India had a GDP on a purchasing power parity basis (equalized exchange rates) of an estimated US $ 4.046 trillion in calendar 2010 (Source: United States Central Intelligence Agency Factbook). This made the Indian economy the fifth largest in the world after the European Union, United States, China and Japan. The broad-based recovery of the Indian economy started in the second half of FY 2010 and continued through the first quarter of FY 2011. The Indian economy exhibited robust acceleration in the pace of recovery in the fourth quarter of FY 2010 led by strong growth in industrial activities. GDP growth in the first quarter of FY 2011 showed a significant recovery from the 5.8 % growth recorded during the second half of FY 2009 and also grew over the 7.7% figure of previous quarter by recording a figure of 8.5%, mainly on account of the investment component. However, the growth rates of GDP at market prices and all its components were lower in the first quarter of 2011-12 than in the corresponding quarter of the previous year, which was 9.1% (Source: RBIs Macroeconomic and Monetary Developments Second Quarter Review 2011-12 dated October 24, 2011). The global growth projection for 2011 was lowered to 4.0% from 4.3%. The IMF lowered the estimate for both, advanced economies, which saw the deepest cut, as well as for emerging and developing economies. It also lowered its growth forecast for India to 7.8% (for 2011) at market prices corresponding to 7.6% at factor cost (for 2011-12 and 2012-13) (World Economic Outlook, IMF, September, 2011). The Indian Real Estate Sector (The information contained below has been extracted from the report Embracing Change Scripting the Future of Indian Real Estate dated October 2011, published by Cushman & Wakefield.) The economic growth so far has been gradual in approach with planned and coordinated policies in various sectors, unveiling India's growth potential to withstand the macroeconomic instability and become a stronger, more resilient and stable economy. However, to consolidate its position further against a rather volatile global economic backdrop, India is awaiting a second generation of reforms. The need to have an inclusive and sustainable growth can only be achieved with policy reforms especially with regards to land, financial, trade, investment, infrastructure and manufacturing. The government has taken up an active role in coming up with several regulations (see table below) and some of them are already at the advanced stages of discussion. Reforms related to land, investment and taxation, which have a direct impact on the real estate sector, are briefly discussed below. Land reforms Land Acquisition, Proposed Second Round of Reforms Financial reforms Trade and Investment Reforms Banking Laws Goods and Services Tax Infrastructure and manufacturing reforms National policy for Public-
43
Land reforms Rehabilitation and Resettlement Bill Consent of 80% of the project affected families required No governmental help in acquiring land for private companies for private purposes A comprehensive rehabilitation and resettlement scheme will be applicable as necessary Sharing of 20% of the appreciated land value upon each transfer (without development) within 10 years Real Estate Regulation Bill Establishment of a regulatory authority Bringing all project details into public domain Residential Tenancy Act Balancing rights and responsibilities of landlords and tenants
Proposed Second Round of Reforms Financial reforms Trade and Investment Reforms Amendment Bill Provide an all Increase access of inclusive tax structure nationalized banks to Removes the capital market cascading effect replaces multiple Prevention of Money indirect taxes at the Laundering (Amendment) state and central Bill levels Bringing more financial institutions FDI in retail & multi brand under the radar retail Opening up of Direct Tax Code (DTC) multibrand retail Replaces the existing sector to foreign Income Tax Act, 1961 investments with a cap of 51% Tax rate for foreign companies will be Stores should be same as Indian opened in the cities companies with a population over 1 million Implementation of Minimum Alternate Minimum capital Tax (MAT) and required for FDI is Dividend Distribution USD100 million Tax (DDT) on Special 30% of goods and Economic Zones commodities should (SEZ) come from local suppliers
Infrastructure and manufacturing reforms Private Partnership (PPP) Eliminate inconsistencies in current rules Set up Infrastructure Fund India Debt
National Manufacturing Policy National Investment and Manufacturing Zones (NIMZ) - to give a boost to the manufacturing sector Facilitate regional development Increase contribution of manufacturing sector to GDP from 16% to 25% by 2025
The current macroeconomic environment in the country indicates the necessity of bringing in some reforms in the taxation, investment and banking policies. The proposed banking sector reforms are expected to strengthen the rural economy. Implementation of Goods and Services Tax (GST) could be beneficial in simplifying financial transactions at various levels by replacing the existing multiple taxation system. As per the recent estimates by the National Council of Applied Economic Research (NCAER), GST is expected to contribute anywhere between 0.9 - 1.7% of GDP to the economy on an annual basis by reducing the cascading effect inherent in the current tax structure. Despite its large scale contribution to the economy, real estate sector is overlooked by the proposed dual GST structure. The stamp duties, registration charges and service tax systems pertaining to land and real estate are heterogeneous among states and are likely to result in controversies for the implementation of GST. Direct Tax Code (DTC) is another tax reform that will be implemented in the next couple of years. Introduction of Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) on Special Economic Zones (SEZs) as a part of the Direct Tax Code (DTC) may impact the profitability of some key sectors such as IT/ITeS, Biotech and Manufacturing which occupy a majority of SEZ space in the country. To substantiate the country's economic growth policy, it is important to have a well laid out land policy, as the impact of any regulatory or policy changes pertaining to land are going to be multifold and long term in nature. The proposed Land Acquisition, Rehabilitation and Resettlement (LARR) bill is believed to put some pressure on manufacturing and real estate sectors, where large scale expansion is dependent on land acquisition. On the other hand, opening up of multi-brand retail sector to foreign investments will add momentum to many of the corporate backed major retail players like Wal-Mart, Carrefour and Tesco to venture into India. FDI in the retail sector would not only lead to a substantial surge in the country's GDP and overall economic development, but would also help in integrating the Indian retail market with that of the global retail market apart from providing
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employment. Continued economic growth in the country and population pressures in urban areas have necessitated the need for large scale development and modernization of infrastructure. India would double its investments in infrastructure to USD 1 trillion during the 12th Five Year Plan that begins in 2012. The proposed policy for Public-Private Partnership (PPP) model for development could help streamlining the approval process and help eliminate inconsistencies in current rules for infrastructure projects. The regulation will help the projects in getting higher returns thus making investments more profitable. The proposal of setting up India Infrastructure Debt Fund is also a major factor for this sector. Employment numbers are also expected to grow on the national scale. Urban areas are likely to grow and the real estate market would be positively affected by the improved infrastructure. Though the first generation reforms have initiated a stronger economic base for India, today, it seems to have run out of steam to close the missing links in the economy. With concerns growing over inflationary pressures, widening trade deficit coupled with the falling GDP numbers, it is evident that second generation of reforms are needed to pave the way for India to be at par with global standards. India would also need to have a proactive attitude towards strategic reforms in many other areas like agriculture, irrigation, education, delivery of public services, including primary health, urban facilities, better connectivity in rural sector and law and order. Indian Investment Landscape During the year 2010, India suffered a marginal drop in the total Foreign Direct Investment (FDI) received, primarily attributed to the macroeconomic instability. FDI in real estate sector fared no different from the overall FDI inflows. The market continued to attract interest and investments from foreign investors during the first half of 2011 and private equity investments in the real estate segment also registered an increase in activities as compared to 2010. As opposed to 2010, when a good share of funds flowing into the realty sector was sourced from the public markets, equity funding in 2011 was noticed to be dominated by the private equity market. FDI Inflows in Real Estate & Housing Sector With the investment market yet to reach the pre-recession levels, FDI inflows in the real estate market remained modest during the first quarter of 2011 in comparison to previous quarters. The total FDI inflow in real estate sector was recorded at INR 4,690 million during the first quarter of 2011. This represents approximately 3% of Indias overall FDI investments which is lower than the investment registered during the same time period in 2010. After a weak start, rising FDIs in the following months signal a positive sentiment amongst the global investors. Private Equity in Real Estate Faced with the difficulty of raising funds from traditional sources such as banks and public equity etc., several real estate companies opted for private equity funding during the year 2011. Despite no significant growth in the number of deals, the value of deals being committed was seen to be on the rise. As of August 2011, a total of approximately INR 36,290 million has been recorded as private equity investment in the real estate industry. The amount of investment raised through private equity route during the first half of 2011 was noticed to surpass the total investment during the same period in 2010. While categorizing investments based on the asset class, fund flow into the office space emerged as the highest due to the big ticket sized deals in this sector during 2011. The large size transactions in office space were primarily pertaining to investment in leased assets. Investment in leased asset which started with a few transactions in 2010 registered a significant growth during 2011. This provided an opportunity for funds to minimise risk and enabled the developers to raise funds. Approximately INR 16,700 million of private equity investment during 2011 was in leased asset developments. The residential sector registered the maximum number of SPV deals till date in 2011 as investors' preference for this segment is high largely due to the ease of exit. Investment in mixed use real estate developments which had been registering a slow down over the last few years continued to witness a downward trend in 2011. Also the retail sector, which had not seen significant investment in the recent past also registered moderate investment through private equity funding. Private Equity market in India was primarily driven by domestic funds. The cautious approach adopted by foreign investors could be primarily attributed to the current turmoil in the global economy. In addition to the growth in private equity investments, the number of exits in the market has also seen a growth during 2011 due to the maturity of investments.
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Investments in Land Banking Buoyant investment activities were witnessed in 2007 towards land banking as developers had started their extensive expansions and needed to add land to their inventory. Post 2009, increasing number of big ticket land transactions exceeding INR 5,000 million were registered. Close to INR 121,031 million worth of land deals were closed till August in 2011. 66% of the total transaction value registered during the year was pertaining to land acquired for commercial space. Investment Outlook On account of government encouragement for investments in infrastructure, it is likely to emerge as an important investment destination for private equity firms. With further tightening of lending norms by financial institutions anticipated in the short term, the share of private equity funding in real estate sector is likely to grow in near future. Developers are likely to postpone their plans to tap the public market for funding purposes due to the current investment environment. Segments within the Real Estate Sector The Residential Segment The residential segment was characterised by positive sentiments witnessing significant recovery across the major cities in terms of renewal of buyer confidence or improving job conditions, prices attending new high; however a cautious approach was evident in most of the residential markets. Consistent end user interest fueled demand but the growth for the same was deterred by several factors like the rising interest rates, inflation and some socio political conflicts in certain cases. The quick rebound witnessed by the housing sector in 2009 - 2010, raised a few concerns pertaining to the sustenance of this growth and stability in the sector. Confronted with high construction costs and inflation, several developers have been forced to raise the property prices. To add to it, RBI increased home loan interest rates, causing much worry for the end consumer. On the whole, higher prices and rising financing costs have resulted in dampening of property sales during the year. In 2011, several residential markets have attained their earlier established peak levels in terms of property prices as a result of increasing construction costs and anticipated demand. Premium micro markets in southern Mumbai and Central Delhi were noticed to have surpassed the peak price levels. On the supply side, during the first half of 2011, the residential sector registered a number of project launches across the top seven cities. A detailed study of the major cities across India reveals that on a relative measure, markets like National Capital Region (NCR), Bangalore, Chennai and Kolkata have strong end user demand compared to Pune and Hyderabad. Demand & Supply Analysis Housing Shortage still remains one of the biggest challenges for India. According to Cushman & Wakefield Research, property markets in India from 2011-15 is likely to witness a demand for 3.94 million housing units growing at a CAGR of 11%. Demand Supply Projections 2011-2015 (top 7 cities)
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Additionally, the total housing demand across top seven cities in India from 2011-15 is expected to be around 2.36 million units. Of this total demand, the mid-ranged housing segment is expected to drive the maximum demand (45%). Majority of the developers in the top seven cities are concentrating on this segment which would help reduce the supply /demand gap. On the other hand, the affordable segment of the property market which is likely to register approximately 3 times more demand than supply might see gap increasing during the next five years (2011-15). Impact on Real Estate The anticipated demand is likely to exert an upward pressure on property prices especially in markets like NCR and Bangalore where the demand supply gap is high. As a result of the relatively lower demand supply gap between 2011-15 in Tier II cities, the capital values in these cities are likely to appreciate at a slower pace compared to the Tier I cities during this time period. With the gained momentum in 2010 in the residential market, developers in the Tier II cities launched several high end projects in order to take advantage of the positive market sentiments. As these projects are expected to reach completion over the next few years, these cities are also likely to witness a substantial supply in the high end segment. Thus the appreciation of high end property prices in these markets might witness a gradual slowdown. The Low Income Group (LIG) and Economically Weaker Section (EWS) housing segments will continue to see a high demand supply gap in the next five years. Several policy reforms by the Government of India and State Governments are expected to have an impact on the demand supply scenario. Several states across India are considering allocating a percentage of developed land to LIG and EWS in order to meet the demand arising from this segment. As a result, boost in supply in the affordable segment is expected. The housing demand supply scenario from 2011- 15 and the resulting gap is likely to reduce based on the current market scenario in the next five years. Despite the current cautious stand adopted in the housing market, the cumulative demand in top seven cities from 2011-15 exceeds the supply by 2.3 times, and is likely to keep the market buoyant during the next five years. However, the upcoming supply needs to be priced judiciously along with appropriate location, infrastructure, connectivity, relevant features and amenities to ensure absorption. The Commercial Segment The world economy that was expanding at a favorable pace in 2007-08 went into contraction in 2009 due to the economic turmoil. Recovery was evident during 2010 but it was short lived and is threatened by the crisis in the Euro zone. The countrys economy has grown at an average rate of 8.8% during 2003-04 to 2006-07, with the 2006-07 growth rate of 9.6% being the highest in the last 18 years. Inspite of the global downturn during 2009, India's quick economic revival along with the favourable GDP growth rate, compared to the other emerging and developed nations, makes India an attractive destination. The recession had significantly impacted the office space demand in 2009, which recorded a decline of 50% compared to the previous year. This resulted in increase of vacant stock and decline in rents across most \cities. In 2010, scaling up of operations by several companies against the backdrop of economic resurgence resulted in increased transaction activities. The demand in 2010 was recorded at 39.6 million square feet (msf) which was a significant 67% higher than 2009. Going forward, this momentum is likely to continue but at a slower pace as indicated by the performance in the first half of 2011 and the world economic sentiment. During the first half of the year, supply was recorded at 17.4 msf indicating a decline of 21% from the previous year same period. The overall demand for 2011 is estimated to be 37 msf registering a minor decline over the previous year. IT/ITeS
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sector, which was the highest demand driver, reported to lose the share of the total absorption with the take up by Banking Financial Services & Insurance (BFSI) segment increasing swiftly in select cities. As a result of changing demand dynamics and restricted supply, the vacancy levels across most cities underwent marginal changes. Demand & Supply Analysis According to Cushman & Wakefield research, cumulative pan India demand in next five years is expected to be 267 msf, with Bangalore, NCR and Mumbai constituting 47% of the total demand. However, other cities such as Chennai, Kolkata and Hyderabad are likely to see the healthy growth in demand over the years.
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Commercial Office Space Demand-Supply Projections 2011-2015 (top 7 cities)
Availability of talent pool for IT/ITeS sector, quality supply at comparatively lower prices and supporting government policies are a few factors which drive demand in the major seven cities. Bangalore will dominate the demand for office space throughout the period (2011-2015) where the demand is anticipated to exceed the supply. The demand trend in Bangalore has been consistent and is likely to continue. Grade A supply for seven major cities is likely to be 243.5 msf till 2015 following an inverted 'W' trend beginning from 2011 as per Cushman Wakefield research. Majority of the supply will be operational in Mumbai, followed by NCR and Chennai during 2011 - 2015. Interestingly, cities such as Bangalore, Kolkata and Pune are likely to witness a negative supply growth over the period under consideration, primary reason being fewer planned projects owing caution exhibited by the developers. Chennai is anticipated to see the highest real estate activity with the highest demand and supply growth during next five years. On the other hand, Kolkata is expected to have lowest demand-supply gap owing to reduced pace of supply and second highest growth in demand during the next five years. Impact on Real Estate The analysis shows that the supply will be exceeding the demand for commercial office spaces in the next 5 years at the prevailing economic conditions. However, with an improvement in the overall situation the demand may accelerate. On the contrary, if the pace of growth is slowed, during the next five years, it may lead to increasing vacancy. The corporate clients in such a scenario will look for better value proposition in terms of rents, maintenance cost, parking etc. while expanding and consolidating operations. Bangalore is expected to be the only exception where demand is likely to exceed planned supply in the forthcoming years, indicating the potential for developments. Scarcity of options and lesser availability of space is likely to prevail in the city unless second generation supply increases. This may put an upward pressure on rentals in select micro markets. The Retail Segment India maintaining its top position in the Nielsen Companys global Consumer Confidence Index in the second quarter of 2011 illustrates the rich and diverse demography and indicates a good consumer base. Private consumption in the domestic market continues to maintain a steady year-on-year growth. Despite the prevailing inflationary conditions in the economy, rising aspiration of the middle class, growing urbanization and increasing disposable income has kept the basic consumer demand intact. The retail market in the country is maturing and becoming more complex and competitive. The economy, though reflects increasing confidence, is characterized by cautious and weighed initiatives. Retail operations are becoming more sophisticated with increased consolidations and intense competition in pricing and promotional activities. New players, international as well as national and regional, are coming in and expanding into new categories and formats, and reaching out to a new set of
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customers. The industry is witnessing growing saturation in existing markets; and increasing dissemination of retail into new destinations. Most of the upcoming developments are expected to be launched with around 60-62% occupancy levels, based on past experiences. The overdrive in delivering large volume of retail projects, over the last half a decade, has been gradually replaced with quality developments today. In the nascent stages of industrys life-cycle, retail developments were perceived to be capable of yielding better and quicker returns leading to large-scale infusion of retail spaces. Expectedly, though unfortunately, this led to an oversupply of malls and several unsuccessful developments. In the second phase, however, the deficiencies are being realized and rectified, with the result that there have been significantly better developments in the recent times. Demand & Supply Analysis As per Cushman & Wakefield Research, total demand for retail space in malls across India during 2011-2015 is expected to reach approximately 57 million square feet, recording 37% compounded annual growth rate (CAGR). Additional retail space demand in the main streets is expected to be at approximately 112.57 million square feet. Retail Demand-Supply Projections 2011-2015 (Top 7 cities)
The share of the total demand in the top 7 cities in the demand for retail space in malls across India is expected to be about 55.9% for 2011-2015. NCR, Bangalore and Mumbai will continue to dominate accounting for 43% of the demand. NCR is likely to witness highest cumulative demand for retail space in malls at approximately 11.8 million square feet by 2015 followed by Bangalore with demand anticipated at 6.6 million square feet. Situation of oversupply of mall space is likely to prevail till 2014. Moreover, if the organized retail growth continues with its steady trend, the demand is expected to rise above the supply levels in 2015. Over supply situation is likely to be more pronounced in Pune as the city is likely to witness delivery of substantial supply during the period 2011-2015. The demand supply situation will be balanced in Mumbai with demand anticipated to firm up in the coming years. The supply scenario across Tier II and Tier III cities of India is far moderate over the five year period. The demand for retail space is likely to increase in the medium term as more retailers are exploring opportunities in these cities. Impact on Real Estate The retail real estate market in the country is likely to see intensive screening and crucial studies on project viability before commencement of construction. Projects which were announced during the period of volume growth (2005-2008) in retail are likely to be revisited keeping a few factors in mind such as proximity to other similar developments, lack of requisite catchments, retailers disinterest. Developers interested in new retail ventures are contemplating on conducting due diligence to ascertain the success of their project. This is likely to assure them of pre-commitments from retailers prior to commencement and improve prospects of returns for the investors.
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Investor community may continue to remain apprehensive of any major investments in retail developments till the time the oversupply situation balances or retailers exhibit clear commitment and preference for a designated project. Moreover, investors may, in exceptional cases, show interest or fund notable and differentiated projects on account of their standing be it with respect to design, concept, catchment or branding. Developers and retailers are likely to take more joint initiatives to understand the core requirements of each channel partners such as for project planning, development and operations or even sharing risks at each step like revenue sharing rental arrangement among others. Conclusion The global economic uncertainty rising out of the sovereign debt crisis, US credit rating down gradation, Euro zone crisis and downward pressure in Japan's economy has accelerated the shifting of the economic power axis to the emerging economies. The high growth rate and dynamic environment of the emerging Asian economies are increasingly gaining confidence of the global investors. China and India being the two prominent economic powers of the region are likely to dictate the global investment environment in the near future. The appetite for real estate investments has subsided largely due to the slowdown in the Indian economy and increasing real estate prices. In the absence of real estate investment instruments like Real Estate Investment Trust (REIT) in conjunction with Real Estate Mutual Fund (REMF), the real estate sector suffers from several shortcomings including less transparency and lower liquidity. With these becoming active, the real estate market will get a structured monetization vehicle for the capital intensive commercial office and retail market. The present economic situation may be viewed as a transitory point for the real estate dynamics in India. Although, the market looks positive in the medium term with considerable demand across sectors, the industry seems to be plagued with thoughts of the revised land acquisition policy and rising interest rates. Simultaneously, end users and developers are feeling the heat of a continuous rise in construction costs and inflation. However the long term perspective suggests that the sector will continue to witness demand in all asset classes in light of the present economic conditions. As housing shortage remains a critical element for India, the residential segment will exhibit a buoyant trend. The demand of commercial office space across the seven major cities by the end of 2015 is not likely to exceed or meet the pre-recessionary times which reflects the gradual recovery mode. As the organized retail growth continues with its steady trend, the demand is expected to rise above the supply levels in 2015. Private Equity continued as a preferred investment option for real estate. This trend is likely to continue as lending norms get tightened further by financial institutions. The sectors like healthcare and hospitality are also showing a positive outlook in the next few years. However the growth momentum in real estate will largely depend on the overall economic outlook. As the present situation of high inflation and widening trade current deficit causes worry for investors, the Government's early action towards a prevention will be crucial. Hence implementing second generation reforms in regard to land, taxation and FDI in retail, can prove to be crucial for sustaining the growth across sectors.
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OUR BUSINESS Incorporated in September 2007 as Castle Mall Private Limited, our Company is a subsidiary of Provogue (India) Limited (Provogue), engaged in the business of real estate development. Our Promoter, Provogue is inter alia engaged in the business of designing, manufacturing and selling branded readymade garments and other accessories under the brand name "Provogue", which has been positioned as a leading fashion label in the Indian market. Pursuant to the Composite Scheme of Arrangement and Amalgamation, (i) the retail-centric real estate undertaking of Provogue has been demerged into our Company, and (ii) PEPL, another subsidiary of Provogue engaged in real estate development, has been merged into our Company. PEPL, established in November 2004 with the objective of developing, owning and managing various real estate assets, is a joint venture between Provogue and Capital Shopping Centres Group Plc (CSC), a UK FTSE100 company with over GBP 7 billion in retail infrastructure property assets. CSC owns 10 of the top 25 centres in the UK including the Metrocentre in Newcastle, one of Europes largest shopping centres. The main objects clause of Memorandum permits us to engage in the business of mixed-use real estate development. Accordingly, we plan to engage in a number of real estate development projects in India, encompassing various categories of real estate retail, residential, commercial and hospitality with a focus on growing markets in India. Our business will encompass all aspects of real estate development, commencing from the identification and acquisition of land, to the planning, execution and marketing of its projects right through to maintenance/ management of its completed developments. Our business model is retail-centric, with the residential and commercial properties expanding around the retail component, thereby creating gated townships. As of March 31, 2012, we have acquired 169.55 acres of land with clear title across Aurangabad, Coimbatore, Indore, Jaipur, Nagpur and Mysore. Further, as of March 31, 2012, we have developed a built-up area of around 1.62 million sq.ft. on a GLA of 800,410 sq.ft. of property in Aurangabad, and plan to develop around 11 million sq. ft. of mixed use property, over the next five years. For further details of our projects, please refer section titled Our Projects Portfolio on page 55. Key Competitive Strengths We believe the following are our principal strengths: Retail and Residential Market Opportunity There are strong growth opportunities offered by the real estate markets in India, particularly those in the non-metro regions. The organized Indian retail industry today is witnessing significant growth and this trend is expected to continue in the future. Professional shopping mall development firms are needed to ensure that contemporary retail infrastructure projects are delivered in a timely and efficient manner, adhering to world-class standards and are designed to meet the needs of the modern Indian consumer. Of the estimated 300 million Indian consumers only 15% live in the six major metro cities. Present Indian mall development in non-metro regions is fragmented and mainly small scale. India is witnessing a high shift to urbanisation. With 17% of the worlds population living on 3% of the worlds land mass, the major metros are under pressure to meet demand for housing and more of Indias mobile population are migrating to non-metro and other emerging cities where higher standards of living are generally more affordable. A diversified portfolio of real estate projects The focus of our real estate business is to bring quality construction in the non-metro and other emerging cities in India. Our current project portfolio is widely spread across cities such as Aurangabad, Coimbatore, Indore, Jaipur, Mysore and Nagpur, and targets diverse categories of real estate development retail, residential as well as commercial. We believe that the range of locations and product offerings that comprise our project portfolio will help provide us with stable cash flows over the near to medium term. Our projects are carefully planned and we conduct market research and analysis of our proposed projects to analyse absorption trends, competitive factors, market prices and product gaps. As a result, we are able to customize our product offerings to cater to customer and market demands at the particular location of the project. The table below sets out the number of our completed projects and our various projects under development/ forthcoming projects across various cities, as of March 31, 2012:
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City Aurangabad Coimbatore Indore Jaipur Nagpur Mysore Total
Completed Projects Number 1 1 Area (sq. ft.) 800,410 800,410
Projects Under Development/ Forthcoming Projects Number Area (sq. ft.) 1 773,615 3 2,536,318 1 2,361,000 1 1,500,000 3 2,619,000 1 1,215,868 10 11,005,801
Balance FSI Area (sq. Ft.) 899,170 2,182,296 1,275,900 1,634,882 5,992,248
Total Area (sq. ft.) 1,574,025 3,435,488 4,543,296 2,775,900 4,253,882 1,215,868 17,798,459
Our association with established players Our association with major international players such as Capital Shopping Centres Group Plc, Triangle Real Estate India Fund and LTG International provides us with the necessary operational and financial expertise to conduct our business. Capital Shopping Centres Group Plc, is a leading specialist developer and manager of shopping centres in UK having a portfolio of 14 shopping centres, including 10 of the top 25 shopping centres in UK. Triangle Real Estate India Fund, co-promoted by ICS Realty Group and Old Mutual Investment Group Property Investments is an investor in our project-specific SPVs for the Aurangabad, Coimbatore and Nagpur locations. Similarly, LTG International, promoted by Lewis Trust Group, an investment company that operates retail stores, real estate, wealth management business and hotels globally, is also an investor in our project-specific SPVs for the Aurangabad, Coimbatore and Nagpur locations. We believe that through these strategic associations and partnerships, we are able to blend the necessary global experience with our local knowledge and experience, enabling us to create, develop and manage world-class regional shopping centres and associated mixed-use developments. Our strong lineage and our reputation for quality In addition to our association with established real estate players mentioned above, we believe that we are a strong brand name known for quality. In our real estate business, the Prozone Mall at Aurangabad, is a known landmark in the region and as per our internal estimates, experiences an average footfall rate of approximately 23,500 footfalls during weekdays and up to 50,000 footfalls during weekends. We believe customers identify our projects with quality construction and, as a result, we enjoy customer confidence. We continue to develop our in-house competencies for every stage in the property development life cycle, commencing from property development inception to execution and culminating in property delivery. We have a separate inhouse quality assurance team that undertakes regular inspection of our projects to ensure adherence to our quality standards. Experienced management team We have a dynamic hands-on management team led by a group of experienced and well-qualified professionals. Our management includes individuals from various disciplines such as architecture, engineering, project supervision, finance and accounting, marketing and sales. In addition, the experience of our management in dealing with the suppliers from whom we source construction materials and the contractors we engage for construction services enables us to better manage the quality, schedule and cost of the materials and construction in our projects. Our management personnel have the necessary experience in anticipating market trends, identifying new markets and potential sites for development, as well as anticipate trends in design, engineering, construction and marketing of projects in accordance with changing customer requirements. We believe that the strength of our management team and their understanding of the real estate market will enable us to continue to take advantage of current and future market opportunities. Business Strategy Following are the key tenets of our business strategy: Continue to Focus on Enhancing our Brand through Development of High Quality Real Estate Projects
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We believe that project planning and execution capabilities have been and will continue to be one of the key differentiating factors in the real estate industry in the future. We will continue to focus on developing high quality real estate projects and enhance our brand through the following: Understanding different consumer segments and tailoring our products accordingly; Continuing to invest in technology to enhance quality, minimising costs and increasing efficiency; and Improving our key processes to deliver quality projects to customers in a timely manner. We believe that we have established, through our Promoters and our joint venture partners, a reputation for developing projects that are known for their aesthetics, quality and delivery in a timely manner. We intend to continue to focus on quality project execution and construction by using technologically advanced tools and processes, in order to maximise client satisfaction. We also intend to expand the scale of our operations while ensuring quality and efficiency in our operations. Outsourcing construction to sources who we believe are best-in-class service providers enables us to undertake more developments while optimally utilising our resources. We intend to continue to outsource activities such as design, architecture and construction to well known and reputed firms and intend to enhance and leverage our existing relationships with leading real estate service providers. Continue to expand and develop our land reserves All our current projects are concentrated in non-metro regions, such as Aurangabad, Coimbatore, Indore, Nagpur, Mysore and Jaipur. As of March 31, 2012, we own 169.55 acres of land in the aforesaid locations. We believe that continuing to expand and develop our land reserves is critical to increasing our market penetration across the various market segments in which we operate. Increasing our market share in the residential, commercial and retail segments is central to our growth strategy and we intend to continue acquiring land at strategic locations at various emerging destinations across India. We believe that we have enhanced our land reserves by acquiring large parcels of land at competitive costs, thereby allowing us to undertake large scale retail, residential and commercial projects. We will continue to focus on geographic areas where we see capital appreciation opportunities by developing such projects for sale or lease in our market segments. Balanced revenue generation model for cash flow visibility We intend to maintain a balance of assets developed for sale and assets developed for ownership by us and leased to third parties to enable us to achieve steady and visible cash flow and better manage cyclical risks. For instance, our retail properties are leased to third parties, whereas our residential and commercial properties are developed for sale to our customers. We believe that our leased properties provide us with a stable income stream which helps to develop long-term value and compensate for volatility in sales of our residential and other projects for sale. In determining the proportion of assets to be retained by us, we consider a number of factors, such as prevailing and expected market conditions, the strategic nature and location of the asset, and cash flow and other needs of our business. Continue to utilize effective development and ownership structures to optimize resources We will continue to utilize project-specific SPVs and project-specific equity financing from investors, which will assist us in reducing our working capital investment and diversifying our risk. This model provides us with the flexibility to strategically exit any particular property or project by selling our interest in such property or project where we believe an absolute sale or perpetual leases will provide us with more favorable returns. Aspirational developments We look to create aspirational developments that we believe have distinctive designs or functionalities with quality construction and finishings as we believe that this enhances our brand and reputation, and will enable us to sell our units quickly and at a premium to other competing developments. For example, all our forthcoming projects have been conceptualised keeping in mind a gated community model, using mixed-use development plans covering residential, shopping centres and commercial premises, thereby providing a convenient and all-inclusive living experience to our customers.
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Our Projects Portfolio As of March 31, 2012, we owned 169.55 acres of land across cities such as Aurangabad, Indore, Coimbatore, Jaipur, Mysore and Nagpur, on which we plan to develop a number of retail-centric mixed-use projects to capture the growth in modern format retailing in India and the high demand for middle income residential housing. SPVs have been established and the necessary land has already been acquired for development at all six locations. All projects are at various stages of design, approvals and implementation. Our first retail shopping centre project in Aurangabad was successfully launched in October 2010 and activities for extension of this site into commercial office space are currently underway. Similarly, our projects in Indore, Coimbatore and Nagpur are already in advanced stages of design and approvals. The total saleable area is expected to be over 11 million square feet spread over these locations. The table below provides the necessary details about our projects: Location Segment Planning & Architectural Status Approximate Saleable Area (sq.ft.) Land Area Land Status Construction Status Expected Completion (Phase 1) Aurangabad Commercial, Retail Completed 15,74,025 19.79 acres Acquired clear title Commenced (November 2011) December 2012 Coimbatore Residential, Commercial, Retail In Progress 25,36,318 25.66 acres Acquired clear title October 2012 October 2014 Nagpur Residential, Commercial, Retail In Progress 26,19,000 41.30 acres Acquired clear title October 2012 October 2014 Indore Residential, Commercial, Retail In Progress 23,61,000 43.49 acres Acquired clear title October 2012 June 2015 Mysore Residential Design Concept 12,15,868 11 acres Acquired clear title October 2013 December 2016 & Jaipur Residential Design & Concept 15,00,000 28.31 acres Acquired clear title October 2012 December 2016
Aurangabad: With a total population of around 2.90 million people (2001 census) of which approximately 1.09 million resided in urban areas, Aurangabad is recognized as one of the fastest developing cities in India. We have presence in Aurangabad through our SPV, Empire Mall Private Limited. Our total land area is 19.79 acres located at Chikalthana, Aurangabad, on lease from MIDC until March 31, 2066. Our flagship retail property at Auranganbad, Prozone Mall, was established in October 2010. With a built-up area of around 1.62 million sq.ft. on a GLA of approx. 800,410 sq.ft., we believe that Prozone Mall is one of the first horizontally designed shopping malls in India. The mall has more than 150 retail stores selling top local and international brands, and offers several modern amenities such as a five-screen cinema complex, food courts, a 40,000 sq. ft. family entertainment centre, large community spaces, etc. The overall occupancy at Prozone Mall as of March 31, 2012 was 530,088 sq. ft., representing an occupancy rate of 66.19%. We are also developing a commercial office segment within the mall admeasuring approximately 773,615 sq. ft. As of March 31, 2012, we have launched Phase 1 of the Commercial Office Space of 190,000 sq ft. We have already received pre-bookings for the entire area of Phase 1. Coimbatore: Coimbatore, the second largest city in Tamil Nadu, is one of its most industrialized cities and is known as the textile capital of South India. Other key industries in Coimbatore include engineering, software services, education and healthcare. Coimbatore has been ranked 4th among Indian cities in investment climate by a survey done by the Confederation of Indian Industry (CII). Coimbatore has a total population of 2.92 million (2001 census), of which 2.06 million resided in urban regions.
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We have presence in Coimbatore through our SPV, Alliance Mall Developers Company Private Limited. We own 25.66 acres of land on Sathyamangalam Road in the Sarvanampatti area, one of the prominent locations in the city, with clear title in our name. We plan to build an integrated township comprising residential complexes, commercial offices as well as shopping centre. The project, which currently is in advanced stages of planning, is expected to commence construction by Q2FY2012-13. The residential complex, targeted at the middle-income residential segment, is proposed to be built over a land area admeasuring approximately 8.50 acres, and is expected to contain around 1,008 units. The concept design for the same has already been completed and we are in the process of obtaining the necessary regulatory approvals. The retail mall, planned on an area admeasuring 17.16 acres, is expected to have GLA of 664,318 sq. ft (ground + 1). The Company has already engaged discussions with several anchor tenants and is in the process of obtaining confirmations. The Coimbatore project would also have a well positioned commercial office space of around 360,000 sq. ft. Nagpur: Nagpur is winter capital of the state of Maharashtra, and the third largest city in the state, after Mumbai and Pune. Historically, Nagpur has been the main centre of commerce in the Vidarbha region, and has served as an important trading location. Nagpur lies at the geographical centre of India, with the Zero Mile Marker passing through it. Given its geographical advantage, Nagpur enjoys excellent connectivity through road, rail and airways. With MIHAN, one of the biggest economical development projects in India currently underway, Nagpur is poised to emerge as a major transport and logistics hub of India. Nagpur is also a major educational centre in Central India with several colleges providing education in various specialty streams. Other predominant industries in Nagpur include engineering, textiles and automobiles. As per the 2001 census, Nagpur had a population of 4.05 million people. We have a presence in Nagpur through our SPV, Hagwood Commercial Developers Private Limited. We own 41.30 acres of land at Chinchbhuvan, Nagpur, a prominent growth corridor in the city, with clear title in our name. We plan to develop retail, residential as well as commercial property on the said land, and expect to commence construction by Q3FY2012-13. With a number of employment opportunities being created across industries, Nagpur is becoming a preferred city for people to migrate to, thereby leading to an increase in demand for residential properties in Nagpur, as well as contributing towards an increase in disposable income. Nagpur being an educational hub of the region with thousands of graduates each year, the city presents attractive demographical profile, boding well for the development of retail property in the city. Additionally, the proximity of our location to MIHAN, Butibori and Hingna Industrial Estates is also expected to work in our favour. Indore: Indore is one of the major cities in India, the largest city and a major commercial centre of Madhya Pradesh. As per the 2001 Census, Indore had a population of 1.84 million people. Indore is often referred as the commercial capital of Madhya Pradesh with a bulk of its trade coming from small, mid and large scale manufacturing & service industries, including automobiles, pharmaceuticals, software, retail and textiles. Major industrial areas surrounding the city include the Pithampur Special Economic Zone and the Sanwer Industrial belt. We have a presence in Indore through our SPV, Omni Infrastructure Private Limited. We own 43.49 acres of land at Khajrana, Indore, with clear title in our name. We plan to develop a gated township in Indore comprising residential, commercial and retail units. The residential segment would be aimed at the middle to upper income segment, and would consist of 2BHK, 3BHK and 4BHK flats with modern amenities including landscape gardens, a clubhouse and a swimming pool. Our project location in Indore is easily accessible from the city and the ring roads. The infrastructure work has already begun and we expect to launch Phase 1 of the project by Q3FY2012-13. Mysore: Mysore is one of the prominent cities in the state of Karnataka. According to the provisional results of the 2011 census of India, Mysore city had a total population of 887,446, making Mysore the second most populous city in Karnataka. With the growth of information technology related industry, Mysore has emerged as the second largest software exporting city in Karnataka, second only to Bangalore. With its heritage, art and cultural background, tourism is another major industry in Mysore. Additionally, agriculture, sandalwood, automobiles, production of lime and salt, etc., are some of the other economy drivers in Mysore. We have a presence in Mysore through a joint venture with local developer where in we have minority stake of 25%. Size of land parcel is around 11 acres wherein there is an opportunity of developing residential apartments. We expect that project will launch by Q3FY2013-14.
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Jaipur: The city of Jaipur, the largest city and capital of the state of Rajasthan, has been one of the major tourism destinations in India and over the years, has also emerged as a prominent business centre of Rajasthan. The city of Jaipur has several modern infrastructural amenities such as well a connected road network, planned colonies in gridlike patterns, and is well connected by road and rail. Apart from tourism, which is a major industry, other industries also include jewelry, cement, agriculture, textiles, etc. We have a 28.31 acres land parcel under joint venture where in we have the controlling stake. The site lies along the AjmerJaipur highway, an upcoming real estate destination in Jaipur, and has frontage on the existing Ajmer Road, and is expected to have frontage on the proposed Jaipur Outer Ring Road We plan to develop residential township aimed at the middle to upper income segment, and would consist of 2BHK, 3BHK and 4BHK flats with modern amenities including landscape gardens, a clubhouse and a swimming pool. We plan to launch phase 1 of the project by Q2FY2012-13. Intellectual Property We have applied for registering the Prozone Capital Shopping Centres Limited logo with the Trademark Registry under classes 35, 36, 37, 41, 42, 43 and 44 of the Indian Trademarks Act, 1999. On receiving necessary registration, we would be able to legally protect our trademark and logo from infringement or deceptive use by others. Litigation For information on material litigation involving our Company, see the section titled Outstanding Litigation and Material Developments on page 85.
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HISTORY AND CERTAIN CORPORATE MATTERS Brief history of the Company Prozone Capital Shopping Centres Limited was incorporated as "Castle Mall Private Limited", a private limited company under the Companies Act, 1956, and was issued a Certificate of Incorporation dated September 14, 2007 by the Registrar of Companies, Mumbai. With effect from September 28, 2011, the Company was converted into a public limited company and the name of the Company was changed to Castle Mall Limited, and subsequently on October 5, 2011, the name of the Company was further changed to Prozone Capital Shopping Centres Limited. The corporate identification number issued to the Company is U45200MH2007PLC174147. Our Main Objects The main objects of our Company as contained in our Memorandum include: To carry on business as developers, constructors, lease of all types of mall, mall management and to develop land, building, immovable properties, real estates by constructing, restructuring, altering, improving, decorating, furnishing and maintaining offices, ware-houses, shops, super markets, hyper markets, food courts, restaurants, banqueting, business centres, theatres, entertainment centres, amusements, games, parking facilities require for mall development and to run, maintain and manage the same businesses in India and abroad. Amendments to our Memorandum Since incorporation of our Company the following changes have been made to our Memorandum: Date of shareholders Nature of alteration resolution August 25, 2011 Sub-division of share capital of Company divided into equity share of face value of Rs. 10/- each to equity share of face value of Rs. 2/-. Consequently the Authorised Share Capital of Rs. 1,00,000/- divided into 10,000 equity shares of Rs. 10/- each was sub-divided into 50,000 equity shares of Rs. 2/- each. August 25, 2011 Increase of authorised share capital from Rs. 1,00,000/- to Rs. 5,00,000/September 14, 2011 Conversion of Company into Public Limited Company. The Registrar of Companies, Mumbai vide its certificate dated 28th September 2011 approved the conversion of company into Public Limited Company. Consequently the name of the Company was changed from Castle Mall Private Limited to Castle Mall Limited October 03, 2011 Change of name of the Company from Castle Mall Limited to Prozone Capital Shopping Centres Limited. The Registrar of Companies, Mumbai vide its certificate dated 5th October 2011 approved the change of name of Company. Major events and milestones The table below sets forth some of the major events in the history of our Company: Sr. No. 1. 2. 3. 4. 5. 6. Date September 14, 2007 September 28, 2011 October 5, 2011 February 10, 2012 February 27, 2012 March 12, 2012 Details Incorporated as Castle Mall Private Limited Conversion into a public limited company Change of name to Prozone Capital Shopping Centres Limited Date of Approval of Scheme by the Bombay High Court The above Scheme came into effect from the date of filing of the Order along with Form 21 with the Registrar of Companies, Mumbai Allotment of 15,23,52,883 equity shares of Rs. 2/- each pursuant to Composite Scheme of Arrangement and Amalgamation
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Shareholders Agreements There are no separate agreements executed between the Company and any shareholder as on date of filing of this Information Memorandum. Financial Partners and other material contracts Our Company has not entered into any financial partnerships with any entity as on the date of filing this Information Memorandum. Subsidiaries and Joint Ventures of the Company Direct and Indirect Subsidiaries Name of the Company Alliance Mall Developers Co. Private Limited Royal Mall Private Limited Jaipur Festival City Private Limited Kruti Multitrade Private Limited Prozone Liberty International Limited Prozone International Limited Prozone Overseas Pte Limited Prozone International Coimbatore Limited Omni Infrastructure Private Limited Hagwood Commercial Developers Private Limited Empire Mall Private Limited Joint Ventures Name of the Company Emerald Buildhome Private Limited Moontown Trading Company Private Limited Held through Prozone International Limited Prozone Capital Centres Limited Shopping Country Incorporation India India of % of Voting Power held as on March 31, 2012 50.00% 25.00% Held through Direct subsidiary Direct subsidiary Direct subsidiary Direct subsidiary Direct subsidiary Indirect subsidiary, held through Prozone Liberty International Limited Indirect subsidiary, held through Prozone Liberty International Limited Indirect subsidiary, held through Prozone Liberty International Limited Indirect subsidiary, held through Prozone International Limited Indirect subsidiary, held through Prozone International Limited Indirect subsidiary, held through Prozone International Limited % of Voting Power held as on March 31, 2012 61.50% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 60.00% 61.50% 61.50% Date of becoming subsidiary August 31, 2007 September 14, 2007 September 14, 2007 November 15, 2011 October 17, 2007 October 18, 2007 January 2008 October 2009 23, 1, Country of Incorporation India India India India Singapore Singapore Singapore Singapore India India India
May 4, 2007 May 7, 2007 March 2008 11,
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OUR MANAGEMENT Under its Articles of Association, our Company is required to have at least 3 Directors but not more than 12 Directors (excluding alternate directors). Currently, the Board comprises six Directors out of which two Directors are independent Directors in terms of Clause 49 of the Listing Agreement. The following table sets forth details regarding the Board as of the date of filing of this Information Memorandum. Particulars Name: Mr. Nikhil Chaturvedi Age: 43 years Fathers Name: Mr. Anupendranath Chaturvedi Date of Appt.: 27.02.2012 DIN: 00004983 Nationality: Indian Designation: Managing Director Shareholding in PCSCL: 10611995 shares (6.95%) 1. 2. 3. 4. 5. 6. 7. 8. 9. 1. 2. 3. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Other Directorships Indian Companies Provogue (India) Limited Floro Mercantile Private Limited Topspeed Trading Company Private Limited Acme Hotels & Hospitality Private Limited Sporting and Outdoor Ad Agency Private Limited. Pronet Interactive Private Limited Everest Plaza Private Limited Image Builders Private Limited Rock.in Fashions Private Limited
Name: Mr. Salil Chaturvedi Age: 41 years Fathers Name: Mr. Anupendranath Chaturvedi Date of Appt.: 27.02.2012 DIN: 00004768 Nationality: Indian Designation: Deputy Managing Director Shareholding in PCSCL: 10295135 shares (6.75%)
Name: Mr. Punit Goenka Age: 37 years Fathers Name: Mr. Subhash Chandra Date of Appt.: 20.04.2012 DIN: 00031263 Nationality: Indian Designation: Independent Director Shareholding in PCSCL: NIL
Overseas Companies Prozone Liberty International Limited -Singapore Prozone International Limited.-Singapore Religion of Couture Kings-Trading e Marketing Lda-Portugal Provogue (India) Limited Floro Mercantile Private Limited Everest Plaza Private Limited Topspeed Trading Company Private Limited Acme Hotels & Hospitality Private Limited Calendula Commerce Private Limited Image Builders Private Limited Flowers, Plants & Fruits (India) Private Limited Headstrong Films Private Limited Good- Day Foods Limited Entrepreneurs Organisations Mumbai Indian Companies 1. Zee Entertainment Enterprises Limited 2. Essel Infraprojects Limited 3. Essel Ship Breaking Limited 4. Essel Damoh-Jabalpur Toll Roads Limited 5. Essel Sagar Damoh Tolls Limited 6. Provogue (India) Limited 7. Zee Sports Limited 8. Adhikar Foundation 9. Diligent Media Corporation Limited 10. Zee Turner Limited 11. Zee News Limited 1. 2. 1. 2. 3. Overseas Companies Agrani Satellite Communications Entp. (Gilbraltar) Limited Taj TV Limited, Mauritius Karamtara Engineering Private Limited Karamtara Fasteners Private Limited Karamtara Steel Pvt. Limited
Name: Mr. Rajiv Singh Age: 39 years Fathers Name: Mr. Hanwant M. Singh
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Date of Appt.: 20.04.2012 DIN: 01689209 Nationality: Indian Designation: Independent Director Shareholding in PCSCL: NIL Name: Mr. John Abel Age: 68 years Fathers Name: Mr. John William Abel Date of Appt. : 20.04.2012 DIN: 01217613 Nationality: United Kingdom Designation: Non Executive Director Shareholding in PCSCL: NIL Name: Mr. David Fischel Age: 54 years Fathers Name: Mr. John Fischel Date of Appt. : 20.04.2012 DIN: 01217574 Nationality: United Kingdom Designation: Non Executive Director Shareholding in PCSCL: NIL
4. 5. 6. 7. 8.
Sunder Rolling Mills Private Limited Karamtara Agrotech Private Limited Karamtara Financial Services Private Limited Karamtara Reality Private Limited Poona Galvanizers Private Limited
Overseas Companies 1. Capital Shopping Centres Group PLC 2. NG Limited
Overseas Companies 1. Barton Square Limited; 2. Belside Limited; 3. Braehead Glasgow Limited; 4. Braehead Park Estates Limited; 5. Braehead Park Investments Limited; 6. Broadway Construction & Development Limited; 7. Broadway Retail Leisure Limited; 8. Capital Shopping Centres Debenture PLC; 9. Capital Shopping Centres Group PLC; 10. Chapelfield GP Limited; 11. Chapelfield Nominee Limited; 12. Chapelfield Property Investments Limited; 13. Chapelfield Property Management Limited; 14. Conduit Insurance Holdings Limited; 15. Cribbs Mall Nominee (2) Limited (alternate director); 16. CSC (Eldon Square) Limited; 17. CSC Breahead Leisure Limited; 18. CSC Breahead Nominee (No. 1) Limited; 19. CSC Breahead Property Management Limited; 20. CSC Bromley (High Street No. 2) Limited; 21. CSC Bromley (High Street No. 3) Limited; 22. CSC Bromley (High Street) Limited; 23. CSC Bromley Limited; 24. CSC Capital (Jersey) Limited; 25. CSC Cardiff Limited; 26. CSC Chapelfield Limited; 27. CSC Chapelfield Residential Limited; 28. CSC Enterprises Limited; 29. CSC FM Limited; 30. CSC Hanley Limited; 31. CSC Harlequinn Limited; 32. CSC Harlequinn Property Management Limited; 33. CSC Kensington Limited; 34. CSC Lakeside Hotel Limited; 35. CSC Lakeside Limited; 36. CSC Lakeside Property Management Limited; 37. CSC Leisure Limited; 38. CSC London PLC; 39. CSC Management Services Limited; 40. CSC MetroCentre Limited;
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41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95.
CSC MetroCentre Property Management Limited; CSC Payments Limited; CSC Potteries Limited; CSC Properties 2021 Limited; CSC Properties 2027 Limited; CSC Properties Investments Limited; CSC Properties Limited; CSC Property Management Limited; CSC Property Services Limited; CSC Trading; CSC Trafford Centre Limited; CSC Uxbridge (Jersey) Limited; CSC Uxbridge Limited; CSC Ventures Limited; Curley Limited; Ferensway Limited; Fortheath (No. 3) Limited; Greenheaven Industrial Properties Limited; Kindmotive Limited; Lakeside 1988 Limited; Liberty Capital PLC; Liberty International Construction and Development Limited; Liberty International Financial Services Limited; Liberty International Group Treasury Limited; Liberty International Holdings Limited; Liberty Life Assurance Limited; Liberty Retail Properties Limited; Libtai Holdings (Jersey) Limited; Mall-UK Limited; Manchester Nominee (2) Limited (alternate director); Marlowe Investments (Kent) Limited; Middleford Property Investments Limited; Nailsfield Limited; Potteries (GP) Limited; Potteries (Nominee No. 1) Limited; Potteries (Nominee No. 2) Limited; Prozone International Limited Singapore; Prozone Liberty International Limited Singapore; Runic Nominees Limited; Sandal Investments Limited; St. Davids (Cardiff Residential) Limited; St. Davids (General Partner) Limited ; St. Davids (No.1) Limited; St. Davids (No.2) Limited; Steventon Limited; TAI Investments Limited; TAI Nominees Limited; The Bullfinch Company Limited; The Trafford Centre Finance Limited; The Trafford Centre Holdings Limited; The Trafford Centre Investments Limited; The Trafford Centre Limited; TransAtlantic Holdings Limited; Transol Investments Limited; VCP (GP) Limited;
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96. VCP (Nominees) No. 1 Limited; 97. VCP (Nominees) No. 2 Limited; 98. Westgate Oxford Investments Limited; 99. Whitesun Limited; 100. WRP Management Limited; Equity One, Inc. Mr. Punit Goenka is the Chairman of the Board of Directors. Apart from Mr. Nikhil Chaturvedi and Mr. Salil Chaturvedi who are brothers, none of the Directors are related to one another. Brief Profiles of Directors Mr. Nikhil Chaturvedi, 43 years, is the Managing Director of our Company, and is the founder and managing director of Provogue. Nikhil is a visionary and hands-on leader, who inspires the organisation with a passion for excellence and single mindedness to build shareholder value. Mr. Salil Chaturvedi, 41 years is the Deputy Managing Director on our Board of Directors, and is the co-founder and deputy managing director of Provogue. Salil is known for his entrepreneurial drive, and has been at the forefront of the brand creation of Provogue, led the mixed used real estate developments in PEPL and investor relations for the Company. Mr. Punit Goenka, 37 years, is an Independent Director on our Board of Directors. Punit, a director on the Essel group, is the chief executive officer of Zee Entertainment Limited and manages one of India's prominent television and media businesses. Punit has an extensive and diversified background in the areas of media, entertainment, and telecommunications across global markets. Mr. Rajiv Singh, 39 years, is an Independent Director on our Board of Directors. Rajiv is the director finance of the Karamtara group of companies. Rajiv holds a Bachelor of Commerce degree from Mithibai College, Mumbai and a MBA-Finance degree from the European University in Switzerland. Mr. David Fischel, 54 years, is an Executive Director on our Board of Directors. David joined the Capital Shopping Centres group, one of UKs prominent real estate conglomerates, in 1985, appointed finance director in 1988, managing director in 1992 and chief executive officer in 2001. Throughout his career with the CSC group, he has been closely involved with its corporate development, including its shopping centre business. Mr. John Abel, 68 years, is an Executive Director on our Board of Directors. John was appointed a director of Capital Shopping Centres in 1994 and as managing director in September 2005. He has been integrally involved with the group's shopping centre activities from its very first major development, The Victoria Centre, Nottingham, which opened in the early 1970s. Interest of Director Other than their respective shareholding in the Company and reimbursement of expenses incurred and normal remuneration/ sitting fee from the Company, all Directors of the Company have no interest in the Company. Compensation of Managing Director In accordance with the provisions of Section III of Schedule XIII to the Companies Act, 1956, Mr. Nikhil Chaturvedi, our Managing Director, and Mr. Salil Chaturvedi, our Deputy Managing Director, holding the same positions respectively in Provogue (India) Limited, is entitled to draw remuneration from one or both companies, provided the total remuneration drawn from the said companies does not exceed the higher maximum limit admissible from any one of the companies of which he is a Managerial Person. Shareholding by our Directors As on the date of this Information Memorandum, Equity Shares held by our Directors in the Company is as follows: Name of Director Number of Shares (post-Scheme) % Shareholding Mr. Nikhil Chaturvedi 1,06,11,995 shares 6.95% Mr. Salil Chaturvedi 1,02,95,135 shares 6.75%
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Changes in Board of Directors in the last three years Name Deep Gupta Rakesh Rawat Jambu Kumar Jain Deep Gupta Akhil Chaturvedi Nikhil Chaturvedi Salil Chaturvedi Punit Goenka Rajiv Singh David Fischel John Abel Corporate Governance Our Company has complied with the requirements of the applicable regulations, including the listing agreement to be entered in to with the Stock Exchanges and the SEBI Regulations, in respect of corporate governance including constitution of the Board and Committees thereof. The corporate governance framework is based on an effective independent Board, separation of the Boards supervisory role from the executive management team and constitution of the Board Committees, as required under law. Our Company has a Board constituted in compliance with the Companies Act and listing agreement to be entered in to with the Stock Exchanges and in accordance with best practices in corporate governance. The Board functions either as a full Board or through various committees constituted to oversee specific operational areas. Our Company undertakes to take all necessary steps to comply with the regulations on corporate governance and adopt the corporate governance code as per Clause 49 of the listing agreement to be entered into with the Stock Exchanges. Borrowing Powers of the Board In terms of the Articles, the Board may, from time to time, at its discretion by a resolution passed at its meeting raise or borrow or secure the payment of any sum or sums of money for the purposes of our Company. However, if the moneys sought to be borrowed together with the moneys already borrowed (apart from temporary loans obtained from our Companys bankers in the ordinary course of business) should exceed the aggregate of the paid-up capital of our Company and our free reserves (not being reserves set apart for any specific purpose), the Board is required to obtain the consent of our Company in general meeting prior to undertaking such borrowing. In this regard, our Company, in the meeting of our shareholders dated March 5, 2012 had resolved that pursuant to the provisions of Section 293(1)(d) of the Companies Act, 1956, the Board is authorised to borrow moneys (apart from temporary loans obtained from the bankers of our Company in ordinary course of business) for the purpose of Companys business in excess of the aggregate of the paid-up capital of our Company and its free reserves (not being reserves set apart for any specific purpose) provided that the total amount of such borrowings together with the amounts already borrowed and outstanding shall not exceed Rs. 1,000 crores at any one time. Committees of the Board Our Company has constituted the following committees in compliance with corporate governance requirements: Committee Members of the Committee & Designation Audit Committee Mr. Punit Goenka, Independent Director and Chairman Mr. Rajiv Singh, Independent Director and member Mr. Salil Chaturvedi, Director and member Shareholders/ Investor Grievance Committee Mr. Rajiv Singh, Independent Director and Chairman Mr. Punit Goenka, Independent Director and member Mr. Salil Chaturvedi, Member Date of Appointment 14.09.2007 14.09.2007 25.01.2008 29.08.2011 13.10.2011 20.04.2012 20.04.2012 20.04.2012 20.04.2012 20.04.2012 20.04.2012 Date of Cessation 25.01.2008 13.10.2011 20.04.2012 20.04.2012 20.04.2012 Reason Resignation Resignation Resignation Resignation Resignation -
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Employees
Mr. Nikhil Chaturvedi, Member
Upon effectiveness of the Scheme, all permanent employees employed/engaged in the retail centric real estate business undertaking as on the Effective Date automatically stand transferred to the Company and their services will be treated as uninterrupted for the purposes of calculating employee benefits.
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PROMOTERS AND GROUP ENTITIES The Promoters of our Company are: 1. Provogue (India) Limited 2. Mr. Nikhil Chaturvedi 3. Mr. Salil Chaturvedi 4. Mr. Deep Gupta 5. Mr. Akhil Chaturvedi 6. Mr. Nigam Patel 7. Mr. Rakesh Rawat as per regulation 2(1)(zb)(ii) of the SEBI (Issue of Capital and Disclosure Requirement) Regulation, 2009, the following natural persons form part of our promoter group: Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Name Mrs. Indu Chaturvedi Mrs. Shital Chaturvedi Ms. Akanksha Chaturvedi Ms. Anushka Chaturvedi Mr. Kirit Mehta Mrs. Chhaya Mehta Mrs. Rupal Shah Mrs. Anisha Chaturvedi Ms. Myraa Chaturvedi Master Shivaan Salil Chaturvedi Mr. Virendra Chhabra Mrs. Bala Chhabra Mr. Sushant Chhabra Mrs. Veena Gupta Master Tanay Gupta Mr. Subhash Gupta Mrs. Santosh Gupta Mr. Dhiraj Gupta Mrs. Ritu Agarwal Mr. Prem Kumar Agarwal Mrs. Suman Lata Agarwal Mr. Susheel Agarwal Mrs. Sarita Tibarumal Mrs. Monica Chaturvedi Ms. Anica Chaturvedi Master Akash Chaturvedi Mr. Tarak Nath Chaturvedi Mr. Pankaj Chaturvedi Mrs. Renu Rawat Master Aush Rawat Master Aryan Rawat Mr. Ghanshyam Rawat Mrs. Pushpalata Rawat Mrs. Vandana Vaidh Madan Gopal Koolwal Mrs. Jesal Patel Relationship Mother of Mr. Nikhil Chaturvedi, Mr. Salil Chaturvedi and Mr. Akhil Chaturvedi Wife of Mr. Nikhil Chaturvedi Daughter of Mr. Nikhil Chaturvedi Daughter of Mr. Nikhil Chaturvedi Father of spouse of Mr. Nikhil Chaturvedi Mother of spouse of Mr. Nikhil Chaturvedi Sister of spouse of Mr. Nikhil Chaturvedi Wife of Mr. Salil Chaturvedi Daughter of Mr. Salil Chaturvedi Son of Mr. Salil Chaturvedi Father of spouse of Mr. Salil Chaturvedi Mother of spouse of Mr. Salil Chaturvedi Brother of spouse of Mr. Salil Chaturvedi Wife of Mr. Deep Gupta Son of Mr. Deep Gupta Father of Mr. Deep Gupta Mother of Mr. Deep Gupta Brother of Mr. Deep Gupta Sister of Mr. Deep Gupta Father of spouse of Mr. Deep Gupta Mother of spouse of Mr. Deep Gupta Bother of spouse of Mr. Deep Gupta Sister of spouse of Mr. Deep Gupta Wife of Mr. Akhil Chaturvedi Daughter of Mr. Akhil Chaturvedi Son of Mr. Akhil Chaturvedi Father of spouse of Mr. Akhil Chaturvedi Bother of spouse of Mr. Akhil Chaturvedi Wife of Mr. Rakesh Rawat Son of Mr. Rakesh Rawat Son of Mr. Rakesh Rawat Father of Mr. Rakesh Rawat Mother of Mr. Rakesh Rawat Sister of Mr. Rakesh Rawat Father of spouse of Mr. Rakesh Rawat Wife of Mr. Nigam Patel
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37 38 39 40 41 42 43 44 45
Ms. Shanaya Patel Ms. Pareen Patel Mr. Anil Bhailal Patel Mrs. Sudhaben Anil Patel Mrs. Surbhi Yogi Patel Mr. Mukeshbhai Purushottamdas Patel Mrs. Prabhaben MukeshBhai Patel Mr. Jeyur Patel Ms. Toral Patel
Daughter of Mr. Nigam Patel Daughter of Mr. Nigam Patel Father of Mr. Nigam Patel Mother of Mr. Nigam Patel Sister of Mr. Nigam Patel Father of spouse of Mr. Nigam Patel Mother of spouse of Mr. Nigam Patel Brother of spouse of Mr. Nigam Patel Sister of spouse of Mr. Nigam Patel
Note: the above given is comprehensive list of relative of promoters as per definition given under regulation 2(1)(zb)(ii) of the SEBI (ICDR) Regulation, 2009, they are not necessarily a shareholder of the Company. Group Entities/ Companies: 1. Acme Advertisements Private Limited 2. Acme Hotels & Hospitality Private Limited 3. Brightland Developers Private Limited 4. Calendula Commerce Private Limited 5. Classique Creators Limited 6. Elite Team (HK) Limited 7. Everest Plaza Private Limited 8. Faridabad Festival City Private Limited 9. Flowers, Plants & Fruits (India) Private Limited 10. Floro Mercantile Private Limited 11. Image Builders Private Limited 12. Meerut Festival City LLP 13. Millennium Accessories Ltd. 14. Oasis Fashion Ltd 15. Profab Fashions (India) Ltd 16. Pronet Interactive Private Limited 17. Provogue Infrastructure Private Limited 18. Provogue Holding Ltd., Singapore 19. Prozone Infrastructure Limited 20. Rock.in Fashion Private Limited 21. Sporting and Outdoor Ad Agency Private Limited 22. Standard Mall Private Limited 23. Starlight City Commercial Developers Private Limited 24. Topspeed Trading Company Private Limited Details about our Promoters Details of Corporate Promoter Provogue India Limited (Provogue) - Provogue was incorporated on November 17, 1997 as Acme Clothing Private Limited. The Company was converted into a public limited company (i.e. Acme Clothing Limited) on March 11, 2005, in terms of a special resolution dated March 2, 2005 passed under Section 31(1) and Section 44 of the Act in a Meeting of the Shareholders of the Company. The name of the Company was subsequently changed to Provogue (India) Limited and a fresh certificate of incorporation dated March 14, 2005 was issued by the Registrar of Companies, Mumbai. The board of directors of Provogue consist of Mr. Nikhil Chaturvedi, Mr. Salil Chaturvedi, Mr. Deep Gupta, Mr. Akhil Chaturvedi, Mr. Rakesh Rawat, Mr. Nigam Patel, Mr. Arun Bhargava, Mr. Surendra Hiranandani, Mr. Amitabh Taneja and Mr. Punit Goenka. The PAN of Provogue is AABCA8524F.
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The shares of Provogue are listed on BSE and NSE. Key financial particulars of the company as per audited results is as follows: (All Amounts except per share data in Rupees Lakh) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 62,486 58,260 50,141 Profit/ Loss After Tax 2,503 3,341 2,835 Earnings per share 2.19 2.92 2.45 Equity Share Capital 1,144 2,287 2,287 Reserves & Surplus 53,809 70,891 67,973 Book Value per share 48.04 63.99 61.44 Details of Individual Promoters 1. Nikhil Chaturvedi Fathers Name Date of Birth Residential Address Permanent Account Number Passport Number 2. Salil Chaturvedi Fathers Name Date of Birth Residential Address Permanent Account Number Passport Number 3. Deep Gupta Fathers Name Date of Birth Residential Address Permanent Account Number Passport Number
Anupendranath Chaturvedi April 1, 1969 Unit No. - 8, Premium Towers CHS, Lokhandwala Complex, Andheri (West), Mumbai, 400053 AABPC9053G Z1777358
Anupendranath Chaturvedi April 22, 1971 Bungalow No. 8, Premium Towers, Lokhandwala Complex, Mumbai, 400053, Maharashtra, India ACYPC0862A Z2194934
Subhash Gupta October 24, 1968 Sushila Sadan, Manchubhai Road, Malad(E), Mumbai, 400097, Maharashtra, India AABPG6915D Z1299153
4. Akhil Chaturvedi Fathers Name Date of Birth Residential Address Permanent Account Number Passport Number 5. Nigam Patel Fathers Name Date of Birth Residential Address Permanent Account Number Passport Number
Anupendranath Chaturvedi April 20, 1965 Bungalow No.-1, Unit-1, Premium Units CHS Ltd., Lokhandwala Complex,Versova Link Road, Andheri (West), Mumbai, 400053, Maharashtra, INDIA AACPC2708D G4725453
Anil Patel February 28, 1970 Adarsh Dughdalaya, No.2 Sharda, Marve Road, Malad (West), Mumbai, 400064, Maharashtra, India AAHPP9955G Z1776565
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6. Rakesh Rawat Fathers Name Date of Birth Residential Address Permanent Account Number Passport Number GROUP COMPANIES
Ghanshyam Rawat April 11, 1970 Flat no. 1401, G5, Vastu Heights, Sundarban, Complex, Off JP Road, Oshiwara Village, Andheri(w), Mumbai, 400053, Maharashtra, India AAZPR1600C Z1935066
1) Acme Advertisements Private Limited (Acme Advertisements) Acme Advertisements was incorporated as Zonz Entertainment Private Limited on May 11, 2006. The name of company was changed to Acme Advertisements with effect from March 26, 2009. The main objects of the company includes undertaking and carrying on the business of and engaging in activities relation to conception, visualization, creation, production, publication, etc. of programs and software of all kinds and types including news, current affairs, films, advertisements, etc. The board of directors of the company consists of Mr. Deep Gupta and Mr. Rakesh Rawat. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares % Shareholding Provogue (India) Limited 9,999 99.99% Deep Gupta as a Nominee of PIL 1 0.01% Total 10,000 100.00% The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 3,69,43,292 2,15,05,302 2,92,45,590 Profit/ Loss After Tax 388,015 2,20,511 3,20,082 Earnings per share 38.80 22.05 32.01 Equity Share Capital 1,00,000 1,00,000 1,00,000 Reserves & Surplus 886,299 4,98,284 2,77,773 Book Value per share 98.63 59.83 37.78 2) Acme Hotels & Hospitality Private Limited (Acme Hotels) Acme Hotels was incorporated on August 28, 2003. The main objects of the company includes owning, constructing, running, managing and carrying on the business of hotels, motels, resorts, etc. The board of directors of the company consists of Mr. Nikhil Chaturvedi, Mr. Akhil Chaturvedi, Mr. Salil Chaturvedi, Mr. Deep Gupta and Mr. Nigam Patel. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares % Shareholding Nikhil Chaturvedi 4,953 31.14% Salil Chaturvedi 4,953 31.14% Deep Gupta 2,000 12.57% Akhil Chaturvedi 2,000 12.57% Nigam Patel 2,000 12.57% Total 15,906 100.00% The company is not listed on any stock exchange. The key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 17,060 Profit/ Loss After Tax -11,236 -10,199 -1,27,470
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Earnings per share Equity Share Capital Reserves & Surplus Book Value per share
-0.71 1,59,060 -263,124 -6.54
-0.64 1,59,060 -2,51,888 -5.84
-8.01 1,59,060 -2,41,689 -5.19
3) Brightland Developers Private Limited (Brightland Developers) Brightland Developers was incorporated on August 24, 2006. The main objects of the company include carrying on the business as developers of land, buildings, immovable properties and of real estate (commercial and retail). The board of directors of the company consists of Mr. Deep Gupta and Mr. Nigam Patel. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares % Shareholding Provogue (India) Limited 9,999 99.99% Nigam Patel as a Nominee of PIL 1 0.01% Total 10,000 100.00% The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income Profit/ Loss After Tax -169,121 -15,913 -12,320 Earnings per share -16.91 -1.59 -1.23 Equity Share Capital 1,00,000 1,00,000 1,00,000 Reserves & Surplus -240,036 -70,915 -55,002 Book Value per share -14.00 2.91 4.50 4) Calendula Commerce Private Limited (Calendula) Calendula was incorporated on December 13, 2007. The main objects of the company include carrying on the business of derivatives in shares, securities and commodities and trading in capital markets. The board of directors of the company consists of Ms. Anisha Chhabra and Mr. Salil Chatuvedi. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares % Shareholding Salil Chaturvedi 9,000 90.00% Anisha Chhabra 1,000 10.00% Total 10,000 100.00% The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 0 Profit/ Loss After Tax -18,854 -18,623 -22,524 Earnings per share -1.89 -1.86 -2.25 Equity Share Capital 1,00,000 1,00,000 1,00,000 Reserves & Surplus -85,896 -67,043 -48,420 Book Value per share 1.41 3.30 5.16 5) Classique Creators Limited(Classique Creators) Classique Creators was incorporated on August 18, 2011 as Prozone Capital Shopping Centres Private Limited as a private limited company. The company was converted into a public limited company, and its name was changed to Prozone Capital Shopping Centres Limited w.e.f. August 30, 2011. The name of the company was further changed to Classique Creators Limited w.e.f. September 28, 2011, and its erstwhile name was assigned to the Company. The board of directors of the company consist of Mr. Deep Gupta, Mr. Akhil Chaturvedi and Mr. JK Jain.
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The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) Limited 2,49,994 Nikhil Chaturvedi as nominee of Provogue (India) Limited 1 Salil Chaturvedi as nominee of Provogue (India) Limited 1 Deep Gupta as nominee of Provogue (India) Limited 1 Akhil Chaturvedi as nominee of Provogue (India) Limited 1 Rakesh Rawat as nominee of Provogue (India) Limited 1 Nigam Patel as nominee of Provogue (India) Limited 1 Total 2,50,000
% Shareholding 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00%
The company is not listed on any stock exchange. Since the company was incorporated in FY 2012, there are no financials available prior to FY 2012. Particulars March 31, 2012 Total Income Profit/ Loss After Tax -21,072 Earnings per share -0.42 Equity Share Capital 5,00,000 Reserves & Surplus -21,072 Book Value per share 9.58 6) Elite Team (HK) Limited (Elite Team) Elite Team was incorporated on December 17, 2008 as Elite Team Trading Limited. The name of the company was changed to Elite Team (HK) Limited w.e.f. July 14, 2011. The main objects of the company include trading in general goods. The board of directors of the company consists of Mr. Deep Gupta and Mr. Rakesh Rawat. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares % Shareholding Provogue (India) Limited 50,00,000 100.00% Total 50,00,000 100.00% The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 1,94,26,77,960 1,09,23,27,453.80 9,14,99,572.44 Profit/ Loss After Tax 7,94,24,411 6,69,24,611.06 33,86,567.61 Earnings per share 79.42 66.92 3.39 Equity Share Capital 3,31,02,500.00 58,14,300.00 57,95,900 Reserves & Surplus 13,77,44,547.32 6,95,47,272.68 32,09,717 Book Value per share 170.85 75.36 9 7) Everest Plaza Private Limited (Everest Plaza) Everest Plaza was incorporated on February 7, 2006. The main objects of the company include carrying on the business of setting up, establishing, owning, running, maintaining, managing and operating the business of markets and malls, shopping centres, departmental stores, theatres, super markets, etc. The board of directors of the company consists of Mr. Nikhil Chaturvedi, Mr. Salil Chaturvedi, Mr. Deep Gupta, Mr. Akhil Chaturvedi, Mr. Rakesh Rawat and Mr. Nigam Patel. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Nikhil Chaturvedi 2949 Salil Chaturvedi 2882 Deep Gupta 1479 Akhil Chaturvedi 918 Rakesh Rawat 854 % Shareholding 29.49% 28.82% 14.79% 9.18% 8.54%
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Nigam Patel Total
918 10,000
9.18% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 70,89,706 Profit/ Loss After Tax -1,90,45,940.00 -2,66,46,454 -16,42,49,199 Earnings per share -1,904.59 -2,664.65 -16,424.92 Equity Share Capital 1,00,000.00 1,00,000 1,00,000 Reserves & Surplus -21,31,81,511.00 -19,41,35,571 -16,74,89,117 Book Value per share -21,308.15 -19,403.56 -16,738.91 8) Faridabad Festival City Private Limited (Faridabad Festival City) Faridabad Festival City was incorporated on September 14, 2007 as Ahmedabad Festival City Private Limited. The name of the company was changed to Faridabad Festival City Private Limited and a new certificate of incorporation was issued on July 14, 2008. The main objects of the company carrying on business as developers of land, buildings, immovable properties and of real estate (commercial and retail). The board of directors of the company consists of Mr. Sameer Khandelwal and Mr. JK Jain. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) Limited 4,11,354 Cybele Paradise Pvt Ltd 1,52,145 Deep Gupta as Nominee of PIL 1 Total 5,63,500 % Shareholding 73.00% 27.00% 0.00% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 2,40,77,484 2,07,61,540 27,200 Profit/ Loss After Tax -80,39,912 -62,32,004 -97,477 Earnings per share -58.64 -611.80 -0.10 Equity Share Capital 56,35,000 1,40,000 1,00,000 Reserves & Surplus 3,60,22,640 -61,79,039 -1,34,397 Book Value per share 73.93 -431.36 -3.44 9) Flowers, Plants & Fruits (India) Private Limited (Flowers, Plants & Fruits) Flowers, Plants & Fruits was incorporated on March 10, 1995. The main objects of the company includes acquiring, utilising, growing, cultivating, producing, exporting, etc. estates or lands for floricultural, tissue cultural, aquacultural, agricultural, horticultural, sericultural, plantation and farming purposes and agro-industrial projects. The board of directors of the company consists of Mr. Akhil Chaturvedi and Mr. Salil Chaturvedi. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) Ltd 9,999 Deep Gupta Nominee of PIL 1 Total 10,000 % Shareholding 99.99% 0.01% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 28,39,986 27,40,000 24,00,000 Profit/ Loss After Tax 20,34,593 19,49,327 17,62,698 Earnings per share 203.46 194.93 176.27
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Equity Share Capital Reserves & Surplus Book Value per share
1,00,000 1,34,34,242 1,353.42
1,00,000 1,13,99,648 1,149.96
1,00,000 94,50,322 955.03
10) Floro Mercantile Private Limited (Floro Mercantile) Floro Mercantile was incorporated on October 9, 2000. The main objects of the company includes carrying on the business of buyers, sellers, suppliers, traders, merchants, etc., of agricultural products, dairy products, food articles, household goods, hardware and stores, manmade fabrics, garments, cements, chemicals, iron and steel, drugs, building materials, glass and rubber, etc. The board of directors of the company consists of Mr. Nikhil Chaturvedi, Salil Chaturvedi, Mr. Deep Gupta, Mr. Akhil Chaturvedi and Mr. Nigam Patel. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Nikhil Chaturvedi 3,115 Akhil Chaturvedi 1,257 Salil Chaturvedi 3,114 Deep Gupta 1,257 Nigam Patel 1,257 Total 10,000 % Shareholding 31.15% 12.57% 31.14% 12.57% 12.57% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 16,81,763 17,28,000 23,89,692 Profit/ Loss After Tax 16,70,356 15,56,167 22,10,628 Earnings per share 167.00 155.62 221.06 Equity Share Capital 1,00,000 1,00,000 1,00,000 Reserves & Surplus 1,31,83,813 1,15,13,467 99,57,290 Book Value per share 1,328.38 1,161.35 1,005.73 11) Image Builders Private Limited (Image Builders) Image Builders was incorporated on July 12, 1994. The main objects of the company include carrying on the business of purchasing, leasing, acquiring, possessing, developing, selling land and buildings and carrying on the trade or business or activity of builders, constructors and contractors for building and construction work. The board of directors of the company consists of Mr. Nikhil Chaturvedi and Mr. Salil Chaturvedi. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Nikhil Chaturvedi 5,000 Salil Chaturvedi 5,000 Total 10,000 % Shareholding 50.00% 50.00% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income Profit/ Loss After Tax -23,636 -11,205 -4,30,138 Earnings per share -2.36 -1.12 -43.01 Equity Share Capital 1,00,000 1,00,000 1,00,000 Reserves & Surplus -25,09,789 -24,86,153 -24,74,948 Book Value per share -240.98 -238.62 -237.49 12) Meerut Festival City LLP (Meerut Festival City)
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Meerut Festival City was incorporated on September 14, 2007 as Ranchi Festival City Private Limited. The name of the company was changed to Meerut Festival City Private Limited on July 14, 2008. Subsequently, the company was changed into a limited liability partnership w.e.f December 21, 2011. The main objects of Meerut Festival City include carrying on business as developers of land, buildings, immovable properties and of real estate (commercial and retail). The designated partners of the entity comprise Mr. Nikhil Chaturvedi and Mr. Sanjay Vaidh. The partners contribution as of March 31, 2012 is as follows: Name of Shareholder Contribution in Rs. Nikhil Chaturvedi 99,000 Sanjay Vaidh 1,000 Total 1,00,000 % 99.00% 1.00% 100.00%
The entity is not listed on any stock exchange. Key financial particulars of the entity as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 3,94,592 Profit/ Loss After Tax -94,79,522 -11,438 -13,093 Earnings per share -947.95 -1.14 -1.31 Equity Share Capital 1,00,000 1,00,000 1,00,000 Reserves & Surplus -95,40,974 -61,452 -50,014 Book Value per share -944.10 3.85 5.00 13) Millennium Accessories Ltd. (Millennium Accessories) Millennium Accessories was incorporated on March 24, 2008 and received its certificate for commencement of business on May 2, 2008. The main objects of the company include carrying on the business as manufacturers, producers, processors, purchasers, sellers, distributors, importers, exporters, retailers and dealers in all kind of readymade garments & fabrics and accessories, and items including beauty products, toys & music, books and periodicals, home products and furniture and all products in connection therewith. The board of directors of the company consists of Mr. Salil Chaturvedi, Mr. Akhil Chaturvedi and Mr. Nikhil Patel. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) ltd. 15,49,994 Salil Chaturvedi as Nominee of PIL 1 Deep Gupta as Nominee of PIL 1 Akhil Chaturvedi as Nominee of PIL 1 Nigam Patel as Nominee of PIL 1 Nikhil Patel as Nominee of PIL 1 JK Jain as Nominee of PIL 1 Total 15,50,000 % Shareholding 99.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 11,38,447 3,35,783 28,28,436 Profit/ Loss After Tax -29,98,976 -17,47,989 -21,23,945 Earnings per share -3.73 -34.62 -42.63 Equity Share Capital 1,55,00,000 5,00,000 5,00,000 Reserves & Surplus 12,87,91,925 -29,24,573 -11,76,584 Book Value per share 93.09 -48.49 -13.53 14) Oasis Fashion Limited (Oasis Fashion) Oasis Fashion was incorporated on February 20, 2008. The main objects of the company include carrying on the business of manufacturers, producers, processors, purchasers, sellers, distributors, importers, exporters, retailers and dealers in all kind of
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readymade garments & fabrics, accessories and related items. The board of directors of the company consists of Mr. Sameer Khandelwal, Mr. Nikhil Patel and Mr. Akhil Chaturvedi. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) Ltd. 49,994 Deep Gupta as Nominee of PIL 1 Akhil Chaturvedi as Nominee of PIL 1 Bipin Gurnani as Nominee of PIL 1 J. K. Jain as Nominee of PIL 1 Nikhil Patel as Nominee of PIL 1 Sameer Khandelwal as Nominee of PIL 1 Total 50,000 % Shareholding 99.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income Profit/ Loss After Tax -13,736 -13,530 -20,142 Earnings per share -0.27 -0.27 -0.40 Equity Share Capital 5,00,000 5,00,000 5,00,000 Reserves & Surplus -93,421 -79,685 -66,155 Book Value per share 8.13 8.41 8.68 15) Profab Fashions (India) Limited (Profab Fashions) Profab Fashions was incorporated on February 20, 2008. The main objects of the company include carrying on the business of manufacturers, producers, processors, purchasers, sellers, distributors, importers, exporters, retailers and dealers in all kind of readymade garments & fabrics, accessories and related items. The board of directors of the company consists of Mr. Sameer Khandelwal, M. Nikhil Patel and Mr. Akhil Chaturvedi. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) Ltd. (PIL) 4,49,994 Deep Gupta as Nominee of PIL 1 Akhil Chaturvedi as Nominee of PIL 1 Bipin Gurnani as Nominee of PIL 1 J. K. Jain as Nominee of PIL 1 Nikhil Patel as Nominee of PIL 1 Sameer Khandelwal as Nominee of PIL 1 Total 4,50,000 % Shareholding 99.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income Profit/ Loss After Tax -22,06,757 -14,197 -20,307 Earnings per share -44.14 -0.28 -0.41 Equity Share Capital 45,00,000 5,00,000 5,00,000 Reserves & Surplus 4,35,52,386 -79,857 -65,660 Book Value per share 106.78 8.40 8.69 16) Pronet Interactive Private Limited (Pronet Interactive) Pronet Interactive was incorporated on June 6, 2007. The main objects of the company include carrying on the business of software designing, developing, marketing, purchasing, selling importing, exporting, franchising, web-designing, business portal
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management, consumer portal management, hosting web portals, e-commerce, m-commerce and other related activities. The board of directors of the company consists of Mr. Nikhil Chaturvedi, Mr. Nigam Patel, Mr. Nikhil Patel, Mr. Dipan Patel and Mr. Kalpesh Shah. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) Ltd. 1,00,002 Winmax Technologies P.Ltd. 30,000 Mango Interactive LLC 69,085 Total 199,087 % Shareholding 50.23% 15.07% 34.70% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 42,126 11,601 Profit/ Loss After Tax 27,915 -1,569 -12,735 Earnings per share 0.14 -0.01 -0.06 Equity Share Capital 19,90,870 19,90,870 19,90,870 Reserves & Surplus -4,60,308 -4,88,223 -4,86,654 Book Value per share 7.69 7.55 7.56 17) Provogue Infrastructure Private Limited (Provogue Infrastructure) Provogue Infrastructure was incorporated on October 4, 2006 as Omaxe Prozone Mall Developers Private Limited. With effect from September 28, 2007, the name of the company was changed to Prozone Mall Developers Private Limited, and subsequently, with effect from August 8, 2008, the name was further changed to Provogue Infrastructure Private Limited. The main objects of the company include carrying on as engineers, contractors or sub-contractors or builders, owners or developers the business of designing, developing, construction, maintenance, operation, etc., of various real estate, engineering and infrastructure projects. The board of directors of the company consists of Mr. Akhil Chaturvedi and Mr. Nikhil Patel. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) Limited 45,09,999 Deep Gupta as nominee of Provogue (India) Ltd. 1 Total 45,10,000 % Shareholding 100.00% 0.00% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 8,86,744 98,615 Profit/ Loss After Tax 5,81,948 -11,380 34,635 Earnings per share 0.13 -1.14 3.46 Equity Share Capital 4,51,00,000 1,00,000 1,00,000 Reserves & Surplus 53,91,75,651 -19,297 -7,917 Book Value per share 129.55 8.07 9.21 18) Provogue Holding Limited (Provogue Holding) Provogue Holding was incorporated on September 2, 2008 in Singapore. The main objects of the company permit it to pursue any business or activity. The board of directors of the company consists of Mr. Deep Gupta and Mr. Araganal. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue India Limited 9,385 % Shareholding 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows:
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Particulars Total Income Profit/ Loss After Tax Earnings per share Equity Share Capital Reserves & Surplus Book Value per share
March 31, 2012 -3,33,962 -35.58 5,42,158 -14,47,982 -96.52
March 31, 2011 -2,96,764 -31.62 4,77,297 -9,62,594 -51.71
(All amounts in Rupees) March 31, 2010 -2,61,175 -27.83 4,27,917 -5,84,397 -16.67
19) Prozone Infrastructure Limited (Prozone Infrastructure) Prozone Infrastructure was incorporated on July 23, 2011 as Prozone Infrastructure Private Limited and was converted into a public limited company w.e.f., August 23, 2011. The main objects of the company include carrying on the business of development, owning and operation of entertainment centres, convention centres, shopping malls, multiplex, hotels, township, restaurants, markets, or conveniences thereon and develop infrastructure facilities like roads, bridges, sideways etc. The board of directors of the company consists of Mr. Deep Gupta, Mr. Akhil Chaturvedi and Mr. JK Jain. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) Limited 49,994 Nikhil Chaturvedi as a nominee of PIL 1 Salil Chaturvedi as a nominee of PIL 1 Deep Gupta as a nominee of PIL 1 Akhil Chaturvedi as a nominee of PIL 1 Rakesh Rawat as a nominee of PIL 1 Nigam Patel as a nominee of PIL 1 Total 50,000 % Shareholding 99.99% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00%
The company is not listed on any stock exchange. Since the company was incorporated in FY 2012, there are no financials available prior to FY 2012. Particulars March 31, 2012 Total Income Profit/ Loss After Tax -27,804 Earnings per share -0.56 Equity Share Capital 5,00,000 Reserves & Surplus -27,804 Book Value per share 9.44 20) Rock.in Fashion Private Limited (Rock.in Fashion) Rock.in Fashion was incorporated on November 14, 2011. The main objects of the company include carrying on the business of manufacturers, producers, processors, purchasers, sellers, distributors, importers, exporters, retailers and dealers in all kind of readymade garments & fabrics, accessories and related items. The board of directors of the company consists of Mr. Nikhil Chaturvedi, Mr. Suraj Sharma and Mr. Ashish Puri. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Religion of Couture Kings- Trading e Marketing Lda 9,999 Suraj Sharma 1 Total 10,000
% Shareholding 99.99% 0.01% 100.00%
The company is not listed on any Stock Exchange. Since the company was incorporated in FY 2012, there are no financials available prior to FY 2012. The financials for FY 2012 are in the process of being audited. 21) Sporting and Outdoor Ad Agency Private Limited (Sporting and Outdoor Ad Agency)
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Sporting and Outdoor Ad Agency was incorporated on June 8, 2007. The main objects of the company include carrying on the business of advertising, publicity and propaganda agents to promote the sale of any products and service through various media resources, to do business of advertising contractors and agents; to acquire and dispose advertising time, space or opportunities in any media, to undertake advertising and promotional campaigns of every nature, etc. The board of directors of the company consists of Mr. Nikhil Chaturvedi, Mr. Deep Gupta, Mr. Rajesh Jawalkar and Mr. Tanvir Shah. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) Ltd 4,18,102 Rajesh Jawalkar 52,499 Tanvir 2,09,050 Rajesh J HUF 1,56,551 Total 8,36,202 % Shareholding 50.00% 6.28% 25.00% 18.72% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 1,75,69,907 3,20,30,548 4,03,39,273 Profit/ Loss After Tax -2,64,18,517 -22,76,053 -25,69,903 Earnings per share -31.59 -2.72 -3.07 Equity Share Capital 83,62,020 83,62,020 83,62,020 Reserves & Surplus -1,35,68,886 1,28,49,630 1,51,25,683 Book Value per share -6.23 25.37 28.09 22) Standard Mall Private Limited (Standard Mall) Standard Mall was incorporated on September 14, 2007. The main objects of the company include carrying on the business as developers, constructors, lease of all types of mall, mall management and to develop land, building, immovable properties, real estates by constructing, restructuring, altering, improving, decorating, furnishing and maintaining offices, ware-houses, shops, super markets, hyper markets, food courts, restaurants, banqueting, business centres, theatres, entertainment centres, amusements, games, parking facilities require for mall development and to run, maintain and manage the same businesses in India and abroad. The board of directors of the company consists of Mr. Sameer Khandelwal and Mr. JK Jain. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Provogue (India) Limited 9,999 Provogue Infrastructure Private Limited 40,000 Deep Gupta as Nominee of PIL 1 Total 50,000 % Shareholding 20.00% 80.00% 0.00% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income Profit/ Loss After Tax -13,22,055 -13,938 -21,797 Earnings per share -132.21 -1.39 -2.18 Equity Share Capital 5,00,000 1,00,000 1,00,000 Reserves & Surplus -13,95,173 -73,117 -59,180 Book Value per share -17.90 2.69 4.08 23) Starlight City Commercial Developers Private Limited (Starlight) Starlight was incorporated on June 20, 2006. The main objects of the company include carrying on business as developers of land, buildings, immovable properties and of real estate (commercial and retail). The board of directors of the company consists of Mr. Akhil Chaturvedi and Mr. Deep Gupta.
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The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Deep Gupta 5,000 Akhil Chaturvedi 3,000 Nigam Patel 2,000 Total 10,000
% Shareholding 50.00% 30.00% 20.00% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income Profit/ Loss After Tax -13,956 -12,225 -12,328 Earnings per share -1.40 -1.22 -1.23 Equity Share Capital 1,00,000 1,00,000 1,00,000 Reserves & Surplus -23,75,554 -23,61,598 -23,49,373 Book Value per share -227.56 -226.16 -224.94 24) Topspeed Trading Company Private Limited (Topspeed) Topspeed was incorporated on August 12, 2004. The main objects of the company includes carrying on the business as traders, distributors, dealers, exporters, importers, brokers, stockists & commission agents, etc. of agricultural, commercial, industrial products, household, domestic, automobiles, farms & forest products, etc. The board of directors of the company consist of Mr. Nikhil Chaturvedi, Mr. Salil Chaturvedi, Mr. Akhil Chaturvedi, Mr. Deep Gupta and Mr. Nigam Patel. The equity shareholding pattern of the company as of March 31, 2012 is as follows: Name of Shareholder Number of Shares Nikhil Chaturvedi 3,115 Akhil Chaturvedi 1,257 Salil Chaturvedi 3,114 Deep Gupta 1,257 Nigam Patel 1,257 Total 10,000 % Shareholding 31.15% 12.57% 31.14% 12.57% 12.57% 100.00%
The company is not listed on any stock exchange. Key financial particulars of the company as per audited results is as follows: (All amounts in Rupees) Particulars March 31, 2012 March 31, 2011 March 31, 2010 Total Income 15,50,291 12,95,504 16,53,299 Profit/ Loss After Tax 14,38,872 11,61,025 15,63,508 Earnings per share 144.00 116.10 156.35 Equity Share Capital 1,00,000 1,00,000 1,00,000 Reserves & Surplus 90,92,760 76,53,888 64,92,863 Book Value per share 919.28 775.39 659.29
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DIVIDEND POLICY The Board of Directors of our Company may, at its discretion, recommend dividend to be paid to the members of our Company. The factors that may be considered by our Board before making any recommendations for thedividend includes but not limited to profits/earnings during the financial year, liquidity of our Company, need for reserving resources for future growth, applicable taxes including tax on dividend, as well as exemptions under tax laws available to various categories of investors from time to time etc. Our Company has not declared any dividends on Equity Shares since its incorporation. Dividend will be declared and approved at the Annual General Meeting of the shareholders based on the recommendation of our Board, if any. The Board may also from time to time pay interim dividend to the members if it considers justified by the profits generated by our Company.
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SECTION V - FINANCIAL INFORMATION FINANCIAL STATEMENTS Particulars Consolidated audited financial results of PCSCL as of March 31, 2012 Standalone audited financial results of PCSCL as of March 31, 2012 Page Reference F1 F35 F36 96
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Auditors Report
Auditors Report to the Board of Directors of Prozone Capital Shopping Centres Limited (Formerly known as "Castle Mall Private Limited") on the Consolidated Financial Statements of Prozone Capital Shopping Centres Limited, its Subsidiaries and its interest in Joint Ventures. We have audited the attached Consolidated Balance Sheet of Prozone Capital S hopping Centres Limited (Formerly known as "Castle Mall Private Limited") (hereinafter referred as the Company), its subsidiaries and its interest in joint ventures (hereinafter collectively referred to as the Group) as at 31st March, 2012, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement for the year ended on that date prepared in acco rdance with the accounting principles generally accepted in Ind ia. These finan cial statements are the responsibility of the Companys management. Our responsibility is to expr ess an opinion on these financial statements based on our audit.
1.
We conducted our audit in accordance with generally accepted auditing standards in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the acco unting principles used and significant estimates made by management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our opinion.
2.
We report that the Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements and Accounting Standard 27 Financial Reporting of In terest in Joint Ventures notified pursuant to the Companies (Accounting Standards) Rules, 2006 and on basis of the separate audited financial statement of the Company , its subsidiaries and joint ventures of its subsidiaries included in the Consolidated Financial Statements.
F1
~2~ 3. We did not audit the financial statements of four subsidiaries viz., Prozone Liberty International Limited, Prozone International Limited, Prozone Overseas Pte Ltd., a nd Prozone International Coimbatore Limited (all incorporated in Singa pore) whose financial statements reflect the Group share of total net assets of Rs. 58748.00 lakhs as at 31st March 2012 and Group share of total revenue of Rs. 1.91 lakhs and net cash outflow amounting to Rs. 1 3.36 lakhs for the year ended at that date, as considered in the Consolidated Financial Statements. The Financial Statements and other Fina ncial Informations of these four subsidiaries have been audited by other auditors, whose reports have been furnished to us and our opinion, in so far as it relates to the amounts included in respect of the subsidiaries, is based solely on the report of the other auditors. 4. The Financial Statements of the joint venture of its subsidiary viz., Emerald Buildhome Private Limited are unaudited for the year and which reflects total net assets of Rs. 1376.92 lakhs as at 31st March 2012, total revenue of Rs. Nil and net cash outflow amounting to Rs. 0.65 lakhs for the year ended at that date. 5. On the basis of the information and explanations given to us and on the consideration of the separate audit reports on individual audited financial statements of the Company, its subsidiaries and joint ventures of its sub sidiaries, we are of the opinion that the consolidated financial statements give a true and fair view: (a) (b) (c) In case of the Consolidated Balance Sheet, of the consolidated state of affairs of the Group as at 31st March, 2012 ; In case of the Consolidated Statement of Profit and Loss, of the consolidated results of operations of the Group for the year then ended; and In case of the Consolidated Cash Flow Statement, of the co nsolidated cash flows of the Group for the year ended on that date. For Singrodia Goyal & Co. Chartered Accountants Firm Reg. No. 112081W Shyamratan Singrodia Partner Mem. No. 49006 Place : Mumbai Date : 15th May, 2012.
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Prozone Capital Shopping Centres Limited (Formerly known as "Castle Mall Private Limited) Consolidated Balance Sheet as at 31st March, 2012
(Rs. In Lakhs) Notes As at 31.03.2012
Particulars EQUITY AND LIABILITIES Shareholders' Funds Share capital Reserves & surplus Minority Interest Non-current Liabilities Long-term borrowings Deferred tax liabilities (net) Other long-term liabilities Long-term provisions Current Liabilities Short-term borrowings Trade payables Other current liabilities Short term provisions
3 4
3,052.06 58,370.48 61,422.54 21,097.43
5 6 7 8
12,699.74 15.68 908.72 2.62 13,626.76 34.73 453.73 3,029.75 179.14 3,697.35 99,844.08
9 10 11 12
ASSETS Non-Current Assets Fixed assets Tangible assets Intangible assets Capital work in progress Goodwill on consolidation Non-current investments Long-term loans and advances Other non-current assets Current Assets Current investments Inventories Trade receivables Cash and cash equivalents Short-term loans and advances Other current assets
13
14 15 16 17 18 19 20 21 22
53,194.43 8.24 1,821.48 19,993.13 2,466.04 2,679.58 53.52 80,216.42 4,491.89 6,592.92 2,299.43 3,994.08 2,242.65 6.69 19,627.66 99,844.08
The Composite Scheme of Arrangement and Amalgamation Significant Accounting Policies Accompanying Notes to Accounts As per our report of even date attached For Singrodia Goyal & Co. Chartered Accountants Shyamratan Singrodia Partner Mem. No. 49006 Place : Mumbai Date : 15th May, 2012 For and on behalf of the Board
1 2 31
Nikhil Chaturvedi Managing Director Snehal Bansode Company Secretary

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Salil Chaturvedi Dy. Managing Director
Prozone Capital Shopping Centres Limited (Formerly known as "Castle Mall Private Limited) Statement of Consolidated Profit & Loss for the year ended 31st March 2012
(Rs. In Lakhs) Year Ended 31.03.2012 5,030.50 841.38 5,871.88 1,712.72 663.97 1,663.91 2,704.72 1,285.05 8,030.37 (2,158.49) (536.37) (2,694.86) 3.72 870.77 28.21 902.70 (3,597.56) (1,309.51) (2,288.05)
Particulars INCOME Revenue from Operations Other Income Total Revenue EXPENSES Cost of Construction Project Employee benefits expenses Finance costs Depreciation Other expenses Total Expenses Profit / (Loss) before tax and exceptional items Exceptional items Profit / (Loss) before tax Less: Tax expense Current tax Deferred tax liability / (assets) Tax of earlier years Profit / (Loss) after tax for the year Minority Interest Profit / (Loss) for the year Earnings per equity share (Nominal value of share Rs.2) : Basic : Diluted The Composite Scheme of Arrangement and Amalgamation Significant Accounting Policies Accompanying Notes to Accounts As per our report of even date attached For Singrodia Goyal & Co. Chartered Accountants Shyamratan Singrodia Partner Mem. No. 49006 Place : Mumbai Date : 15th May, 2012 For and on behalf of the Board
Notes 23 24
25 26 27 13 28
29
30
(1.50) (1.50)
1 2 31
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Prozone Capital Shopping Centres Limited (Formerly known as "Castle Mall Private Limited) Consolidated Cash Flow Statement for the year ended 31st March, 2012
(Rs. In Lakhs) Year ended 31.03.2012 (2,158.49) 2,704.72 (278.21) (302.30) (80.68) (331.91) 1,663.91 90.95 (2.88) 1,305.11 194.94 (1,365.15) (3.21) 10.96 4,152.01 1,607.89 (1,839.42) 384.38 33.14 475.12 (7.32) 4,948.45 (137.46) (105.12) 4,705.87 (3,074.21) 2,036.30 (0.25) (1.00) 1.00 (42,624.74) 44,817.86 278.21 302.30 76.79 1,812.26
Particulars A Cash Flow from Operating Activities: Net Profit / (Loss) before tax and before extraordinary items Adjustments for : Depreciation Interest income Dividend income Amalgamation expenses Net gain / (loss) on sale of current investments Finance costs Bad debts written off Sundry balance written back Operating profit before working capital changes Adjustments for : Increase / (Decrease) in Trade payables Increase / (Decrease) in Other current liabilities Increase / (Decrease) in Long-term provisions Increase/(Decrease) in Short term provisions Increase / (Decrease) in Other long- term liabilities Decrease / (Increase) in Long-term loans and advances Decrease / (Increase) in Trade receivables Decrease / (Increase) in Short-term loans and advances Decrease / (Increase) in Other Non - current assets Decrease / (Increase) in Inventories Decrease / (Increase) in Other current assets Cash generated from / (used in) operations Direct taxes paid Exceptional items Net cash flow from / (used in) operating activities Cash Flow from Investing Activities: Purchase of fixed assets Capital work in progress Security deposits Purchase of non-current investments Sale of non-current investments Purchase of current investments Sales of current Investments Interest income Dividend income Redemption / maturity of bank deposits (having original maturity of more than 3 months) Net cash flow from / (used in) investment activities
B.
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Prozone Capital Shopping Centres Limited (Formerly known as "Castle Mall Private Limited) Consolidated Cash Flow Statement for the year ended 31st March, 2012
(Rs. In Lakhs) Year ended 31.03.2012 4.00 (15.59) (13.19) 2,317.74 (8,087.86) 6,985.98 (2,635.57) (1,663.91) (3,108.40) 3,409.73 (2.70) 0.50 19.83 274.66 3,702.02
Particulars C. Cash Flow from Financing Activities: Proceeds from Issue of Shares Share Issue Expenses Loans and Advances given Proceeds from Short - term borrowings Repayment of Short - term borrowings Proceeds from long - term borrowings Repayment of long - term borrowings Finance costs Net cash flow from / (used in) financing activities Net increase in Cash and Cash Equivalents Foreign Currency Translation Reserve Cash and Cash Equivalents - at the beginning of the year - Pursuant to the Scheme - on consolidation of subsidiaries and joint ventures Cash and Cash Equivalents at the end of the year Notes: a) Cash and Cash Equivalents at the end of the year consists of cash in hand and balances with banks are as follows:
Particulars Balances with Banks: On Current Accounts Cash on Hand Add: Share in joint venture
(Rs. In Lakhs) As at 31.03.2011 3,684.67 11.32 6.03 3,702.02
b) Cash Flow Statement has been prepared after fiving effect to the Scheme of Demerger and Amalgamation to the Opening Balance Sheet from appointed date i.e. 1st April, 2011
As per our report of even date attached For Singrodia Goyal & Co. Chartered Accountants Shyamratan Singrodia Partner Mem. No. 49006 Place : Mumbai Date : 15th May, 2012 For and on behalf of the For and on behalf of the board
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Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 1 : The Composite Scheme of Arrangement and Amalgamation a) As per the Order dated 10th February, 2012, the Honble High Court of Judicature at Bombay approved the Composite Scheme of Arrangement and Amalgamation (The Scheme) whereby the Retail Centric Real Estate Development Business (RCREDB) division was demerged and transferred from Provogue (India) Limited (the Demerged Company) and vested in Prozone Capital Shopping Centres Limited (the Resulting Company) as a going concern with retrospective effect from 1st April, 2011 being the appointed date b) The Scheme became effective from 27th February, 2012 (the Effective Date) upon which the business of RCREDB division including all its assets whether moveable or immoveable, tangible or intangible and liabilities whether present or contingent (as detailed in the Scheme) stands transferred and vested in the Resulting Company c) The management of Provogue (India) Limited (Demerged Company), Prozone Enterprises Private Limited (the Amalgamating Company) and Prozone Capital Shopping Centres Limited (the Company), in terms of provision contained in para no. 19.1.4 of the Scheme, mutually decided to disregard the investment made by the Demerged Company in Provogue Infrastructure Private Limited from the RCREDB division. Accordingly, Provogue Infrastructure Private Limited is deemed to be continued as subsidiary of the Demerged Company. d) From the Appointed Date upto the Effective date, the business of RCREDB Division is deemed to have been carried out by the Demerged Company in trust for the Company.And hence, any income or profit accruing or arising and any costs, charges, expenses and losses incurred by the Demerged Company in relation to RCREDB Division in accordance with the Scheme shall be treated as of the Company. The under mentioned assets and liabilities have been accounted for, in the method and manner, as prescribed in the Scheme: Particulars Assets Fixed Assets - Tangible Non - Current Investments Liabilities Long Term Borrowings Long Term Provisions Other Current Liabilities Excess of Assets over Liabilities Less: Investment Disregarded 1143.57 lakhs Equity Shares of Rs. 2 each fully paid up allotted to the Shareholders of Demerged Company Amount Credited / (Debited) to Amalgamation Reserve (A) (Rs. in lakhs) 240.90 20,512.20 63.93 1.09 1.16 20,753.10
66.18 20,686.92 1.00 20,685.92 2,287.14 18,398.78
e) Similarly, pursuant to the aforesaid Order and the Scheme, Prozone Enterprises Private Limited (the Amalgamating Company) got amalgamated with the Company. From the Appointed Date upto the Effective date, the Amalgamating Company carried out its business in trust for the Company. In view of the same, any income or profit accruing or arising and any costs, charges, expenses and losses incurred by the Amalgamating Company in accordance with the Scheme shall be treated as of the Company. The Accounting impact on amalgamation of the Amalgamating Company with the Company, is mentioned hereunder: i) All the assets and liabilities of the Amalgamating Company as at 1st April, 2011 transferred on amalgamation have been accounted in the books of the Company at their respective book values. ii) All the reserves of the Amalgamating Company as at 1st April, 2011 have been transferred to the "Amalgamation Reserve Account," in the books of the Company. iii) Costs incurred for the purposes of executing the Scheme have been debited to the "Amalgamation Reserve Account."
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Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 The under mentioned assets, liabilities and reserves have been accounted for, in the method and manner, as prescribed in the Scheme: Particulars Assets Fixed Assets - Tangible Fixed Assets - Intangible Non - Current Investments Deferred Tax Assets (Net ) Long-Term Loans And Advances Trade Receivables Cash And Cash Equivalents Short-Term Loans And Advances Liabilities Long Term Borrowings Trade Payables Other Current Liabilities Excess Of Assets Over Liabilities Less: Reserves And Surplus Securities Premium Surplus Cross Holding Investment 463.07 11.16 28,470.73 150.35 12,155.79 180.56 19.83 1,015.44 2,293.70 51.12 68.45 (Rs. in lakhs)
42,466.93
2,413.27 40,053.66
36,434.05 (22.16) 20,511.20
Less : 379.96 Lakhs Equity Shares of Rs. 2/- each fully paid up allotted to the Shareholders of Transferor Company Costs incurred for the purpose of executing the Scheme by the Amalgamating Company Amount Credited / (Debited) to Amalgamation Reserve Net Amount Credited to Amalgamation Reserve (B) (A)+(B)
56,923.09 (16,869.43) 759.92 80.68 (17,710.03) 688.75
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Prozone Capital Shopping Centres Limited (Formerly known as Castle Mall Private Limited) Notes to Consolidated Financial Statements for the year ended 31st March, 2011 Corporate information: Prozone Capital Shopping Centres Limited (the Company) is a public company domiciled in India and incorporated under the provisions of t he Companies Act, 1956. The Company is engaged in the business of developing, owning and operating of Shopping Malls, Commercial and Residential Premises. The Company is also providing related management consultancy services. Basis of preparation: The financial statements of the com pany have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Co mpanies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. Note 2 : Significant Accounting Policies (A) Basis Of Accounting : a) The Financial Statements have been prepared in compliance with the Accounting Standards notified by Co mpanies (Accounting Standard) Rules 2006 and the relevant provisions of the Companies Act, 1956 in all material aspects. Financial Statements are based on historical cost convention and are prepared on accrual basis Significant Accounting Policies: (a) Principles of Consolidation: The Consolidated Financial Results comprise of the financial statements of Prozone Capital Shopping Centres Limited and its sub sidiaries, which are consolidated in acco rdance with Accou nting Standard 21 o n Consolidated Financial Statements notified pursuant to the Companies (Accounting Standards) Rules, 2006. The proportionate share in the results of bo th Joint Venture Companies viz. E merald Buildhome Private Limited (unaudited) and Moon Town Trading Company Private Limited (audited) are consolidated in a ccordance with Accounting Standard 27 on Financial Reporting of Interests in Joint Ventures. The Consolidated Financial Statements relate to Prozone Capital Shopping Centres Limited (The Compan y) and its Subsidiaries and Joint Ventures have been prepared on the following basis: i) The financial statements of the Compan y and its sub sidiaries have been combined on a line-by-line basis by adding together the balances of like items of assets, liabilities, income and expenditure after fully eliminating the int ragroup balances and intra-group transactions resulting in un realized profit or loss.
b) (B)
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Prozone Capital Shopping Centres Limited (Formerly known as Castle Mall Private Limited) Notes to Consolidated Financial Statements for the year ended 31st March, 2011 ii) iii) The financial statements of the Company and its Jo int Ventures have been consolidated using the proportionate consolidation method. The Consolidated Financial Statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the Companys separate financial statements. While preparing Consolidated Financial Statements, the foreign exchange adjustments have been carried out as p er Accounting Standard 11 Accounting for e ffects of changes in Fo reign Exchange Rates on following basis: a) The summarized revenue and expenses transactions at th e year-end reflected in Profit and Loss Account of the foreign subsidiaries, which are stated in the currency of their domicile, are translated into Indian Rupees at an average exchange rate. b) All monetary and non-monetary items reflected in the Balance Sheet of the foreign subsidiaries which are stated in the currency of their domicile, are translated into Indian Rupees at the year-end closing exchange rate. c) The resultant translation exchange gain/loss in case of non-integral foreign operations is disclosed as Foreign Exchange Translation Reserve in Reserves & Surplus Schedule in the Accounts. v) The excess of cost to the Company of its investments in the subsidiaries over its portion of equity of subsidiaries at the dates they become subsidiaries is recognized in the financial statements as goodwill. The excess of Companys portion of equity of the subsidiaries over the cost to the Company of its in vestments at the dates they become subsidiaries is recognized in the financial statements as capital reserve.
iv)
vi)
(b) Other Significant Accounting Policies: a) Revenue Recognition: i. ii. Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection. Income earned by way of leasing or renting out of commercial premises is recognised as income in accordance with Accounting Standard 19 on Leases (AS 19). Initial direct costs are recognised as expense on accrual basis in Profit and Loss Account.
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Prozone Capital Shopping Centres Limited (Formerly known as Castle Mall Private Limited) Notes to Consolidated Financial Statements for the year ended 31st March, 2011 iii. The Company follows the Percentage of Project completion method for the projects. Under this method the Company recognizes revenue in proportion to the actual cost incurred as against the total estimated cost of the project under execution subject to completion of construction work to a certain level depending on the type of the project. Land & TDR cost is not included in comp uting the P ercentage of Project Completion for recognizing revenue. Revenue is recognized either on execution of an agreement or a letter of allotment. The estimates relating to percentage of completion, cost to completion, saleable area, etc being of technical nature are revised periodically by the management and are considered as chan ge in estimates and accordingly, the effect of such ch anges in estimates is recognized in the period in which such changes are determined.
iv. v. b) i.
Interest is re cognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is recognised when the right to established. Fixed Assets: Fixed Assets a re stated a t cost less accumulated depreciation and impairments loss, if any. Cost co mprises the purchase price and any attributable cost of bringing the assets to its working condition for intended use. Indirect preoperative expenses and borrowing costs attributable to construction or acquisition of Fixe d Assets for the period up to the completion of construction or acquisition of Fixed Assets are capitalised. Intangible Fixed Assets are recognised only if they are separately identifiable and the Company controls the future economic benefits arising out of them. Intangible assets ar e stated at cost less accumulated amortisation and impairment. receive payment is
ii.
c) Expenditure during construction i. Expenditure of capital nature incurred during construction period in respect of a p roject being executed by th e Company is group ed under Capital work in progress. Such expe nditure would be capitalized upon the commencement of commercial operation of the project. Incidental expenditure during construction pending allocation included in capital work in progress represents expenditure incurred in connection with the project which is intended to be capitalized to the project.
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ii.
Prozone Capital Shopping Centres Limited (Formerly known as Castle Mall Private Limited) Notes to Consolidated Financial Statements for the year ended 31st March, 2011 d) Impairment of Fixed Assets: An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment lo ss is charged to the P rofit and Loss Account in the year in which an asset is i dentified as impaired. The impairment loss recognised in prior accounting period is reve rsed if there has been a change in the estimate of recoverable amount. e) Depreciation: a) Tangible Assets i. Leasehold Land is amortised over the remaining period of the Lease. ii. Depreciation on Other Fixed Assets is p rovided on Written down value method at th e rates an d in the manne r specified in the Schedule XIV of the Companies Act, 1956. b) Intangible Assets Computer softwares are amortised on Straight Line Method over a period of five years. f) Inventories: Construction work in progress includes cost of land, premium for development rights, construction cost, borrowing cost and other all ocated overheads incidental to the projects undertaken by the Company. g) Investments: Investments that is intended to be held for more than a year from the date of acquisition are classified as long term investments and are carried at cost less any provision for permanent diminution in value. Investments other than long term investments being current investments are valued at cost or fair market value whichever is lower. h) Borrowing Costs:Borrowing costs are recognised as an expense in the period in which they are incurred except the borrowing cost attributable to be acquisitions\ constructions of a qualifying assets which are capitalised as a part of the cost of the fixed assets, upto the date, the assets are ready for its intended use. i) Miscellaneous Expenditure: i) Preliminary expenses are amortized in the year in which they are incurred.
ii) Expenses on preferential issue of shares/warrants are written off against the securities premium received.
F12
Prozone Capital Shopping Centres Limited (Formerly known as Castle Mall Private Limited) Notes to Consolidated Financial Statements for the year ended 31st March, 2011 j) Employee Benefits: i) Companys contribution to Provident Fund and other Funds for the year is accounted on accrual basis and charged to the Profit & Loss Account for the year. ii) Liability for le ave encashment benefits has been provided on accru al basis. iii) Retirement benefits in the form of Gra tuity are considered as defined benefit obligations and are provided on the basis of the actuarial valuation, using the projected unit credit method as at the date of the Balance Sheet. k) Provisions and Contingent Liabilities: The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resou rces. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. l) Use of Estimates: The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be mad e that affect the reported amou nts of assets and l iabilities and disclosure of contingent liabilities on the financial statements and the reported amounts of revenues and expenses during the reporting period. Difference between actual results and estimates are recognized in the periods in which the results are known/ materialize. m) Foreign Currency Transactions: i) ii) The transactions in foreign currencies on revenue accounts are stated at the rate of exchange prevailing on the date of transactions. The difference on account of fluctuation in the rate of exchange, prevailing on the date of transaction and the date of realization is charged to the Profit & Loss Account. Non monetary foreign currency items are carried at cost. Differences on translation of Current Assets and Current Liabilities remaining unsettled at the year-end are recognized in the Profit and Loss Account. The premium in respect of forward e xchange contract is a mortized over the life of the contract. The net gain or loss on account of any exchange difference, cancellation or renewal of such forward exchange contracts is recognized in the Profit & Loss Account.
F13
iii) iv)
v)
Prozone Capital Shopping Centres Limited (Formerly known as Castle Mall Private Limited) Notes to Consolidated Financial Statements for the year ended 31st March, 2011 n) Accounting for Taxation of Income : Current Taxes: Provision for current income-tax is re cognized in accordance with the provisions of Indian Income- tax Act, 1961 and is made annually based on the tax liability after taking credit for tax allowances and exemptions. Deferred Taxes: Deferred tax asse ts resulting from timing difference between taxable and accounting income is accounted for using the tax rates and laws that a re enacted or substantively enacted as on the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.
F14
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 3 : Share capital Particulars Authorised 2,002.50 Lakhs Equity Shares of Rs.2 each Issued, Subscribed and Paid Up 1,526.03 Lakhs Equity Shares of Rs.2 each fully paid up (Rs. In Lakhs) As at 31.03.2012 4,005.00 4,005.00 3,052.06 3,052.06 (a) The members of the Company in their extra-ordinary general meeting held on 25th day of August 2011, sub divided authorised/ issued/ paid up share capital of Rs.1.00 Lakh divided into 0.10 Lakh equity shares of Rs.10 each to 0.5 Lakhs equity shares of Rs.2 each. Further, the company also increased its authorised share capital from Rs.1 Lakhs divided into 0.50 Lakhs equity shares of Rs.2 each to Rs.5.00 Lakhs divided into 2.50 Lakhs equity shares of Rs.2 each and, allotted 2.00 Lakhs equity shares of Rs.2 each to Provogue (India) Limited. Authorised Share Capital of Amalgamating Company amounting to Rs.4,000.00 lakhs divided in to 400.00 lakhs equity shares of Rs.10 each has been deemed to be sub divided in to 2,000.00 lakhs equity shares of Rs.2 each as per the Composite Scheme of Arrangement and Amalgamation. (b) The Company has allotted 1,523.53 Lakhs equity shares of Rs. 2 each fully paid up to the Shareholders of Demerged Company and Transferor Company pursuant to the Scheme. (c) Reconciliation of the equity shares outstanding at the beginning and at the end of the reporting period As at 31.03.2012 Particulars No. in lakhs Rs. in lakhs (Face Value of Rs. 10 each) At the beginning of the period 0.10 1.00 (Face Value of Rs. 2 each) No. of Shares Sub-Divided in the ratio 1:5 Issued during the period - for cash - pursuant to the Scheme of Demerger and Amalgamation Outstanding at the end of the period (d) Details of shares issued for a consideration other than cash Particulars Equity Shares issued pursuant to the Scheme of Demerger and Amalgamation As at 31.03.2012 No. in lakhs Rs. in lakhs 1,523.53 3,047.06 0.50 2.00 1,523.53 1,526.03 1.00 4.00 3,047.06 3,052.06
(e) Terms / rights attached to equity shares The Company has only one class of equity shares having a par value of Rs.2 per share. Each holder of equity share is entitled to one vote per share. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
F15
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 (f) Details of Shareholders' holding more than 5% shares in the company: Names of Shareholders Nailsfield Limited, Mauritius Nikhil Chaturvedi Salil Chaturvedi Note 4 : Reserves & surplus Particulars Amalgamation Reserve (Pursuant to the Scheme) Foreign Currency Translation Reserve Securities Premium Opening Balance Add: Pursuant to the Scheme Less: Share issue expenses * Surplus / (deficit) in the Statement of Profit and Loss Opening Balance Add: Pursuant to the the Scheme Add: Profit / (Loss) during the year Less: Utilised during the year Closing Balance As at 31.03.2012 688.75 924.87 57,156.63 15.59 57,141.04 1,926.03 (22.16) (2,288.05) (384.18) (384.18) 58,370.48 * Share issue expenses amounting to Rs. 15.59 lakhs represents expenses incurred in relation to issue of shares during the financial year 2010-11 Note 5 : Long-term borrowings Particulars Secured Term Loans Less: Interest accrued but not due on borrowings Less: Current maturities of long term debt Hire Purchase Loans Less: Current maturities of Long Term Debt (disclosed under other current liabilities) As at 31.03.2012 13,575.31 (162.34) (1,598.66) 11,814.31 64.15 (43.47) 20.68 11,834.99 864.75 864.75 12,699.74 As at 31.03.2012 No. in lakhs % holding 32.38 494.11 6.95 106.12 6.75 102.95 (Rs. In Lakhs)
Unsecured Interest free loans and advances from related parties Total
F16
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 (Rs. In Lakhs)
Note 6 : Deferred tax liabilities (net) Particulars As at 31.03.2012
Deferred Tax Liabilities (Gross)
Fixed Assets : Impact of difference between tax depreciation and depreciation / amortisation charged for the financial reporting Impact of income charged to the statement of profit and loss in the current year but allowed for tax purposes on receipt basis - Lease Rental Adjustments - Unbilled Revenue Less: Deferred Tax Assets (Gross) Unabsorbed Losses Impact of Expenditure charged to the statement of profit and loss in the current year but allowed for tax purposes on payment basis
3.06 17.78 20.84
5.16 5.16 15.68
Deferred Tax Liabilities (Net) Note 7 : Other long-term liabilities Particulars Lease Deposits from Tenants Add: Share in Joint Ventures
As at 31.03.2012 907.93 0.79 908.72
Note 8 : Long-term provisions Particulars Provision for Employees' Benefits Provision for Gratuity As at 31.03.2012 2.62 2.62
Note 9 : Short-term borrowings Particulars Interest free loans from related parties repayable on demand (Unsecured) As at 31.03.2012 34.73 34.73
F17
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 10 : Trade payables Particulars Trade payables - Due to Micro, Small & Medium Enterprises (Refer note below) - Others Add: Share in Joint Ventures As at 31.03.2012 453.70 0.03 453.73 There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006. This information takes into account only those Suppliers who have responded to the enquiries made by the company for this purpose. Note 11 : Other current liabilities Particulars Current maturities of long term debt Interest accrued but not due on borrowings Payables in respect of Capital Assets Payables for capital work in progress
Advance from debtors
(Rs. In Lakhs)
As at 31.03.2012 1,642.13 162.34 927.14 23.13 155.01 120.00 3,029.75
Duties & taxes payable
Note 12 : Short term provisions Particulars Provision for Employee Benefits Expense Provision for Expenses As at 31.03.2012 93.31 85.83 179.14
F18
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 13 : Fixed assets a) Tangible Assets Particulars Leasehold Land (Refer Note below) Free hold Land Building (Given on Operating Lease) Building Residential Premises Plant & Equipments Furnitures & Fittings Motor Vehicles Painting Computers Total Add: Share in joint ventures Grand Total Note : Gross Block Additions Additions Deduction As at Pursuant to during the during the 01.04.2011 the Scheme year year 2,896.04 22,540.01 19,443.97 141.73 31.74 5,916.85 593.87 365.29 8.82 96.80 52,035.12 1,158.85 53,193.97 899.71 6,366.10 3.32 5.45 0.96 7,275.54 7,275.54 1,318.94 1,318.94 1,318.94 Depreciation ConsoliAdjustment Additions As at Upto Provided dation s for the Pursuant to for the year Adjust- 31.03.2012 31.03.2011 the Scheme year ments 943.29 278.87 1,222.16 1,222.16 3,795.75 27,587.16 18,500.68 141.73 31.74 5,641.31 599.33 365.29 8.82 97.76 56,769.57 1,158.85 57,928.42 219.03 887.62 17.66 4.84 390.94 190.58 169.70 1.45 66.09 1,947.91 1,947.91 63.79 1,856.24 6.20 1.35 768.29 74.12 50.72 1.40 10.71 2,832.82 2,832.82 (68.05) (68.05) (68.05) (Rs. In Lakhs)
Net Block ConsoliUpto As at dation Adjust- 31.03.2012 31.03.2012 ments 88.86 25.95 114.81 114.81 350.87 2,655.00 23.86 6.19 1,133.28 264.70 220.43 2.85 76.80 4,733.98 4,733.98 3,444.88 27,587.16 15,845.68 117.87 25.54 4,508.03 334.63 144.87 5.97 20.95 52,035.58 1,158.85 53,194.43
During the year, a portion of land which was converted into inventory from capital assets to develop a Commercial Project has been reconverted in to capital assets by the Company .The balance value of the said land is now amortised over the remaining leasehold period. Accordingly any shortfall of depreciation / amortisation pertaining to previous year has been adjusted in the current year.
F19 F1
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 13 : Fixed assets b) Intangible Assets Particulars Additions As at Pursuant to 01.04.2011 the Scheme 26.27 26.27 Gross Block Deduction Additions during the year Amortisation ConsoliAdjustment Additions As at Upto Provided dation s for the Pursuant to for the year Adjust- 31.03.2012 31.03.2011 the Scheme year ments 26.27 26.27 12.45 12.45 5.58 5.58 (Rs. In Lakhs)
Net Block ConsoliUpto As at dation Adjust- 31.03.2012 31.03.2012 ments 18.03 18.03 8.24 8.24 1,821.48 2,832.82 5.58 (114.81) 2,723.59 18.87 2,704.72
Computer Software Total
c) Capital Work in Progress - Project Expenses Pending Capitalisation d) Depreciation / Amortisation for the year ended 31st March, 2012 Depreciation provided for the year on tangible assets Amortisation provided for the year on intangible assets Consolidation adjustments for the year on tangible assets Less: Capitalised to the cost of Capital Work in Progress during the year
F20
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 14 : Non-current investments Particulars Investment in Property Non-Trade Investments Unquoted Equity Instruments Choice Realty Private Limited (1.00 Lakhs Equity Shares of Face value of Rs.10 each fully paid up) Rigveda Properties Limited (0.50 Lakh Equity Shares of Face value of Rs.10 each fully paid up) Anant Trexim Private Limited (0.40 Lakh Equity Shares of Face value of Rs.10 each fully paid up) Golden Ingots Private Limited (0.20 Lakh Equity Shares of Face value of Rs.100 each fully paid up) Jorko Commodities Private Limited (0.50 Lakh Equity Shares of Face value of Rs.10 each fully paid up) Madhujas Promotions Private Limited (0.125 Lakh Equity Shares of Face value of Rs.10 each fully paid up) Sojatia Auto Private Limited (0.165 Lakh Equity Shares of Face value of Rs 100 each fully paid up) Trade Winds Impex Private Limited (0.20 Lakh Equity Shares of Face value of Rs.10 each fully paid up) Preference Shares (Unquoted) Miracle Agro Private Limited (4.50 Lakhs 6% Non Cumulative Preference Shares of Face value of Rs.100 each fully paid up) 2,466.04 Agreegate book value of unquoted Investments 2,466.04 (Rs. In Lakhs) As at 31.03.2012 5.16
650.00 1,000.00 40.00 100.00 25.00 10.00 160.88 25.00
450.00
F21
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 15 : Long-term loans and advances Particulars Security Deposits (Unsecured, Considered Good) Capital Advance (Unsecured, Considered Good) Loans and Advances (Unsecured, Considered Good) - To Related Parties - To Others Advance Recoverable in Cash or in Kind (Unsecured, Considered Good) Other Loans and Advances Advance Tax & TDS (Net of Provisions) CENVAT Credit Receivable Input VAT Receivable Prepaid Expenses Add: Share in Joint Ventures As at 31.03.2012 125.49 257.27 (Rs. In Lakhs)
203.96 150.00 194.50
683.87 673.11 4.32 199.81 2,492.33 187.25 2,679.58
F22
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 16 : Other non-current assets Particulars Lease Rental Adjustments - Unbilled Revenue Note 17 : Current investments Particulars Investment in Mutual Funds (Unquoted) 2.45 Lakhs Units of ICICI Prudential Flexible Income Plan 8.05 Lakhs Units of ICICI Prudential Liquid Plan 0.0095 Lakhs Units of Fidelity Short Term Income Fund 0.0009 Lakhs Units of ICICI Prudential Ultra Short Term Plan Investments in Bonds (Unquoted) 176 Units of 10.05% Air India Bonds (27/09/2031) of Rs. 10 Lakhs each fully paid up 2 Units of 9.70% IFCI Bonds (18/5/2030) of Rs.10 Lakhs each fully paid up 15 Units of 10.75% DPSC Bonds (03/11/2018) of Rs. 2 Lakhs each fully paid up 4 Units of 12.60% SREI Equipment NCD (30/7/2017) of Rs.10 Lakhs each fully paid up 50 Units of 10.00% Punj Lloyd Limited (10/03/2014) of Rs. 1 Lakhs each fully paid up 133 Units of 12.50% Magma Fincorp Limited Perpetual Bonds of Rs. 10 Lakhs each fully paid up Agreegate book value of unquoted Investments Note 18 : Inventories Particulars Work In Progress - Construction Project As at 31.03.2012 6,592.92 6,592.92 Note 19 : Trade receivables Particulars Unsecured, Considered Good Outstanding for a period exceeding six months from the date they are due for payment Other Debts As at 31.03.2012 100.05 2,199.38 2,299.43 As at 31.03.2012 259.28 805.27 0.10 0.10 (Rs. In Lakhs) As at 31.03.2012 53.52 53.52
1,907.69 21.97 30.75 40.76 56.22 1,369.75 4,491.89 4,491.89
F23
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 20 : Cash and cash equivalents Particulars Cash and Cash Equivalents Balances with Banks: On Current Accounts Cash on Hand Add: Share in Joint Ventures Other Bank Balances Deposits with original maturity for more than 3 months but less than 12 months Balance with banks to the extent held as security deposit Balance with banks to the extent held as margin money (Rs. In Lakhs) As at 31.03.2012 3,684.67 11.32 6.03 12.89 141.52 137.65 3,994.08 Note 21 : Short-term loans and advances Particulars Mobilisation Advances (Unsecured, Considered Good) Loans & Advances (Unsecured, Considered Good) Advance Recoverable in Cash or in Kind (Unsecured, Considered Good) Other Loans and Advances Loan to Employees Prepaid Expenses Note 22 : Other current assets Particulars Interest accrued on current investments As at 31.03.2012 6.69 6.69 As at 31.03.2012 127.96 753.56 1,228.37
9.75 123.01 2,242.65
F24
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 23 : Revenue from Operations Particulars Sale Sale of commercial units
License Fees CAM Charges Amenities Charges Other Operational Income
(Rs. In Lakhs) Year Ended 31.03.2012 2,563.99 1,525.60 678.78 153.67 108.46 5,030.50
Sale of services
During the year, Empire Mall Private Limited (a step down subsidiary company) has reversed a revenue from operations amounting to Rs. 119.84 lakhs on account of reasonable uncertainity of its ultimate realisation which were accounted for as per contractual agreements with lesses. Note 24 : Other Income Particulars Interest on Long Term Loans & Advances Interest on Fixed Deposits Interest on Current Investments Interest on Income Tax Refund Dividend on Current Investments Net Gain / (Loss) on sale of current investments Sundry Balances Written back Note 25 : Cost of Construction Project Particulars Opening Balance Add: Conversion of Capital Work In Progress in to Stock in Trade Conversion of Land in to Stock in Trade Administrative Expenses Additional FSI Premium Construction & Development Costs Borrowing Costs Less: Leasehold land reconverted in capital assets Transferred to Work in Progress Year Ended 31.03.2012 4,646.09 1,949.79 1,318.94 9.87 385.00 484.92 357.82 (846.79) (6,592.92) 1,712.72 Year Ended 31.03.2012 86.43 23.35 168.43 5.29 223.09 331.91 2.88 841.38
F25
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 26 : Employee benefits expenses Particulars Salaries and Wages Directors' Remuneration Contribution to Provident Fund and Other Funds Staff Welfare Expenses Note 27 : Finance costs Particulars Interest on Bank Loans Interest on Other Loans Other Borrowing Costs Less: Capitalised in Inventory Note 28 : Other expenses Particulars Rent Rates and taxes Insurance Repairs & Maintenance - Building Repairs & Maintenance - Plant & Machinery Repairs & Maintenance - Others Advertisement & Business Promotion Expenses Brokerage & Commission Travelling & Conveyance Communication Costs Printing & Stationery Legal & Professional Fees Auditors' Remuneration Electricity Charges Housekeeping Charges Security Charges Office Expenses Miscellaneous expenses Bad debts / advances written off Exchange Gain/(Loss) Add: Share in Joint Ventures Less: Elimination of the cost of services rendered to subsidiaries and joint ventures Year Ended 31.03.2012 125.67 172.59 60.72 10.20 59.43 47.28 393.51 23.64 172.39 20.62 11.78 258.06 61.69 54.72 125.11 77.86 15.00 24.71 91.34 1.29 0.41 (522.97) 1,285.05 Year Ended 31.03.2012 1,827.57 43.38 150.78 (357.82) 1,663.91 (Rs. In Lakhs) Year Ended 31.03.2012 480.94 168.58 6.38 8.07 663.97
F26
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 29 : Exceptional items Particulars Prior Period Items Advances Written Off a) Prior Period Items includes: Particulars Prior Period Expenses Property Tax of earlier year Amortisation of Leasehold Land for earlier year (Rs. In Lakhs) Year Ended 31.03.2012 120.24 416.13 536.37 Year Ended 31.03.2012 105.12 15.12 120.24
b) Advances Written Off includes : i) Rs. 127.50 lakhs out of loan granted amounting to Rs.255 lakhs to Shalom Voyagers Private Limited (a Co-Venturer in Moon Town Trading Company Private Limited). In the previous year the Company had made provision of Rs. 127.50 lakhs and balance amount was shown as recoverable. During the year, looking at the circumstances, it seems the Company will not be able to recover the entire amount and therefore Rs. 255 lakhs have been written off. ii) Rs. 100.99 lakhs out of advance of Rs. 669.75 lakhs given to M/s ANS Constructions Private Limited (ACPL) towards land acquisition and Rs. 11.23 lakhs to a person as brokerage by Royal Mall Private Limited (RMPL), a wholly owned subsidiary. Since ACPL failed to procure the land in terms of the agreement it was decided to cancel the said agreement and RMPL could recover only Rs. 580.00 lakhs from ACPL and the balance of Rs. 100.99 has been written off. iii) Rs.87.64 lakhs out of advances of Rs. 361.00 lakhs given to Sai Prasad Organisers (SPO) by Kruti Multitrade Private Limited (KMPL), a wholly owned subsidiary to acquire the Land for developing a Commercial Mall at Surat. In the previous year the Company has provided for an amount of Rs. 180.50 lakhs as doubtful. During the year an amount of Rs.37.60 lakhs (PY Rs. 34.01 lakhs) was recovered. In view of the management, only 21.25 lakhs are recoverable and hence balance of Rs.87.64 lakhs has been written off. iv) Rs.100.00 lakhs of advances given to one private limited company as mobilisation advance in the earlier years. During the year, looking at the circumstances, it seems the Company will not be able to recover the entire amount and therefore Rs. 100.00 lakhs have been written off. Note 30 : Earning Per Share In accordance with Accounting Standard 20- Earning Per Share prescribed by The Institute of Chartered Accountants of Sr No i) a) b) c) d) e) f) ii) iii) iii) Particulars Weighted average number of Equity Shares of Rs. 2 each Number of shares at the beginning of the year Number of shares sub-divided in the ratio 1:5 during the year Number of shares at the end of the year Weighted average number of shares outstanding during the year Weighted average number of Potential Equity shares outstanding during the year Total number of Potential Equity Share for calculating Diluted Earning Per share Net Profit \ (Loss) after tax available for equity shareholders Basic Earning per share (in Rs.) Diluted Earning per share (in Rs.) As at 31.03.2012 0.10 0.50 1,526.03 1,525.21 1,525.21 1,525.21 (2,288.03) (1.50) (1.50)
F27
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 31 : Accompanying Notes to Accounts A) Companies considered in the consolidated financial statement are: a) Subsidiaries: Date of Becoming Subsidiary 31-Aug-07 04-May-07 07-May-07 11-Mar-08 14-Sep-07 14-Sep-07 15-Nov-11 17-Oct-07 18-Oct-07 23-Jan-08 01-Oct-09 Country of Incorporation India India India India India India India Singapore Singapore Singapore Singapore % Voting Power held As on 31.03.2012 61.50 60.00 61.50 61.50 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Name of Company Alliance Mall Developers Co Private Limited (AMDPL) Omni Infrastructure Private Limited (OIPL) Hagwood Commercial Developers Private Limited (HCDPL) Empire Mall Private Limited (EMPL) Royal Mall Private Limited (RMPL) Jaipur Festival City Private Limited (JFCPL) Kruti Multitrade Private Limited (KMPL) Prozone Liberty International Ltd (PLIL) Prozone International Ltd (PIL) Prozone Overseas Pte Ltd (POPL) Prozone International Coimbatore Limited (PICL) b) Joint Ventures:
Held Through 1 3 3 3 1 1 1 1 2 2 2
Name of Company Emerald Buildhome Private Limited (EBPL) Moontown Trading Company Private Limited (MTCPL) Held Through 1) Prozone Capital Shopping Centres Limited 2) Prozone Liberty International Limited, Singapore 3) Prozone International Limited, Singapore
Held Through 3 1
Country of Incorporation India India
% Voting Power held As on 31.03.2012 50.00 25.00
F28
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 B) Employees Defined Benefits: The disclosure as required under Accounting Standard 15 regarding the employees retirement benefits plan for gratuity is as follows: Defined Benefit Plans As per Actuarial Valuation on 31 st March 2012. Particulars Discount rate Expected rate of return on assets Expected rate of future salary increase Changes in present value of obligations Particulars Present value of obligation as at 31.03.2011 (Pursuant to amalgamation) Interest Cost Current Service Cost Benefits paid Actuarial loss on obligations Present Value of obligation as at 31.03.2012 (Assets) / Liability recognized in the Balance Sheet Particulars Present value of obligation as at 31.03.2011 Fair Value of plan assets as at the end of the year Unfunded status Unrecognized Actuarial (Gain)/ loss Net (Assets)/ Liability recognized in the Balance Sheet Expenses recognized in the Profit and Loss Account Particulars Current Service Cost Past Service Cost Interest Cost Expected return on plan assets Net Actuarial (Gain)/ loss recognized during the year Total Expenses recognized in the Profit and Loss account (Rs. In Lakhs) 5.63 0.96 (0.45) (2.43) 5.02 (Rs. In Lakhs) 7.94 5.71 2.22 2.22 (Rs. In Lakhs) 11.96 0.96 5.63 (2.43) 16.11
8.00% 8.50% 5% F5Y8.5% TA
F29
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 C) Related Party Disclosure: As required under Accounting Standard 18 Related Party Disclosure (AS-18), following are details of transactions during the year with the related parties of the Company as defined in AS 18: For the year ended 31st March, 2012 i)Key Management Personnel Mr. Nikhil Chaturvedi Mr. Akhil Chaturvedi Mr. Salil Chaturvedi Mr. Deep Gupta Mr. Nigam Patel Mr. Rakesh Rawat Mr. J. K. Jain Director Director Director Director Director Director Director
ii) Shareholder having significant interest in the Company Nailsfield Limited, Mauritius
iii)Enterprises Owned or significantly influenced by key management personnel or their relatives Starlight City Commercial Developers Private Limited Provogue (India) Limited Faridabad Festival City Private Limited Acme Advertisement Private Limited iv) Joint Ventures and Coventurers :Emerald Buildhome Private Limited (JV) Moontown Trading Company Private Limited (JV) Shalom Voyagers Private Limited (CoV)
F30
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Related Party Transactions a) Sale/Purchase of goods and services Particulars Lease Rental Deposit License Fees Sale of services Purchase of Services Reimburse ment of expense Amount due to Rent Paid Related Parties
Amount due from Related Parties 16.32 109.67 -
Enterprises owned or significantly influenced by key management personnel or their relatives Provogue (India) Limited 9.96 7.27 17.49 59.85 Faridabad Festival City Private Limited 40.39 Acme Advertisement Private Limited b) Loans given and repayment thereof Particulars Joint Ventures and Coventurers Moontown Trading Company Private Limited. (JV) Shalom Voyagers Private Limited (CoV) c) Loans taken and repayment thereof Particulars i)Key Management Personnel Mr. Deep Gupta Mr. Nigam Patel Pursuant to Amalgamation Loans Taken Loan Repaid Pursuant to Amalgamation Written Off Amount due from Related Parties 203.96 12.50
80.81
73.64 53.50 -
120.00 -
48.47
235.28 267.50
31.32 255.00
Interest Paid 0.06 -
Amount due to Related Parties 0.04 0.10 34.59 864.75
Enterprises owned or significantly influenced by key management personnel or their relatives Provogue (India) Limited 560.61 166.75 717.51 Joint Ventures and Coventurers 864.75 Emerald Buildhome Private Limited.(JV)
F31
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 d) Remuneration to Key Management Personnel Particulars i) Key Management Personnel Mr. Nikhil Chaturvedi Mr. Salil Chaturvedi Mr. Nigam Patel Remuneration Amount due to Related Parties
84.00 24.58 60.00
3.51 1.00
F32
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 D) Segment information: The Segment Reporting of the Company had been prepared in accordance with Accounting Standard 17 on Segment Reporting issued by the ICAI / Companies (Accounting Standards) Rules, 2006 The Company is engaged in the business of developing, owning and operating of Shopping Malls, Commercial and Residential Premises. Based on the business activities during the financial year, the Company has identified the following business segments as its primary segment:a) Leasing b)Outright Sales The primary segment reporting format is determined to be business segment as the company's risks and rates of returns are affected predominantly by the nature of activities Particulars For the year ended 31st March, 2012 Revenue Results Segment Results Unallocated Expenses Operation Profit Finance Costs Other Income Exceptional Items Profit / (Loss) Before Tax Tax Expense Net Profit / (Loss) for the year 2,465.40 (1,217.54) 2,565.10 849.61 5,030.50 (367.93) 968.06 (1,335.99) 1,663.90 (841.38) 536.36 (2,694.87) 902.69 (3,597.56) Leasing Outright Sales (Rs. In Lakhs) Total
As at 31st March, 2012 Segment Assets Unallocated Assets Total Assets Segment Liabilities Unallocated Liabilities Total Liabilities Other segment information : Depreciation & Amortisation expense
22,475.92
8,996.96
31,472.88 68,355.52 99,828.40 16,011.37 22,394.49 38,405.86
13,867.27
2,144.10
2,505.52
2,505.52
The Companys business consists of one reportable geographic segment i.e., Domestic, hence no separate disclosures pertaining to attributable Revenues and Assets are given
F33
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 E) The Company has given its premises on operating lease and entered in to non-cancellable leave and License agreements with various parties. The disclosure required to be made in accordance with Accounting Standard 19 on Leases. a) Future minimum lease payments receivable under non-cancellable operating leases in aggregate for the following periods: (Rs. in lakhs) As at 31.03.2012 1,598.06 2,473.72 -
Particulars Not later than one year Later than one year and not later than five years Later than five years
b) Initial direct costs incurred on these leasing transactions have been recognised in the Profit and Loss Account. F) In January, 2012, the Income Tax Authorities had carried out search and seizure proceedings at the premises of the Company, its promoters and its senior officials under the provisions of section 132 of Income Tax Act, 1961. The Company has since produced all relevant materials and responded to the various queries raised by the Income Tax Authorities from time to time. The Company presently believes that there will not be any revision in income booked in the current as well as earlier accounting years. The proceedings shall be attended to as per provisions of the Income tax laws. The audited financial statements of foreign subsidiaries have been prepared in accordance with the Generally Accepted Accounting Principle of its Country of Incorporation or International Financial Reporting Standards. The differences in accounting policies of the Company and its subsidiaries are not material and hence no adjustment have been made in the Consolidated Financial Statements. Figures less than Rs. 500/- have been shown at actuals wherever statutory required to be disclosed since figures have been rounded off to the nearest thousands Previous Year's figures have not been given as there was no subsidiary in that year.
G)
H)
I)
For Singrodia Goyal & Co. Chartered Accountants
For and on behalf of the Board
Shyamratan Singrodia Partner Mem. No. 49006 Place : Mumbai Date : 15th May, 2012
F34
Prozone Capital Shopping Centres Limited Statement pursuant to general exemption received under Section 212(8) of the Companies Act, 1956 relating to subsidiary companies Investment s (Except Total investm Liabilities ent in sub sidiaries) 568.97 0.80 0.15 36.73 52.92 76.52 22.17 13.42 2,495.24 220.21 4,868.08 5.16 360.88 6,100.94 Turnover (Including other income) 400.57 1.91 1.89 137.17 Profit /(Loss) before taxation 39.87 (0.40) (0.15) (0.52) (13.17) (14.66) (4.58) (4.68) (99.21) 12.21 (Rs. In Lakhs) Proposed dividend -
S.No. Subsidiary Company Alliance Mall Developers Co Private Limited Royal Mall Private Limited Jaipur Festival City Private Limited Kruti Multitrade Private Limited Prozone Liberty International Limited Prozone International Limited Prozone Overseas Pte Limited Prozone International Coimbatore Limited Omni Infrastructure Private Limited Hagwood Commercial Developers Private Limited Empire Mall Private Limited
Reporting Note Exchange Currency Rate INR INR INR INR USD 1 2,3 2,4 2 2 USD USD USD INR INR 1.00 1.00 1.00 1.00 50.88 50.88 50.88 50.88 1.00 1.00
Capital
Reserves
Total Assets 16,922.21 0.11 0.23 6.38 31,405.04 27,502.64 3.56 1.79 8,433.91 22,749.54
Profit / Tax (Loss) after Expense taxation 7.28 0.36 (0.39) 6.30 744.83 47.15 (0.40) (0.15) (0.52) (13.17) (14.31) (4.58) (4.68) (99.60) 18.51 (3,363.51)
1 2 3 4 5 6 7 8 9 10
395.73 1.00 1.00 1.00 26,140.48 27,015.65 4.00 1,541.50
16,026.41 (1.69) (0.92) (31.36) 5,211.63 410.47 (18.60) (11.63) 5,934.67 20,987.83
11 2 INR 1.00 7,676.33 2,069.59 32,265.09 22,519.18 0.10 5,074.80 (4,108.34) Notes: 1 Held through Prozone Liberty International Limited (Singapore) 2 Held through Prozone International Limited (Singapore) 3 Capital Rs. 40 4 Capital Rs. 48 5 Indian rupee equivalents of the figures given in foreign currencies in the accounts of the subsidiary companies, are based on the exchange rates as in 31.03.2012 6 Tax expense includes deffered tax For and on behalf of the Board Place : Mumbai Date : 15th May, 2012 Nikhil Chaturvedi Managing Director Salil Chaturvedi Dy. Managing Director Snehal Bansode Company Secretary
F F35
Auditors' Report To the Members of Prozone Capital Shopping Centres Limited (formerly known as Castle Mall Private Limited) We have audited the attached Balance Sheet of Prozone Capital Shopping Centres Limited (formerly known as Castle Mall Private Limited) as at 31st March, 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 1. We conducted o ur audit in a ccordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financia l statements are free of material misstatement. An audit includes examining, on a test b asis, evidence supporting the amounts and d isclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 and amendments thereto issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in the paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 2 above, we report that: a) b) c) d) We have obtained all the information and explanations, which to the best of o ur knowledge and belief were necessary for the purpose of our audit. In our opinion, proper books of accounts as required by la w have b een kept by the Company so far as it appears from our examination of those books. The Balance Sheet, the Statement Profit & Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of accounts. In our opinion the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply in all material aspects with the applicable Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956. On the basis of written representations received from the directors as on 31st March, 2012 and taken on record by the Board, we report that none of the director is disqualified as on 31st March, 2012 from being appointed as a director in terms of clause (g) of Subsection (1) of Section 274 of the Companies Act, 1956.
2.
3.
e)
F36
~2~ f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with notes appearing thereon, give the information required by the Companies Act, 1956 in the manner so re quired and give a true and fair view in conformity with the accounting principles generally accepted in India: i) ii) iii) In the case of the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2012, In the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date, and In the case of Cash Flow St atement, of the Cash Flows of the Company for the year ended on that date. For Singrodia Goyal & Co. Chartered Accountants Firm Reg No. 112081W Place : Mumbai Date : 15th May, 2012
Shyamratan Singrodia Partner Mem. No. 49006
F37
Annexure to Auditors Report Annexure referred to in Paragraph 2 of the Auditors Report for the year ended 31st March 2012. As required by the Companies (Auditors Report) Order, 2003 and amendments thereto and according to the information and explanations given to us during the course of the audit and on the basis of such checks of the books and records as were considered appropriate we report that: (i) a) b) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. The scope of annual physical verification of fixed assets conducted by the management has been limited to fixed assets o ther than Furniture and Fixtures only. In our opinion the interval of physical verification is reasonable. No discrepancies have been noticed on the assets physically verified. The Company has not disposed off any fixed assets during the year.
c) (ii) (iii)
Since the Company does not have any inventory, the clauses 4 (ii) (a) (b) and (c) of the said Order are not applicable to the Company. a) The Company has granted unsecured loans to seven subsidiary companies covered in the register maintained under Section 301 of the Companies Act, 1956 on call basis. The maximum amount outstanding during the year was Rs. 11,514.27 lakhs and the year-end balance was Rs. 4,980.53 lakhs The said loans are interest free except in two cases where interest has been charged. The rate on interest wherever charged and other terms and con ditions on which the loans have been granted are prima facie, not prejudicial to the interest of the Company; In view of our comments in para (iii) (a) and (b) above, clauses 4 (iii) (c) and (d) of the said Order are not applicable. The Company has taken unsecured loans from two parties covered in the register maintained under Section 301 of the Companies Act, 1956 on call basis. The maximum amount outstanding during the year was Rs. 2,416.83 lakhs and the year-end balance was Rs. 1764.08 lakhs. The said loans are interest free. Other terms and conditions on which these loans have been taken are prima facie, not prejudicial to the interest of the Company; In view of our comments in para (iii) (d) and (e) above, clause 4 (iii) (g) of the said Order is not applicable.
b)
c) d)
e) f) (iv)
There are adequate internal control systems commensurate with the size o f the Company and the nature of its b usiness with regard to purchase of fixed assets and for the sale of services. The Company has not carried o ut any activity of purchases of inve ntories and sal e of goods during the year. During the course of ou r audit, no major weakness has been noticed in the in ternal control systems. a) The particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that needs to be entered into the register maintained under section 301 have been so entered.
(v)
F38
~2~ b) (vi) (vii) (viii) (ix) The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
The Company has not accepted any deposits from the public. The Company has an ade quate internal audit syst em commensurate with its s ize and nature of its business. The Central Government has not prescribed for maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 for the Company. a) Accordingly to the records of the Company, the undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess wherever applicable have been regularly deposited with the appropriate authorities. There are no undisputed amount payable in respect of such statutory dues which have remained outstanding as at 31st March, 2012 for a period more than six months from the date they became payable. b) There are n o amount in respect of any disputed sales tax, inco me tax, wea lth tax, service tax, custom duty, excise duty and cess.
(x) (xi) (xii) (xiii) (xiv) (xv)
The Company is not in existence for more than five years and hence the provisions of the clause 4 (x) of the Order is not applicable for the year under report. The Company has not defaulted in repayment of its dues to banks and financial institutions. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities. The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are not applicable to the Company. The Company is not a dealer or trader in shares, securities, debentures and other investments. The Company has given guarantees for loan availed by a stepdown subsidiary from various Banks/ Institutions and in our opinion the terms and conditions thereof are not prejudicial to the interest of the Company. The Company has not obtained any term loans during the year under report. On an overall examination of the balance sheet of the Company, we report that the no funds raised on short-term basis have been used for long term investments.
vi) (xvii)
(xviii) The Company has made preferential allotment of shares to one party covered in the register maintained under Section 301 of the Companies Act, 1956 at the price which is not prejudicial to the interest of the Company. (xix) The Company has not issued any debentures during the year.
F39
~3~ (xx) (xxi) The Company has not raised any money through the public issue during the year. During the course of o ur examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of any material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management. For Singrodia Goyal & Co. Chartered Accountants Firm Reg No: 112081W
Place Date
: Mumbai : 15th May, 2012
Shyamratan Singrodia Partner Mem. No. 49006
F40
Prozone Capital Shopping Centres Limited (Formerly known as "Castle Mall Private Limited") Balance Sheet as at 31st March, 2012 As at 31.03.2012 (Rs. in lakhs) As at 31.03.2011
Particulars EQUITY AND LIABILITIES Shareholder's Funds Share capital Reserves and surplus Non - current Liablities Long - term borrowings Current Liabilities Short - term borrowings Trade payables Other current liabilities
Notes
3 4 5
3,052.06 36,896.97 39,949.03 1,741.32 1,741.32 34.59 67.34 151.75 253.68 41,944.03
1.00 (0.59) 0.41 24.68 0.22 0.08 24.98 25.39
6 7 8
ASSETS Non-current Assets Fixed assets Tangible assets Intangible assets Deferred tax assets (net ) Non - current investments Long - term loans and advances Current Assets Current investments Trade receivables Cash and cash equivalents Short - term loans and advances Other current assets
9 10 11 12 13 14 15 16 17 18
590.30 8.23 34.28 28,470.73 5,975.18 35,078.72 1,222.79 945.88 3,603.77 1,092.68 0.19 6,865.31 41,944.03
24.89 24.89 0.50 0.50 25.39
The Composite Scheme of Arrangement and Amalgamation Significant Accounting Policies Accompanying Notes to Accounts As per our report of even date attached For Singrodia Goyal & Co. Chartered Accountants
1 2 26
For and on behalf of the Board
F41
Prozone Capital Shopping Centres Limited (Formerly known as "Castle Mall Private Limited") Statement of Profit & Loss for the year ended 31st March, 2012 Particulars INCOME Revenue from operations Other income Total Revenue EXPENSES Employee benefits expense Finance costs Depreciation and amortisation expense Other expenses Total Expenses Profit before tax & exceptional items Exceptional items Profit / (Loss) before tax Less: Tax Expense Current tax Deferred tax liabilities / (assets) Tax of earlier years Profit / (Loss) for the year Earnings per equity share (Nominal value of share Rs.2 (PY Rs.10) : Basic : Diluted The Composite Scheme of Arrangement and Amalgamation Significant Accounting Policies Accompanying Notes to Accounts As per our report of even date attached For Singrodia Goyal & Co. Chartered Accountants For and on behalf of the Board 25 24 21 22 23 Notes Year ended 31.03.2012 789.73 651.42 1,441.15 489.04 4.58 131.06 517.00 1,141.68 299.47 358.23 (58.76) 116.08 28.24 (203.08) (0.13) (0.13) (Rs. in lakhs) Year ended 31.03.2011 0.95 0.95 0.76 0.14 0.90 0.05 0.05 0.06 (0.01) (0.02) (0.02)
19 20
1 2 26
F42
Prozone Capital Shopping Centres Limited Cash Flow Statement for the year ended 31st March, 2012 Particulars A Cash Flow from Operating Activities: Net Profit / (Loss) before tax Adjustments for : Depreciation Finance costs Interest income Dividend income Amalgamation Expenses Net gain on sale of investments Operating profit before working capital changes Adjustments for : Increase / (Decrease) in Trade payables Increase / (Decrease) in Other current liabilities Increase / (Decrease) in Long-term provisions Decrease / (Increase) in Long-term loans and advances Decrease / (Increase) in Trade receivables Decrease / (Increase) in Short-term loans and advances Decrease / (Increase) in Other current assets Cash generated from / (used in) operations Direct taxes paid Net cash flow from / (used in) operating activities Cash Flow from Investing Activities: Purchase of fixed assets Purchase of Non - current investments Sale of Non - current investments Purchase of current investments Sale of current investments Interest income Dividend income Net cash flow from / (used in) investment activities Cash Flow from Financing Activities: Proceeds from issue of equity shares Proceeds from long term borrowings Repayment of long term borrowings Finance costs Net cash flow from / (used in) financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year - Opening - Pursuant to the Scheme Cash and cash equivalents at the end of the year Year ended 31.03.2012 299.47 131.07 4.58 (429.14) (192.23) (80.68) (24.76) (291.69) 15.41 106.97 0.74 5,847.26 (765.32) (171.62) (0.19) 4,741.56 14.47 4,756.03 (14.47) (1.00) 1.00 (10,495.17) 9,297.13 429.14 192.23 (591.14) 4.00 (580.87) (4.58) (581.45) 3,583.44 0.50 19.83 3,603.77
(Rs. in lakhs) Year ended 31.03.2011 0.05 0.76 (0.95) (0.14) 0.16 (24.89) (24.87) (0.06) (24.93) 0.95 0.95 24.68 (0.76) 23.92 (0.06) 0.56 0.50
B.
C.
F43
Prozone Capital Shopping Centres Limited Cash Flow Statement for the year ended 31st March, 2012 Notes : 1 Cash and Cash Equivalents at the end of the year consists of cash in hand and balances with banks are as follows : (Rs. in lakhs) Particulars Cash on hand Balances with bank on current account As at 31.03.2012 4.88 3,598.89 3,603.77 As at 31.03.2011 0.50 0.50
The previous year's figures have been regrouped / rearranged wherever necessary in order to conform to current year's presentation.
As per our Report of even date attached For Singrodia Goyal & Co. Chartered Accountants For and on behalf of the Board
F44
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 1 : The Composite Scheme of Arrangement and Amalgamation a) As per the Order dated 10th February, 2012, the Honble High Court of Judicature at Bombay approved the Composite Scheme of Arrangement and Amalgamation (The Scheme) whereby the Retail Centric Real Estate Development Business (RCREDB) division was demerged and transferred from Provogue (India) Limited (the Demerged Company) and vested in Prozone Capital Shopping Centres Limited (the Resulting Company) as a going concern with retrospective effect from 1st April, 2011 being the appointed date b) The Scheme became effective from 27th February, 2012 (the Effective Date) upon which the business of RCREDB division including all its assets whether moveable or immoveable, tangible or intangible and liabilities whether present or contingent (as detailed in the Scheme) stands transferred and vested in the Resulting Company c) The management of Provogue (India) Limited (Demerged Company), Prozone Enterprises Private Limited (the Amalgamating Company) and Prozone Capital Shopping Centres Limited (the Company), in terms of provision contained in para no. 19.1.4 of the Scheme, mutually decided to disregard the investment made by the Demerged Company in Provogue Infrastructure Private Limited from the RCREDB division. Accordingly, Provogue Infrastructure Private Limited is deemed to be continued as subsidiary of the Demerged Company. d) From the Appointed Date upto the Effective date, the business of RCREDB Division is deemed to have been carried out by the Demerged Company in trust for the Company.And hence, any income or profit accruing or arising and any costs, charges, expenses and losses incurred by the Demerged Company in relation to RCREDB Division in accordance with the Scheme shall be treated as of the Company. The under mentioned assets and liabilities have been accounted for, in the method and manner, as prescribed in the Scheme: Particulars Assets Fixed Assets - Tangible Non - Current Investments Liabilities Long Term Borrowings Long Term Provisions Other Current Liabilities Excess of Assets over Liabilities Less: Investment Disregarded 1143.57 lakhs Equity Shares of Rs. 2 each fully paid up allotted to the Shareholders of Demerged Company Amount Credited / (Debited) to Amalgamation Reserve (A) (Rs. in lakhs) 240.90 20,512.20 63.93 1.09 1.16 20,753.10
66.18 20,686.92 1.00 20,685.92 2,287.14 18,398.78
F45
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 e) Similarly, pursuant to the aforesaid Order and the Scheme, Prozone Enterprises Private Limited (the Amalgamating Company) got amalgamated with the Company. From the Appointed Date upto the Effective date, the Amalgamating Company carried out its business in trust for the Company. In view of the same, any income or profit accruing or arising and any costs, charges, expenses and losses incurred by the Amalgamating Company in accordance with the Scheme shall be treated as of the Company. The Accounting impact on amalgamation of the Amalgamating Company with the Company, is mentioned hereunder: i) All the assets and liabilities of the Amalgamating Company as at 1st April, 2011 transferred on amalgamation have been accounted in the books of the Company at their respective book values. ii) All the reserves of the Amalgamating Company as at 1st April, 2011 have been transferred to the "Amalgamation Reserve Account," in the books of the Company. iii) Costs incurred for the purposes of executing the Scheme have been debited to the "Amalgamation Reserve Account."
The under mentioned assets, liabilities and reserves have been accounted for, in the method and manner, as prescribed in the Scheme: Particulars Assets Fixed Assets - Tangible Fixed Assets - Intangible Non - Current Investments Deferred Tax Assets (Net ) Long-Term Loans And Advances Trade Receivables Cash And Cash Equivalents Short-Term Loans And Advances Liabilities Long Term Borrowings Trade Payables Other Current Liabilities Excess Of Assets Over Liabilities Less: Reserves And Surplus Securities Premium Surplus Cross Holding Investment 463.07 11.16 28,470.73 150.35 12,155.79 180.56 19.83 1,015.44 2,293.70 51.12 68.45 (Rs. in lakhs)
42,466.93
2,413.27 40,053.66
36,434.05 (22.16) 20,511.20
Less : 379.96 Lakhs Equity Shares of Rs. 2/- each fully paid up allotted to the Shareholders of Transferor Company Costs incurred for the purpose of executing the Scheme by the Amalgamating Company Amount Credited / (Debited) to Amalgamation Reserve Net Amount Credited to Amalgamation Reserve
56,923.09 (16,869.43) 759.92
(B) (A)+(B)
80.68 (17,710.03) 688.75
F46
Notes to financial statements for the year ended 31st March, 2012
Prozone Capital Shopping Centres Limited
Corporate information: Prozone Capital Shopping Centres Limited (the Com pany) is a public c ompany domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of developing, owning and operating of Shopping Malls, Commercial and Residential Premises. The Company is also providing related management consultancy services. Basis of preparation: The financial statements of the co mpany have been prepared in accord ance with gener ally accepted accounting principles in India (Indian G AAP). The company has prepared these financial statements to comply in all material respects with the acc ounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provis ions of the Companies Ac t, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. Note 2 : Significant Accounting Policies a) Basis of Accounting: i. The Financial Statements have been prepared in complianc e with all material aspects as notified in Accounting Standa rds by Companies (Accounting Standard) Rules 2006 and the relevant provisions of the Companies Act, 1956. Financial Statements are based on historical cost convention and are prepared on accrual basis
ii.
b)
Use of Estimates: The preparation of financ ial statements in conformity with Generally Accepted Accounting Principles requires estim ates and as sumptions to be made t hat affect the reported amounts of a ssets and lia bilities and disclosure of c ontingent liabilities on the financia l statements and the reported amounts of revenues and exp enses during the reporting period. Difference between actual results and estimates are recognized in the periods in which the results are known/ materialize.
c)
Revenue Recognition : i. Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.
F47
Notes to financial statements for the year ended 31st March, 2012 ii. terms and condition of contract.
Revenue from management cons ultancy is recognised on accrual basis as per the Interest is recognised on a time proporti on basis taking in to account the amount outstanding and the rate applicable. Dividend income is recognised when the right to receive payment is established.
iii. iv. d)
Fixed Assets: Fixed Assets are stated at ac tual cost less accumulat ed depreciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
e)
Depreciation and Amortization: Depreciation on Fixed Assets is provided on Written down method at the rates and in the manner prescribed in the Schedule XIV of the Companies Act, 1956.
f)
Impairment of Fixed Assets: As at the end of each year , the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indication t hat an impairment loss may have occurred in accordance with Accounting Standard 28 on Impairment of Assets. Where the recoverabl e amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed asset is made for the difference.
g)
Miscellaneous Expenditure: Preliminary expenses are being amortised in the year they are incurred.
h)
Employee Benefits: i) ii) iii) Companys Contribution to Provident Fund and other Funds for the year is accounted on accrual basis and charged to Profit & Loss Account for the year. Liability for Leave Encashment Benefits has been provided on accrual basis. Retirement benefits in the form of Grat uity are considered as defined benefits obligations and are pr ovided on the basis of the ac tuarial valuation, using the projected unit method, as at the date of the Balance Sheet.
F48
Notes to financial statements for the year ended 31st March, 2012
i)
Investments: Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long ter m investments and are carried at cost less any provision for permanent diminution in value. Investments other than l ong term investments being current investments are valued at cost or fair market value whichever is lower.
j)
Foreign Currency Transactions : i) ii) The transactions in foreign currencies are stated at the rate of exchange prevailing on the date of transactions. The difference on account of fluctuation in the rate of exchange prevailing on the date of transaction and the date of realization is charged to the Profit and Loss Account. Differences on translations of Current Assets and Current Li abilities remaining unsettled at the year-end are recognized in the Profit and Loss Account. The premium or discount in respect of forward exchange contract is amortized over the life of contract. The net gain or losses on account of any exchange difference, cancellation or renewal of such forward exchange contracts are recognised in the Profit & Loss Account.
iii) iv)
k)
Contingent Liabilities: The Company recognizes a provis ion when there is a present obl igation as a result of a past event that probably requires an outflow of resources and a r eliable estimate can be made of the amount of the oblig ation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
l)
Accounting for Taxation of Income : Current taxes Provision for current income-tax is recognized in accordance with t he provisions of Indian Income- tax Act, 1961 and is made annually based on the tax liability after taking credit for tax allowances and exemptions Deferred taxes Deferred tax assets and liabilities ar e recognized for the future tax consequences attributable to timing differences that result between the profits offe red for income taxes and the profits as per the fi nancial statements. Deferred tax assets and liab ilities are measured using the tax rates and the tax laws that have been enact ed or substantially enacted at the Balance Sheet dat e. Deferred tax assets are recognized only to the extent there is reasonable certainty t hat the assets can be realized in the future. D eferred tax assets are reviewed as at each Balance Sheet date.
F49
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 3 : Share Capital Particulars Authorised 2,002.50 lakhs (PY 0.10 lakhs) Equity Shares of Rs.2 (PY Rs.10) each Issued, Subscribed and Paid Up 1,526.03 lakhs (PY 0.10 lakhs) Equity Shares of Rs.2 (PY Rs.10) each fully paid up
(Rs. in lakhs)
As at 31.03.2012 As at 31.03.2011 4,005.00 3,052.06 3,052.06 1.00 1.00 1.00
(a) The members of the Company in their extra-ordinary general meeting held on 25th day of August 2011, sub divided the authorised/ issued/ paid up share capital of Rs.1.00 lakhs divided into 0.10 lakhs equity shares of Rs.10 each to 0.50 lakhs equity shares of Rs.2 each. Further, the Company has also increased its authorised share capital from Rs.1.00 lakhs divided into 0.50 lakhs equity shares of Rs.2 each to Rs.5.00 lakhs divided into 2.50 lakhs equity shares of Rs.2 each and allotted 2.00 lakhs equity shares of Rs.2 each to Provogue (India) Limited.
Authorised Share Capital of Amalgamating Company amounting to Rs.4,000.00 lakhs divided in to 400.00 lakhs equity shares of Rs.10 each has been deemed to be sub divided in to 2,000.00 lakhs equity shares of Rs.2 each as per the Composite Scheme of Arrangement and Amalgamation. (b) The Company has allotted 1,523.53 Lakhs equity shares of Rs. 2 each fully paid up to the Shareholders of Demerged Company and Transferor Company pursuant to the Scheme. (c) Reconciliation of the equity shares outstanding at the beginning and at the end of the reporting period As at 31.03.2012 As at 31.03.2011 Particulars No. in lakhs Rs. in lakhs No. in lakhs Rs. in lakhs (Face value of Rs. 10 each) At the beginning of the period 0.10 1.00 0.10 1.00 (Face value of Rs. 2 each) No. of Shares Sub-Divided in the ratio 1:5 Issued during the year - for cash - pursuant to the Scheme of Demerger and Amalgamation Outstanding at the end of the year 0.50 2.00 1,523.53 1,526.03 1.00 4.00 3,047.06 3,052.06 0.10 1.00
(d) Details of shares issued for a consideration other than cash Particulars Equity Shares issued pursuant to the Scheme of Demerger and Amalgamation (e) Terms / rights attached to equity shares The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity share is entitled to one vote per share. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
F50
As at 31.03.2012 No. in lakhs Rs. in lakhs 1,523.53 3,047.06
As at 31.03.2011 No. in lakhs Rs. in lakhs -
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 (f) Details of Sharehlders holding more than 5% shares in the company: Names of Shareholders Provogue (I) Limited & Its Nominees Nailsfield Limited, Mauritius Nikhil Chaturvedi Salil Chaturvedi Note 4 : Reserves and Surplus Particulars Amalgamation Reserve (Pursuant to the Scheme) Securities Premium Opening Balance Add: Pursuant to the Scheme Closing Balance Surplus in Profit & Loss Account Opening Balance Add: Pursuant to the Scheme Add: Profit / (Loss) during the year Less: Utilised during the year Closing Balance As at 31.03.2012 No. in lakhs % holding 2.50 494.11 106.12 102.95
(Rs. in lakhs)
0.16 32.38 6.95 6.75
As at 31.03.2011 No. in lakhs % holding 0.10 100.00 -
As at 31.03.2012 As at 31.03.2011 688.75 36,434.05 36,434.05 (0.59) (22.16) (203.08) (225.83) (225.83) 36,896.97 (0.58) (0.01) (0.59) (0.59) (0.59)
Note 5 : Long - term borrowings (a) Particulars Hire Purchase Loans (Secured) Less: Current maturities of Long Term Debt (disclosed under other current liabilities) Loan & Advance from related parties (Unsecured) As at 31.03.2012 As at 31.03.2011 37.36 (25.53) 11.83 1,729.49 1,741.32 -
F51
(Rs. in lakhs) (b) Hire Purchase Loans includes Rs. 34.07 lakhs in respect of two vehicles are secured by hypothecation of vehicles financed. The loan carries interest @ 8.66 % p.a. The loan is repayable in 48 equal installments starting from 1st November, 2009. (c) Hire Purchase Loan includes Rs. 3.29 lakhs in respect of one vehicle is secured by hypothecation of vehicles financed. The loan carries interest @ 8.36 % p.a. The loan is repayable in 36 equal installments starting from 1st November, 2009. (d) Loan and advances from related parties represents loan received from Emerald Buildhome Private Limited, a step down Joint Venture Company(JVC) vide Joint Venture Agreement (JVA) dated 14th December 2007 entered into with the Co-venturer, Shree Salasar Overseas Private Limited for developing a Mall at Jaipur. The said loan was repayable to the JVC at the time of aquisition of additional land. Since the JVC presently does not have any land proposal in hand, the said loan will remain with the Company and no interest is payable as agreed between the JV Partners, till the time any new land acquired by the JVC.
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012
Note 6 : Short - term borrowings Particulars Interest free Loan from related party repayable on demand (Unsecured) Note 7 : Trade payables Particulars Trade payables - Due to Micro, Small & Medium Enterprises (Refer note below) - Others As at 31.03.2012 As at 31.03.2011 67.34 67.34 0.22 0.22 As at 31.03.2012 As at 31.03.2011 34.59 34.59 24.68 24.68
There are no amounts due to the suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006. This information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose. Note 8 : Other current liabilities Particulars Others Current maturities of long term debt Duties & Taxes Payable Provision for Employee Benefits Expense Provision for Expenses As at 31.03.2012 As at 31.03.2011 25.53 71.33 40.67 14.22 151.75 0.08 0.08
F52
Prozone Capital Shopping Centres Limited Notes to Financial Statements for the year ended 31st March 2012 Note 9 : Tangible Assets Gross Block Additions Additions Pursuant to during the the Scheme year 141.73 559.90 265.17 69.85 78.52 1,115.17 4.93 0.91 5.98 11.82 Depreciation Deductions during the year As at 31.03.2012 141.73 564.83 265.17 70.76 84.50 1,126.99 Upto 31.03.2011 Pursuant to the Scheme 17.66 184.64 131.69 18.70 58.52 411.21 Provided for the year 6.20 68.82 34.60 7.22 8.64 125.48 Adjustments during the year Upto 31.03.2012 23.86 253.46 166.29 25.92 67.16 536.69 (Rs. in lakhs) Net Block As at 31.03.2012 117.87 311.37 98.88 44.84 17.34 590.30 As at 31.03.2011 -
Particulars
As at 01.04.2011 -
Buildings Furnitures & Fittings Motor Vehicles Office Equipments Computers Total Previous Year Note 10 : Intangible Assets Particulars
As at 01.04.2011 -
Additions Pursuant to the Scheme 23.61 23.61 -
Gross Block Additions during the year 2.65 2.65 -
Amortisation Deductions during the year As at 31.03.2012 26.26 26.26 Upto 31.03.2011 Pursuant to the Scheme 12.45 12.45 Provided for the year 5.58 5.58 Adjustments during the year Upto 31.03.2012 18.03 18.03 -
Net Block As at 31.03.2012 8.23 8.23 As at 31.03.2011 -
Computer Software Total Previous Year
F F53
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 11 : Deferred Tax Assets (Net ) Particulars Fixed Assets : Impact of difference between tax depreciation and depreciation / amortisation charged for the financial reporting Impact of Expenditure charged to the statement of profit and loss in the current year but allowed for tax purposes on payment basis Provision for doubtful debts and advances Deferred Tax Assets Note 12 : Non - current investments Particulars Trade Unquoted Equity Instruments Investment in Subsidiaries: Prozone Liberty International Limited (Singapore) ( 614.74 lakhs (PY Nil) Ordinary Shares of USD 1/- each fully paid up) Alliance Mall Developers Co Private Limited (20.1 lakhs (PY Nil) Equity Shares of Rs. 10/- each fully paid up) Jaipur Festival City Private Limited (0.1 lakhs (PY Nil) Equity Shares of Rs. 10/- each fully paid up) Royal Mall Private Limited (0.1 lakhs (PY Nil) Equity Shares of Rs. 10/- each fully paid up) Kruti Multitrade Private Limited (0.1 lakhs (PY Nil) Equity Shares of Rs. 10/- each fully paid up) Investment in Joint Ventures : Moontown Trading Company Private Limited (0.025 lakhs Equity Shares of Rs. 10/- each fully paid up) Others - Unquoted Investments in Debentures Omni Infrastructure Private Limited (Step down subsidiary company) 1.77 lakhs 0% Optional Convertible Debentures of Rs. 1,000/- each Aggregate Book Value of Unquoted Investments
(Rs. in lakhs)
As at 31.03.2012 As at 31.03.2011
30.90 3.38 34.28
22.06 2.33 125.96 150.35
As at 31.03.2012 As at 31.03.2011
26,140.48 557.00 1.00 1.00 1.00
0.25
1,770.00 28,470.73 28,470.73 Nil
F54
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 13 : Long - term loans and advances Particulars Security deposits (Unsecured, Considered Good) Loans and advances (Unsecured, Considered Good) - To Related Parties - To Others Other loans & advances (Unsecured, Considered Good) AdvanceTax & TDS (Net of Provision for Tax) CENVAT Credit Receivable
(Rs. in lakhs)
As at 31.03.2012 As at 31.03.2011 7.16 7.16 -
(A)
(B)
5,266.85 150.00 5,416.85
24.85 24.85
(C) Total (A+B+C)
480.74 70.43 551.17 5,975.18
0.04 0.04 24.89
Loans and advances to related parties includes : Unsecured, Considered Good - Loans given to step down subsidiary companies Empire Mall Private Limited Omni Infrastructure Private Limited - Loan given to Joint Venture Company Moon Town Trading Company Private Limited (Refer note (b) below) - Share application money given to : Moon Town Trading Company Private Limited - Joint Venture Company Kruti Multitrade Private Limited - Subsidiary Company
4,320.17 438.22 271.95 200.00 36.51 5,266.85
a) Loan to Others amounting to Rs. 150 lakhs represents amount due from De Lara Tourism Corporation Limited (DTCL). The Company, in the earlier years, has debited a sum of Rs. 328.17 lakhs on account of proportionate share of preoperative expenses to DTCL vide sub-concession agreement and supplemental sub concession agreements executed in the previous year to acquire the rights to build and develop a Commercial Mall at Hyderabad. On account of non compliance of certain clauses of the Agreement by DTCL, the Company has terminated the agreements. The Company has invoked arbitration clause under the agreement and has filed a petition u/s 9 and 11 of the Arbitration and Conciliation Act 1996, before the Hyderabad High Court for appointment of an arbitrator. The High Court has passed an order appointing DCTLs nominee as a sole arbitrator. The Company has filed a petition against the said Order in the Supreme Court (SC) of India. As per the instruction of SC the Arbitral Tribunal is duly constituted consisting of a panel of Arbitrators who has awarded DTCL to refund a sum of Rs.150.00 Lacs to the Company against the Companys total claims amounting of Rs. 328.17 Lacs. Against the Award given by the Arbitral Tribunal the management has considered Rs. 150 Lacs as good and fully recoverable and the balance amount of Rs. 178.17 Lacs is being written off during the earlier years. DTCL has now challenged this award before the District Court by filing an appeal. The said appeal is pending. b) The Company is a co-venturer in the Joint Venture Company (JVC) Moontown Trading Company Private Limited (MTCPL) along with Shalom Voyagers Private Limited (SVPL) to develop a Mall at Mysore. In terms of Shareholding Agreement (SHA) entered in April 2006 between the co venturers and the JVC, the Company had paid Rs. 200 lakhs to MTCPL as Share Application Money. In addition the Company had also advanced a loan of Rs. 271.95 lakhs to the JVC. In view of the management of the Company, the advances are considered good and fully recoverable.
F55
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 14 : Current investments Particulars Unquoted Investments (Valued at lower of cost and fair value, unless stated otherwise ) Investments in Bonds 70 (PY Nil) 10.05% Air India Bonds (27/09/2031) of Rs. 10 lakhs each fully paid up Investments in Mutual Funds 2.45 Lakh(PY Nil) units Pru ICICI Flexi Income Plan-Daily Dividend 2.03 lakhs (PY Nil) units Pru ICICI Liquid Plan - Super Inst Daily Dividend Aggregate Book Value of Unquoted Investments Note 15 : Trade receivables Particulars Unsecured, Considered Good Trade Receivable Outstanding for a period exceeding six months from the date they are due for payment Other Debts Trade receivable represents debt due from related parties : (a) Outstanding for a period exceeding six months from the date they are due for payment Omni Infrastructure Private Limited Empire Mall Private Limited Royal Mall Private Limited (b) Other Debts Alliance Mall Development Co. Private Limited Empire Mall Private Limited Hagwood Commercial Deveplopers Private Limited Omni Infrastructure Private Limited Note 16 : Cash and cash equivalents Particulars Balance with Banks On Current Accounts Cash on hand 156.90 4.44 0.57 296.49 272.40 169.16 45.91
(Rs. in lakhs)
As at 31.03.2012 As at 31.03.2011
760.06 259.28 203.45 1,222.79 1,222.79
Nil
As at 31.03.2012 As at 31.03.2011 161.91 783.97 945.88 -
As at 31.03.2012 As at 31.03.2011 3,598.89 4.88 3,603.77 0.50 0.50
F56
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 17 : Short - term loans and advances Particulars Loans and advances (Unsecured, Considered Good) To Related Parties To Others Advance Recoverable in cash or in kind (Unsecured, Considered Good) Other Loans & Advances (Unsecured, Considered Good) Prepaid expenses Advances to employees Loans and advances to related parties includes : Unsecured, Considered Good - Loans given to subsidiary companies Prozone Liberty International Limited (Singapore) Alliance Mall Developers Company Private Limited - Loans given to step down subsidiary companies Hagwood Commercial Developers Private Limited Prozone International Limited (Singapore)
(Rs. in lakhs)
As at 31.03.2012 As at 31.03.2011
222.14 744.56 111.52 4.71 9.75 1,092.68
38.42 112.29 23.38 48.05 222.14
Loan and advances to Others amounting to Rs. 744.56 lakhs represents being loan (including interest) to a private limited company out of the surplus funds of the Company. The Company has recovered an amount of Rs. 38.20 lakhs during the year. Interest has been duly provided during the year. The management is of the view that the balance amount is fully realisable and considered good. Note 18 : Other current assets Particulars Accrued Interest on Bonds Note 19 : Revenue from operations Particulars Sale of services Management Consultancy Charges Year Ended 31.03.2012 789.73 789.73 Year Ended 31.03.2011 As at 31.03.2012 As at 31.03.2011 0.19 0.19 -
F57
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 20 : Other income Particulars Interest Income on Loans & advances Current investments Income Tax Refund Dividend on current investments Net gain/loss on sale of current investments Note 21 : Employee benefits expense Particulars Salaries, Wages and Bonus Directors' Remuneration Contribution to PF and Other Fund Gratuity Expense Staff Welfare Expenses Note 22 : Finance costs Particulars Interest Expenses Note 23 : Other expenses Particulars Rent Rates and taxes Insurance Repairs & Maintenance - Others Advertisement & Business Promotion Expenses Travelling & Conveyance Communication Costs Printing & Stationery Professional Fees Auditors' Remuneration Electricity Charges Vehicle Expenses Office Expenses Miscellaneous expenses a) Payment to Auditors Particulars - For Audit Fees - For Taxation Matters - For Management Services - For Other Services Year Ended 31.03.2012 10.11 16.50 0.25 0.15 27.01 Year Ended 31.03.2012 120.00 4.11 3.47 47.28 8.87 107.84 15.54 10.07 91.00 27.01 24.69 32.04 14.82 10.26 517.00 Year Ended 31.03.2012 4.58 4.58 Year Ended 31.03.2012 307.19 168.58 2.83 4.64 5.80 489.04 Year Ended 31.03.2012 428.95 0.19 5.29 192.23 24.76 651.42
(Rs. in lakhs) Year Ended 31.03.2011 0.95 0.95 Year Ended 31.03.2011 Year Ended 31.03.2011 0.76 0.76 Year Ended 31.03.2011 0.11 0.03 0.14 Year Ended 31.03.2011 0.11 0.11
F58
Prozone Capital Shopping Centres Limited Notes to financial statements for the year ended 31st March, 2012 Note 24 : Exceptional Items Particulars Reversal of expenses allocated to Joint Venture Company Advances Written Off Year Ended 31.03.2012 41.76 316.47 358.23
(Rs. in lakhs)
Year Ended 31.03.2011 -
a) The Company has a Joint Venture Project at Mysore through its SPV Moon Town Trading Company Private Limited (MTCPL) in which the Company has 25% stake and the Co-Venturer Shalom Voyagers Private Limited (SVPL) holds balance 75% stake. Based on the understanding arrived at during the year by the Company with its Co-Venturer that the project is not likely to take off in the near future, MTCPL has reversed an amount of Rs. 41.76 lakhs being various expenses incurred in the previous years, allocated to MTCPL by the Company towards the project work. b) Advances Written Off includes : i) Rs. 127.5 lakhs out of loan granted amounting to Rs.255 lakhs to Shalom Voyagers Private Limited (a Co-Venturer in Moontown Trading Company Private Limited). In the previous year the Company had made provision of Rs. 127.50 lakhs and balance amount was shown as recoverable. During the year, looking at the circumstances, it seems the Company will not be able to recover the entire amount and therefore Rs. 255 lakhs have been written off. ii) Rs. 101.33 lakhs out of loan amounting to Rs.681.93 lakhs given to Royal Mall Private Limited (RMPL), a wholly owned subsidiary. The Company had ventured into a project at Lucknow through RMPL. The Company had made an advance to RMPL amounting to Rs. 681.93 lakhs towards acquisition of the land. RMPL had further given advance of Rs. 669.75 lakhs to M/s ANS Constructions Private Limited (ACPL) towards land acquisition and Rs. 11.23 lakhs to a person as brokerage and an amount of Rs. 0.34 lakhs was utilised towards other operational expenses. Since ACPL failed to procure the land in terms of the agreement it was decided to cancel the said agreement and RMPL could recover only Rs. 580.00 lakhs from ACPL. However, RMPL had refunded Rs. 580.60 lakhs of the advance paid to the Company and balance amount of Rs. 101.33 lakhs is written off as there is no possibility of any further recovery. iii) Rs.87.64 lakhs out of Share Application Money amounting to Rs. Rs.391.52 lakhs given to the SPV Company Kruti Multitrade Private Limited (KMPL). The Company has entered into a Shareholding cum Share Subscription Agreement (SSA) with Sai Prasad Organisers (SPO) in September 2006 to develop a Commercial Mall at Surat through KMPL. KMPL had in turn paid Rs. 361 lakhs to SPO to acquire the Land and the balance amount has been utilised for preoperative and other expenses. In the previous year the Company has provided for an amount of Rs. 195.76 lakhs as doubtful. During the year an amount of Rs.37.60 lakhs (PY Rs. 34.01 lakhs) was recovered from KMPL against Share application money and Rs.87.64 lakhs has been written off as possibility of any further recovery from SPO is very remote. Note 25 : Earnings per equity share In accordance with Accounting Standard 20- Earning Per Share prescribed by The Institute of Chartered Accountants of India, the computation of earning per share is set out below: Sr No i) a) b) c) d) e) f) ii) iii) iv) Particulars Number of shares at the beginning of the year Number of shares sub-divided in the ratio 1:5 during the year Number of shares at the end of the year Weighted average number of shares outstanding during the year Weighted average number of Potential Equity shares outstanding during the year Total number of Potential Equity Share for calculating Diluted Earning Per share Net Profit \ (Loss) after tax available for equity shareholders Basic Earning per share (in Rs.) Diluted Earning per share (in Rs.) As at 31.03.2012 As at 31.03.2011 0.10 0.50 1,526.03 1,525.21 1,525.21 1,525.21 (203.06) (0.13) (0.13) 0.10 0.10 0.10 0.10 0.10 (0.01) (0.02) (0.02)
F59
Prozone Capital Shopping Centres Limited Notes to Accounts for the year ended 31st March 2012 Note 26 : Accompanying Notes to Accounts A) Contingent liabilities not provided for: Guarantee given to Bank on behalf of subsidiary company Rs. 1,80,00 Lakhs (P.Y. Nil )
(Rs. in lakhs)
B) Some of the sundry creditors are subject to confirmations and reconciliations. Consequential adjustment thereof, if any, will be given effect into the books of account in the year of such adjustments. C) In the opinion of the Board, the current assets, loans and advances are approximately of the value stated and are realisable in the ordinary course of business. Further the provisions for all known liabilities are adequately made & not in excess of amount reasonably required D) During the year, the company was converted into a public limited company vide special resolution passed in the extra ordinary general meeting of the members of the company held on 14th September, 2011. Further vide resolution passed in the meeting of board of directors held on 29th September, 2011, name of the Company has been changed from Castle Mall Limited to Prozone Capital Shopping Centres Limited . The fresh Certificate of Incorporation dated 5th October, 2011 has been received by the company from the Registrar of Companies, Maharashtra. E) Loans and advances in the nature of loans given to subsidiaries and associates as required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of Listing Agreement is under: a) Details of Loans to Subsidiaries / Step down Subsidiaries Name of Subsidiary Company Alliance Mall Developers Co. Private Limited Royal Mall Private Limited Prozone Liberty International Ltd, Singapore Prozone International Ltd, Singapore Omni Infrastructure Private Limited Empire Mall Private Limited Hagwood Commercial Developers Private Limited. b) Details of Investments in Subsidiaries Name of Subsidiary Company Alliance Mall Developers Co Private Limited Jaipur Festival City Private Limited Royal Mall Private Limited Kruti Multitrade Private Limited Prozone Liberty International Limited (Singapore) Investments through Prozone Liberty International Limited (Singapore) Prozone International Limited (Singapore) Prozone International Coimbatore Limited (Singapore) Prozone Overseas Pte Limited (Singapore) Investments through Prozone International Limited (Singapore) Empire Mall Private Limited Hagwood Commercial Developers Private Limited Omni Infrastructure Private Limited 31st March, 2012 2,010,000 10,000 10,000 10,000 61,474,094 31st March, 2012 Maximum Amount Rs. In lakhs 112.29 112.29 681.93 38.42 38.42 48.05 48.05 438.22 438.22 4,320.17 10,054.73 23.38 140.63 4,980.53 11,514.27 31st March, 2011 Maximum Amount Rs. In lakhs Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil (No. of shares) 31st March, 2011 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
38,046,055 1 1
47,209,412 9,480,235 24,000
F60
Prozone Capital Shopping Centres Limited Notes to Accounts for the year ended 31st March 2012 F) Disclosure as per AS 15 Employee Benefits : The principal assumptions used in the actuarial valuation of Gratuity are as follows. Particulars Discount rate Expected rate of return on assets Expected rate of future salary increase Changes in present value of obligations Particulars Present value of obligation as at 31.03.2011 (Pursuant to amalgamation) Interest Cost Current Service Cost Benefits paid Actuarial loss on obligations Present Value of obligation as at 31.03.2012 (Assets) / Liability recognized in the Balance Sheet Particulars Present value of obligation as at 31.03.2011 Fair Value of plan assets as at the end of the year Unfunded status Unrecognized Actuarial (Gain)/ loss Net (Assets)/ Liability recognized in the Balance Sheet Expenses recognized in the Profit and Loss Account Particulars Current Service Cost Past Service Cost Interest Cost Expected return on plan assets Net Actuarial (Gain)/ loss recognized during the year Total Expenses recognized in the Profit and Loss account Current Year 2.30 0.43 (0.45) 2.36 4.64 Current Year 10.47 15.26 (4.79) (4.79) Current Year 5.38 0.43 2.30 2.36 10.47 Current Year 8.00% 8.50% 5% F5Y 8.5% TA
(Rs. in lakhs)
Previous Year Nil Nil Nil
Previous Year Nil Nil Nil Nil Nil Nil
Previous Year Nil Nil Nil Nil Nil
Previous Year Nil Nil Nil Nil Nil Nil
F61
(Rs. in lakhs) G) Related Party Disclosure: As required under Accounting Standard 18 Related Party Disclosure (AS-18), following are details of transactions during the year with the related parties of the Company as defined in AS 18: For the year ended 31 March, 2012 i) Key Management Personnel Mr. Nikhil Chaturvedi Mr. Akhil Chaturvedi Mr. Salil Chaturvedi Mr. Deep Gupta Mr. Nigam Patel Mr. Rakesh Rawat Mr. J.K. Jain Director Director Director Director Director Director Director
st
Prozone Capital Shopping Centres Limited Notes to Accounts for the year ended 31st March 2012
ii) Shareholder having significant interest in the Company Nailsfield Limited, Mauritius iii)Enterprises owned or significantly influenced by key management personnel or their relatives Starlight City Commercial Developers Private Limited Bright Land Developers Private Limited Provogue (India) Limited iv) Subsidiaries / Step down Subsidiaries :Alliance Mall Developers Co Private Limited Standard Mall Private Limited Royal Mall Private Limited Jaipur Festival City Private Limited Prozone Liberty International Ltd, Singapore Prozone International Ltd, Singapore Omni Infrastructure Private Limited Empire Mall Private Limited Hagwood Commercial Developers Private Limited Kruti Multitrade Private Limited v) Joint Ventures and Coventurers :Emerald Buildhome Private Limited Moontown Trading Company Private Limited Shalom Voyagers Private Limited
F62
Prozone Capital Shopping Centres Limited Notes to Accounts for the year ended 31st March 2012 Related Party Transactions a) Sale / Purchase of goods and services
(Rs. in lakhs)
Amount due from Rent Paid Particulars Related Parties Enterprises owned or significantly influenced by key management personnel or their relatives Provogue (India) Limited 63.95 120.00 Sale of Reimbursemen services t of expense Subsidiaries / Step down Subsidiaries Alliance Mall Developers Co. Private Limited 315.67 Royal Mall Private Limited Omni Infrastructure Private Limited 46.25 Empire Mall Private Limited 274.41 Hagwood Commercial Developers Private Limited. 176.58
296.49 0.57 202.82 276.84 169.16
b) Loans given and repayment thereof Particulars Pursuant to the Scheme Loans Given Received Back Written Off Interest Accrued
Subsidiaries / Step down Subsidiaries Alliance Mall Developers Co. Private Limited 2.56 Royal Mall Private Limited 681.93 Prozone Liberty International Ltd, Singapore 18.82 Prozone International Ltd, Singapore 44.92 Omni Infrastructure Private Limited 103.95 Empire Mall Private Limited 9,839.83 Hagwood Commercial Developers Private Limited. 140.63 Joint Ventures and Coventurers Moontown Trading Company Private Limited. (JV) Shalom Voyagers Private Limited (CoV) c) Loans taken and repayment thereof Particulars Pursuant to the Scheme 313.71 255.00
Amount due from Related Parties 112.29 38.42 48.05 438.22 4,320.17 23.38
167.83 19.60 3.13 329.38 1,245.08 115.13
58.10 681.93 24.99 7,125.73 232.38
29.88 360.99 -
41.76 255.00
271.95 -
Loans Taken
Loan Repaid
Interest Paid
Amount due to Related Parties 34.59 1,729.49
Enterprises owned or significantly influenced by key management personnel or their relatives Provogue (India) Limited 560.61 166.75 717.51 0.06 Joint Ventures and Coventurers Emerald Buildhome Private Limited.(JV) 1,729.49 F63
Prozone Capital Shopping Centres Limited Notes to Accounts for the year ended 31st March 2012 d) Share Application Money Given Particulars Pursuant to the Scheme Received Back Written Back
(Rs. in lakhs)
Subsidiaries / Step down Subsidiaries Kruti Multitrade Private Limited Joint Ventures and Coventurers Moontown Trading Company Private Limited. (JV) 357.51 37.60 283.40
Amount due from Related Parties 36.51
200.00
200.00
e) Remuneration to Key Management Personnel Particulars i) Key Management Personnel Mr. Nikhil Chaturvedi Mr. Salil Chaturvedi Mr. Nigam Patel Remuneration 84.00 24.58 60.00 Amount due to Related Parties 3.51 1.00
For the year ended 31 March 2011: i)Key Management Personnel Mr. Rakesh Rawat Mr. J.K. Jain Director Director
st
ii)Holding Company :- Provogue (India) Limited Related Party Transactions Loans taken and repayment Particulars Holding Company Provogue (India) Limited Loans Taken 24.00 Loan Repaid 0.08 Interest Paid 0.76 Amount due to Related Parties 24.68
Note: Related Parties are as disclosed by the Management and relied upon by the auditors. H) The Company is mainly engaged in the business of designing, developing, owning and operating of Shopping Malls, Commercial and Residential Premises through its various SPVs. The Company is also providing related management consultancy services to its SPVs. There is no other reportable business segment as per Accounting Standard (AS-17) issued by The Institute of Chartered Accountants of India. I) In January, 2012, the Income Tax Authorities had carried out search and seizure proceedings at the premises of the Company, its promoters and its senior officials under the provisions of section 132 of Income Tax Act, 1961. The Company has since produced all relevant materials and responded to the various queries raised by the Income Tax Authorities from time to time. The Company presently believes that there will not be any revision in income booked in the current as well as earlier accounting years. The proceedings shall be attended to as per provisions of the Income tax laws.
F64
(Rs. in lakhs) J) Figures less than Rs. 500/- have been shown at actuals wherever statutory required to be disclosed since figures have been rounded off to the nearest thousands K) Till the year ended 31st March 2011, the Company was using Old Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31st March, 2012, the Revised Schedule VI notified under the Companies Act, 1956 has become applicable to the Company. The Company has re-grouped, reclassified and/or re-arranged previous years figures, wherever necessary to conform to current years classification. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements applicable in the current year.
Prozone Capital Shopping Centres Limited Notes to Accounts for the year ended 31st March 2012
As per our Report of even date attached For Singrodia Goyal & Co. Chartered Accountants For and on behalf of the Board
F65
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Industry Outlook India had a GDP on a purchasing power parity basis (equalized exchange rates) of an estimated US $ 4.046 trillion in calendar 2010 (Source: United States Central Intelligence Agency Factbook). This made the Indian economy the fifth largest in the world after the European Union, United States, China and Japan. The broad-based recovery of the Indian economy started in the second half of FY 2010 and continued through the first quarter of FY 2011. The Indian economy exhibited robust acceleration in the pace of recovery in the fourth quarter of FY 2010 led by strong growth in industrial activities. GDP growth in the first quarter of FY 2011 showed a significant recovery from the 5.8 % growth recorded during the second half of FY 2009 and also grew over the 7.7% figure of previous quarter by recording a figure of 8.5%, mainly on account of the investment component. However, the growth rates of GDP at market prices and all its components were lower in the first quarter of 2011-12 than in the corresponding quarter of the previous year, which was 9.1% (Source: RBIs Macroeconomic and Monetary Developments Second Quarter Review 2011-12 dated October 24, 2011). The global growth projection for 2011 was lowered to 4.0% from 4.3%. The IMF lowered the estimate for both, advanced economies, which saw the deepest cut, as well as for emerging and developing economies. It also lowered its growth forecast for India to 7.8% (for 2011) at market prices corresponding to 7.6% at factor cost (for 2011-12 and 2012-13) (World Economic Outlook, IMF, September, 2011). The global economic uncertainty rising out of the sovereign debt crisis, US credit rating down gradation, Euro zone crisis and downward pressure in Japan's economy has accelerated the shifting of the economic power axis to the emerging economies. However, the relatively higher growth rates and dynamic environment of the emerging Asian economies are increasingly gaining confidence of the global investors. China and India being the two prominent economic powers of the region are likely to dictate the global investment environment in the near future. The appetite for real estate investments has subsided largely due to the slowdown in the Indian economy and increasing real estate prices. In the absence of real estate investment instruments like Real Estate Investment Trust (REIT) in conjunction with Real Estate Mutual Fund (REMF), the real estate sector suffers from several shortcomings including less transparency and lower liquidity. With these becoming active, the real estate market will get a structured monetization vehicle for the capital intensive commercial office and retail market. The present economic situation may be viewed as a transitory point for the real estate dynamics in India. Although, the market looks positive in the medium term with considerable demand across sectors, the industry seems to be plagued with thoughts of the revised land acquisition policy and rising interest rates. Simultaneously, end users and developers are feeling the heat of a continuous rise in construction costs and inflation. However the long term perspective suggests that the sector will continue to witness demand in all asset classes in light of the present economic conditions. As housing shortage remains a critical element for India, the residential segment will exhibit a buoyant trend. The demand of commercial office space across the seven major cities by the end of 2015 is not likely to exceed or meet the pre-recessionary times which reflects the gradual recovery mode. As the organized retail growth continues with its steady trend, the demand is expected to rise above the supply levels in 2015. Private Equity continued as a preferred investment option for real estate. This trend is likely to continue as lending norms get tightened further by financial institutions. The sectors like healthcare and hospitality are also showing a positive outlook in the next few years. However the growth momentum in real estate will largely depend on the overall economic outlook. As the present situation of high inflation and widening trade current deficit causes worry for investors, the Government's early action towards a prevention will be crucial. Hence implementing second generation reforms in regard to land, taxation and FDI in retail, can prove to be crucial for sustaining the growth across sectors. Business Overview Incorporated in September 2007 as Castle Mall Private Limited, our Company is a subsidiary of Provogue (India) Limited (Provogue), engaged in the business of real estate development. Our Promoter, Provogue is inter alia engaged in the business of designing, manufacturing and selling branded readymade garments and other accessories under the brand name "Provogue", which has been positioned as a leading fashion label in the Indian market.
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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Industry Outlook India had a GDP on a purchasing power parity basis (equalized exchange rates) of an estimated US $ 4.046 trillion in calendar 2010 (Source: United States Central Intelligence Agency Factbook). This made the Indian economy the fifth largest in the world after the European Union, United States, China and Japan. The broad-based recovery of the Indian economy started in the second half of FY 2010 and continued through the first quarter of FY 2011. The Indian economy exhibited robust acceleration in the pace of recovery in the fourth quarter of FY 2010 led by strong growth in industrial activities. GDP growth in the first quarter of FY 2011 showed a significant recovery from the 5.8 % growth recorded during the second half of FY 2009 and also grew over the 7.7% figure of previous quarter by recording a figure of 8.5%, mainly on account of the investment component. However, the growth rates of GDP at market prices and all its components were lower in the first quarter of 2011-12 than in the corresponding quarter of the previous year, which was 9.1% (Source: RBIs Macroeconomic and Monetary Developments Second Quarter Review 2011-12 dated October 24, 2011). The global growth projection for 2011 was lowered to 4.0% from 4.3%. The IMF lowered the estimate for both, advanced economies, which saw the deepest cut, as well as for emerging and developing economies. It also lowered its growth forecast for India to 7.8% (for 2011) at market prices corresponding to 7.6% at factor cost (for 2011-12 and 2012-13) (World Economic Outlook, IMF, September, 2011). The global economic uncertainty rising out of the sovereign debt crisis, US credit rating down gradation, Euro zone crisis and downward pressure in Japan's economy has accelerated the shifting of the economic power axis to the emerging economies. However, the relatively higher growth rates and dynamic environment of the emerging Asian economies are increasingly gaining confidence of the global investors. China and India being the two prominent economic powers of the region are likely to dictate the global investment environment in the near future. The appetite for real estate investments has subsided largely due to the slowdown in the Indian economy and increasing real estate prices. In the absence of real estate investment instruments like Real Estate Investment Trust (REIT) in conjunction with Real Estate Mutual Fund (REMF), the real estate sector suffers from several shortcomings including less transparency and lower liquidity. With these becoming active, the real estate market will get a structured monetization vehicle for the capital intensive commercial office and retail market. The present economic situation may be viewed as a transitory point for the real estate dynamics in India. Although, the market looks positive in the medium term with considerable demand across sectors, the industry seems to be plagued with thoughts of the revised land acquisition policy and rising interest rates. Simultaneously, end users and developers are feeling the heat of a continuous rise in construction costs and inflation. However the long term perspective suggests that the sector will continue to witness demand in all asset classes in light of the present economic conditions. As housing shortage remains a critical element for India, the residential segment will exhibit a buoyant trend. The demand of commercial office space across the seven major cities by the end of 2015 is not likely to exceed or meet the pre-recessionary times which reflects the gradual recovery mode. As the organized retail growth continues with its steady trend, the demand is expected to rise above the supply levels in 2015. Private Equity continued as a preferred investment option for real estate. This trend is likely to continue as lending norms get tightened further by financial institutions. The sectors like healthcare and hospitality are also showing a positive outlook in the next few years. However the growth momentum in real estate will largely depend on the overall economic outlook. As the present situation of high inflation and widening trade current deficit causes worry for investors, the Government's early action towards a prevention will be crucial. Hence implementing second generation reforms in regard to land, taxation and FDI in retail, can prove to be crucial for sustaining the growth across sectors. Business Overview Incorporated in September 2007 as Castle Mall Private Limited, our Company is a subsidiary of Provogue (India) Limited (Provogue), engaged in the business of real estate development. Our Promoter, Provogue is inter alia engaged in the business of designing, manufacturing and selling branded readymade garments and other accessories under the brand name "Provogue", which has been positioned as a leading fashion label in the Indian market.
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Pursuant to the Composite Scheme of Arrangement and Amalgamation, (i) the retail-centric real estate undertaking of Provogue has been demerged into our Company, and (ii) PEPL, another subsidiary of Provogue engaged in real estate development, has been merged into our Company. PEPL, established in November 2004 with the objective of developing, owning and managing various real estate assets, is a joint venture between Provogue and Capital Shopping Centres Group Plc (CSC), a UK FTSE100 company with over GBP 7 billion in retail infrastructure property assets. CSC owns 10 of the top 25centres in the UK including the Metrocentre in Newcastle, one of Europes largest shopping centres. The main objects clause of Memorandum permits us to engage in the business of mixed-use real estate development. Accordingly, we plan to engage in a number of real estate development projects in India, encompassing various categories of real estate retail, residential, commercial and hospitality with a focus on growing markets in India. Our business will encompass all aspects of real estate development, commencing from the identification and acquisition of land, to the planning, execution and marketing of its projects right through to maintenance/ management of its completed developments. Our business model is retail-centric, with the residential and commercial properties expanding around the retail component, thereby creating gated townships. As of March 31, 2012, we have acquired 169.55 acres of land with clear title across Aurangabad, Coimbatore, Indore, Jaipur, Nagpur and Mysore. Further, as of March 31, 2012, we have developed a built-up area of around 1.62 million sq.ft. on a GLA of 800,410 sq.ft. of property in Aurangabad, and plan to develop around 11 million sq. ft. of mixed use property over the next five years. Key Competitive Strengths Retail and Residential Market Opportunity There are strong growth opportunities offered by the real estate markets in India, particularly those in the non-metro regions. The organized Indian retail industry today is witnessing significant growth and this trend is expected to continue in the future. Professional shopping mall development firms are needed to ensure that contemporary retail infrastructure projects are delivered in a timely and efficient manner, adhering to world-class standards and are designed to meet the needs of the modern Indian consumer. Of the estimated 300 million Indian consumers only 15% live in the six major metro cities. Present Indian mall development in non-metro regions is fragmented and mainly small scale. India is witnessing a high shift to urbanisation. With 17% of the worlds population living on 3% of the worlds land mass, the major metros are under pressure to meet demand for housing and more of Indias mobile population are migrating to non-metro and other emerging cities where higher standards of living are generally more affordable. A diversified portfolio of real estate projects The focus of our real estate business is to bring quality construction in the non-metro and other emerging cities in India. Our current project portfolio is widely spread across cities such as Aurangabad, Coimbatore, Indore, Jaipur, Mysore and Nagpur, and targets diverse categories of real estate development retail, residential as well as commercial. We believe that the range of locations and product offerings that comprise our project portfolio will help provide us with stable cash flows over the near to medium term. Our projects are carefully planned and we conduct market research and analysis of our proposed projects to analyse absorption trends, competitive factors, market prices and product gaps. As a result, we are able to customize our product offerings to cater to customer and market demands at the particular location of the project. The table below sets out the number of our completed projects and our various projects under development/ forthcoming projects across various cities, as of March 31, 2012: City Aurangabad Coimbatore Indore Jaipur Nagpur Completed Projects Number 1 Area (sq. ft.) 800,410 Projects Under Development/ Forthcoming Projects Number Area (sq. ft.) 1 773,615 3 2,536,318 1 2,361,000 1 1,500,000 3 2,619,000 Balance FSI Area (sq. Ft.) 899,170 2,182,296 1,275,900 1,634,882 Total Area (sq. ft.) 1,574,025 3,435,488 4,543,296 2,775,900 4,253,882
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Mysore Total
800,410
1 10
1,215,868 11,005,801
5,992,248
1,215,868 17,798,459
Our association with established players Our association with major international players such as Capital Shopping Centres Group Plc, Triangle Real Estate India Fund and LTG International provides us with the necessary operational and financial expertise to conduct our business. Capital Shopping Centres Group Plc, is a leading specialist developer and manager of shopping centres in UK having a portfolio of 14 shopping centres, including 10 of the top 25 shopping centres in UK. Triangle Real Estate India Fund, co-promoted by ICS Realty Group and Old Mutual Investment Group Property Investments is an investor in our project-specific SPVs for the Aurangabad, Coimbatore and Nagpur locations. Similarly, LTG International, promoted by Lewis Trust Group, an investment company that operates retail stores, real estate, wealth management business and hotels globally, is also an investor in our project-specific SPVs for the Aurangabad, Coimbatore and Nagpurlocations. We believe that through these strategic associations and partnerships, we are able to blend the necessary global experience with our local knowledge and experience, enabling us to create, develop and manage world-class regional shopping centres and associated mixed-use developments. Our strong lineage and our reputation for quality In addition to our association with established real estate players mentioned above, we believe that we are a strong brand name known for quality. In our real estate business, the Prozone Mall at Aurangabad, is a known landmark in the region and as per our internal estimates, experiences an average footfall rate of approximately 23,500 footfalls during weekdays and up to 50,000 footfalls during weekends. We believe customers identify our projects with quality construction and, as a result, we enjoy customer confidence. We continue to develop our in-house competencies for every stage in the property development life cycle, commencing from property development inception to execution and culminating in property delivery. We have a separate inhouse quality assurance team that undertakes regular inspection of our projects to ensure adherence to our quality standards. Experienced management team We have a dynamic hands-on management team led by a group of experienced and well-qualified professionals. Our management includes individuals from various disciplines such as architecture, engineering, project supervision, finance and accounting, marketing and sales. In addition, the experience of our management in dealing with the suppliers from whom we source construction materials and the contractors we engage for construction services enables us to better manage the quality, schedule and cost of the materials and construction in our projects. Our management personnel have the necessary experience in anticipating market trends, identifying new markets and potential sites for development, as well as anticipate trends in design, engineering, construction and marketing of projects in accordance with changing customer requirements. We believe that the strength of our management team and their understanding of the real estate market will enable us to continue to take advantage of current and future market opportunities. Financial Comparison against prior periods The Retail Centric Real Estate Business of Provogue stands transferred to the Company w.e.f. April 1, 2011, as per the implementation of the Scheme. Since the Company did not have much activity by way of business operations prior to the implementation of the Scheme, a financial comparison is not enclosed.
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SECTION VI LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS Except as stated below (i) there are no outstanding legal proceedings, suits, criminal or civil prosecutions, statutory or legal proceedings including those for economic offences, tax liabilities, show cause notices or legal notices pending against our Company, Directors/ Promoters in relation to the Company, and Group Entities or against any other company whose outcome could have a materially adverse effect on the business, operations or financial position of our Company, and (ii) there are no defaults including non-payment or overdue payment of statutory dues, over-dues to banks or financial institutions, defaults against banks or financial institutions or rollover or rescheduling of loans or any other liability, defaults in dues payable to holders of any debenture, bonds and fixed deposits or arrears on cumulative preference shares issued by our Company, Promoter and Group Entities, defaults in creation of full security as per the terms of issue/other liabilities, proceedings initiated for economic, civil or any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (1) of Part I of Schedule XIII of the Companies Act) other than unclaimed liabilities of our Company except as stated below, and (iii) no disciplinary action has been taken by SEBI or any stock exchange against our Company, Promoter, Group Entities or Directors. Further, (i) except as disclosed below, neither our Company nor our Promoter, Group Entities, and Directors, have been declared as wilful defaulters by the RBI or any other governmental authority and, (ii) there are no violations of securities laws committed by them or penalties imposed on them thereunder in the past or pending against them, and adverse findings regarding compliance with securities laws. Unless stated to the contrary, the litigations summarised below are as on the date of this Information Memorandum. I. Contingent liabilities not provided for During FY2012, the Company has given guarantee to IDBI Bank Limited, Central Bank of India Limited and State Bank of Patialia on behalf of its subsidiary Empire Mall Private Limited for an amount of Rs. 180 crore. Apart from the foregoing, there are no contingent liabilities not provided for as on March 31, 2012. II. 1. Legal proceedings involving the Company Adverse findings against the Company as regards compliance with the securities laws. There are no adverse findings against our Company as regards compliance with the securities laws. 2. Outstanding litigation against other companies whose outcome could have an adverse effect on the Company There are no outstanding legal proceedings, suits, criminal or civil prosecutions, statutory or legal proceedings including those for economic offences, tax liabilities, show cause notices or legal notices pending against any company whose outcome could have a material adverse effect on the position of our Company. 3. Proceedings initiated against the Company for economic offences There are no proceedings initiated against our Company for any economic offences. 4. Potential legal proceedings against the Company There are no potential legal proceedings against our Company that we are presently aware of or in connection with which we have received any notice. 5. Proceedings initiated by SEBI or the stock exchanges There are no proceedings initiated against our Company by SEBI or stock exchanges for any economic offences.
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6.
Legal proceedings against the Company Civil proceedings
Following are proceedings that had been initiated against the Transferor Company, which were assigned in the name of the Company pursuant to the Scheme: CASE No. Particulars O.P. NO. 1556 OF 2011 PEPL had invoked arbitration against Delara Tourism Corporation Limited (hereinafter referred to before the Chief Judge of as Delara) by termination of the agreement and claiming refund of amounts paid by PEPL to the City Civil Court at Delara and also damages. Delara had also filed a counter claim award was passed by the Hyderabad. arbitrator in favour of PEPL awarding a sum of Rs.1.50 Crores to be paid by Delara to PEPL. Delara has now challenged this award before the district court by filing an appeal. This appeal is pending. FIR filed by PEPL with the An FIR had been filed by PEPL against Mr. Dinesh Jalalpara, Mr. Hemant Shah, Mr. Mayank Amboli Police Station Shah and others parties for defrauding PEPL into parting with Rs.3.61 Crores by making false (through the Economic representations to PEPL and also for impersonation etc. The investigation is presently on. Offences Wing) In the Court of 5th Judge, One Mrs. Nirmala Bum has filed a suit against the predecessor in title of land in Indore alleging Case No. 434 of 2007. that there was an agreement between them regarding an area admeasuring 1.18 Acres, and has made PEPL and Omni Infrastructure Private Limited (one of the group entities of the Company, hereinafter referred to as Omni) parties to the suit. The suit was filed on 23rd October, 2007. The plaintiff applied for interim relief which was rejected on 8th February, 2008. The plaintiff appealed against the said order on 3rd April, 2008, which was also disposed off on 8th September, 2008. Hence, there is no interim order against PEPL and Omni, though the main suit is pending. Pursuant to filing of the suit, the plaintiff also wanted to modify the scope of the suit and took out an application for modification of the plaint. This application was rejected by the court. An appeal was preferred before the Honourable Madhya Pradesh High Court against this order. The Madhya Pradesh High Court dismissed this appeal. The Plaintiff has now approached the Honourable Supreme Court challenging this order of the Madhya Pradesh High Court.
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Other proceedings In January 2012, the Income Tax authorities had carried out search and seizure proceedings at the premises of the Company, its Promoters and its senior officials under the provisions of section 132 of the Income Tax Act, 1961. The Company has since responded to the various queries raised by the Income Tax authorities from time to time and produced the relevant materials as directed by the authorities. The proceedings shall be attended to as per the provisions of the Income Tax laws. There have been no other proceedings against our Company. 7. Legal proceedings by the Company Civil proceedings There have been no civil proceedings by our Company. Other proceedings There have been no other proceedings by our Company. III. Legal proceedings involving the Directors of the Company There are no proceedings involving the Directors of our Company in relation to matters in connection with the Company. IV. Legal proceedings involving our Promoter 1. Legal proceedings by our Promoter
There are no proceedings filed by our Promoter in relation to matters in connection with the Company. 2. Legal proceedings against our Promoter Particulars Advance Magazine Publishers Inc., had filed a trademark violation suit against Provogue in the Gurgaon District Court. The suit was dismissed in favour of Provogue. Subsequently, Advance Magazine has filed an Appeal before the Punjab and Haryana High Court against this lower court order. However, no interim reliefs have been granted to Advance Magazine and the Appeal is pending. Arbitration is invoked by Ambience Commercial Developers Private Limited for pre-mature termination of the lease by Provogue. They have claimed certain amount as rent for the unexpired lock-in period and damages for breach of contract and we have filed a counter claim. The matter has been placed for a hearing before the Arbitrator Mrs. Justice (Retd.) Usha Mehra. This suit is filed for recovery of a sum of Rs. 3,28,435/- plus interest @ 24% p.a. as pending amounts towards designing and architects fees and attending various stores for inspection of sites from time to time.
CASE No. Case No. 5250 of 2008 before the Punjab and Haryana High Court. Arbitration Dispute with Ambience Commercial Developers Private Limited Suit No. 1160 of 2011 filed by M/s. DCA Architects before the Additional District Judge, Dwarka, New Delhi Suit No. 1161 of 2011 filed by M/s. DCA Workshop before the Additional District Judge, Dwarka, New Delhi
This suit is filed for recovery of a sum of Rs. 7,26,138/- plus interest @ 24% p.a. as pending amounts against the supply of goods at various locations and work done at various locations in respect of Provogue Stores.
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V.
Legal proceedings involving our Group Entities
Omni Infrastructure Private Limited CASE No. Particulars In the Court of 5th One Mrs. Nirmala Bum has filed a suit against the predecessor in title of land in Indore alleging Judge, Case No. 434 of that there was an agreement between them regarding an area admeasuring 1.18 Acres, and 2007. has made PEPL and Omni Infrastructure Private Limited (hereinafter referred to as Omni) parties to the suit. The suit was filed on 23rd October, 2007. The plaintiff applied for interim relief which was rejected on 8th February, 2008. The plaintiff appealed against the said order on 3 rd April, 2008, which was also disposed off on 8th September, 2008. Hence, there is no interim order against PEPL and Omni, though the main suit is pending. Pursuant to filing of the suit, the plaintiff also wanted to modify the scope of the suit and took out an application for modification of the plaint. This application was rejected by the court. An appeal was preferred before the Honourable Madhya Pradesh High Court against this order. The Madhya Pradesh High Court dismissed this appeal. The Plaintiff has now approached the Honourable Supreme Court challenging this order of the Madhya Pradesh High Court. Material developments since the last balance sheet date In the opinion of our Board, there have not arisen, since Fiscal 2012, any circumstances that materially or adversely affect or are likely to affect our profitability or the value of our consolidated assets or its ability to pay its material liabilities within the next 12 months.
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SECTION VII REGULATORY DISCLOSURES REGULATORY AND STATUTORY DISCLOSURES Authority for Listing The Bombay High Court has vide its order dated February 10, 2012 has approved the Composite Scheme of Arrangement and Amalgamation between Provogue, PEPL and PCSCL and their respective shareholders and creditors. In accordance with the Scheme, the retail centric real estate business of Provogue stood transferred to and vested with the Company, w.e.f. April 1, 2011 (the Appointed Date under the Scheme), pursuant to sections 391 to 394 of the Companies Act, 1956. In accordance with the said Scheme, the Equity Shares of the Company issued pursuant to the Scheme as well as the existing Equity Shares of the Company shall be listed and admitted to trading on BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE). Such listing and admission for trading is not automatic and will be subject to fulfilment by the Company of the listing criteria of BSE and NSE, and also subject to such other terms and conditions as may be prescribed by BSE and NSE at the time of the application by the Company seeking listing. The Company has submitted this Information Memorandum, containing information about itself, making disclosure in line with the disclosure requirement for public issues, as applicable to BSE and NSE for making the said Information Memorandum available to public through their websites viz. www.bseindia.com and www.nseindia.com. The Company has made this Information Memorandum available on its website viz., www.prozonecsc.com. Our Company has made a public announcement in one English (Financial Express), one Hindi newspaper (Jansatta) and one Marathi newspaper (Navshakti) with nation-wide circulation containing particulars in line with the details required as in terms of SEBI (ICDR) Regulations, 2009. Prohibition by SEBI The Company, its Promoters, Directors or any of the Company's associates or group companies with which the Directors of the Company are associated as Directors or Promoters have not been prohibited from accessing the capital market under any order or direction passed by SEBI. General Disclaimer from the Company The Company accepts no responsibility for statements made otherwise than in this Information Memorandum or in the advertisements or any other material issued by or at the Companys instance and anyone placing reliance on any other source of information, including our Companys web site, www.prozonecsc.com, would be doing so at his or her own risk. All information shall be made available by our Company to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner. Disclaimer from the Stock Exchanges While the Company has received the in-principle approval from both the NSE and the BSE with respect to the Scheme as well as the listing of shares being issued pursuant to the Scheme, it may be noted that the exchanges have not expressed any opinion on the fairness or otherwise of the valuation of the entities concerned or the exchange ratio proposed in the Scheme. Filing Copies of this Information Memorandum have been filed with BSE and NSE. Listing The Company has received in-principle approvals from both BSE as well as NSE for its Equity Shares to be listed and admitted to dealings on the Stock Exchanges. The Company has nominated NSE as the designated stock exchange for the aforesaid
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listing of the shares. The Company shall ensure that all steps for completion of necessary formalities for listing and commencement of trading at all the Stock Exchanges mentioned above. Demat Credit The Companys equity shares have been admitted by both NSDL and CDSL. Pursuant to the Scheme, on March 12, 2012, the Company allotted 15,23,52,883 Equity Shares of Rs. 2/- per share to all the eligible shareholders of Provogue and PEPL. NSDL and CDSL have given the necessary credit to the accounts of the shareholders on March 22, 2012. Dispatch of share certificates Pursuant to the Scheme, upon allotment of shares to eligible shareholders, the allotment advices to those shareholders who were holding shares in in demat form and allotment advices along with share certificates to those shareholders who were holding shares in physical form, as on the Record date have been dispatched. Expert Opinions Apart from the Statement of Tax Benefits obtained from M/s. Singrodia Goyal & Co. and disclosed in this Information Memorandum on page 37 of this Information Memorandum, we have not obtained any expert opinions. Previous rights and Public Issues The Company was incorporated on September 14, 2007 and has not undertaken any such issuances. Promise vis--vis performance This is for the first time the Company is getting listed on the Stock Exchanges. There are no outstanding debentures or bonds and redeemable preference shares and other instruments previously issued by the Company. Stock Market Data for Equity shares of the Company Equity Shares of the Company are not listed on any Stock Exchanges. The Company is seeking approval for listing of its shares through this Information Memorandum. Disposal of Investor Grievances Link Intime India Private Limited is the Registrar and Share Transfer Agent of the Company. All documents received by the Registrar and Share Transfer Agent are classified based on the nature of the queries/actions to be taken and coded accordingly. The documents are then electronically captured before forwarding to the respective processing units. The documents are processed by professionally trained personnel. The Company has appointed Ms. Snehal Bansode as the Compliance Officer and she may be contacted in case of any problems at the following address: Ms. Snehal Bansode 105/106, Provogue House, Off New Link Road, Andheri (West), Mumbai 400 053 Telephone: +9122 3068 0564; Facsimile: +9122 3068 0570 E-mail: snehal.bansode@prozonecsc.com
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SECTION VIII ARTICLES OF ASSOCIATION MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION The main provisions of the Articles of Association are detailed below. Please note that each provision herein below is numbered as per the corresponding article number in the Articles of Association and capitalized/defined terms herein have the same meaning given to them in the Articles of Association. CAPITAL Authorised Capital 3.A The Authorised Share Capital of the Company is Rs. 40,05,00,000/- (Rupees Forty Crore Five Lac only) divided into 20,02,50,000 (Twenty Crore Two Lac Fifty Thousand) Equity Shares of Rs. 2/- (Rupees Two only) each. The authorized share capital of the Company shall be the Capital as specified in Clause V of the Memorandum of Association, with power to increase or reduce the share capital of the Company and to divide the shares in the capital for the time being into several classes as permissible in law and to attach thereto respectively such preferential, deferred, qualified or special rights, privileges or conditions as may be determined by or in accordance with the Articles of Association of the Company and to vary, modify, amalgamate or abrogate any of such rights, privileges or conditions in such manner as may for the time being be provided in the Articles of Association. B. Subject to the right of the holders of any shares entitled by the terms of issue of preferential repayment over the equity shares in the event of winding up of the Company, holders of the equity shares shall be entitled to be repaid the amount of Capital paid up or credited as paid up on such equity shares and all surplus assets thereafter shall belong to the holders of Equity Shares in proportion to the amount paid up or credited as paid up on such equity shares respectively at the commencement of the winding up. C. The preference shares shall confer on the holder thereof the right to a cumulative preferential dividend for each year at a rate as may be fixed by the Board of Directors at the time of issue thereof or revising rate of interest on the existing preference shares in conformity with the rate prescribed by law from time to time subject to deduction of tax at sources at the prescribed rates, on the capital paid up or credited as paid up thereon, and in the event of winding up the right to redemption of capital and arrears of dividend accrued up to the date of the commencement of the winding up whether declared or undeclared shall rank in priority to equity shares in the capital of the Company for the time being, but the said preference shares shall not entitle the holder thereof to any further or other participation in the profits or assets of the Company. Increase in Capital 5. The Company in General Meeting may from time to time by Ordinary Resolution increase the capital by the creation of new shares, the increases to be of such aggregate amount and to be divided into Shares of such respective amounts as the Resolution shall prescribe, subject to the provisions of the Act, any shares of the original or increased capital shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the General Meeting resolving upon the creation thereof, shall direct, and if no direction be given, as the Directors shall determine, and in particular, such shares may be issued with a preferential or a qualified right to dividends, and in the distribution of the assets of the Company in conformity with Section 87 and 88 of the Act. Whenever the capital of the Company has been increased under the provisions of this Article, the Directors shall comply with the provisions of Section 97 of the Act. New Capital same as existing capital 6. Except so far as otherwise provided by the conditions of issue or by these presents, any capital raised by the creation of new shares shall be considered as part of the existing capital, and shall be subject to the provisions herein contained, with reference to the payment of calls and installments, forfeiture, lien, surrender, transfer and transmission, voting and otherwise. Reduction of Capital 10. The Company may from time to time by Special Resolution, subject to the provisions of Section 78, 80, 100 to 104 inclusive of the Act, reduce its Share Capital and any Capital Redemption Reserve Account or Share Premium Account in any manner for the time being authorised by law, and in particular without prejudice to the generality of the forgoing power may:
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a) b) c)
extinguish or reduce the liability on any of its shares in respect of share capital not paid up; either with or without extinguishing or reducing liability on any of its shares, cancel any paid up share capital which is lost or is unrepresented by available assets; or either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the Company; and may, if and so far as is necessary, alter its Memorandum, by reducing the amount of its share capital and of its shares accordingly.
Sub-division, consolidation and cancellation of shares 11.A. The Company in general meeting may subject to the provisions of Section 94 of the Act by Ordinary Resolution alter the conditions of its Memorandum as follows, that is to say, it may: a) Consolidate and divide any of its Share Capital into Shares of larger amounts than its existing shares; b) Sub-divide its shares or any of them into shares of smaller amount than originally fixed by the Memorandum, so however, that in the sub-division the proportion between the amount paid-up and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived and so that as between the holders of the shares resulting from such sub-division one or more of such shares may, subject to the provisions of the Act, be given any preference or advantage or otherwise over the others or any other such share. c) Convert all or any of its fully paid-up shares in to stock and reconvert that stock into fully paid-up shares of any denomination. d) Cancel shares which, on the date of such General Meeting have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of shares so cancelled; B. The cancellation of shares in pursuance of this Article shall not be deemed to be reduction of Share Capital. CALLS Directors may make calls 43. The Board may, from time to time, subject to the terms on which any shares may have been issued and subject to the conditions of allotment, by a resolution passed at a meeting to the condition of allotment by a resolution passed at a meeting of the Board (and not by circular resolution) make such call as it thinks fit upon the Members in respect of all moneys unpaid on the shares held by them respectively and such Member shall pay the amount of every call so made on him to the person or persons and at the time and places appointed by the Board. A call may be made payable by installments. Notice of Calls 44. Twenty-one days Notice in writing of any call shall be given by the Company specifying the time and place of payment and the person or persons by whom such call shall be paid. Calls to date from resolution 45. A call shall be deemed to have been made at the time when the resolution authorizing such call was passed at the meeting of the Board. Call may be revoked or postponed 46. A call may be revoked or postponed at the discretion of the Board. Liability of joint holders 47. The joint-holders of any share shall be jointly and severally liable in respect of all calls or installments and other payment, which ought to me made in respect of such shares. Directors may extend time 48. The Board may from time to time at its discretion, extend the time fixed for the payment of any call and may extend such time as to all or any of the Members who from residence at a distance or other cause, the Board may deem fairly entitled to such extension but no Member shall be entitled to such extension save as a matter of grace and favor. Calls to carry interest 49. If any Member fails to pay any call due from him on the day appointed for payment thereof, or any such extension thereof as aforesaid, he shall be liable to pay interest on the same from the day appointed for the payment thereof to the time of actual payment at such rate as shall from time to time be fixed by the Board not exceeding 18 percent per
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annum but nothing in this Article shall render it obligatory for the Board to demand or recover any interest from any such Member and the Directors may waive payment by any one or more Members of any such interest wholly or in part. Sums deemed to be calls 50. Any sum, which by the terms of issue of a share becomes payable on allotment or at any time fixed date, whether on account of the nominal value of the share or by way of premium shall for the purposes of these Articles be deemed to be a call duly made and payable on the date on which by the terms of issue the same becomes payable, and in case of non-payment of such sum all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of call duly made and notified. Calls on shares of same class to be made on uniform basis 54.A. Any calls for future share capital are made on shares such calls shall be made on a uniform basis on all shares falling under the same class. For the purpose of this Article, shares of the same nominal value on which different amount have been paid up shall not be deemed to fall under the same class. B. If by the condition of allotment for any shares the whole or part of the amount of issue price thereof shall be payable by installments every such installment shall, when due be paid to the company by the person who, for the time being and from time to time shall be registered holder of the share or his legal representative. C. The provisions of the Articles under this Chapter, to the extent applicable, shall mutates mutandis apply to Debentures of the company. FORFEITURE AND SURRENDER OF SHARE If money payable on shares not paid notice to be given to member 60. If any Member fails to pay the whole or any part of any call or installments or any money due in respect of any shares either by way of principal or interest on or before the day appointed for the payment of the same or any such extension thereof as aforesaid, the Directors may at any time thereafter, during such time as the call or installment or any part thereof or the other moneys remain unpaid or a judgment or decree in respect thereof remains unsatisfied in whole or in part, send a notice on such Member or on the person (if any) entitled to the share by transmission, requiring him to pay such call or installment or such part thereof or other moneys as remain unpaid together with any interest that may have accrued and all expenses that may have been incurred by the Company by reason of such non-payment. Form of Notice 61. The notice shall name a day (not being less that fourteen days from the date of the notice) and a place or places on and at which such calls or installments and such interest thereon at such rate not exceeding 18 percent per annum as the Directors shall determine from the day on which such call or installment ought to have been paid and expenses as aforesaid are to the paid. The notice shall also state that, in the event of the non-payment at or before the time and at the place appointed, the shares in respect of which the calls was made or installment is payable, will be liable to be forfeited. In default of payment shares to be forfeited 62. If the requirements of any such notice as aforesaid shall not be complied with, every or any share in respect of which, such notice has been given, may at any time thereafter before payment of all calls or installments, Interest and expenses due in respect thereof be forfeited by a ordinary resolution of the Board to that effect. Such forfeiture shall include all dividends declared or any other moneys payable in respect of the forfeited shares and not actually paid before the date of forfeiture which shall be the date on which the ordinary resolution of the Directors is passed forfeiting the shares. Notice of Forfeiture to Member 63. When any share shall have been so forfeited notice of the forfeiture shall be given to the Member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture, with the date thereof, shall forthwith be made in the Register of Members, but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or to make any such entry as aforesaid.
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Forfeited share to be property of the company and may be sold etc. 64. Any share so forfeited shall be deemed to be the property of the Company, and may be sold, re-allotted, or otherwise disposed of, either to the original holder thereof or to any other person, upon such terms and in such manner as the Board shall think fit and at any time before a sale or disposal as aforesaid the board may cancel the forfeiture on such terms as it thinks fit. Surrender of forfeited shares 65. Upon forfeiture of shares, the member shall forthwith forfeit the shares to the Company. Liability on forfeiture 66. Any member whose shares have been forfeited shall cease to be a member in respect of those shares but shall notwithstanding the forfeiture be liable to pay and shall forthwith pay to the Company, on demand all calls, installments, interest and expenses owing upon or in respect of such shares at the time of the forfeiture together with interest thereon from the time of the forfeiture until payment, at such rate not exceeding eighteen percent per annum or as the Board may determine and the Board may enforce the payment thereof, if it thinks fit. Effect of forfeiture 67. The forfeiture of a share shall involve extinction, at the time of the forfeiture, of all interest in and all claims and demand against the Company, in respect of the share and all other rights incidental to the share, except only such of those rights as by these Articles are expressly saved. Evidence of forfeiture 68. A declaration in writing that the declarant is a Director or Secretary of the Company and that a share in the Company has been duly forfeited in accordance with these Articles on a date state in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares. TRANSFER AND TRANSMISSION OF SHARES Register of Transfer 74. The Company shall keep a book to be called Register of Transfer, and therein shall be fairly and distinctly entered particulars of every transfer or transmission of any share held in material form. Instrument of Transfer 75. Shares in the company may be transferred by instrument in writing in such form and by such procedure as may from time to time be prescribed by law. Subject thereto the directors may prescribe a common form of for instruments of transfer which may from time to time be altered by the Directors. Transfer by Joint Holders 76. In the case of transfer of shares/debentures held by joint holders, the transfer will be effective only if it is made by all the joint holders. Transfer form to be completed and Presented to the Company 77. The Instrument of Transfer duly stamped and executed by the transferor and the transferee shall be delivered to the Company in accordance with the provisions of the Act. The instrument of transfer shall be accompanied by such evidence as the Board may require to prove the title of transferor and his right to transfer the shares and every registered Instrument of Transfer shall remain in the custody of the Company until destroyed by order of the Board, The Transferor shall be deemed to be the holder of such shares until the name of the Transferee shall have been entered in the Register of Members in respect thereof. Before the registration of the transfer, the certificate or certificates of the shares must be delivered to the Company. Transfer Books and Register of Members when closed 78. The Board shall have power on giving not less than seven days previous notice by advertisement in some newspaper circulation in the district in which the Office of the Company is situated to close the Transfer Books, the Register of Members or Register of Debenture holders at such time or times and for such period or periods, not exceeding thirty days at a time and not exceeding in the aggregate forty-five days in a year.
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Transfer of shares 80.i) An application of registration of the transfer of shares may be made either by the transferor or the transferee provided that where such application is made by the transferor, no registration shall in the case of partly paid shares be effected unless the company gives notice of the application to the transferee and subject to the provisions of Clause (d) of this Article, the company shall unless objection is made by the of Members the name of the transferee in the same manner and subject to same conditions as if the application for registration was made by the transferee. ii) For the purpose of Clause (i) above notice to the transferee shall be deemed to have been duly given if sent by prepaid registered post to the transferee at the address given in the instrument of transfer and shall be deemed to have been duly delivered at the time at which it would have been delivered to him in the ordinary course of post. iii) It shall be not be lawful for the company to register a transfer of any shares unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation if any, of the transferee has been delivered to the company along with the Certificate relating to the Shares and if no such Certificate is in existence, along with the letter of allotment of shares. The Directors may also call for such other evidence as may reasonably be required to show the right of the transferor to make the transfer, provided that where it is proved to the satisfaction of the Directors of the Company that an instrument of transfer signed by the transferor and the transferee has been lost, the company may, if the Directors think fit, on an application in writing made by the transferee and bearing he stamp required by an instrument of transfer register the transfer on such terms as to indemnity as the Directors may think fit. iv) Nothing in Clause 80 (iii) above shall prejudice any power of the company to register as shareholder any person to whom the right to any share has been transmitted by operation of law. v) Nothing in this Article shall prejudice any power of the company to refuse to register the transfer of any share. Custody of instrument of transfer 81. The instrument of transfer shall after registration be retained by the company and shall remain in their custody. All instruments of transfer which the Directors may decline to register, shall on demand be returned to the persons depositing the same. The Directors may cause to be destroyed all transfer deeds lying with the company after such period as they may determine. Notice of application when to be given 82. Where, in the case of partly paid shares, an application for registration is made by the transferor, the Company shall give notice of the application to the transferee in accordance with the provision of Section 110 of the Act. Nomination 85. A holder or joint holders of shares in or debentures of the company may nominate, in accordance with the provisions of Section 109A of the Companies Act, 1956 (including any amendment thereto or any re-enactment thereof) and in the manner prescribed there under, any person to whom all the rights in the shares in or debentures of the Company shall vest in the event of death of such holder (s). Any nomination so made shall be dealt with by the company in accordance Act, 1956 or any statutory modification or re-enactment thereof for the time being in force. Registration of Persons entitled to shares otherwise than by transfer, The Transmission Article 87.a) Subject to the provisions of the Act and Articles 79 to 85 and 88 any person becoming entitled to shares in consequence of the death, lunacy, bankruptcy or insolvency of any Member, or by any lawful means other than by a transfer in accordance with these Articles may, with the consent of the Board (which is shall not be under any obligation to give) upon producing such evidence that he sustains the character in respect of which be proposes to act under this Article or of such title as the Board thinks sufficient either be registered himself as the holder of the shares or elect to have some person nominated by him and approved by the Board registered as such holder, provided nevertheless, that if such person shall elect to have his nominee registered he shall testify the election by executing in favour of his nominee an instrument of transfer in accordance with the provisions herein contained, and until he does so, he shall not be freed from any liability in respect of the share. This Article is hereafter called The Transmission Article. b) A transfer of the share or other interest in the Company of a deceased member thereof made by his legal representative shall, although the legal representative is not himself a member be as valid as if he has been a member at the time of the execution of the instrument of transfer.
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Refusal to register on transmission 88. The Board shall have the same right to refusal register a person entitled by transmission to any shares or his nominee as if he were the transferee named in an ordinary transfer presented for registration. Person entitled may receive dividend without being registered as member 89. A person entitled to a share by transmission shall, subject to the right of the Directors, retain such dividends or money as hereinafter provided, be entitled to receive and may give discharge for any dividends or other moneys payable in respect of the shares. Fee on transfer or transmission 92. The company may charge such fees (as may be decided by the Directors from time to time and for any period of time) in respect of transfer or transmission of the shares, subject to the stipulations, rules, regulations of stock exchange or the statute concerned in this regard. Company not liable for disregard of a notice, prohibiting registration of a transfer 93. The Company shall incur no liability or responsibility whatsoever in consequence of its registering or giving effect to any transfer of shares made or purporting to be made by any apparent legal owner thereof (as shown or appearing in the Register of Members) to the prejudice of persons having or claiming any equitable right, title or interest in the said shares, notwithstanding that the Company may have had notice of such equitable right, title or interest or notice prohibiting registration of such transfer and may have entered such notice or referred thereto, in any book of the Company and the Company shall not be bound or required to regard or attend or give effect to any notice which may be given to it of any equitable right, title or interest or be under any liability whatsoever for refusing or neglecting so to do, thought it may have been entered or referred to in some book of the Company, but the Company shall nevertheless be at liberty to regard and attend to any such notice and give effect thereto if the Board shall so think fit. Directors may require evidence of transmission 94. Every transmission of a share shall be verified in such manner as the Directors may require, and the company may refuse to register any such transmission until the same be so verified or until or unless an indemnity be given to the company with regard to such registration which the Directors at their discretion Transfer of shares in Dematerialised form 95. In the case of transfer or transmission of shares or other marketable securities where the company has not issued any certificates and where such shares or securities are being held in an electronic and fungible form in a Depository, the provisions of the Depositories Act, 1996 shall apply. Transfer or transmission of debentures and/or detachable warrants 96. The provisions of these Articles shall mutates mutandis apply to the transfer or transmission by operation of law of debentures and / or detachable warrants of the Company. BORROWING POWER Powers to borrow 98. Subject to the provisions of Section 58A, 292 and 293 of the Act and of the Companies (Acceptance of Deposits) Rules, 1975 and of these Articles or any statutory modification thereof for the time being in force the Board may, from time to time at its discretion by a resolution passed at a meeting of the Board, accept deposits from Members either in advance of calls or otherwise and generally raise or borrow or secure the payment of any sum or sums of money for the purpose of the company. Provided the payment of any sum or sums of money for the purpose of the Company. Provided however where the moneys to be borrowed together with the moneys already borrowed (apart from temporary loans to be obtained from the Companys bankers in the ordinary course of business) exceed the aggregate of the paid up capital of the Company and its, free reserves (not being reserves set apart for any specific purpose) the Board of Directors shall not borrow such money without the sanction of the Company in General Meeting. No Debt incurred by the Company in excess of the limit imposed by these Articles shall be valid or effectual unless the lender proves that he advances the loan in good faith and without knowledge that the limit imposed by this Article had been exceeded.
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SHARE WARRANTS Power to issue Share warrants 107. The Company may issue share warrants subject to and in accordance with the provision of Section 114 and 115 and accordingly, the Board may in its discretion, with respect to any share which is fully paid up on application in writing signed by the persons registered as holder of the share and authenticated by such evidence (if any) as the Board, may from time to time require as to the identity of the person signing the application and on receiving the certificate (if any) of the share and the amount of the stamp duty on the warrant and such fee as the Board may from time to time require, issue a share warrant. Deposit of share warrants 108. a) The bearer of a share warrant may at any time deposit the warrant at the Office of the Company and so long as the warrant remains so deposited, the Depositor shall have the same right of signing a requisition for calling a meeting of the Company and of attending and voting and exercising the other privileges of a Member at any meeting held after the expiry of two clear days from the time of deposit, as if his name were inserted in the Register of Members as the holder of the share included in the deposit warrant. b) Not more than one person shall be recognised as depositor of the share warrant. c) The Company shall on two days written notice return the deposited share warrant to the depositor. Power to make rules 110. The Board may, from time to time make rules as to the terms on which (if it shall think fit) a new share warrant or coupon may be issued by way of renewal in case of defacement, loss or destruction. MEETING OF MEMBERS The Statutory Meeting 115. The Statutory Meeting of the Company, shall as required by Section 165 of the Act, be held at such time not being less than one month and not more than six months from the date at which the Company shall be entitled to commence business and at such place as the Board may determine, and the Board shall comply with the requirements of that Section, as to the report to be submitted and otherwise. Annual General Meeting 116. The Company shall in each year hold a General Meeting as its Annual General Meeting in addition to any other meetings in that year. All General Meetings other than Annual General Meeting and the Statutory Meeting shall be called Extraordinary General Meetings. The First Annual General Meeting shall be held within eighteen months from the date of incorporation of the Company and the next Annual General Meeting shall be held within six months after the expiry of the financial year in which the first Annual General Meeting was held and thereafter an Annual General Meeting of the Company shall be held within six months after the expiry of each financial year, provided that not more that fifteen months shall elapse between the date of one Annual General Meeting and that of the next. Nothing contained in the foregoing provisions shall be taken as affecting the right conferred upon the Registrar under the provisions of Section 166(1) of the Act to extend the time within which any Annual General Meeting may be held. Every Annual General Meeting shall be called for a time during business hours, on a day that is not a public holiday, and shall be held at the Registered Office of the Company. The Company may in any one Annual General Meeting fix the time for its subsequent Annual General Meeting. Every Member of the Company shall be entitled to attend either in person or by proxy and the Auditor of the Company shall have the right to attend and to be heard at any General Meeting, which he attends on any part of the business which concerns him as Auditor. At every Annual General Meeting of the Company there shall be kept on the table the Directors Report and Audited Statement of Accounts, Auditors Report (if not already incorporated in the Audited Statement of Accounts) the Proxy Register shall remain open and accessible during the continuance of the meeting. The Board shall cause to be prepared the Annual List of Members, Summary of Share Capital, Balance Sheet and Profit and Loss Account and forward the same to the Registrar in accordance with Section 159, 161 and 220 of the Act. Special Business 118. a) In the case of an Annual General Meeting, all business to be transacted at the meeting shall be deemed special with the exception of business relating to: i) The consideration of the Accounts, Balance Sheet and Profit and Loss account and Report of the Board of Directors and of the Auditors;
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d)
ii) the declaration of dividend; iii) the appointment of Directors in the place of those retiring; iv) the appointment of and fixing of the remuneration of the Auditors. b) In the case of any other meeting all business shall be deemed special. c) Where any items of business to be transacted at the meeting are deemed to be special as aforesaid, there shall be annexed to the notice of the meeting a statement setting out all material facts concerning each such item of business including in particular the nature of the concern or interest, if any, therein of every Director. Where any item of business to be transacted at the meeting or the Company consists of according to the approval of the meeting to any document, the time and place where the document can be inspected shall be specified in the explanatory statement referred to in sub-clause (c) of this Article.
Service of Notice 119. Notice of every meeting shall be given to every Member of the Company in any manner authorized by sub-sections (1) to (4) of Section 53 of the Act and by these Articles. It shall be given to the persons entitled to a share in consequence of the death or insolvency of a Member, by sending it through the post in a prepaid letter addressed to them by name, or by any like description, at the address, if any, in India supplied for the purpose by the persons claiming to be so entitled, or until such an address has been so supplied by giving the notice in any manner in which it might have been given if the death or insolvency had not occurred, provided that where the notice of a meeting is given by advertising the same in a newspaper circulating in the neighborhood of the Registered Office of the Company under sub-section (3) of the Section 53 of the Act, explanatory statement need not be annexed to the notice as required by Section 173 of the Act, but it shall be mentioned in the advertisement that the statement has been forwarded to the Members of the Company. Extraordinary General Meeting 124.A. The Board may, whenever it thinks fit, call an Extraordinary General Meeting and it shall do so upon a requisition in writing by any Member or Members holding in the aggregate not less than one-tenth of such of the paid-up capital as that date carries the right of voting in regard to the matter in respect of which the requisition has been made. B. If at any time they are not present in India, Directors capable of acting who are sufficient in number to form a quorum, any Director of the Company may call an Extraordinary General Meeting of the Company, in the same manner, nearly a possible, as that in which such a meeting can be called by the Board. Twenty-one days notice of meeting to be given 132. At least Twenty-one days notice of every General Meeting, Annual or Extraordinary General Meeting, and by whomsoever called specifying the day, place and hour of meeting and the general nature of the business to be transacted threat, shall be given in the manner hereinafter provided, to such persons as are under these Articles entitled to receive notice from the Company. Provided that in the case of an Annual General Meeting with the consent in writing of all the Members entitled to vote thereat and in case of any other meetings, with the consent of Members holding not less than 95 percent of such part of the paid-up share capital of the Company as gives a right to vote at the meeting, a meeting may be convened by a shorter notice. In the case of an Annual General Meeting, if any business other than the ordinary business is to be transacted and in the case of any other meeting in any event there shall be annexed to the notice of the Meeting a statement setting out all material facts concerning each such item of business, including in particular the nature of the concern or interest, if any, therein of every Director, and the Manager (if any) where any such item of business relates to, or affect any other Company the extent of shareholding interest in that other Company of every Director and the Manager, if any, of the Company shall also be set out in the statement if the extent of such shareholding interest is not less than twenty percent of the paid-up share capital of that other Company, where any item of business consists of the according of approval to any document by the Meeting, the time and place where the document can be inspected shall be specified in the statement aforesaid. Omission to give notice not to invalidate a resolution passed 133. The accidental omission to give any such notice as aforesaid to any of the members, or the non-receipt thereof, shall not invalidate any resolution passed at or the proceedings of any such meeting. Meeting not to transact business not mentioned in notice 134. No General Meeting, Annual or Extraordinary General Meeting, shall be competent to enter upon, discuss or transact any business which has not been mentioned in the notice or notices upon which it was convened.
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Resolution passed at Adjourned Meeting 135. The provisions of Section 191 of the Act shall apply to resolutions passed at an adjourned meeting of the Company, or of the holders of any class of shares in the Company and of the Board of Directors of the Company and the resolutions shall be deemed for all purposes as having been passed on the date on which in fact they were passed and shall not be deemed to have been passed on any early date. Quorum at General Meeting 137. Five Members present in person shall be the quorum for a General Meeting. VOTES OF MEMBERS Restrictions on Voting 149. No Member shall be entitled in respect of any shares registered in his name to be present or to exercise any voting right on any question at any General Meeting or be reckoned in a quorum whilst any call or other sum presently payable to the Company in respect of such shares, shall remain unpaid or in regard to which the Company has exercised any right of lien; and no member shall be entitled to be present or to vote in respect of any shares that he has acquired by transfer at any meeting unless his name has been entered as the registered holder of such share in respect of which he claims to vote. Equal Rights of Shareholders 150. Any shareholder whose name is entered in the Register of Members of the company shall enjoy the same rights and be subject to the same liabilities as all other shareholders of the same class. Number of votes to which a member is entitled 151. Subject to the provisions of these Articles and without prejudice to any special privileges or restrictions as to voting for the time being attached to any class of shares for the time being forming part of the capital of the Company, every member, not disqualified by the last preceding Article shall be entitled to be present and to speak and vote at such meeting, and on a show of hands every Member present in person or by proxy shall have one vote and upon a poll the voting right of every Member present in person or by proxy shall be in proportion to his share of the paid-up equity share capital of the Company. Provided, however if any preference Shareholder be present at any meeting of the Company, save as provided in clause (b) of sub-section (2) of Section 87, he shall have a right to vote only on resolutions placed before the meeting which directly affect the rights attached to his preference shares. Appointment of proxy 157. Every proxy (whether a Member or not) shall be appointed in writing under the hand of the appointer or his attorney, duly authorized in writing, or if such appointer is a body corporate under the common seal of such corporation, or be signed by an officer or any attorney duly authorised by it, and any Committee or guardian may appoint such proxy. The proxy so appointed shall not have any right to speak at the meeting. Proxy either for specified meeting or for a period 158. An instrument of may appoint a proxy either for purposes of a particular meeting specified in the instrument and any adjournment thereof or it may appoint for the purpose of every meeting of the Company, or of every meeting to be held before a date specified in the instrument and every adjournment of any such meetings. MINUTES OF MEETINGS Minutes of General Meeting and inspection thereof by members 167. a) The Company shall cause minutes of all proceedings of every General Meeting to be kept in accordance with the provisions of Section 193 of the Act. b) Each page of every such book shall be initialed or signed and the last page of the record of proceedings of each meeting in such book shall be dated and signed by the Chairman of the same meeting within the aforesaid period of thirty days or in the event of the death or inability of that Chairman within that period, by a Director duly authorised by the Board for the purpose. c) In no case shall the minutes of proceedings of a meeting be attached to any such book as aforesaid by pasting or otherwise. d) The Minutes of each Meeting shall contain a fair and correct summary of the proceeding thereat. e) All appointments of Officers made at any aforesaid meeting shall be included in the Minutes of the Meeting.
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f) Nothing herein contained shall require or be deemed to require the inclusion in any such Minutes of any matter which in the opinion of the Chairman of the Meeting (a) is or could reasonably be regarded as, defamatory of a person, or (b) is irrelevant or immaterial to the proceedings, or (c) is detrimental to the interests of the Company. The Chairman of the meeting shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter in the Minutes on the aforesaid grounds. g) Any such Minutes shall be evidence of the proceedings recorded therein. h) The book containing the Minutes of the proceedings of any General Meeting of the Company shall: i) be kept at the Registered Office of the Company, and ii) be open, during the business hours to the inspection of any members without charge, subject, to such reasonable restrictions as the Company may, in General Meeting impose so however that not less than two hours in each day are allowed for inspection. iii) Any Member shall be entitled to be furnished within seven days after he has made a request in that behalf to the company, with a copy of any minutes referred to in Clause (h) above, on payment of such fees as prescribed under Section 196 of the Act. Presumptions to be drawn where minutes duly drawn and signed 168.a) Where minutes of the proceedings of any General Meeting of he company have been kept in accordance with the provisions of Section 193 of the Act, then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place and in particular all appointments of Directors or Liquidators made at the meeting shall be deemed to be valid and the minutes shall be evidence of the proceedings recorded therein. b) On document purporting to be a report of the proceedings of any General Meeting of he Company shall be circulated or advertised at the expense of the Company unless it includes the matters required by Section 193 of the Act to be contained in the Minutes of the proceedings of such meeting. DIRECTORS Number of Directors 169. Until otherwise determined in a General Meeting of the Company and subject to the provisions of Section 252 of the Act, the number of Directors of the Company (excluding Alternate Directors) shall not be less than three or more than twelve. First Directors 170. The first Directors of the Company are : Mr. Rakesh Rawat Mr. Deep Gupta 171. a) b) Two thirds of the total number of Directors of the Company shall: be persons whose period of office is liable to determination by retirement of Directors by rotation and save as otherwise expressly provided in the Act; be appointed by the Company in General Meeting.
Appointment of non-retiring Directors 172. One third of the total number of Directors shall be non-retiring and the Managing Director of the company shall not be liable to retire by rotation. Appointment of Special Director 173.a) In Connection with any collaboration agreement with any Company or Corporation or firm or person for supply of Technical know-how and/or machinery or technical advice, the Directors may authorize such company, corporation firm or person (hereinafter in this clause referred to as Collaborator) to appoint from time to time, any person or persons as Director or Directors of the Company (hereinafter referred to as Special Director) and may agree that such Special Director shall not be liable to retire by rotation and need not possess any qualification shares to qualify him for the office of such Director, so however, that such Special Director shall hold office so long as such collaboration arrangement remains in force unless otherwise agreed upon between the Company and such Collaborator under the Collaboration arrangements or at any time thereafter. b) The Collaborator may at any time and from time remove any such Special Director appointed by it and may at the time of such removal and also in the case of death or resignation of the person so appointed, at any time, appoint any other
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c)
person as a special director in his place and such appointment or removal shall be made in writing signed by such company or corporation or an partner of the firm or such person and shall be delivered to the Company at its registered office. It is clarified that every collaborator entitled to appoint a Director under this Article may appoint one or more such person or persons as a Director(s) and so that if more than one Collaborator is so entitled there may at any time be as many Special Directors as the Collaborators eligible to make the appointment.
Power to appoint ex-officio Directors 176. Notwithstanding anything to the contrary contained in these Articles, so long as any moneys remain owing by the company to the Industrial Development Bank Of India (IDBI), Industrial Finance Corporation of India (IFCI), The Industrial Credit and Investment Corporation of India Limited (ICICI), The Industrial Reconstruction Bank of India (IRBI), Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC), and its subsidiaries viz., National Insurance Corporation of India (NIC), The New India Assurance Company INIA), The Oriental Insurance Company (OIC), United Insurance Company (UII), Unit Trust of India (UTI), Gujarat Industrial Investment Corporation Limited (GIIC), any one or more commercial Bank (Banks) or to any other Finance Corporation or Credit Corporation or any other Finance Company or Body out of any loans granted by them to the Company or so long as IDBI, IFCI, ICICI, IRBI, LIC, GIC, NIC, OIC, UTI, GIIC, Banks or any other Finance Corporation of credit Corporation or any other Finance Company or Body (each of which IDBI, IFCI, ICICI, IRBI, LIC, GIC, NIC, NIA, OIC, UTI, UII, GIIC, Banks or any other Finance Corporation or Credit Corporation or any other Finance Company or Body is hereinafter in this Article referred to as the Corporation) continue to hold debentures in the Company by direct subscription or private placement, or so long as the Corporation holds shares in the company as a result of underwriting or so long as any liability of the company arising out of any guarantee furnished by the Corporation on behalf of the company remains outstanding, the Corporation shall have a right to appoint from time to time, any person or persons as a Director or Directors whole time or non-whole time, (which Director or Directors are hereinafter referred to as Nominee Director/s) on the Board of the Company and to remove such office any person or persons so appointed and to appoint any person or persons in his or their place/s. Appointment of Alternate Director 178. The Board may, in accordance with and subject to the provision of Section 313 of the Act, appoint an Alternate Director during the letters absence for a period of not less than three months from the state in which the meeting of the Board is ordinarily held. An Alternate Director appointed under this Article shall not hold office for a period longer than that permissible to the original director in whose place he has been appointed and shall vacate office if and when the original director returns to that State. If the term of office of the original Director is determined before so returns to that State, any provisions in the Act or in these Articles for the automatic reappointment of a retiring Director in default of another appointment shall apply to the Original Director and not the Alternate Director. Additional Director 179. Subject to the provisions of Section 260, 261 and 264 of the Act and further subject to Articles 174, the Board shall have power at any time and from time to time to appoint any person to be an Additional Director, but so that the total number of Directors shall not at any time exceed the maximum fixed under Article 169. Any such Additional Director shall hold office only up to the date of next Annual General Meeting. Eligibility 186. A person shall not be capable of being appointed as a Director if he has the disqualifications referred to in Section 274 of the Act, as may be amended from time to time. When office of Director to become vacant 187. Subject to Sections 283(2) and 314 of the Act the office of a Director shall become vacant if: a) he is found to be of unsound mind by the Court of competent jurisdiction; or b) he applies to be adjudicated an insolvent; or c) he is adjudged an insolvent; or d) he fails to pay any call made on him in respect of shares of the company held by him, whether alone or jointly with other, within six months from the date fixed for the payment of such call unless the Central Government has by notification in the Official Gazette removed the disqualification incurred by such failure; or e) he absents himself from three consecutive meetings of the Directors or from all meetings of the Directors for a continuous period of three months, whichever is longer, without leave of absence from the Board; or
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f) g) h) i) j) k) l) m)
He contravenes the provisions of Section 314 of the Act; or he becomes disqualified by an order of the court under section 203 of the Act; or he is removed in pursuance of section 284; or he (whether by himself or by any person for his benefit or on his account) or any firm in which is a partner or any private company of which he is a Director, accepts a loan, or ay guarantee of security for a loan, from the company in contravention of section 295 of the Act; or he acts in contravention of section 299 of the Act; or he is convicted by a court for an offence involving moral turpitude and is sentenced in respect thereof to imprisonment for not less than six months; or having been appointed a Director by virtue of his holding any office or other employment in the Company, he ceases to hold such office or other employment in the Company; or he resigns his office by a notice in writing addressed to the company.
Disclosure of Interest 191. A Director of the company who is in any way, whether directly of indirectly concerned or interested in a contract or arrangement, or proposed contract or arrangement entered into or to be entered into by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board in the manner provided in section 299(2) of the Act; provided that it shall not be necessary for a Director to disclose his concern or interest in any contract or arrangement entered into or to be entered into with any other company where any of the Directors of the company or two or more of them together hold or holds not more than two percent of the paid-up share capital in any such other Company or the Company. General notice of interest 192. A General Notice given to the Board by the Directors, to the effect that he is a Director or Member of a specified body corporate or is a member of a specified firm and is to be regarded as concerned or interested in any contract or arrangement which may after the date of the notice, be entered into with that body corporate or firm, shall be deemed to be a sufficient disclosure of his concern or interest in relation to any contract or arrangement so made. Any such general notice shall expire at the end of the financial year in which it is given but may be renewed for a further period of one financial year at a time by a fresh notice given in the last month of the financial year in which it would have otherwise expired. No such general notice, and no renewal thereof shall be of effect unless, either it is given at a meeting of the Board or the Directors concerned takes reasonable steps to secure that it is brought up and read at the first meeting of the Board after it is given. Register of Contracts in which Directors are interested 194. The company shall keep a Register in accordance with section 301(1) of the Act and shall within the time specified in Section 301(2) enter therein such of the particulars as may be relevant having regard to the application of Section 297 or Section 299 of the Act as the case may be. Nothing in this Article shall apply to any case to which Clause (3A) of Section 301 of the Act applies. The Register shall be kept at the Registered Office of the Company and shall be open to inspection at such office, and extracts may be taken there from and copies thereof may be required by any member of the Company to the same extent, in the same manner, and on payment of the same fees as in the case of the Register of Members of the Company and the Provisions of Section 163 of the Act shall apply accordingly. Directors not to hold office or place of profit 195. A Director may be or become a Director of any Company promoted by the Company, or in which it may be interested as a vendor, shareholder or otherwise and no such Director shall be accountable for any benefits received as Director or shareholder of such Company except in so far as Section 309 (6) or Section 314 of the Act may be applicable. Loan to Directors 196. The Company shall observe the restrictions imposed on the Company in regard to granting of loans to Directors and other persons as provided in Section 295 and other applicable provisions, if any, of the Act. Rotation Retirement and of Directors 198. At every Annual General Meeting of the Company one-third of such of the Directors for the time being as are liable to retire by rotation in accordance with the provisions of Section 255 & 256 of the Act or these Articles or if their number is not three or a multiple of three, the number nearest to one-third shall retire from office. The Debenture Directors, if any,
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shall not be subject to retirement under this clause and shall not be taken into account in determining to rotation of retirement or the number of Directors to retire. Ascertainment of Directors retirement by rotation and filling of vacancies 199. Subject to Section 256(2) of the Act, the Directors to retire by rotation under Article 200 at every Annual General Meeting shall be those who have been longest in office since their last appointment, but as between persons who became Directors on the same day, those who are to retire shall, in default of and subject to any agreement among themselves, be determined by lot. Company may increase or reduce the number of Directors 203. Subject to Sections 259 of the Act, the Company may by ordinary resolution, from time to time, increase or reduce the number of Directors, within the limits fixed in that behalf by these Articles, and may alter their qualifications and the Company may (subject to the provisions of Section 284 of the Act) remove any Director before the expiration of his period of office and appoint another qualified person in his place. The person so appointed shall hold office during such time as the Director in whose place he is appointed would have held the same if he had not been removed. Right of persons other than retiring Directors to stand for Directorship 204. a) A person who is not a retiring Director shall, in accordance with and subject to the compliance of provisions of Section 257 of the Act and Article 205 of this Articles of Association, be eligible for appointment to the office of Director at any General Meeting. b) The Company shall comply with the provisions of said Section 257 of the Act in case of such an appointment. Removal of Director 206.a) The Company may (subject to the provision of Section 284 of the Act and other applicable provisions of the Act and these Articles) remove any Director before the expiry of his period of office. b) Special notice as provided by Article 121 or Section 190 of the Act shall be given of any resolution to remove a Director under this Article or to appoint some other person in place of a Director so removed at the meeting as which he is removed. c) On receipt of notice of a resolution to remove a director under this Article, the Company shall forthwith send a copy thereof to the Director concerned and the Director concerned and the Director (Whether or not he is a Member of the Company) shall be entitled to be heard on the resolution at the meeting. d) Where notice is given of resolution to remove a Director under this Article, and the Director concerned makes with respect thereto representations in writing to the Company (not exceeding a reasonable length) and requests their notification to Members of the Company, the Company shall, unless the representations are received by it too late for it to do so (i) in the notice of the resolution given to Members of the Company state the fact of the representations having been made, and (ii) send a copy of the representations to every Member of the Company, and if a copy of the representation is not sent as aforesaid because they were received too late or because of the Companys default, the Director may without prejudice to his right to be heard orally require that copies of the representations shall be read out at the meeting. Provided that copies of the representations need not be sent or read out at the meeting if on the application either of the Company or of any other person who claims to be aggrieved, the Court is satisfied that the rights conferred by this sub-clause are being abused to secure needless publicity for defamatory matter. e) A vacancy created by the removal of director under this Article may, if he has been appointed by the company in General Meeting or by the Board in pursuance of Article 179 and 180 or section 262 of the Act, be filled by the appointment or another director in his stead by the meeting at which he is removed, provided special notice of the intended appointment has been given under sub-clause (b) hereof. A director so appointed shall hold office until the date up to which his predecessor would have held office if he had not been removed as aforesaid. f) If the vacancy is not filled under sub-clause (e) hereof, it may be filled as casual vacancy in accordance with the provisions, in so far as they are applicable of Article 180 or Section 262 of the Act, and all the provisions of the said Act in all respects thereof shall accordingly apply. g) A Director who has removed from office under this Article shall not be re-appointed as a director by the Board of Directors. h) Nothing contained in this Article shall be taken : i) as depriving a person removed hereunder of any compensation or damages payable to him in respect of the termination of his appointment as director or of any appointment terminating with that as Director; or ii) as derogating from any power to remove a Director which may exist apart from this Article.
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Register of Directors etc. and notifications of change, to Registrar 207. a) The Company shall keep at its Office a Register containing the particulars of its Directors, Secretary and other persons mentioned in Section 303 of the Act, and shall otherwise comply with the provisions of the said section in all respects. Register of shares or debentures held by Directors b) The Company shall in respect of each of its Directors also keep at its office a Register, as required by Section 307 of the Act, and shall otherwise duly comply with the provisions of the said section in all respects. Disclosure by Director of appointment to any other Body Corporate 208. a) Every Director including a person deemed to be a Director (by virtue of the Explanation (1) to sub-section (1) of Section 303 of the Act), Managing Director, Manager, or Secretary of the Company shall within twenty days of his appointment to any of the above offices in any other Body Corporate, disclose to the Company the particulars relating to his office in the other body corporates which are required to be specified under sub-section (2) of Section 303 of the Act. MANAGING DIRECTOR The Board to appoint Managing Director/s 209. Subject to the provisions of the Act and these Articles, the Board shall have the power to appoint from time to time any of its members as Managing Director or Managing Directors and/or Whole time Director/s and/or Special Directors like Technical Director, Financial Director etc. of the Company for a fixed term not exceeding five years at a time and upon such terms and conditions as the Board thinks fit, and the Board may by resolution vest in such Managing Director or Managing Directors/Whole time Director(s) and Special Directors such of the powers hereby vested in the Board generally as it thinks fit, and such powers may be made ex-ercisable for such period or periods, and upon such conditions and subject to such restrictions as it may determine. The remuneration of such Directors may be by way of monthly remuneration and/or fee for each meeting and/or participation in profits, or by any or all of those nodes, or of nay other node not expressly prohibited by the Act. Provided that, subject to the provisions of Section 198, 269, 309, 310 and 311 of the Act, the appointment and payment of remuneration shall be subject to the approval of members in General Meeting and of the Central Government, if required. Restriction of Management 210. Managing Director or Managing Directors shall not in any event exercise the powers to: a) make calls on shareholders in respect of money unpaid on the shares in the Company; b) issue debentures and except to the mentioned in a resolution passed at the Board Meeting under Section 292 of the Act, shall also not exercise the power to; c) borrow money, otherwise than on debentures; d) the funds of the Company; and e) make loans. Certain Persons not to be appointed Managing Director 211. The company shall not appoint or employ, or continue the appointment or employment, of a person as its Managing or Whole-time Director who: a) is an undischarged insolvent or has at any time been adjudged an insolvent; b) suspends, or has at any time suspended, payment to his creditors, or makes or has at any time made a composition with them; or c) is, or has at any time been, convicted by a court of an offence involving moral turpitude. Special position of Managing Director 212. A Managing Director shall not while he continues to hold that office be subject to retirement by rotation, in accordance with Article. If he ceases to hold the office of director he shall ipso facto immediately cease to be a Managing Director.
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WHOLE TIME DIRECTOR Power to appoint Whole Time Director and/or Whole-time Directors 213. Subject to the provisions of the Act and of these Articles, the Board may from time to time with such sanction of the Central Government as may be required by law appoint one or more of its Director/s or other person/s as Whole-Time Director or Whole-Time Directors of the Company out of the Directors/ persons nominated under Article only either for a fixed term that the Board may determine or permanently for life time upon such terms and conditions as the Board may determine or permanently for life time upon such terms and conditions as the Board thinks fit. The Board may by ordinary resolution and / or an agreement/s vest in such Whole-Time Director or Whole Time Directors such of the powers authorities and functions hereby vested in the Board generally as it thinks fit and such powers may be made exercisable and for such period of periods and upon such conditions and subject to such restrictions as it may be determined or specified by the Board and the Board has the powers to revoke, withdraw, alter or vary all or any of such powers and / or remove or dismiss him or them and appoint another or others in his or their place or places again out of the Directors / persons nominated under Article 174 only. The Whole Time Director or Whole Time Directors will be entitled for remuneration as may be fixed and determined by the Board from time to time either by way of ordinary resolution or a Court act/s or an agreement/ s under such terms not expressly prohibited by the Act. PROCEEDINGS OF THE BOARD OF DIRECTORS Meeting of Directors 216. The Directors may meet together as a Board for the dispatch of business from time to time, and shall so meet at least once in every three months and at least four such meetings shall be held in every year. The Directors may adjourn or otherwise regulate their meeting as they think fit. Notice of Meetings 217. At least five days prior notice of every meeting of the Board shall be given in writing to every Director for the time being in India, and at his usual address inn India, to every other Director. Notice may be given by telegram, cable, telex or other means of communications to any Director who is not in India and a Notice sent by registered airmail shall confirm the same. Quorum 218. Subject to the Section 287 of the Act, the quorum for a meeting of the Board shall be one-third of its total strength (excluding Director, if any, whose places may be vacant at the time) any fraction contained in that one-third being rounded off as one), or two Directors, whichever is higher, provided that where at any time the number of interested Directors exceeds or equal to two-third of the total strength the number of the remaining Directors, that is to say, the number of Directors who are not interested present at the meeting being not less than two, shall be the quorum during such time. Adjournment of meeting for want of quorum 219. If a meeting of the Board could not be held for want of a quorum, than the meeting, subjects to Section 288 of the Act, shall automatically stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day which is not a public holiday, at the same time and place or such day, time and place as may be fixed by the Chairman and the Directors present at the meeting. Chairman 221. The Board may from time to time elect from among their number, a Chairman of the Board and determine the period for which he is to hold office. The Directors may likewise appoint from among their number a Vice-Chairman and determine the period for which he is to hold office. If at any meeting of the Board, the Chairman and the Vice-Chairman are not present within fifteen minutes after the time appointed for holding the same or is unwilling to act as Chairman, the Directors may choose one of their number to be Chairman of the Meeting. Powers of Board Meeting 223. A meeting of the Board for the time being at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions which by or under the Act or the Articles of the Company are for the time being vested in or exercisable by the Board generally.
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Resolution by circulation 226. No resolution shall be deemed to have been duly passed by the Board or by a Committee thereof by circulation, unless the resolution has been circulated in draft, together with the necessary papers, if any, to all the Directors, or to all the Members of the Committee, then in India (not being less in number than the quorum fixed for a meeting of the Board or Committee, as the case may be) and to all other Directors or Members of the Committee, at their usual address in India and has been approved by such of the Directors or Members of the Committee as are then in India, by a majority of such of them, as are entitled to vote on the resolution. Minutes of proceedings of meetings of the Board 228. a) The Company shall cause Minutes of all proceedings of every meeting of the Board and committee thereof to be kept by making within thirty days of the conclusion of every such meeting entries thereof in books kept for that purpose with their pages consecutively numbered. b) Each page of every such book shall be initialled or signed and the last page of they record or proceedings of every meeting in such book shall be dated and signed by the Chairman of the said meeting or the Chairman of the next succeeding meeting. c) In no case the minutes of proceedings of a meeting be attached in any such book as aforesaid by pasting or otherwise. d) The minutes of each meeting shall contain a fair and correct summary of the proceeding thereat. e) All appointments of officers made at any of the meeting aforesaid shall be included in the Minutes of the meeting. f) The minutes shall also contain: i) the names of the Directors present at the meeting, and ii) in the case of each resolution passed at the meeting, the names of the Directors, if any, dissenting from or not concurring in the resolution. g) Nothing contained in sub-clauses (a) to (f) shall be deemed to require the inclusion in any such Minutes of any matter which, in the opinion of the Chairman of the meeting: i) (a) is, or could reasonably be regarded as defamatory of any person; or ii) (b) is irrelevant or immaterial to the proceedings; or iii) (c) is detrimental to the interests of the Company; The Chairman shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in this sub-clause and the decision of the Chairman shall be final and binding. h) Minutes of any meeting of the Board of Directors or of any committee of the Board if purporting to be signed by the Chairman of such meeting or by the Chairman of the next succeeding meeting shall be, for all purposes whatsoever, prima facie evidence of the actual passing of the resolutions recorded and the actual and regular transaction of occurrence of the proceedings so recorded and the regularity or the meeting at which the same shall appear to have been taken place. POWERS OF DIRECTORS Power of Directors 230. The Board may exercise all such powers of the Company and do all such acts and things as are not, by the Act, or any other Act or by the Memorandum or by the Articles of the Company required to be exercised by the Company in General Meeting, but subject nevertheless to these Articles, to the provisions of the Act, or any other Act and to such regulations being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by the Company in General Meeting, but no regulation made by the Company in General Meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made. a) Provided that the Board shall not, except with the consent of the Company in General Meeting: sell, lease or otherwise dispose of the whole, or substantially the whole of the undertaking of the Company, or where the Company owns more than one undertaking, or the whole, or substantially the whole, of any such undertaking; provided that nothing herein contained shall affect the selling or leasing of any property of the Company when the ordinary business of the Company consists of, or comprises, such selling or leasing; remit, or give time for the repayment of any debt due by a Director; invest otherwise than in trust securities the amount of com pensation received by the Company in respect of compulsory acquisition of such undertaking as is referred to in clause (a) above, or of any premise or properties used for any such undertaking and without which it cannot be carried on or can be carried on only with difficulty or any after a considerable time;
b) c)
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d)
e)
g)
h)
i)
j)
borrow moneys where the moneys to be borrowed together with the moneys already borrowed by the Company (apart from temporary loans obtained from the Companys bankers in the ordinary course of business), will exceed the aggregate of the paid-up capital of the Company and its free reserves, that is to say, reserves not set apart for any specific purpose. Contribute to charitable and other funds not directly relating to the business of the Company or the welfare of its employees in excess of limits laid down by Section 293 of the Act. f) A receipt signed by the Managing Director or any one of the Managing Directors or by a Whole Time Director or by any one of the Whole Time Directors or by a person authorized by a resolution of directors to give receipt for any moneys, funds or property, lent or payable or belonging to the Company, shall be an effectual discharge on behalf of and against the Company for the moneys, funds or property which is such receipt shall be acknowledged to be received, and the person paying any such moneys shall not be bound to see to the application thereof or by answerable for the misapplication thereof To open and operate upon and overdraw bank accounts, to sign, make issue, negotiable, discount, endorse, accept or otherwise deal in all types of negotiable instruments including cheques, promissory notes, hundies , bill of exchange and bearer bonds arrange for credits in cash or in kind, specifying the bank or banks with them the cash, credit account is to be opened and the limit of such accounts. To incur from time to time such expenses and lay out such sum or sums of moneys as Directors may deem expedient for the purpose of working the work-shop/s or factory/ies or for improving the business of the Company from time to time, to erect and fix new machinery or plant, or in any of the lands, building and premises for the time being in the position or the property or the Company, and time to time removal for all or any of the machinery, plant and stores of the Company being in or upon any loans, buildings and premises of the Company, to other lands. Building or premises wherever situate of the Company. To effect all kinds of insurance which in the opinion of the Directors ought to be effected for the benefit of the Company and in particular to ensure the property of the Company against loss or damage by fire or otherwise, and also to ensure against any standing charges and to ensure any anticipated profits of the company of any transaction or transactions entered into by the company, and to sell assign, surrender or discontinue any policies of insurance effected in pursuance of this power. To give any person employed by the Company a commission on the profits of any particular business or transaction and such commission shall be treated as part of the working expenses of the Company. Provided further that the powers specified in Section 298 of the Act, subject to these Articles be exercised only at meeting of the Board, unless the same be delegate to the extent therein stated. REGISTERS, BOOKS AND DOCUMENTS
Registers, Books and Documents 233. a) The Company shall maintain registers, books, and documents as required by the Act or these Articles including the following namely: (i) Register of Investments not kept in the Companys name according to Section 49 of the Act. (ii) Register of Mortgages, Debentures and Charges according to Section 143 of the Act. (iii) Register of Members according to Section 150. (iv) Register and Index of Debenture-holders according to Section 152 of the Act. (v) Register of Contracts, Companies and firms in which Directors are interested according to Section 301 of the Act. (vi) Register of Directors and Managing Directors, according to Section 303 of the Act. (vii) Register of Directors Shareholdings and Debenture-holdings according to Section 307 of the Act. (viii) Books of accounts in accordance with the provision of Section 209 of the Act. (ix) Copies of instruments creating any charge requiring registration according to Section 136 of the Act. (x) Copies of Annual Returns prepared under Section 159 of the Act together with the copies of certificates required under Section 161. (xi) Register of renewed and duplicate Cetificates according to Rule 7(2) of the Companies (issue of Share Certificate) Rules, 1960. b) The said register, books and documents shall be maintained in con formity with the applicable provisions of the Act and shall be kept open for inspection by such persons as may be entitled thereto respectively under the Act, on such days and during such business hours as may in that behalf be determined in accordance with the provisions of
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the Act or these Articles and extracts shall be supplied to persons entitled thereto in accordance with the provisions of the Act or these Articles. c) The Company may keep a foreign Register of Member in accordance with Section 157 and 158 of the Act. Subject to the provisions of Sections 157 and 158, the directors may from time to time make such provisions as they may think fit in respect of the keeping of such Branch Registers of members and / or debentures holders. MANAGEMENT Prohibition of simultaneous appointment of different categories of managerial personnel 234. The Company shall not appoint or employ at the same time more than one of the following categories of managerial personnel namely : (a) Managing Director and (b) Manager. THE SECRETARY 235. Subject to the provisions of Section 383 of the Act, the Directors may from time to time appoint, and at their discretion, remove any individual (hereinafter called the Secretary) who shall have such qualification as the authority under the Act may prescribe to perform any functions, which by the Act or these Articles are to be performed by the Secretary, and to execute any other duties which may from time to time be assigned to the Secretary by the Directors. The Directors may also any time appoint some person (who need not be Secretary) to keep the register required to be kept by the Company. THE SEAL The Seal, its custody and use 236. a) The Board shall provide a Common Seal for the purposes of the Company, shall have powers from time to time to destroy the same and substitute a new Seal in lieu thereof, and the Board shall provide for the safe custody of the Seal for the time being, and the Seal shall never be used except by the authority of the Board of Committee of the Board, previously given. b) The Company shall also be at liberty to have an official Seal in accordance with Section 50 of the Act, for use in any territory, district or place outside India. DIVIDENDS Division of profits 238. Subject to the provision of Section 205 of the act and the rules made there under, the profits of the Company, subject to any special rights relating thereto created or authorized to be created by these Articles and subject to the provision of these Articles, shall be divisible among Members in proportion to the amount of capital paid-up or credited as paidup on the shares held by them respectively. The Company in General Meeting may declare a dividend 239. The Company in General Meeting may declare dividends to be paid to Members according to their respective rights but no dividends shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend. Dividends only not to be paid out of profit 240. No dividend shall be declared or paid except in accordance with Section 205 and Section 205 A of the Act and no dividend shall carry interest as against the Company. The declaration of the Board as the amount of profits of the Company shall be conclusive. Where a dividend has been declared, either the dividend shall be paid or the warrant in respect thereof shall be posted to the shareholder entitled to the payment of the dividend within time prescribed under Section 207 of the Act. Dividend payable to Registered holders 241. No dividend shall be paid by the Company in respect of any share except to the registered holder of such share or to his order or to his banker.
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Interim Dividend 242. Subject to the provision of the Act, the Board may, from time to time pay to the Members such interim dividend as in their judgment the position of the Company justifies. Unclaimed dividend 250. The Company shall not forfeit any unpaid or unclaimed dividend and such dividends shall be dealt with according to the provisions of Section 205A, 205B, 205C and 205D of the Companies Act, 1956. Dividend and call together 251. Any General Meeting declaring a dividend, may, on the recommendation of the dividend, make a call on the Member of such amount as the meeting fixes, but so that the call on each Member shall not exceed the dividend payable to him and so that the call be made payable at the same time as the dividend; and the dividend may, if so arranged between the Company and the Member be set off against the calls. INTEREST OUT OF CAPITAL Interest may be paid out of capital 257. Where any shares in the Company are issued for the purpose of raising money to defray the expenses of construction of any work or building, or the provisions of any plant, which can not be made profitable for a lengthy period, the Company may pay interest on so much of that Share Capital as is for the time being paid up, for the period and at the rate and subject to the conditions and restrictions provided by Section 208 of the Act, and may charge the same to capital as part of the cost of construction of the work or building, or the provisions of plant. ACCOUNTS Inspection of accounts or books by Members 259. The Board shall from time to time determine whether and to what extend and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors, and no Member (not being a Director) shall have any right of inspecting any accounts or books or documents of the Company except as conferred by law or authorized by the Board or by a resolution of the Company in General Meeting. Statement of accounts to be furnished to General Meeting 260. The Directors shall from time to time, in accordance with Sections 210, 211, 212, 215 and 217 of the Act, cause to be prepared and to be laid before this Company in General Meeting, such Balance Sheets, Profit & Loss Accounts and Reports as are required by those Sections and in the form set out in part I of Schedule VI of the Act. Boards Report to be attached to Balance Sheet 261.A. Every Balance Sheet laid before the Company in General Meeting shall have attached to it a Report by the Board of Directors with respect to the state of the Companys affairs; the amounts if any which it proposes, to carry to any reserve in such Balance Sheet, the amounts, if any, which it recommends to be paid by way of dividends and material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the Balance Sheet relates and the date of the report. B. The Report shall so far as it is material for the appreciation of the state of the Companys affairs by its members and will not in the Boards opinion be harmful to the business of the Company or of any of its subsidiaries, deal with any changes which have occurred during the financial year in the nature of Companys business in the Companys subsidiaries or in the nature of the business in which the Company has an interest. C. The Report shall also include a statement showing particulars of its employees as mentioned in Section 217 (2A) of the Act. D. The Board shall also give the fullest information and explanation in its report or in cases falling under the provision to Section 222 of the Act in an addendum to that Report, on every reservation, qualification or adverse remark contained in the Auditors Report. E. The Boards Report and addendum (if any) thereto shall be signed by its Chairman if he is authorized in that behalf by the Board; and where he not so authorized shall be signed by such number of Directors as are required to sign the Balance Sheet and the Profit and Loss Account of the Company.
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F.
The Board shall have the right to charge any person not being a Director with the duty of seeing that the provisions of sub-clause A to D of this Article are complied with.
Power to amend audited accounts 262. A copy of the audited Balance Sheet and Profit and Loss Account together with a copy of Auditors Report and a copy of every document required by law to be annexed thereto, as the case may be, to the Balance Sheet which is to be laid before the members in General Meeting shall, not less than twenty one days before the date of the Meeting, be sent to every member of the Company, unless the requirements of proviso (b) (iv) of Section 219 (1) of he Act are complied with. Copies shall be sent to each Member 263. A copy of the audited Balance Sheet and Profit and Loss Account together with a copy of Auditors Report and a copy of every document required by law to be annexed thereto, as the case may be, to the Balance Sheet which is to be laid before the members in General Meeting shall, not less than twenty one days before the date of the Meeting, be sent to every member of the Company, unless the requirements of the proviso (b)(iv) of Section 219(1) of the Act are complied with. AUDIT Accounts to be audited 264.a) Every Balance Sheet and Profit & Loss Account shall be audited by one or more Auditors, as may be appointed from time to time. b) The Company will comply with all the provisions prescribed in Section 224 to Section 233 (both inclusive) of the Act, as amended from time to time. First Auditor or Auditors 265. The first Auditor or Auditors of the Company shall be appointed by the board within one month of the date of registration of the Company and the Auditor or Auditors so appointed shall hold office until the conclusion of the first Annual General Meeting. Provided that the Company may at a General Meeting remove any such Auditor or all of such Auditors and appoint in his or their place any other person or persons who have been nominated for appointment by any member of the Company not less than fourteen days before the date of the meeting, provided further that if the Board fails to exercise its power under this Article, the Company in General Meeting may appoint the first Auditor or Auditor. Accounts when audited and approved be conclusive 266. Every account when audited and approved by a General Meeting shall be conclusive except as regards any error discovered therein within three months next after the approval thereof. Whenever any such error is discovered within that period the accounts shall forthwith be corrected and henceforth shall be conclusive, Authentication of documents and proceedings 267. Save as otherwise expressly provided in the Act, A document or proceedings requiring authentication by the Company may be signed by the Director, the Managing Director, the Manager, the Secretary or other authorized officer of the Company and need not be under its Common Seal. WINDING UP Winding up 277. A. Subject to the provisions of the Act, if the Company shall be wound up and the assets available for distribution among the members as such be less than sufficient to repay the whole of the paid up capital such assets shall be distributed so that, as nearly, as may be the losses shall be borne by the members in proportion to the Capital paid up, or which ought to have been paid up, at the commencement of winding up, on the shares held by them respectively. And if in winding up, the assets available for distribution amongst the members shall be more than sufficient to repay the whole of the Capital paid up at the commencement of winding up the excess shall be distributed amongst the members in proportion to the Capital at the commencement of the winding up or which ought to have been paid up on the shares held by them respectively. B. But this clause will not prejudice the rights of the holders of shares issued upon special terms and conditions.
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Distribution in specie or in kind 278. Subject to the provisions of the Act if the Company shall be wound up whether voluntarily or otherwise the liquidator may with the sanction of a Special Resolution and any other sanction required by the Act, divide amongst the contributories, in specie or kind the whole or any part of the assets of the Company, and may, with the like sanction vest any part of the assets of the company in trustees upon such trusts for the benefit of the contributories or any of them as the liquidators with the like sanction shall think fit. INDEMNITY AND RESPONSIBILITY Directors and others right of indemnity 279. a) Subject to the provisions of Section 201 of the Act, every Director, Manager, Auditor and other Officer or Servant of the Company shall be indemnified by the Company against, and it shall be the duty of the Directors out of the Funds of the Company to pay all costs, losses and expenses which any such Director, Manager, Auditor or other Officer of Servant may incur or become liable to by reason of any contract entered into, or act or thing done by him as such Director, Manager, Auditor of other Officer or servant or in any way in the discharge of his duties including travelling, expenses and in particular and so as not to limit the generality of the forgoing provisions against all liabilities incurred by him as such Director, Manager, Auditor or other Officer in defending any proceedings, whether civil or criminal, in which judgment is given in his favor or he is acquitted, or in connection with any application under Section 633 of the Act in which relief is provided shall immediately attach as a lien on the property of the Company and have priority as between the members over all other claims. b) Subject to the provision of Section 201 of the Act, no Director, Manager, or other Officer of the Company shall be liable for the acts, receipts neglects or defaults of any other Director or Officer or for joining in any receipt or other Act for conformity or for any loss or for joining in any receipt or other Act for conformity or for any loss or expenses happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the Directors for and on behalf of the Company or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damage arising from the bankruptcy, insolvency or tortuous act of any person with whom any moneys, securities or effect shall be deposited or for any loss occasioned by an error of judgment or oversight on his part, or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of his office or in relation thereto unless the same happen through his own dishonest.
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SECTION IX OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION Material Documents for inspection 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Memorandum and Articles of the Company, as amended till date. Our certificate of incorporation dated September 14, 2007 Fresh certificates of incorporation dated September 28, 2011 and October 5, 2011 Composite Scheme of Arrangement and Amalgamation sanctioned by the Honourable High Court vide order dated February 10, 2012 Order passed by the Honourable Bombay High Court dated February 10, 2012 Agreement with the Registrar and Share Transfer Agent Form 21 along with orders filed with the Registrar of Companies on the Effective Date Tripartite Agreement between the Company, RTA and NSDL dated March 05, 2012 Tripartite Agreement between the Company, RTA and CDSL dated February 24, 2012 No-objection certificate on the Scheme granted by BSE vide letter dated October 07, 2011 No-objection certificate on the Scheme granted by NSE vide letter dated October 21, 2011 Certificate from Statutory Auditors on Statement of Possible Tax Benefits Copies of Annual Audited Accounts of our Company for the financial years ended March 31, 2010, March 31, 2011, and March 31, 2012. Return of allotment of Equity Shares filed by our Company for allotment of shares pursuant to the Scheme Letters from BSE and NSE dated July 24, 2012 and July 20, 2012 granting in-principle approval for listing the equity shares issued pursuant to the Scheme Letter from SEBI dated August 31, 2012 granting relaxation from the strict enforcement of Rule 19(2)(b) of the SCRR
Any of the contracts or documents mentioned in this Information Memorandum may be amended or modified at any time if so required in the interest of our Company or if required by the other parties, without reference to the shareholders and subject to compliance of the provisions contained in the Companies Act and other relevant statutes.
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DECLARATION We hereby declare that all relevant provisions of the Companies Act and the guidelines and regulations issued by the Government of India and SEBI, as the case may be, have been complied with and no statement made in this Information Memorandum is contrary to the provisions of the Companies Act, the SEBI Act, or any rules, guidelines or regulations, made or issued there-under, as the case may be. We further certify that all statements in this Information Memorandum are true and correct. SIGNED ON BEHALF OF ALL THE DIRECTORS OF OUR COMPANY
________________________ MR. NIKHIL CHATURVEDI MANAGING DIRECTOR DATE : SEPTEMBER 6, 2012 PLACE : MUMBAI
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INFORMATION MEMORANDUM

March 31, 2012 27,915 3,33,962 -27,804 -2,64,18,517 -13,22,055 -13,956

March 31, 2011 -11,380 -2,96,764 -22,76,053 -13,938 -12,225

March 31, 2010 34,635 -2,61,175 -25,69,903 -21,797 -12,328

SALIENT FEATURES OF THE SCHEME

Shareholding Pattern of the Company [Pre-Scheme]

Category of shareholder (II)

6 0 249,994 0 0 0 250,000 0 0 0 0 0 250,000

0.00 0.00 0.00 0.00 0.00 0.00 NA 0 0 0 0 0 NA

(B) (1) (a) (b) (c) (d) (e)

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

(f) (g) (h) (2) (a) (b)

(c) (c-i) (c-ii) (c-iii)

(C) (1) (2)

Name of the shareholder

No. of warrants held

(VI) = (V)/(III) X100

100.00 0.00 0.00 0.00 0.00 0.00 0.00 100.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

100.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00 100.00

Name of the shareholder

Number of shares held

Number of warrants held

As a % total number of warrants of the same class

NOT APPLICABLE Total (I)(c)(ii ) 0 0.00 0 0.00 0 0.00 0.00

Details of convertible securities

Number of warrants held

As a % total number of warrants of the same class 0.00

Number of convertibl e securities held 0

% w.r.t total number of convertible securities of the same class 0.00

Not Applicable Total (I)(d)

Statement showing details of locked-in shares

Not Applicable Total

Statement showing details of Depository Receipts (DRs)

Category Code (I)

Category of shareholder (II)

No. of shareholders (III)

Total no. of shares (IV)

No. of shares held in dematerialized form (V)

36,812,871 0 11,290,000 0 559,600 4,864,778 53,527,249 0 0 0 0 0 53,527,249

36,812,871 0 11,040,000 0 559,600 4,864,778 53,277,249 0 0 0 0 0 53,277,249

0.00 0.00 0.00 0.00 0.00 0.00 NA 0 0 0 0 0 NA

(B) (1) (a) (b) (c) (d)

0.00 0.61 0.00 0.00

0.00 0.61 0.00 0.00

(e) (f) (g) (h) (2) (a) (b)

0 14 0 0 16 643 38,135 36 141 588 1 39,544 39,560 39,579 0 39,579

(c) (c-i) (c-ii) (c-iii)

(C) (1) (2) Notes: 1) 2)

Name of the shareholder

No. of warrants held

As a % of total number of warrants of the same class

Number of convertible securities held

Name of the shareholder

Number of shares held

49,410,788 4,489,600 2,500,000 2,324,160 2,243,375 1,525,195 62,493,118