TATA REALTY AND INFRASTRUCTURE LIMITED ANNUAL REPORT 2009-2010 DIRECTOR'S REPORT To The Members Dear Shareholders, Your Directors have pleasure in presenting their Third Annual Report on the business and operations of the Company together with the Audited Accounts for the year ended 31st March, 2010. 1. FINANCIAL RESULTS: Rupees For the year For the year ended ended 31.03.2010 31.03.2009 Income: Project Management Development Fees 154,998,786 Nil Income from Advisory Fees 250,654,469 243,991,059 Other income 431,967,938 2,123,167,077 Total income 837,621,193 2,367,158,136 Operating expenditure 499,115,702 516,132,588 Profit before tax 338,505,491 1,851,025,548 Provision for tax 117,320,628 534,785,131 Profit/(Loss) after tax 221,184,863 1,316,240,417 Profit/(Loss) brought forward from previous period 633,291,480 (141,847,062) Profit Before Appropriation 854,476,343 1,174,393,355 Appropriations: Dividend on Preference Shares 100,000,000 100,000,000 Dividend on Equity Shares 72,500,000 362,500,000 Tax on Dividends 28,650,093 78,601,875 Balance carried forward to Balance sheet 653,326,250 633,291,480 2. OPERATIONS OF THE COMPANY: The Indian economy which witnessed a slowdown over last one and half years showed signs of revival by the end of the current financial year. The Management Team has been continuously monitoring the development in Real Estate and Infrastructure sectors and has suitably adapted its strategies to improve its sustainability in difficult market conditions. Some of the significant achievements during the year are summarized as under: Realty Segment Development: * The development at the Company's notified `state of the art' Special Economic Zone (SEZ) for IT & ITES, at Taramani, Chennai, is in full pace and the first office block is expected to be ready for commencement of operations by end 2010 or early 2011. IT office space is planned in the Processing Zone, whereas the International Integrated Convention Centre and support amenities such as Retail Mall, Residential and Hotel / Service Apartments have been planned in the Non Processing Zone. The Non Processing Zone design is at the final stages and work is expected to commence in the third quarter of 2010. * The retail mall being developed in the city of Amritsar, Punjab, is also making satisfactory progress. The architectural design, carried out by M/s RTKL International Inc, USA - one of the best architects in retail designs, has taken into consideration all energy saving and energy efficient measures. Construction activities have started in full pace with excavation work and shore pilling, which has been completed. Statutory approvals including Environment clearances are also in place. As an environment friendly step, the Management has opted for `Tree Transplantation', inspite of having tree cutting permission and has successfully transplanted 68 trees. The process of building in-house operations and marketing teams is on. The Construction Contractor, M/s Shapoorji Pallonji Company Limited, has started construction activities at full pace with a target to deliver the project by Aug-October 2011. * The Company has made a small investment in developments comprising both residential and support retail at Kochi in Kerala and at Nagpur in Maharashtra. The Projects envisage a total development of ~1.64 mn sq.ft in Kochi and ~1.27mn sq.ft in Nagpur. The cost for the Kochi and Nagpur Projects would be ~Rs 650 crore and ~Rs 480 crore, respectively. * Tata Power Company Limited has appointed your Company as a Project Advisory Consultant for a slum redevelopment project under the Slum Rehabilitation Scheme (SRS) in respect of its encroached property situated at Chembur, in Mumbai. The project architect, appointed by the Company, has submitted Phase 1 proposal to Slum Rehabilitation Authority. The process of obtaining necessary statutory approvals from the concerned Government Authority, including certification of eligible slum dwellers, is under progress. * Tata Consultancy Services Ltd. (TCS) has appointed your Company as `Owners' Representative' for implementing its project of developing its land situated at Hinjewadi in Maharashtra and Garima Park in Gujarat, into an IT SEZ (for IT & BPO). The Scope of work includes, identification, appointment and co-ordination of all project consultants for architecture, design engineering and project management, review of Bill of Quantities, manage the value engineering process, establish procurement and inventory strategy and implementation methodology for project, monitoring schedule, coordination with government agencies, obtaining statutory approvals, enable suitable frameworks for Quality, Safety and Environment at site, ensure smooth close out of project etc. Negotiations are on with TCS for entering into a similar arrangement in respect of IT SEZ at Rajarhat in West Bengal. Infrastructure Development: * A prestigious project, of developing and managing the Four Laning of Pune-Solapur Section of National Highway, NH-9, from Km 40.000 to Km 144.400 in the State of Maharashtra under National Highway Development Program Phase - III, on a Design, Build, Finance, Operate and Transfer (Toll) basis, is under execution. This project is being executed by a consortium comprising of Atlantia S.p.A., a reputed international Toll Road operator and TRIL Roads Private Limited (TRPL), one of the Company's Road subsidiaries. Pune Solapur Expressways Limited (PSEPL), the Special Purpose Vehicle (SPV) formed for implementing this project, is executing the Project satisfactorily. PSEPL has achieved financial closure as per plan, in October 2009 and the required regulatory permissions have been obtained. The consortium would also bid for other Road projects of National Highway Authority of India (NHAI). Your Company has also inducted, Actis Infrastructure 2LP, a UK based leading private equity investor as a foreign equity partner in TRPL. * The Company is exploring the possibility of entering into the business of High Speed Rail Link at Bangalore and has entered into a MOU with Siemens Limited for technical collaboration with 26% equity. * The Company is also exploring new locations for development of private airports and has been submitting proposals for development of airports on a PPP basis at various locations within India. 3. DIVIDEND: Your Directors have reviewed the performance of the Company and with a view to reward its shareholders, have recommended dividend for the year ended 31st March, 2010 as under: (a) Dividend at the rate of 5% on the Non Cumulative Convertible Preference Shares of Rs 10/- each. (b) Dividend at the rate of 1% on the equity shares of Rs 10/- each. The Dividend recommended by the Directors would be subject to approval of the Members at the Annual General meeting. 4. DIRECTORS: Mr. S. Mahalingam and Mr. Brotin Banerjee, Directors of the Company would retire by rotation at this Annual General Meeting and are eligible for re- appointment. Your Board recommends their re-appointment. At the Board Meeting held on 19th March, 2010, Mr. Sumit Guha was appointed as an Additional Director with effect from 1st April, 2010 to hold office till the ensuing Annual General Meeting. At the same Board Meeting, Mr. Guha was also appointed as the Deputy Managing Director of the Company with effect from 1st April, 2010 to 31st March, 2015. The terms and conditions of his appointment as the Deputy Managing Director, including his remuneration, are subject to the approval of Members. At the Board Meeting held on 31st May, 2010, Mr. Jimmy Bilimoria was appointed as an Additional Director with effect from 31st May, 2010. Mr Bilimoria holds office till the ensuing Annual General Meeting. Notice u/s 257 of the Companies Act, 1956 has been received from a shareholder, proposing to appoint Mr Jimmy Bilimoria, as Directors of the Company at the ensuing Annual General Meeting. Your Board recommends his appointment as Director liable to retire by rotation. The above appointments and re-appointments form part of the Notice of the forthcoming Annual General Meeting and the respective resolutions are recommended for your approval. 5. AUDIT COMMITTEE: Mr. Jimmy Bilimoria was appointed as a Member of the Audit Committee with effect from 31st May, 2010. The re-constituted Audit Committee consists of Mr. S. Mahalingam, Chairman, Mr G Anantharaman, Member, Mr P.D. Karkaria, Member and Mr. Jimmy Bilimoria, Member. During the Financial Year 2009-10, the Audit Committee met five times. The Internal Auditors and the Joint Statutory Auditors also participated in most of the meetings. The Internal Audit Systems, Scope of Internal Audit and the observations from Internal Auditors, were discussed with the Internal as well as the Joint Statutory Auditors. 6. SUBSIDIARY COMPANIES: During the year under review, TRIF Constructions Private Limited, TRIF Erectors Private Limited ceased to be subsidiary companies on account of a stake sale in these companies. TRIF Kochi Private Limited also ceased to be a subsidiary of the Company, consequent to equity investment in it by TRIF 1 - an offshore real-estate fund. Information as required under Section 212 of the Companies Act, 1956 is annexed herewith. 7. PARTICULARS OF EMPLOYEES: Information as required under Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules, 1975. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors state that: a. in the preparation of the annual accounts, the applicable accounting standards have been followed with proper explanation relating to material departures, if any; b. they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2010 and of its Profit for the year ended on that date; c. they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and d. they have prepared the annual accounts for the year ended 31st March, 2010 on a `going concern' basis. 8. FIXED DEPOSITS FROM PUBLIC: The Company has not solicited, accepted or renewed any Public Deposits during the period under review. 9. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION: In view of the nature of activities which are being carried on by the Company, particulars required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, read with Section 217(1)(e) of the Companies Act, 1956, are not applicable. 10. FOREIGN EXCHANGE EARNINGS AND OUTGO: Disclosure of information relating to Foreign Exchange outgo as required under Rule 2 (c) is already given in Schedule 27.1 forming part of the Audited Annual Accounts. 11. AUDITORS: The Joint Statutory Auditors, M/s. BSR & Associates and M/s. PKF Sridhar & Santhanam, retire at this Annual General Meeting and are eligible for reappointment. Your Board recommends their re-appointment. 12. ACKNOWLEDGEMENTS: The Directors express their deep gratitude and thank the Central and State Governments as well as their respective Departments and Development Authorities connected with the business of the Company, contractors and consultants and also Banks, Financial Institutions and shareholders for their continued support and encouragement. The Directors acknowledge the contribution made by employees towards the growth of the Company and appreciate their unstinted co-operation and support to the Management. By order of the Board For Tata Realty and Infrastructure Limited R.K. Krishna Kumar Chairman Date : 31st May, 2010