Respect. Resilience. - CHD Developers...CHD Responsibility Developers Limited Annual Report 2015-16...

Respect. Resilience. Responsibility

CHD Developers

Limited

Annual Report 2015-16

BOARD OF DIRECTORSMr. Rajinder Kumar Mittal

Chairman cum Whole Time

Director (Executive)

DIN – 00015146

R/o Plot No. 10-11, Nelson Mandela

Road, C-3POC, Vasant Kunj, New

Delhi-110070

Mr. Gaurav Mittal

Managing Director (Executive)

DIN- 00052968

R/o Plot No. 11, Nelson Mandela

Road, Vasant Kunj, New

Delhi-110070

Mr. Pran Nath

Director (Independent – Non

Executive)

DIN-00015740

R/o C-II/2255, Vasant Kunj, New

Delhi-110070

Mr. M. S. Kapur


Executive)

DIN- 00703815

R/o KLASSE/1/401, Eldeco Utopia,

Expressway, Noida,-201304

Mrs. Shashi Prabha Passi


Executive)

DIN-07019095

R/o H. No. 386, Sector-14,

Vasundhara, Ghaziabad- 201012 U.P.

CHIEF FINANCIAL OFFICERMr. Sunil Kumar Jindal

COMPANY SECRETARY CUM COMPLIANCE OFFICERMr. Sachin Kumar

REGISTERED OFFICESF-16-17, 1st floor, Madame Bhikaji

Cama Bhawan, Bhikaji Cama Place,

New Delhi-110066

Ph. No: 011-40100100, Fax: 011-

40100190

Web: www.chddevelopers.

com, Email: investorservices@

chddevelopers.com

CIN L74899DL1990PLC041188

AUDITORSM/s Mohan & Mohan

Chartered Accountants,

18A, IInd Floor, North Avenue

Road, Punjabi Bagh (west), New

Delhi-110026

SUBSIDIARIES

DIRECT SUBSIDIARIES

Golden Infracon Private Limited

CHD Facility Management Private

Limited

CHD Infra Projects Private Limited

(formerly known as CHD Armaan

Realtech Private Limited)

Empire Realtech Private Limited

International Infratech Private

Limited

Delight Spirits Private Limited

CHD Blueberry Realtech Private

Limited

CHD Elite Realtech Private Limited

SUBSIDIARY OF CHD Infra Projects

Private Limited

CHD Hospitality Private Limited

PRINCIPAL BANKERS/ FINANCIAL

INSTITUTIONS

Axis Bank Ltd.

Bank of Baroda

DMI Finance Pvt. Ltd.

Reliance Home Finance Limited

Reliance Capital Limited

Kotak Mahindra Bank Ltd.

Kotak Mahindra Investment Ltd.

Capri Global Capital Ltd.

IndusInd Bank Limited

REGISTRAR & SHARETRANSFER AGENTS

Skyline Financial Services Pvt. Ltd.

D-153A, 1st Floor, Okhla Industrial

Area, Phase-I, New Delhi-110 020,

Ph: 011-26812682

CORPORATE INFORMATION

Contents

Corporate identity 03

Milestone 04

Financial Highlights 06

Chairman’s message 12

Managing Director’s message 15

Performance ambition 17

Our business model 18

Management Discussion analysis 20

Finance review 24

Managing risks at CHD 24

Directors’ report 28

Corporate Governance report 44

Standalone Financial Statements 68

Consolidated Financial Statements 95

Despite the nation’s real estate sector weakening in 2015-16, the message that we wish to send out to our shareholders is that CHD Developers Limited embarked on business-strengthing initiatives to build robust capabilities.

By promoting products among consumers.

By reporting a high collection efficiency.

By delivering projects in a timely manner.

By optimising the quantum of debt.

By moderating the cost of funds.

By enhancing liquidity.

We believe that these initiatives will lay the foundation of a stronger company.

Profitable across locations. Sustainable across market cycles.

CHD Developers Limited.

Reinforcing its identity as one of North India’s prominent real estate brands.

Through a distinctive focus on specific pillars.

Execution excellence.

Brand building.

Robust Balance Sheet.

Translating into business sustainability.

2 | CHD Developers Limited

Corporate snapshotCHD Developers Limited was

incorporated in 1990 by Mr R. K. Mittal.

The Company is headquartered in

New Delhi and was started with a

vision to help home buyers realise

their dream homes. The Company is a

leader when it comes to property and

innovative development. In doing so,

the Company has ushered paradigm

changes in North India’s real estate

landscape.

Projects in Vrindavan, Haridwar,

Gurgaon, Karnal and other areas of

Delhi testify to CHD’s commitment

to provide world-class living spaces

to its customers. The Company

has an asset-light operating model

and follows the concept of ‘realty

manufacturing’, which does not

involve the accumulation of a land

bank.

The Company is listed on the BSE

Limited with a market capitalization of

H133.24 crore as on March 31, 2016.

OfferingsThe Company’s product portfolio

comprises residential, commercial,

recreational and retail properties.

The Company derived approximately

90% of its revenues from the sale of

residential apartments. The Company

is certified with the ISO 9001-2008

accreditation.

Focus areasCHD focuses on high growth regions

like Gurgaon and Karnal.

GurgaonFour ongoing

projects across

a total saleable

area of 3.21

million square

feet (including

collaborator’s

share).

Karnal One integrated

township project

of which an area

of 3.69 million

square feet has

been delivered

and 1.82

million square

feet, where

development is

ongoing.

As of March 31, 2016, unsold inventory

from ongoing projects stood at a

mere 30.91% of the total saleable area

of the ongoing projects. There was

no unsold inventory from completed

projects on the Company’s books.

Annual report 2015-16 | 3

Milestones

1990 2002 2006

1995 2005 2010-11

Ventured into the

real estate sector

which was then

dominated by

unorganised entities.

A DDA auction

kick-started plot

purchases, which

were thereafter

developed by

the Company

and marketed

as commercial

properties.

Extended into

the residential

segment via the

launch of Gayatrilok

(Haridwar)

comprising 412

apartments across

an area of 178,000

square feet.

Extended from

standalone projects

to a 250-acre

integrated township

in Karnal, the

first-of-its-kind in

Haryana.

Listed on the

Bombay Stock

Exchange

Launched a

residential group

housing project

Sri Krishnalok at

Vrindavan, Mathura.

Launched Avenue

71, a multistoried

residential offering,

in Gurgaon. The

project redefined

the norms of

premium group

housing in the NCR.


2011-12 2013-14 2015-16

2012-13 2014-15

Handed over Silver

County villas at CHD City,

Karnal, ahead of schedule.

Handed over Avenue

71 for possession.

Started operations at

Daana Paani.

Handed over Lifestyle

Premiere for possession.

Acquired development

rights over 10 acres for

Sector 71 in Gurgaon.

Launched four new

projects in CHD City,

Karnal. This year saw the launch

of two projects in Gurgaon

– CHD Eway Towers and

CHD Resortico.

Handed over

possession of

Lifestyle, Lifestyle

Prime, Lifestyle

Grand and Lifestyle

Floors in Karnal;

provided amenities

like a milk booth, a

grocery store, a daily

convenience store,

salon and a juice

corner at CHD City.

Launched 106 Golf

Avenue, a residential

group housing project

in Gurgaon.

Launched CHD

Vann, a residential

group housing project

at Gurgaon

Handed over

possession of Lifestyle

Floors at CHD City,

Karnal

Launched first

affordable group

housing project in

Karnal (Karnal Homes)


Revenue (H crore)

271

.43

20

12-1

3

33

4.8

3

20

13-1

4

249.9

9

20

14-1

5

182

.13

20

15-1

6

Cash profit (H crore)

14.8

62

012

-13

17.3

92

013

-14

11.7

12

014

-15

11.4

92

015

-16

Profit after tax (H crore)

13.9

12

012

-13

15.9

72

013

-14

8.9

92

014

-15

8.9

62

015

-16

Net profit margin (%)

5.12

20

12-1

3

4.7

72

013

-14

3.6

02

014

-15

4.9

22

015

-16

EBITDA (H crore)

28

.99

20

12-1

3

45.

22

20

13-1

4

33.

722

014

-15

27.

58

20

15-1

6

EBITDA margin (%)

10.6

82

012

-13

13.5

02

013

-14

13.4

92

014

-15

15.1

52

015

-16

Our growth story in numbers (Consolidated basis)


Earnings per share (H)

1.2

22

012

-13

1.4

12

013

-14

0.7

92

014

-15

0.7

92

015

-16

Debt: equity ratio

1.6

82

012

-13

2.0

1 2

013

-14

1.3

6

20

14-1

5

1.0

7 2

015

-16

Book value per share (H)

8.0

02

012

-13

9.3

52

013

-14

10.0

82

014

-15

10.8

32

015

-16

Weighted average interest cost (%)

18.5

02

014

-15

16.2

52

015

-16

Location-wise property sold

98

68

4

29

25

82

20

13-1

4

42

62

64

155

95

72

014

-15

98

68

4

29

25

82

20

15-1

6

3.8

52

012

-13

4.9

92

013

-14

6.4

42

014

-15

1.9

32

015

-16

Karnal (sq ft) Gurgaon (sq ft)

Marketing spend as a proportion of revenues (%)


Enhancing our liquidity

At CHD Developers Limited, the operative word is ‘liquidity’.

At a time when the country’s real estate

development sector is passing through

challenging times marked by decelerated

offtake, flat realisations and declining

margins, we believe that our sustainability

will be strengthened by our ability to

increase the availability of cash within our

system.

This will make it possible for us to

competitively procure building materials

and negotiate better with bankers,

moderate our costs and enhance

surpluses – kick starting a virtuous cycle.

During the year under review, CHD

Developers Limited made decisive

confidence-enhancing initiatives in this

regard.

One, the company repaid H23.20 cr of

debt (net) to banks, selecting to enhance

productivity and work with a smaller

deployment of capital. The result was

a Balance Sheet progressively sized in

proportion to the company’s business and

setting the foundation of lower interest

outflows across the foreseeable future.

Two, the company initiated the process

for substituting its higher cost debt with

lower cost debt and also got regulatory

sanctions, which will result in a significant

reduction in interest cost and also lead to

substantial systemic liquidity.

The arrangement will ensure that the

Company possesses adequate funds

to sustain immediate and forecasted

business requirements.

Three, the company negotiated five-

year debt with a leading bank enjoying

a 30-month front-end moratorium. This

arrangement will make it possible for

the company to fund existing projects,

matching project maturity with debt

repayment (as opposed to the erstwhile

arrangements where repayments began

during project gestation).

We believe that this medium-term

correction in our cost structure will make

it possible to remain viable in the most

challenging downtrends on the one hand

and maximize surpluses during sectoral

corrections on the other.


Strengthening our project pipeline

At CHD Developers Limited, we are focusing on our pipeline.

During the year under review, we

prepared the ground for new project

launches that could translate into

attractive revenues across the next two

years.

During the year under review, the Haryana

Government launched “Affordable Plotted

Housing Policy for Low and Medium

Potential Towns’ scheme known as

”Deen Dayal Jan Awas Yojana” under the

provisions of Section 9A of the Haryana

Development and Regulation of Urban

Areas Act, 1975. The Company plans to

apply for a license under this scheme

to build affordable homes for the mid-

income segment.

In the same light, the Company plans

to launch 30 acres of mass affordable

plotted housing in Karnal under Deen

Dayal Jan Awas Yojana, 2016 Haryana,

This will give the Company the option to

build high density lower-sized and low

ticket size plots or independent floors

(G+2).

By addressing demand for affordable

homes in the mass market with a large

unmet demand, the accelerated offtake

will translate into attractive cash flows,

enhancing liquidity and profitability.

Besides, we believe that by engaging

in affordable housing schemes, the

company will have strengthened its

visibility in a segment, which is still at a

nascent stage in the country’s organized

sector.


Conscious de-riskingWe believe that the relative

attractiveness of our numbers during

the financial year under review was

the result of a conscious long-term

de-risking.

Most companies of our size within

our sector generally select to

specialise in one format of the large

real estate sector. At CHD Developers

Limited, we selected to broaden our

presence from the residential to the

commercial to the retail to serviced

apartments; within the residential

apartment niche, we widened our

presence from the premium to

the affordable, making it possible

to virtually address every kind of

customer within the locations of

our presence. Even during the most

challenging times in the real estate

sector, we continued to address the

needs of our customers, translating

into revenues and cash flows.

Most companies of our aspirations

would have considered it prudent to

widen their geographic footprint. At

CHD Developers Limited, we selected

to do the reverse. Companies that

operate in the real estate sector

focus on growing deeper as opposed

to wider, they stand to leverage

economies of brand, procurement

and managerial bandwidth. This

explains why even after having spent

25 years in property development, we

have selected to grow our presence

only in Gurgaon and Karnal. We

believe that the more

we have worked in these

locations, the better we

have been recognised

as focused players; the

more this has transpired,

the quicker has been

the speed with which

we have been able to

market properties; in turn,

the quicker inflow has

protected our Balance

Sheet and generated

adequate surpluses to

reinvest in new projects,

reinforcing our virtuous cycle.

Most companies would have

selected to invest in land and then

progressively develop the property

with the objective of capitalizing

on the entire value chain. At CHD

Developers Limited, we strengthened

our conviction that the real estate

development industry is really

a coming together of two sub-

businesses: one, which focuses

on prudent land aggregation; two,

which focuses on the efficient

transformation of land into developed

properties. The former business is

cash-intensive across an extensive

period during which the company

is required to get clearances to be

able to launch. The latter business is

quite the opposite: it can be run with

relatively zero working capital and can

be completed in shrinking tenures

following the infusion of modern

technologies. In the real estate sector

it has been usual for a company

to assume both roles. For the last

couple of years, CHD Developers

Limited considered it prudent to

focus on efficient conversion. If we

needed to develop properties, we

felt it would be more prudent to buy

from the open market or develop

jointly with land owners (in exchange

for a part of the profits arising from

property development). We believe

that this single decision has helped

us reallocate the resources that

would have gone into land banking

into equipment and technologies,

accelerating project completion.

Most companies would have focused

on one kind of customer on the

grounds that this would reinforce

their recall and brand. At CHD

Developers Limited, we felt that it

would be business-strengthening if

the ‘CHD’ recall stood for a superior

value proposition, irrespective of

the format or size of our offering.

The result is that CHD emerged as

progressively format-agnostic. During

buoyant markets, we generated

traction for premium residential

offerings; during sluggish markets,

we reported attractive sales of lower

ticket apartments. The result: even

in a challenging 2015-16, we had

successfully liquidated at least 60

per cent of all our property offerings,

providing those specific projects

adequate working capital to take

them to logical project completion.

Most companies tended to complain

about the prevailing sluggishness. At

CHD Developers Limited, we selected

to see the positive side of realities:

negotiating aggressively for volume-

At CHD Developers Limited, we felt that it would be business-strengthening if the ‘CHD’ recall stood for a superior value proposition, irrespective of the format or size of our offering


based material discounts on the

one hand and investing in cutting-

edge technologies to accelerate

construction on the other. The

result was that at a time when most

customers felt that given the sectoral

weakness there would be delays in

project completion, we pleasantly

surprised with timeliness in addressing

project milestones. We believe that

this outperformance at a time of weak

real estate sentiment has

helped reinforced our

recall as a customer-driven

player with long-term

seriousness.

Most companies

complained of weak

collections, which affected

their construction pace

and working capital costs.

At CHD Developers

Limited, the challenging

year under review was

yet another occasion

when our focus on actual

users (as opposed to

investors and arbitrageurs) paid off.

We reported an average collection

efficiency of about 94 per cent during

the year under review, moderating

our need to mobilize external debt

and protecting the attractiveness of

our Balance Sheet.

Most companies complained of

how external realities remained

grim. At CHD Developers Limited,

we focused on maximizing the

efficiency of factors within our

control. One of our decisive initiatives

was a planned rationalisation of high

costs and encouraging multi-skilled

responsibility taking. The result was

higher motivation and increased

per-person productivity, rightsizing

the company for profitable and

sustainable growth.

SummaryThe principal message that I wish

to send out to our shareholders is

that the company selected to invest

in proactive initiatives, strengthen its

business model and prepare for the

economic recovery.

Motivated at a time of pessimism.

Resilient at a time of weakness.

These are the thoughts which I wish

to communicate to our shareholders.

With warm regards,

R. K. Mittal, Chairman

The principal message that I wish to send out to our shareholders is that the company selected to invest in proactive initiatives, strengthen its business model and prepare for the economic recovery.


Two, we intend to make a considered

extension in our presence into a Tier

II city, our first-ever extension beyond

Delhi, Karnal, Gurgaon, Vrindawan

and Haridwar.

Financial restructuring One of the company’s principal

achievements was that in a

challenging year marked by sluggish

sales and weak liquidity for most

players, CHD Developers Limited

selected to strengthen its Balance

Sheet. What the company achieved

was rare: even as revenues declined,

the company repaid nearly H23.20 cr

of debt. The result was that interest

outflow declined by 38.50 per cent

and EBITDA margin improved 166

bps.

This improvement in our financial

structure was largely the payback of

our long-term initiative to address

the growing needs of actual users.

In turn, actual users paid their

instalments on schedule. This

timeliness made it possible to sustain

construction punctuality, which, in

turn, incentivised timely payments – a

virtuous cycle.

Enhancing liquidityAt CHD Developers Limited, we

believed that at a time when the

external environment was sluggish,

it was imperative to enhance our

liquidity.

The result was that we focused on

every cost element, rationalised high-

cost people and encouraged multi-

skilling. The result is that we were able

to repay H23.20 cr of debt during the

year.

Most companies would have been

satisfied with the repayment. At CHD

Developers Limited, we swapped our

existing high cost debt with cheaper

alternatives, strengthening our overall

viability. We believe that this debt

switch was made possible by bankers

who trusted our brand, vision and

business model.

The result was that we increased

our liquidity even in challenging

circumstances, which is an index

of our strategic clarity and rigorous

project implementation.

OutlookOur ambition is to enhance our

capability by 12-15 per cent per

annum. We feel that this desired

growth is sustainable and what the

company’s Balance Sheet would be

able to shoulder without assuming

large debt that could potentially affect

the company’s ability to remunerate

shareholders across the future.

Over the foreseeable future, our

objective is two-fold: create a revenue

pipeline through the launch of new

projects from 2016-17 onwards; utilize

surpluses to pare debt and moderate

interest, creating an additional profit

driver.

We believe that the combination

of profit growth through revenue

increase and declining interest

would strengthen our sustainability,

translating into enhanced value in the

hands of all those who own shares in

our company.

With warm regards,

Gaurav Mittal, Managing Director

Over the foreseeable future, our objective is two-fold: create a revenue pipeline through the launch of new projects from 2016-17 onwards; utilize surpluses to pare debt and moderate interest, creating an additional profit driver.


Our performance ambition

Overall goalGrow our peak property development

capacity 12-15 per cent each year (from the

present total saleable area of 5.03 mn sq ft as

on March 31, 2016)

Probable goal contributors Focus on the micro-markets of Gurgaon,

Karnal and one more Tier II city in North

India

Widen our risk across various property

development formats to be able to generate

diverse revenue streams (lumpy and annuity)

Moderate our debt; enhance liquidity

through prudent debt negotiation and

preference for joint development of

properties (land owned by partner in

exchange for profit sharing)

We are making focused investments in: Processes and competence that make it

possible to enhance productivity

Brand that makes it possible to enhance

sales throughput without a corresponding

increase in promotions and advertising

Land parcels with the objective to develop

them with speed without necessarily creating

a large land inventory with an arbitrage

perspective

Initiatives that enhance the speed of project

completion

We are measuring our performance ambition through Balance Sheet health Debt: Declined from H155.37 cr in 2014-15

to H132.18 cr in 2015-16

Debt-equity ratio: Declined from 1.36 in

2014-15 to 1.07 in 2015-16

Weighted average cost of funds: Declined

from average 18.50 per cent in 2014-15 to

average 16.25 per cent in 2015-16

Collection efficiency: 94 per cent in 2015-

16 compared with 99 per cent in 2014-15

At CHD Developers Limited, our performance ambition is to emerge as one of the most trusted real estate brands in India.


Our business model

Diversified focus The Company addresses the

growing residential needs of the

middle and upper-middle income

segments. The Company focuses

largely on residential housing

(affordable and premium) even as it

has diversified its presence across

commercial properties, serviced

apartments and retail.

Robust financials The Company has selected to

remain fiscally conservative,

reflected in a 14.9% decline in

debt over 2014-15. Financial cost

declined by 38.50% over the

previous year.

Asset-light model The Company is positioned as a

‘realty manufacturer’ (treating land

as a resource, acquiring it as per

project needs), without maintaining

a sizable land bank. Besides, the

company either acquires land

or selects to engage in joint

development where the land is

provided free in exchange for the

company sharing profit or property

with the partners.

Timely execution The company focused on timely

project execution through the

engagement of dependable

contractors. Over the last six

years (2011-16), 50 lacs sq. ft. of

completed property was delivered

on time, strengthening the brand.

Geographic focusThe Company selected to focus

largely on Gurgaon among other

prominent cities and Karnal among

Tier II cities (with the option of

extending its presence to another

within a year).

Customer focus The Company addressed the

needs of end users (as opposed to

speculators), which translated into

timely instalments receipt (around

94% collection efficiency), and

cash profit of H11.49 Crore in 2015-

16

Governance The Company has invested

extensively in governance which

translated into robust core values,

best practices, checks, balances,

transparency and regulatory

compliance.


47Price appreciation per cent in Sectors 81-95 in Gurgaon (called New Gurgaon) expected by 2020

23Percent of the total office space leased among top 8 cities that was taken by Gurgaon in 2015, as reported by Collier International

0.5Minimum additional FAR that can be obtained by older projects in Gurgaon under TOD. Additional FAR can be purchased in slabs of 0.25 subject to a maximum of 1.75 or 0.75 as per location in Intense or Transition Zone respectively.

60Percent of office space solely in Gurgaon that was absorbed by IT/ITeS companies

42Price appreciation per cent in Golf Course Extension Road expected by 2020

2.1Million square feet of commercial office space that was leased out in Gurgaon in 2015.

6Percent average rise in office rents in 2015 in Gurgaon against a 2.8% rise in Delhi-NCR

Development Type

Older permissible FAR

Intense/Transition FAR

Group Housing 1.75 3.5/2.5

IT/ITeS 2.5 3.5/3.0

Commercial/

Mixed land use*

1.75 3.5/2.5

*As per the earlier mixed use policy, 30% commercial

in residential/industrial/institutional zones and 30%

residential in licensed colonies in commercial zones

can avail the benefit

* Gurgaon has seen maximum number of new launches in NCR (primarily affordable housing)


Management discussion and analysis

Indian economyIndia’s GDP grew by 7.6% in 2015-16,

powered by a rebound in farm output,

and an improvement in electricity

generation and mining production

in the fourth quarter of the fiscal.

Economic growth was estimated at

7.3% in 2016-17.

The growth numbers for the last

fiscal, which reinforces India’s position

as the world’s fastest-growing

economy, came on the back of a

strong 7.9% growth in the last quarter

of the fiscal. The strong 7.9% growth

in the fourth quarter comes at a time

when China has reported a 6.7% in

the March quarter — its slowest in

about seven years.

This robust number, inspite of

faltering private investment, weak

capital goods growth and shrinking

exports, has raised expectations. The

RBI has already cut its policy repo

rate by 150 basis points since January

2015, reducing it to 6.5% — the lowest

level in more than five years.

According to data released by the

CSO, the farm sector grew by 2.3%

from a year ago compared with a 1.0%

contraction in the December quarter.

The mining sector grew by 8.6% in

the March quarter, up from 7.1% in the

previous quarter. Electricity, water and

gas production growth surged to 9.3%

from 5.6% in the December quarter.

The CSO, in a statement, said that it

has revised the GDP data for the first

three quarters released earlier from

7.6%, 7.7% and 7.3% to 7.5%, 7.6% and

7.2%, respectively.

Going forward, better monsoons and

Seventh Pay Commission payouts

are likely to remain supportive of

consumption. However, in the

absence of private capex, growth

will continue to be heavily reliant on

governmental spending.

Indian real estate sectorTepid home sales, rising inventory

levels and weak sentiment pulled

down India’s property markets in

2015, with not much hope of a

recovery soon. The sector awaits the

return of investors and customers,

who seem to be waiting for prices to

stabilize and developers to honour

project delivery schedules before they

take the plunge again.

However, India’s real estate sector’s

market size is expected to be USD

180 billion by 2020 from USD 93.8

billion in 2014. Increasing share of real

estate in the GDP would be supported

by increasing industrial activity,

improving income levels and

urbanization.

Several private equity (PE) funds are

either planning or are already on their

way to raise almost $4 billion from

overseas investors to invest in real

estate in 2016. Due to weak project

cash flows and difficulty in procuring

bank lending, developers are securing

much of their funding requirements

from external pools such as PE funds.

The year 2016 is expected to

gradually move towards better home

sales and see a spurt in launches in

some locations. The year will also see

the sector moving from an investor-

driven to an end-user driven cycle.

With the government easing foreign

direct investment (FDI) norms

in the construction sector, more

offshore investors are likely to

invest in real estate. This will also

enable smaller-sized investments.

More exclusive partnership platform

transactions between Indian

developers and investors are also

expected to happen, giving fund

managers more control over

investments and decision making.

The relaxation of FDI norms in the

midst of a prolonged slowdown

in the sector is expected to bring back

some cheer in the real estate sector.

The commercial office sector,

which was a saving grace during the

slowdown, is expected to further

shine in 2016. Vacancy levels have

fallen and large firms, many in the

e-commerce space, are taking up

new space at a brisk pace. Buyouts

of ready commercial space are on,

and private equity funds are now

even looking at investing in under-

construction properties. Realty firms

with office development portfolios are

not only focusing on growing their

business, but in some cases are also

shifting focus from residential to rent-

yielding office projects.


Growth driversBudget: The Union Budget 2016-17

provided some good news for the

sector. The Government raised the

exemption limits for first-time home

buyers with an overall ceiling of loan/

price of property and at the same

time introducing various tax sops/

exemptions in terms of income tax

and service tax to provide affordable

housing and generating supply. REITs

finally got complete exemption from

the DDT; this will help companies

with quality commercial real estate to

monetise their assets. The focus on

infrastructure is kept intact through

an enhanced budget for road, railway

connectivity etc. These will act as

enablers for the real estate sector in

the long run. Lastly, announcement of

digitisation of land records is a move

in the right direction to enhance the

transparency and easy accessibility of

the land records.

Urbanisation: About 377 million

people from India’s total population

of 1.27 billion are urban dwellers.

With more than 10 million people

migrating to cities and towns every

year, the total urban population is

expected to reach about 600 million

by 2031. Furthermore, between 2015

and 2031, the pace of urbanisation is

likely to increase at a compounded

annual growth rate (CAGR) of 2.1

per cent, which is estimated to be

almost double China’s growth rate.

Urbanisation and growing household

incomes are driving demand for

residential real estate and growth in

the retail sector.

Urban housing shortage: The

problem is further compounded as

there are only a few urban centres in

India that promise better prospects

than most cities and towns —

leading to more pressure on their

infrastructure and housing — and

resulting in disordered urbanisation.

This is reflected in almost 65.5

million Indians who, according to

the country’s 2011 Census, live in

urban slums and sprawls. As per

the Economic Survey of India, EWS

(economically weaker sections)

and LIG (lower income groups)

together account for 95.6 per cent

of the urban housing shortage in the

country, and it would be important

to address the need of this significant

segment of population. Amid the

growth of urbanisation, the housing

shortage in India has touched 18.78

million units.

Nuclear families: Approximately 56

per cent of households in urban India

now have four or less members,

which is a marked change in the

Indian housing sector in the past

10 years. This trend has significantly

increased the demand for housing

in the urban context with the growth

of smaller families. Interestingly,

although India’s number of

households increased by 60 million

between 2001 and 2011, the number

of houses went up by almost 81

million over the same period.

Advantage IndiaRobust demand Demand for residential

properties has surged due

to increased urbanisation

and rising household

income

About 10 million people

migrate to cities every

year

35 per cent of the

population is in young

age bracket (15-35 years)

Growing economy

driving demand for

commercial and retail

space

Increasing

investments FDI in construction

development of

USD24.156 billion

between April 2000 and

September 2015

During April 2000–

September 2015, the real

estate sector accounted

for 9 per cent of total FDI

inflows into India

Policy support The government has

allowed FDI of up to 100

per cent for townships

and settlements

development projects

Under the Housing

For All scheme, 6 crore

houses are to be built

in which 4 crore in rural

areas and 2 crore in

urban area by 2022

Increase in exemption

limit from USD 3317 to

USD 4147 will help in

household savings

Attractive

opportunities Growing requirements

of space from sectors

such as education and

healthcare

Growth in tourism

providing opportunities in

the hospitality sector

(Source : IBEF)


Middle class: The middle-class

in India has a 22.6% share of the

country’s wealth. With 108 million

people, China has the highest middle-

class population among BRICS

nations and globally, followed by

India’s 23.6 million people and Brazil’s

11.2 million. China also tops the share

of the global middle-class population

with 16.4%, followed by India with 3%.

India accounts for 3% of the global

middle-class with 23.6 million people.

Real estate regulatory actReal Estate Regulatory Act was passed

by both houses of Parliament last

year and was notified on 1st May,

2016. This will become effective

in a few months. It is a big step by

the government to regulate the

industry and correct issues plaguing

the sector. This Act has some major

provisions which will help in the

timely completion of projects and

help buyers and sellers. The main

provisions of this Act are:

• The developer has to deposit 70%

of amounts realized from allottees

in a separate bank account and get

utilization audited and certified

• It is mandatory for developers to

post all information regarding the

project such as project plan, layout,

government approvals, land title

status, sub contractors for the project,

schedule for completion with the

State Real Estate Regulatory Authority

and also share the same information

with customers

• There are major penalties for

developers related to delay in the

delivery and any violation of the order

of the RERA Appellate Tribunal.

• Every project measuring more than

500 square meters or more than eight

apartments will have to be registered

with the authority.

This Act will help to create a level

playing field for all developers and

will impose legal obligation on even

small developers for compliance

and make real estate transactions

more transparent. It will help curb

the malpractices in the industry,

and facilitate the buyers in taking

informed decisions. The cost of

projects is likely to increase due

to additional capital requirements

and due to the increased cost of

compliance. We expect the Act to

lead to consolidation in the industry

with non-serious players exiting

the business. It will also increase

customer confidence and their

propensity to invest in the sector.

OutlookResponding to an increasingly

well-informed consumer and

keeping in mind the globalization

of the Indian business outlook, real

estate developers have accepted

fresh challenges, The regulatory

environment in the country is likely to

improve on the back of introduction

of RERA. This Act requires completion

of projects on time, otherwise a

penalty would be imposed. It is likely

to improve confidence of consumers

who were otherwise afraid of getting

blocked their money with developers.

The government also launched

major initiatives to improve the real

estate sector. Developers, in order

to attract funding, revamped their

accounting and management systems

to meet due diligence standards.

The ‘Smart City’ project is a plan to

build 100 smart cities across the

nation, which will present a major

opportunity to real estate players.

The Prime Minister’s ‘Housing for

All by 2022’ is a scheme for LIG

and MIG housing projects where

30 million houses will be built by

2022 through the PPP model. The

growing flow of FDI into Indian real

estate is encouraging increased

transparency. This was done to ease

cash flows into the struggling sector

and is expected to boost projects

in affordable housing and Smart

Cities. Real estate investment trusts

(REITs) and infrastructure investment

trusts (InvITs) will also enable easier

access to funds by developers with

SEBI already finalizing regulations for

each investment instrument. Besides,

increasing inflow of FDI is bound

to encourage transparency in the

system.

Internal control systems and their adequacyThe Company has a proper and

adequate system of internal controls

commensurate with its size and

business operations to ensure timely

and accurate financial reporting

in accordance with applicable

accounting standards, safeguarding

of assets against unauthorised use

or disposition and compliance with

all applicable regulatory laws and

Company policies.

Internal Auditors of the Company

review the internal control systems on

a regular basis for its effectiveness and

necessary changes and suggestions

are duly incorporated into the

system. Internal audit reports are also

reviewed by the Audit Committee of

the Board.


Overview The Company laid a keen

emphasis on reconciling operations

across locations

The Company’s SAP platform

ensures efficient organisational

integration

Highlights, 2015-16 The Company created alternative

data storage location

The Company invested in systems

to protect from systemic loss

arising out of power outages

The Company created the

foundation for implementing

Business Intelligence (BI) and

Business Objects (BO) to track

business activities

The Company started

implementing Sales Force software

to track pre-sales activity

The Company laid the foundation

of Phase 2 to track post-sales

activity

Road ahead, 2016-17 The Company positioned 2016-

17 as a year of implementation of

new technologies and systems

enhancement

Overview The Company comprises

engineers, supervisors, sales

executives and administrative

professionals.

The Company focuses

on enhancing employee

competitiveness and productivity.

Highlights, 2015-16 The Company addressed

organizational objectives through

multi-skilling and job rotation,

recruiting only critical manpower.

The Company’s emphasis shifted

to enhanced productivity.

The Company chalked out Vision

2020 with respective department

targets coupled with periodic

reviews.

The Company followed a KRA-

based performance management

process

The Company invested in

employee training (one week a year

based on job role and standard

operating procedure).

Road ahead, 2016-17 The Company will focus on

training and motivation

Information technology

Business drivers

Knowledge capital

Business drivers


Finance review

The company continuously identifies, assesses

and mitigates key risks across levels.

Preparation of Financial StatementsThe financial statements of the Company were prepared in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

The financial performance of the company was stable inspite of sectoral weakness. The financials were largely stable and an overview of the consolidated numbers are as below:

Parameter Performance

Revenue, in H crore 182.13

EBITDA, in H crore 27.58

Net Profit Margin in % 4.92

Book value per share, in H 10.83

EPS, in H 0.79

There was a marked decrease in two important performance parameters:

Debt-Equity ratio decreased from 1.36 in 2014-15 to 1.07 in 2015-16.

Weighted average cost of capital for the Company came down to 16.25% in 2015-16 from 18.50% in 2014-15.

(in H crore)

Parameter 2014-15 2015-16

Total Revenue* 249.70 182.13

Construction expenses 113.21 163.56

Employee Benefit expenses 16.61 16.62

Finance cost** 17.27 10.62

Other Expenses 36.10 24.71

Depreciation and Amortization expenses 2.72 2.52

Tax expenses 4.73 5.46

Profit after tax 8.99 8.96

*This subdued number was largely due to factors beyond our control.

** This decline was largely due to a reduction in the Company’s debt portfolio

Risk management

Raw material riskImplicationUnavailability of raw materials could lead to

delays in project completion

Risk mitigationDuring the year under review, the Company

appointed 82 contractors with stringent vendor

qualification norms for on-time delivery of

projects.

The Company has in place an information

modeling system, which has helped

the Company in holistic planning and

procurement, cost management and quantity

estimation of raw materials required at any

given point of time.

The Company’s flyash bricks manufacturing

plant helped obtain bricks of the required

quantity and quality.

ResultThe Company was able to access raw materials

cost-efficiently and on time.


Geographic riskImplicationLack of infrastructural

development within the

Company’s operating areas

could impact revenues.

Risk mitigationGurgaon has emerged as

an industrial and financial

hub as leading corporates

have set up offices there.

This resulted in increased

demand for residential

apartments in Gurgaon.

CHD Developers Limited

has ongoing projects in

two out of the top four

real estate destinations

in Gurgaon. The two

locations are expected to

see a robust demand in

FY2017 and add further

to the Company’s overall

profitability.

In line with the market

demand, CHD Developers

Limited also has an ongoing

affordable housing project

in Karnal.

ResultThe Company has

developed most of its

properties in Delhi, Karnal

and NCR since inception

except one in Vrindawan

and one in Haridwar.

Competition riskImplicationAn increase in competition

in Gurgaon could affect

growth and profitability.

Risk mitigationThe Company entered

the real estate market in

Gurgaon at an early stage

with strong credentials

in terms of quality

development and on-time

delivery, which enhanced

customer trust. Further,

the Company’s properties

were located at attractive

locations.

ResultDuring the year 2015-16,

the Company reported

good turnaround of its

property sales in the nature

of repeat or referrals.

Project completion riskImplicationA delay in the completion

of projects could impact

the Company’s brand.

Risk mitigationThe Company completed

almost all of its projects on

schedule/within extended

schedules.

It established dedicated

teams for monitoring

project progress

It conducted various

interactions at site with

relevant teams (project and

senior management) to

accelerate decision making.

ResultAlmost every project was

delivered on schedule since

inception.

Finance riskImplicationRising cost of funds could

lead to a delay in projects

and impact profitability.

Risk mitigationThe Company’s brand is

built around timely delivery.

The Company focused

on timely execution and

marketed properties in a

manner that optimized the

need for external funds,

reducing the interest

liability.

ResultThere was a reduction of

225 bps in the Company’s

weighted average

borrowing cost during the

year under review.



To,

The Members,

CHD Developers Limited

Your Directors are pleased to present their Twenty Sixth Annual Report together with the Audited Accounts and Financial

Statements for the year ended 31st March, 2016.

1. Financial ResultsThe summarized financial results of the Company for the year ended 31st March, 2016 are as follows:

(Amount in Rs. Lacs)

Particulars Standalone Consolidated

31.03.2016 31.03.2015 31.03.2016 31.03.2015

Net income from operations 16931.80 23320.68 18202.49 24970.06

Profit before Tax, Depreciation and Interest 2580.44 3022.52 2758.48 3371.62

Interest 970.07 1547.83 1062.61 1726.75

Depreciation 248.23 267.57 252.87 272.22

Profit before Tax 1362.13 1207.12 1443.00 1372.65

Profit after Tax 885.23 788.58 896.46 898.76

2. DividendKeeping in view need to conserve resources for growth

of the Company, your Directors are constrained not to

recommend any dividend for the year under review.

3. Financial Summary or Highlights / PerformanceStandaloneDuring the financial year 2015-16 your Company achieved a

turnover of Rs.16931.80 Lacs (Rs. 23320.68 Lacs in 2014-15)

and Net profit (Post tax) for the year 2015-16 stood at Rs.

885.23 Lacs (Rs. 788.58 Lacs in 2014-15). The Earning per

share (EPS) is 0.78. The Company doesn’t propose to carry

any amount to the reserves.

ConsolidatedDuring the financial year 2015-16 your Company achieved a

turnover of Rs. 18202.49 lacs (Rs. 24970.06 Lacs in 2014-15)

and Net profit (Post tax) for the year 2015-16 stood at Rs.

896.46 Lacs (Rs. 898.76 Lacs in 2014-15). The Earning per

share (EPS) is 0.79.

The Company has managed to perform slightly better than

last year and there has been increase in profits at standalone

basis as compared to last Financial year, During the year

there is decline in Turnover but the Company has managed

to post better profits due to decrease in finance cost and

expenditure.

There has not been significant improvement in the financials

due to factors beyond control Owing to slow down in the

Directors’

Report

Annual Report 2015-16 | 29

whole real estate industry, whereas Inspite of challenging

environment during the year, CHD has still performed

exceptionally well on various fronts by way of concentration

on the existing projects & new launches and positioned itself

way ahead to other established real estate players

OperationsDuring the year 2015-16 the Company initiated adoption

of latest technology such as Tunnel Formwork, which

shall drastically cut down the project cycle time and the

construction cost.

Real Estate sector has been battling multifaced problems

marked by slow growth, decreased absorption rates and

low investor confidence, but he Company is always

embarking on making its presence in the real estate industry

and has solidified its brand image by launching two new

projects, both at Gurgaon; namely CHD EWay Towers and

CHD Resortico i.e. 10,20,000 square feet of area launched.

Further after the period under review the Company was

awarded for Best Customer Satisfaction” by Golden Brick

Awards 2016, Dubai for its image and to deliver on time.

The Company has sold approx. 4,70,000 square feet of new

area with an increased average price realization of Rs. 4,767

per sq. ft. as compared to Rs. 4,205 per sq. ft. last year.

4. Share CapitalDuring the year under review there has been no change

in the paid up Equity Share Capital of the Company and as

on 31st March, 2016 the paid up Equity Share Capital of the

Company was Rs. 22,71,84,572 (Rupees Twenty Two Crores

Seventy One Lacs Eighty Four Thousand Five Hundred and

Seventy Two only).

No shares with differential voting rights, stock or sweat

equity shares were issued by the company during the year

under review.

5. DirectorsIn accordance with the provisions of section 152 of the

Companies Act, 2013 and Articles of Association of the

Company, Mr. Rajinder Kumar Mittal, Whole time Director

of your Company retire by rotation at the ensuing Annual

General Meeting and being eligible, offers himself for re-

appointment, subject to the approval of Shareholders of the

Company. A brief Resume of Mr. Rajinder Kumar Mittal is

attached with the Notice of Annual General Meeting.

During the year under review the members of the Company

approved the appointment of Mrs. Shashi Prabha Passi as

an Independent Director for a period of 5 years, who is not

liable to retire by rotation.

The Company has received declarations from all the

independent directors of the Company that they meet the

criteria of independence as provided under Section 149(6) of

Companies Act, 2013 and Regulation 16 (b) of SEBI (Listing

Obligations and Disclosure Requirements) Regulations,

2015.

During the year under review there is no change in the

Board of Directors of the Company, However the Company

pursuant to the approval of members reappointed Mr.

Rajinder Kumar Mittal, Whole time Director and Mr. Gaurav

Mittal, Managing Director of the Company for a period of 5

years w.e.f. 2nd February, 2016 and the remuneration was

approved for a period of 3 years

The Company has a proper Board Evaluation Framework for

performance evaluation of Independent Directors, Board,

Non-Independent Directors and Chairman of the Company.

Pursuant to this framework, a process of evaluation was

followed by the Board for its own performance and that of

its committees and individual directors.

The Company has also devised a program for familiarization

of independent directors with the Company, nature of the

industry in which Company operate, business model of

the Company and other related matters, which has been

placed on the website of the Company and can be

accessed at the link http://www.chddevelopers.com/pdf/

Familiarization-id.pdf.

Following policies of the Company are attached herewith as

Annexure ‘A’ and Annexure ‘B’ respectively:-

i. Board Evaluation Framework; and

ii. Nomination & Remuneration Policy for Directors, Key

Managerial Personnel and other employees.

Key Managerial PersonnelThe following are the Key Managerial Personnel of the

Company:


1. Mr. Rajinder Kumar Mittal – Whole time Director

2. Mr. Gaurav Mittal – Managing Director

3. Mr. Sunil Kumar Jindal – Chief Financial Officer

4. Mr. Sachin Kumar – Company Secretary

During the year under review Ms. Ritu Goyal resigned as

Company Secretary and Compliance officer w.e.f. 3rd day

of February, 2016 and Mr. Sachin Kumar joined as Company

Secretary and Compliance Officer of the Company w.e.f.

24th day of February, 2016.

6. Material Changes Affecting Financial Position of the CompanyNo material changes or commitments, affecting the financial

position of the Company have occurred between the end

of the financial year of the company to which the financial

statements relate, i.e. 31st March, 2016 and the date of the

Board’s Report

7. AuditorsStatutory AuditorsM/s. Mohan & Mohan, Chartered Accountants, the Auditors

of the Company, hold office until the conclusion of this

Annual General Meeting and term of the Auditors expires at

this Annual General Meeting, considering which the Board

of directors on the recommendation of Audit Committee

have proposed the appointment of M/s. AMRG & Associates,

Chartered Accountants as statutory auditors at the ensuing

Annual General Meeting for a period of five years from the

conclusion of this Annual General Meeting to the Conclusion

of the Annual General Meeting to be held for the financial

year 2020-2021, subject to the ratification of appointment

by the members of the Company at each Annual General

Meeting.

The report of the Auditors is self-explanatory and does not

contain any qualification, reservation or adverse remark and

does not call for any comment.

Cost AuditorsM/s. Rahul Jain and Associates, Practicing Cost Accountant

was appointed by the Board of Directors for conducting the

audit of cost records of the Company for its “construction”

activities, for the financial year 2015-16.

Secretarial AuditorsMohd. Nazim Khan, Practicing Company Secretary was

appointed by the Board of Directors for conducting the

secretarial audit of the Company for the financial year 2015

-16. The secretarial audit report for the financial year 2015-

16 is annexed herewith as Annexure ‘C’ to this report. The

Secretarial Audit Report doesn’t contain any qualification,

reservation or adverse remark.

8. Management Discussion & Analysis and Corporate Governance ReportThe Management’s Discussion and Analysis Report and

Corporate Governance Report for the year under review

together with a certificate from the Company’s Statutory

Auditors confirming compliance forms part of this Report

Corporate Governance report is annexed to this Report

as Annexure ‘D’ and Management Discussion and Analysis

report is separately given under the Annual Report.

9. Extracts of Annual ReturnPursuant to Section 92 (3) of the Act and Rule 12 (1) of The

Companies (Management and Administration) Rules, 2014,

the extract of Annual Return in Form MGT.9 is attached as

Annexure ‘E’.

10. Directors’ Responsibility StatementAs required by the provisions of section 134 (3)(c) of the

Companies Act, 2013, the Directors confirm that:

• In the preparation of the Annual Accounts, the applicable

Accounting Standards have been followed along with

proper explanation to material departure;

• The Directors have selected such accounting policies

and applied them consistently and made judgments

and estimates that were reasonable and prudent so as

to give a true and fair view of the state of affairs of the

Company at the end of the financial year and of the

profit or loss of the Company for the year under review.

• The Directors have taken proper and sufficient care for

the maintenance of adequate accounting records in

accordance with the provisions of the Companies Act,

2013 for safeguarding the assets of the Company and for

preventing and detecting fraud and other irregularities.

• The Directors have prepared the annual accounts on a

going concern basis.

• The Directors have laid down internal financial controls

to be followed by the Company and that such internal

financial controls are adequate and are operating

effectively;

• The Directors have devised proper system to ensure

compliance with the provisions of all applicable laws

and that such systems are adequate and operating

effectively.


11. Subsidiaries of the CompanyAs on 31st March, 2016, the Company had following subsidiaries, all incorporated in India:

S. No. Name of the Company % Holding

DIRECT SUBSIDIARIES 100

1. Golden Infracon Private Limited 100

2. CHD Facility Management Private Limited 100

3. CHD Infra Projects Private Limited (Formerly known as CHD Armaan Realtech Private Limited) 100

4. Empire Realtech Private Limited 100

5. International Infratech Private Limited 100

6. Delight Spirits Private Limited 100

7. CHD Elite Realtech Private Limited 100*

8. CHD Blueberry Realtech Private Limited 100*

SUBSIDIARIES OF CHD Infra Projects Private Limited

1. CHD Hospitality Private Limited 100**

* A part of total share capital of CHD Elite Realtech Private Limited and CHD Blueberry Realtech Private Limited is held by

M/s CHD Infra Projects Private Limited, which itself is a 100% subsidiary of CHD Developers Limited.

** CHD Hospitality Private Limited is a 100% Subsidiary of CHD Developers Limited through CHD Infra Projects Private

Limited which holds 99.71 % shareholding of CHD Hospitality Private Limited.

The Board has formulated a policy for determining Material

Subsidiaries in terms of Regulation 16 (1) (c) of the Securities

and Exchange Board of India (Listing Obligations and

Disclosure Requirements) Regulations, 2015 , which has

been placed on the website of the Company and can be

accessed at the link: http://www.chddevelopers.com/pdf/

Policy-dms.pdf.

In terms of proviso to sub section (3) of Section 129 of the

Act, the salient features of the financial statement of the

subsidiaries is set out in the prescribed form AOC - 1.

12. Fixed DepositsPursuant to the provisions of the chapter V of the Companies

Act, 2013, the Company has accepted Fixed Deposits and as

on 31st March, 2016 such deposits stood at Rs. 2929.27 Lacs

as against Rs. 1912.66 Lacs at the close of the preceding

financial year. There were unclaimed deposits aggregating

Rs. 1,56,763/- pertaining to 62 depositors as on that date.

There is no default in repayment of deposits or payment of

interest thereon, during the year.

13. Particulars of Employees and Other Additional InformationThe information required under Section 197(12) of the

Companies Act, 2013 and rule 5(2) and 5(3) of Companies

(Appointment and Remuneration of Managerial Personnel)

Rules, 2014 is given in Annexure ‘F’ to this report and form

part of this Report.

14. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and OutgoThe information on conservation of energy, technology

absorption and foreign exchange earnings and outgo

stipulated under Section 134 (3) (m) of the Act read with Rule

8 of The Companies (Accounts) Rules, 2014, is attached as

Annexure G.

15. Listing at Stock ExchangeThe Equity Shares of the Company continue to be listed on

BSE Limited. The annual listing fee for the current year has

been paid to BSE Limited.

16. DisclosuresCorporate Social Responsibility (CSR)Your Company has always laid emphasis on progress with

social commitment. We believe strongly in our core values

of empowerment and betterment of not only the employees

but also our communities. Following this principle the

Company had laid the foundation of a comprehensive

approach towards promoting and facilitating various aspects

of our surrounding communities.


The Board has approved a policy for Corporate Social

Responsibility and same has been uploaded on the website

of the Company i.e. www.chddevelopers.com.

During the year, the Company has spent Rs. 34.44 Lacs

around 2.28% of the average net profits of last three financial

years on CSR activities. The details of CSR activities are given

under Annexure ‘H’.

Audit CommitteeThe Audit Committee of the Company comprises of Mr.

Pran Nath (Chairman), Mr. M.S. Kapur and Mr. Rajinder Kumar

Mittal as other members of the Committee.

Vigil Mechanism & Whistle Blower PolicyThe Company has a Vigil mechanism and Whistle blower

policy under which the employees are free to report

violations of applicable laws and regulations and the Code

of Conduct. The reportable matters may be reported to

the Vigilance & Ethics Officer which operates under the

supervision of the Audit Committee, as protected disclosures

through an e-mail, or dedicated telephone line or a written

letter. Employees may also report directly to the Chairman

of the Audit Committee.

The Whistle Blower Policy and Vigil Mechanism have been

placed on the website of the Company and can be accessed

at the link http://www.chddevelopers.com/pdf/Whistle-

Blower-and-Vigil-Mechanism.pdf.

Risk Management PolicyThe Board has approved and implemented risk management

Policy of the Company including identification and element

of risks. The Risk Management is overseen by the Audit

Committee of the Company on a continuous basis. The

Committee oversees Company’s process and policies

for determining risk tolerance and review management’s

measurement and comparison of overall risk tolerance

to established levels. There are no significant element of

risk, which in the opinion of the Board may threaten the

existence of the Company, However any risks identified will

be systematically addressed through mitigating actions on a

continuous basis.

Policy on prevention, prohibition and redressal of sexual harassment at workplaceThe Company has zero tolerance for sexual harassment at

workplace and has adopted a Policy on Prevention, Prohibition

and Redressal of Sexual Harassment at the Workplace, in

line with the provisions of the Sexual Harassment of Women

at Workplace (Prevention, Prohibition and Redressal) Act,

2013 and the Rules there under. The Policy aims to provide

protection to employees at the workplace and prevent and

redress complaints of sexual harassment and for matters

connected or incidental thereto, with the objective of

providing a safe working environment, where employees

feel secure. The Company has also constituted an Internal

Complaints Committee to inquire into complaints of sexual

harassment and recommend appropriate action.

The Company has not received any complaint of sexual

harassment during the financial year 2015-16.

Policy on Related Party TransactionsThe Board of the Company has adopted the Policy and

procedure with regard to Related Party Transactions. The

policy envisages the procedure governing the materiality

of Related Party Transactions and dealing with Related

Party transactions required to be followed by Company to

ensure compliance with the Law and Regulation. Related

Party Transaction Policy has been placed on the website of

the Company and can be accessed at the link: http://www.

chddevelopers.com/pdf/Related-Party-Transaction-Policy.

pdf.

Contracts and Arrangements with Related PartiesAll contracts/arrangements/transactions entered by the

Company during the financial year with related parties were

in the ordinary course of the business and on an arm’s length

basis. During the year, the Company had not entered into

any contract/arrangement/transaction with related parties

which could be considered material in accordance with

the policy of the Company on materiality of related party

transactions. Accordingly no transactions are being reported

in Form AOC-2 in terms of Section 134 of the Companies

Act, 2013 read with Rules made thereunder.

The policy on materiality of related party transactions and

dealing with related party transactions as approved by the

Board has been placed on the website of the Company.

Your directors draw attention of the members to Note No

25 of financial statements, which sets out related party

disclosures.

Meetings of Board of DirectorsDuring the year under review 9 (Nine) meetings of Board

of Directors were held. Further details regarding the Board

Meetings have been provided under Corporate Governance

Report annexed with this Report. The maximum interval

between any two meetings did not exceed 120 days, as

prescribed in the Companies Act, 2013


Particulars of Loan given, Investments made, Guarantee given and Security ProvidedParticulars of loan given, investments made, guarantees

given and securities provided along with the purpose

for which loan, guarantee or security is proposed to be

utilized by the recipient are provided in standalone financial

statements (please refer note no. 10, 11, 25 and 27 to the

standalone financial statements).

Internal Financial Controls and its Adequacy The Company has in place adequate internal financial

controls with reference to financial statements and with

the size, scale and complexity of its business operations.

During the year such controls were tested and no reportable

material weakness in the design or operation was observed.

The scope and functions of Internal Auditor are defined

and reviewed by the Audit committee. The Internal Auditor

reports to the Chairman of the Audit Committee.The

Internal Auditor assesses opportunities for improvement

of business processes, systems and controls, to provide

recommendations, which can add value to the organization.

17. GeneralYour directors state that no disclosure or reporting is

required in respect of the following items as there were no

transactions on these items, during the year under review:-

i. Neither the Managing Director nor the Whole Time

Director of the Company receive any remuneration or

commissions from any of its subsidiaries.

ii. No significant or material orders were passed by the

regulators or courts or tribunals, which impact the going

concern status and company’s operations in future.

18. AcknowledgementsYour Directors place on record their appreciation of the

support extended by its employees, Bankers, Customers

and various Government Agencies. The Board also wishes

to thank the shareholders for their unstinted support.

By order of the Board of Directors

For CHD Developers Limited

Sd/-

Place: New Delhi Rajinder Kumar Mittal

Date: 12th August, 2016 (Chairman)


Annexure-”A”

Board Evaluation Framework

Current dynamics of Domestic and International business

requires that the officers’ in-charge of day to day business

of the Company are well qualified, well trained & equipped,

constantly evalued so as to keep pace with the challenges of

ever changing socio economic scenario.

Such officers’ in the parlance of an incorporated entity are

the Board of Directors’.

The Board of Directors’ of any diversified company shoulders

not only the responsibility of growth and profitability of the

business but also the impact of the business of the Company

on the society and economy under which they operate.

In light of the above, the Company has devised this policy

of Board Evaluation framework, which inter alia includes the

policy of Board’s diversity, Board’s Training and Evaluation

of performance, of the Board of Directors including

Independent Directors.

The new Companies Act, 2013 and as per the Corporate

Governance norms issued by SEBI require every listed

company to establish a Board Diversity Policy to ensure

that there is wide-ranging experience and diversity on the

Board. While following the spirit of diversity, the Company

maintains that the appointments to the Board should be

based on merit as well as complementing and expanding

the skills, knowledge and experience of the Board as a

collective body.

The Company recongnises that the present complex

business environment requires that the Board of the

Company is trained from time to time to equip it with the

latest trends in the domestic and International market relating

to technology, best practices of corporate governance,

environmental protection, Taxation, legal and financial Laws,

HR policies, Marketing, Risk assessment and minimization.

Through the training policy the Company intends to achieve

the following targets:

• Development of understanding in which the Board

operate and the associated responsibilities;

• Providing an overview of the knowledge and

competences expected from Directors in today’s

environment;

• Develop skills that contribute to the creation of an

effective Board culture and performance;

• Hone the ability to challenge executives through positive

exchanges focused on the key issues that underpin

corporate performance.

The Company would from time to time organize seminars,

classroom sessions and workshops to achieve the purpose

of its Training Policy and at the same time ensuring the

compliance of relevant Laws include SEBI (Listing Obligations

and Disclosure Requirements) Regulations, 2015.

Preface

Objective

Board’s Training Policy

Board’s Evaluation Policy

As per the applicable provisions of SEBI (Listing Obligations

and Disclosure Requirements) Regulations, 2015,

the Nomination and Remuneration Committee (the

“Committee”) shall lay down the evaluation criteria for

performance evaluation of Independent Directors and the

Board. Further the Board is required to monitor and review

Board Evaluation Framework. This Framework shall contain

the details of Board’s self-evaluation framework (including

all Committees of the Board and individual directors).


The following process is established to carry out the

evaluation of the Board of Directors:

1. Independent Directors may, at their meeting, review the

performance of the Chairman, the Non-Independent

Directors and the Board;

2. Nomination and Remuneration Committee may, at its

meeting, carry out the evaluation of every Director’s

performance. The Committee, while doing so, may

also consider the outcome of review by Independent

Directors;

3. The Board may evaluate the performance of the Board,

the Committees as defined in this Policy and each

Director and while doing so, may also consider the

inputs received from the Nomination and Remuneration

Committee and the review by Independent Directors.

Some of the assessment criteria, that should be considered

by the Board, Nomination and Remuneration Committee and

Independent Directors for evaluation of the performance,

are as follow -

I. Assessment Criteria for performance evaluation of Board• Size, structure, diversity, experience, skills and expertise

of the Board

• Willingness to spend time to discuss the matters put up

before the Board for discussion

• Development of Strategy and Business plans at

appropriate time and check its effectiveness

• Proper number of committees as required by legislation

and guidelines

• Guidance to drive financial and business performance

of the Company and periodic review of the same

• Strategic and business risk evaluation, assessment and

timely action

• Corporate Governance standards adopted by the Board

and its implementation

• Understanding roles and responsibilities of Directors

• Code of conduct and Ethics and adherence thereto

• Independence of Board functioning

II. Assessment Criteria for performance evaluation of CommitteesIn addition to the principles stated above for evaluation of

Board to the extent applicable to the respective committee,

the following criteria may also be kept in mind for evaluation

of committee –

• Appropriateness of the responsibilities delegated to the

committee

• Corporate Governance standards adopted and

implemented by the Committee

• Implementation of the policies and procedure according

to changing business practices and market conditions

• Adequacy of terms of reference stated by the Board for

the Committee and the role played by the committee

according to such terms of reference

• Effectiveness of suggestions and recommendation

made to the Board

III. Assessment Criteria for performance evaluation of Non-Independent Director

Evaluation of Non-Executive Directors

• Participation at the Board/Committee meetings and

willingness to spend time during the meeting

• Integrity and maintaining of confidentiality

• Knowledge and expertise

• Independent judgment in relation to decision making

• Understanding about roles, responsibilities and

disqualification as a director

Evaluation of Executive Directors

In addition to the parameter decided for Non-Executive

Directors, evaluation of Executive Directors should also be

based on following parameters –

• Skill, expertise, experience, knowledge about the

operations and products of the Company

• Development and management of business plan,

operational plans and financial affairs of the Company

• Achievement of financial/business targets prescribed by

the Board

• Managing relationship with the Board, management

team, bankers and other stakeholders

• Establishment of an effective organization structure to

ensure management focus on key functions necessary

for the growth of the Company

• Development of policies and strategies aligned with

industrial practice, need of shareholders, customers,

employees and other stakeholders


As required by the provisions of Schedule IV to the Act and

the provisions of regulation 25 SEBI (Listing Obligations

and Disclosure Requirements) Regulations, 2015, the

Independent Directors of the Company shall hold at least

one meeting in a year, without the attendance of Non-

independent Directors and members of the management.

The meeting shall:

• review the performance of Non-independent Directors

and the Board as a whole;

• review the performance of the Chairman of the

Company, taking into account the views of Executive

Directors and Non-executive Directors;

• assess the quality, quantity and timeliness of flow of

information between the Company management and

the Board that is necessary for the Board to effectively

and reasonably perform their duties.

• This meeting could be held prior or after the Board

Meeting. The Independent Directors are free to call

such meeting at any point of time, as desired.

As required by the provisions of Schedule IV to the Act and as

per the provisions of regulation 25 SEBI (Listing Obligations

and Disclosure Requirements) Regulations, 2015, the

Company is required to develop a Familiarization Program

for the Independent Directors of the Company.

The Company will impart Familiarization Programmes

for new Independent Directors inducted on the Board

of the Company. The Familiarization Programme of the

Company will provide information relating to the Company.

The programme also intends to improve awareness of

the Independent Directors on their roles, rights, and

responsibilities towards the Company. Further, the

Familiarization Programme should also provide information

relating to the financial performance of the Company and

budget and control process of the Company.

The Company reserves its right to amend or modify this

Policy in whole or in part, at any time without assigning

any reason whatsoever. However, no such amendment or

modification will be binding on the Directors and employees

unless the same is communicated in the manner described

as above.

• Ensuring to provide information on item requiring Board

decisions with recommendation based on supporting

documents and thorough study

IV. Assessment Criteria for performance evaluation of Independent DirectorIn addition to the criteria laid down for Non-Executive

Directors, for performance evaluation of an Independent

Director, other criteria like objective evaluation of Board’s

performance, unbiased opinion on various matters,

compliance of Code of Conduct and Ethics, Code for

Independent Directors, Insider Trading Code etc. may also

be considered.

V. Assessment Criteria for performance evaluation of ChairmanIn addition to the above, the following criteria may be kept

in mind while evaluating the performance of the Chairman:

• Relationship and Communication within the Board

• Leadership quality

• Promoting constructive debate and discussion in the

meeting

• Effectiveness of communication with the shareholders

and other stakeholders

• Promoting effective participation of all Board members

in decision making process

• Promoting shareholders confidence in the Board

• Ensuring ease of raising issue and concern by the Board

Members

Separate Meeting of the Independent Directors

Familiarization program for Independent Directors

Amendment


Annexure-”B”

Nomination & Remuneration Policy

At all levels and at all times monetary compensation has

been if not the sole but the most important motivational

aspect for getting the job fulfilled under any given business

scenario.

It is the endeavor of CHD Developers Limited (“Company”)

that its Nomination & Remuneration Policy should represent

the mode in which the Company carries out its business

practices i.e. fair, transparent, inclusive and flexible.

The Company strives that its Remuneration Policy should

attract, motivate, improve productivity and retain manpower,

by creating a congenial work environment, encouraging

initiatives, personal growth and team work, and inculcating

a sense of belonging and involvement, besides offering

appropriate remuneration packages and superannuation

benefits

This Nomination & Remuneration Policy applies to directors,

Key Managerial Personnel (KMP), Senior Management and

other employees of the Company.

Section 178 of the Companies Act, 2013 requires every listed

company and such class or classes of companies, as may

be prescribed to establish a Nomination and Remuneration

Committee (“Committee”) and that such Committee shall

formulate the criteria for determining qualifications, positive

attributes and independence of a director and recommend

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