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Updated:23 Aug, 2019, 15:59 PM IST

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Updated:23 Aug, 2019, 16:01 PM IST

DIRECTORS' REPORT

Your Directors are pleased to present the 110th Annual Report of the Company together with the Audited Financial Statements for the year ended March 31, 2015.

OPERATIONS

Consumption is one of the central economic themes of 21st century India. With a large Indian middle class emerging as the big force and consumerism getting embedded into our culture, we are clearly more of a consumption play than a pure real estate company. Our retail malls have become highly 'sought after' destinations by the top–end national and international brands. Our mixed–used development portfolio is difficult to replicate, giving us a head–start for 5–6 years. Having created prime retail destinations, we have the ability to attract high–quality occupiers / retailers.

We have 17.88 mn square feet of completed and on–going large format mixed–use and residential projects. We have 9 retail assets with a leasable area of 6.2 million sq. ft. mainly in Tier–1 cities of Mumbai, Bengaluru, Chennai and Pune. Al our large–format retail malls are now operational. With an aggregate of more than 2000 stores and a fantastic array of leading domestic and global retail brands, our malls exhibit great substance and large operational scale.

The Phoenix Mills Limited (PML) has emerged as the leading retail led real–estate firm and the largest mall developer / operator across India. We have emerged as a leading commercial and residential property developer through our mixed–use asset development strategy.

We are suitably positioned to capitalize on India's ever–growing consumption story. The response to all our malls has  been tremendous, evident through steadily rising consumption numbers. In FY15 the total consumption was  Rs. 49 bn. We have seen a CAGR of 38% in the last three years. We are continuing to witness strong footfalls aggregating  nearly Rs. 8.6 million per month across our malls indicating strong consumer interest towards our malls as a retai destination.

As each of our malls are nearing maturity in terms of awareness and brand pull,we expect footfalls and consumption numbers to steadily keep growing. Our focus continues to be on maintaining and enhancing our retail–led assets. Palladium Chennai, our luxury mall adjoining Phoenix Market City, Chennai, with 0.22 million sq. ft. of leasable area, is currently under construction.

We have an ongoing and planned residential portfolio of approximately 5.5 million square feet of which we have sold over 1.6 million square feet in cities of Bangalore, Chennai and Pune. In addition to this we have more than 1.8 million square feet of completed and planned commercial portfolio in Mumbai and Pune and have a significant upcoming pipeline.

In our hospitality portfolio, Palladium Hotel atop Palladium Mall at HSP Complex is now maturing. With total keys of 389, the Hotel has clocked 66% occupancy for the year ended March 31, 2015. The Courtyard by Marriott, our five–star hotel in the tourist city of Agra was launched in January 2015 and is garnering excellent response from all kinds of travellers.

During FY2015, our key focus has been consolidation of our market leadership as the owner, developer and manager of large–format, prime, retail–led assets in the city–centres of India, with multiple options for shopping, entertainment and fine–dining. With our retail–led mixed–use asset development model, we strive to yield the best returns for our shareholders and consumers. We have also increased our equity stakes in most of our SPVs to a majority status, allowing us to accrete them to the holding company.

Management Discussion & Analysis (MDA), which forms a part of this report, deals comprehensively with our current operations and projects in the pipeline. It also deals with the current and future outlook of the Company.

SHARE CAPITAL

During the year under review, the Company issued 1,11,250 equity shares of Rs. 2/– each upon exercise of stock options. Consequently, the paid up equity share capital as on March 31, 2015 stood at Rs. 28,99,13,390 divided into 14,49,56,695 equity shares of Rs. 2 each. During the year, the Company has not issued shares with differential voting rights nor sweat equity shares. Further, the Company has issued 40,250 equity shares of Rs. 2 each upon exercise of stock options during the current financial year up to the date of this report. The paid up equity share capital as on the date of this report stood at Rs. 28,99,93,890 divided into 14,49,96,945 equity shares of Rs. 2 each.

During the year under review, there were no instances of non–exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014.

DIVIDEND

Your Directors are pleased to recommend, for approval of the Company's shareholders in the ensuing Annual Genera Meeting (AGM), a final dividend of 110% for the year ended March 31, 2015, i.e. Rs. 2.20/– for each fully paid up equity share of Rs. 2/–. The said dividend, if declared in the ensuing AGM, shall not be taxable in the hands of the shareholders.

TRANSFER TO RESERVES

The Board has recommended transfer of Rs.200 Million to the General Reserve out of the amount available for appropriation and an amount of Rs. 5697.68 Million is proposed to be carried forward to the Statement of Profit and Loss.

DEPOSITS

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act, 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Act is not applicable.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company under Section 188 of the Companies Act 2013, with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. Conseqent upon which details as prescribed in Form AOC–2 are not required to disclosed.

The details of transactions / contracts / arrangements entered by the Company with related party(ies) as defined under the provisions of Section 2(76) of the Companies Act, 2013, during the financial year under review, is given under Note 24 of the Notes to Accounts, which forms part of the Annual Report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF THE REPORT

Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position, have occurred between the end of the financial year of the Company and date of this report.

SUBSIDIARY COMPANIES

As on March 31, 2015, the Company has 14 direct subsidiaries, 8 indirect subsidiaries and 8 associates. During the year under review, there were no additions or deletions in the subsidiaries of the Company. However, Savannah Phoenix Private Limited which was an associate earlier, has become a subsidiary of the Company with effect from April 7, 2015. During the year, the Company's Board reviewed the affairs of the subsidiaries on a quarterly basis. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which forms part of the Annual Report. Further a statement containing salient features of the financial statements of our subsidiaries in the prescribed format AOC–1 is given under Note 51(ii) of the Notes to Accounts, which forms part of the Annual Report. The statement also provides the details of performance and financia position of each of the subsidiaries.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries are available on the website of the Company. These documents will also be available for inspection during the business hours at our registered office.

CORPORATE GOVERNANCE

The Company is committed to uphold the highest standards of Corporate Governance and adhere to the requirements set out by the Securities and Exchange Board of India. A detailed report on Corporate Governance along with the Certificate of M/s. Rathi & Associates, Company Secretaries, confirming compliance of conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is appended as Annexure I to this report.

PARTICULARS OF EMPLOYEES AND REMUNERATION

The information required pursuant to Section 197(12) read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as Annexure II a to this report.

A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs.60 Lakhs or more or employed for part of the year and in receipt of remuneration of Rs.5 lakhs or more in a month under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as Annexure II b to this report.

BOARD OF DIRECTORS

The Board of Directors in their meeting held on October 14, 2014 have appointed Ms. Shweta Vyas as an additiona director in the category of Independent Director w.e.f October 14, 2014 to hold office till the conclusion of the ensuing annual general meeting. The Company has received notice from a shareholder under section 160 proposing the candidature of Ms. Shweta Vyas for appointment as an Independent Director.

Pursuant to Section 149 and other applicable provisions of the Companies Act, 2013, and the rules made there under (including any statutory enactments thereof) your Directors seek the appointment of Ms Shweta Vyas as Independent Directors for five consecutive years with effect from October 14, 2014. Details of the proposal for the appointment of Ms. Shweta Vyas are mentioned in the Explanatory Statement to the Notice of the 110th Annual General Meeting under Section 102 of the Companies Act, 2013.

Mr. Amit Kumar Dabriwala, Mr. Suhail Nathani, Mr. Amit Dalal, Mr. Sivaramakrishnan Iyer and Ms. Shweta Vyas, Directors of the Company, qualify to be Independent Directors within the meaning of Section 149 of the Companies Act, 2013 and the Company has received necessary declaration from all Independent Directors under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In accordance with the provisions of the Act, none of the Independent Directors are liable to retire by rotation.

Mr. Kiran Gandhi, Whole–time Director on the Company's Board has unfortunately passed away on May 31, 2015 and has accordingly ceased to be a Director. Mr. Gandhi has been associated with the Phoenix Group since 1970 in various capacities including as the head of finance, culminating in his elevation to the Board as a Whole Time Director. The Board places on record, its deep regret and sorrow at his passing and expresses its immense appreciation and gratitude for the invaluable services rendered by Mr. Kiran Gandhi during his long tenure with the Company.

As per the provisions of Section 152 of the Companies Act, 2013, Mr. Shishir Shrivastava, Director, shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re–appointment.

A brief profile of the Directors proposed to be appointed and re–appointed as required by Clause 49 of the Listing Agreement is given in the AGM Notice contained in the Annual Report. The Board recommends the same for Shareholders' approval in the ensuing AGM.

BOARD MEETINGS

The Board of Directors met 7 times during the financial year ended March 31, 2015, the details of which are given in the Corporate Governance Report that forms part of the Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and rules made thereunder.

ANNUAL EVALUATION OF DIRECTORS, COMMITTEES AND BOARD

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has adopted an Annual Performance Evaluation Policy. In terms of the Policy and as per the statutory provisions, the Independent Directors had a separate meeting on February 4, 2015 without the presence of the management in which they discussed and evaluated the performance of the Chairman, Executive Directors and KMPs and the Board as a whole through evaluation feedback forms. The Nomination and Remuneration Committee also evaluated the performance of the Individual Directors and the Board as a whole. On the basis of the feedback and report of the Independent Directors and the Nomination and Remuneration Committee, the Board has also evaluated the performance of individual directors, Board Committees and the Board and has noted its satisfaction on the outcome.

NOMINATION AND REMUNERATION COMMITTEE

In accordance with the requirements of Section 178 of the Companies Act, 2013 and the rules made there under (including any statutory enactments thereof), the Board has constituted the Nomination and Remuneration Committee of the Board which comprises of Mr. Suhail Nathani as the Chairman and Mr. Amit Kumar Dabriwala, Mr. Sivaramakrishnan Iyer and Ms. Shweta Vyas as members of the Committee.

The Board has also formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of directors and policy relating to remuneration for Directors, Key Managerial Personnel and other employees. The aforementioned detailed policy duly approved and adopted by the Board is appended as Annexure III to this report.

AUDIT COMMITTEE

The Audit Committee of the Board of Directors was constituted pursuant to the provisions of Section 177 of the Companies Act, 2013 and the rules made thereunder (including any statutory enactments thereof). The composition of the Audit Committee is in conformity with the provisions of the said section. The composition, scope and terms of reference of the Audit Committee as amended in accordance with the Act and the Listing Agreement entered into with the Stock Exchanges is detailed in the Corporate Governance Report.

During the year under review, the Board of Directors of the Company have accepted all the recommendations of the Committee.

WHISTLE BLOWER POLICY / VIGIL MECHANISM FOR THE DIRECTORS AND EMPLOYEES

The Board of Directors of the Company has, pursuant to the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed the Whistle Blower Policy / Vigil Mechanism for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc.

The employees of the Company have the right / option to report their concern / grievance to the Chairman of the Audit Committee. No personnel have been denied access to the Audit Committee during the financial year ended March 31, 2015.

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. Visit <http://www.thephoenixmills.com/PMLWhistleblowerPolicy.pdf> for more details related to Vigi Mechanism Policy.

RISK MANAGEMENT POLICY

The Board of Directors of the Company has framed a Risk Management Policy and Guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Company's businesses, and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in periodic management reviews.

CORPORATE SOCIAL RESPONSIBILITY POLICY

As per the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee. The Board of Directors of the Company has also adopted and approved CSR Policy based on the recommendation of the CSR Committee. The Company has initiated activities in accordance with the said Policy, the details of which have been prescribed in the CSR Report appended as Annexure IV to this report. The report also contains the compositon of the CSR Committee as per Section 135(2) of the Companies Act, 2013.

The CSR Policy of the Company is available on the Company's website and can be accessed in the link <http://www>. thephoenixmills.com/CSRPolicy.pdf.

REVISION OF FINANCIAL STATEMENT

There was no revision of the financial statements for the year under review.

DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL

No orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company's operations in future.

PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES

Full particulars of loans, guarantees, investments and securities provided during the financial year under review along with the purposes for which such loans, guarantees and securities are proposed to be utilized by the recipients thereof, has been is given under Note 39 of the Notes to Accounts, which forms part of the Annual Report.

EMPLOYEE STOCK OPTION SCHEME (ESOP)

The Company in its meeting held on December 19, 2007 has formulated and adopted The Phoenix Mills Employees Stock Option Plan 2007 which was approved by the shareholders on January 31, 2008. The aggregate number of options that may be granted under this scheme shall not exceed 33,90,000 Equity Shares of Rs. 2 each.

The details of equity shares issued under Employees Stock Option Scheme during the financial year under review as required under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and as per the provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 and other applicable Regulations, is annexed as Annexure V to this report.

INTERNAL CONTROL SYSTEMS

Adequate internal control systems commensurate with the nature of the Company's business and size and complexity of its operations are in place and has been operating satisfactorily. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected.

Further, the internal financial controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.

DIRECTORS' RESPONSIBILITY STATEMENT

In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended March 31, 2015, the Board of Directors hereby confirms that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit / loss of the Company for that year;

c. proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts of the Company have been prepared on a going concern basis;

e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

SECRETARIAL AUDIT

In terms of the provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, and the rules made there under (including any statutory enactments thereof) the Board had appointed M/s Rathi and Associates, Company Secretaries, to conduct the Secretarial Audit of the Company for the financial year 2014–15.

Secretarial Audit Report issued by M/s Rathi and Associates, Company Secretaries in Form MR–3 for the financial year 2014–15 is appended as Annexure VI to this report.

The said report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

The Board has re–appointed M/s Rathi and Associates, Company Secretaries as the Secretarial Auditors of the Company for the financial year 2015–16.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s. A.M. Ghelani and Company (Firm Regn. No. 103173W), Chartered Accountants and M/s. Chaturvedi and Shah (Firm Regn. No. 101720W), Chartered Accountants, Joint Statutory Auditors of the Company hold office upto the conclusion of the ensuing Annual General Meeting.

The said Statutory Auditors have confirmed their respective eligibility as per the provisions of the Companies Act, 2013 and their willingness to act as Auditors of the Company for Financial Year 2015–16, if re–appointed.

The Board recommends the re–appointment of M/s. A.M. Ghelani and Company, Chartered Accountants and M/s. Chaturvedi and Shah, Chartered Accountants, as the Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of the Company's 111th Annual General Meeting.

AUDITORS' REPORT

The matters of emphasis referred by the Auditors in their Report read with the relevant notes given in the Notes to Accounts for the year ended March 31, 2015, are detailed and self–explanatory and do not require any further explanation.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, extract of the Annual Return for the financial year ended March 31, 2015 made under the provisions of Section 92(3) of the Act is appended as Annexure VII to this Report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

In view of the nature of activities which are being carried on by the Company, the particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3)(A & B) of Companies' (Accounts) Rules, 2014 c  regarding Conservation of Energy and Technology Absorption are not applicable to the Company.

CODE OF CONDUCT

The Board of Directors have approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the Company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviors of any form. The Code has been posted on the Company's website. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. All the Board members and the Senior Management personnel have confirmed compliance with the Code.

FOREIGN EXCHANGE OUTGO AND EARNINGS

The particulars regarding foreign exchange expenditure and earnings are contained in Note Nos. 29 and 30 of the Notes to accounts forming part of the financial statements for the year ended March 31, 2015.

CAUTIONARY STATEMENT

Statements in this Report, particularly those which relate to Management Discussion & Analysis as explained in the Corporate Governance Report, describing the Company's objectives, estimates and expectations may constitute "forward looking statements" within the meaning of the applicable laws and regulations. Actual results might differ materially from those expressed or implied in the statements depending on the circumstances.

ACKNOWLEDGEMENT

The Board of Directors place on record their appreciation of the assistance, guidance and support extended by all the regulatory authorities including SEBI, Stock Exchanges, Ministry of Corporate Affairs, Registrar of Companies, Reserve Bank of India, the Depositories, Bankers and Financial Institutions, the Government at the Centre and States, as wel as their respective Departments and Development Authorities in India and abroad connected with the business of the Company for their co–operation and continued support. The Company expresses its gratitude to the Customers for their trust and confidence in the Company.

In addition, your Directors also place on record their sincere appreciation of the commitment and hard work put in by the Registrar & Share Transfer Agents, all the suppliers, sub contractors, consultants, clients and employees of the Company.

On behalf of the Board For The Phoenix Mills Limited

Ashokkumar Ruia

Chairman & Managing Director

DIN: 00086762

 Date: June 20, 2015

Place: Mumbai

Regd. Office Address: 462, Senapati Bapat Marg, Lower Parel, Mumbai – 400013, CIN: L17100MH1905PLC000200 Tel.: (022) 2496 4307 / 8 / 9 Fax.: (022) 2493 8388 Email: info@thephoenixmills.com, Website: www.thephoenixmills.com

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