EMAAR MGF LAND LIMITED ANNUAL REPORT 2009-2010 DIRECTOR'S REPORT Dear Members, The Board of Directors of your Company is pleased to present 5th Annual Report together with the Audited Accounts of the Company for the financial year ended March 31, 2010. FINANCIAL RESULTS: The highlights of performance of your Company for financial year ended on March 31, 2010 are as under: (Rs. in millions) Particulars March 31, March 31, 2010 2009 Total Income 10,693 5,859 Profit/(Loss) before Depreciation and Tax 1,291 (1,501) Less: Depreciation 176 229 Profit/(Loss) before Tax 1,115 (1,730) Less: Provision for Taxation 377 (748) Net Profit/(Loss) for the year 738 (982) BUSINESS PERFORMANCE Your Directors are pleased to inform that during the year under review, the Company has shown significant improvement in the business performance and had successfully surmount out of the slowdown that it has witnessed in the past years due to global economic downturn. Since May 2009, the Indian real estate market has shown signs of recovery and the number of units sold by the Company has also increased substantially thereby resulting in substantial increase in turnover and profits. During the year, the Company launched 12 residential projects and 1 commercial project with an aggregate saleable area of approximately 9.4 million square feet and booked about 3,900 units for sale in the aggregate across our current projects. During the financial year ended March 31, 2010, the turnover of the Company stood at Rs. 10,693 million as against 5,859 millions in the previous year. The Company has made net profit of Rs 738 million against the loss of Rs. (982) million in the previous year. Further, on consolidated basis, the turnover of the Company stood as Rs. 19,510 million as against 9,611 million in the previous year, signifying a growth of 103%. On consolidated basis, the net profit of the Company stood at Rs. 511 million as against previous year loss of Rs. (925) million. The Company has been able to achieve this growth in its financial performance due to continued construction progress on its projects and stringent cost control measures. The Management of the Company continue to adhere to the various initiatives mentioned in the previous Director Report such as (i) Creating value by developing high quality integrated master planned communities (ii) Keeping flexible approach to project development (iii) Strengthen our financial position and actively manage our capital resources (iv) Adoption of international benchmarking and follow best practices in project development and customer services. These initiatives have accelerate the growth of the Company and consequently the financial performance during the year under review. DIVIDEND Keeping in view the future fund requirements of the Company, the Directors of your Company do not recommend any dividend for the financial year ended March 31, 2010. RESERVES & SURPLUS During the year under review, an amount of Rs. 738 million was transferred from Profit & Loss Account to Debenture Redemption Reserve Account. BUSINESS PERFORMANCE AND OUTLOOK Your Company is a leading real estate construction and development company in India with pan-India presence. At present, our focus is on the development of residential projects in Delhi NCR, Mohali, Hyderabad, Chennai and other key Indian cities. The key highlights of the various business segments of the Company for the period under review are given hereunder: Residential:- In residential business line, our main focus is on developing master planned communities in phases, wherein we design, build and sell a wide range of properties across different price points, including plots, villas, independent villa floors and apartments of varying sizes and specifications. One of the most prestigious projects that we are presently undertaking is the development of the 27.2 acre Commonwealth Games Village in Delhi. The successful launch of projects like Emerald Hills, Emerald Estate, Palm Studio, Enclave is a testimony to Company's ability to develop and market its projects. We have already started handing over to customer's part of the plotted development in Mohali and are also in the process of completing and handing over shortly the Palm Springs and Esplanade projects. As of March 31, 2010, we had 31 residential projects under development. We will continue to launch new residential projects of various product-mix keeping in view the demand in specific markets. Commercial:- In commercial business line, our focus is on developing built-to-suit and multi-tenanted developments targeted towards a range of customers, from individual users and small companies, to large corporate groups in various sectors. As of March 31, 2010, we had four commercial projects under development which include both stand alone commercial sites and properties forming part of our residential integrated master planned communities. During the year we also successfully launched the Emerald Plaza project in Gurgaon. Hospitality:- During the year we completed and launched, through one of our subsidiary, a five star hotel in Jaipur. The hotel is being operated by Fortune Park Hotels Limited, a subsidiary of ITC Limited. CAPITAL STRUCTURE: During the financial year under review, the Company had allotted 74,15,125 equity shares to M/s Emaar Holding II, Mauritius. On July 20, 2010, the Company has converted 62,955 Fully Convertible Debentures of face value of Rs. 1,00,000 each into 62,95,50,000 (13.48%) Redeemable Preference Shares of face value of Rs. 10/- each. As on the date of this Director's Report, the paid-up capital of your Company is Rs. 15,421.7 million divided into 912,619,845 equity shares of Rs. 10 each and 62,95,50,000 (13.48%) Redeemable Preference Shares of Rs.10/- each. INITIAL PUBLIC OFFERING: Pursuant to the shareholders approval at the extra-ordinary general meeting held on September 25, 2009 the Company filed the Draft Red Herring Prospectus ('DRHP') with Securities and Exchange Board of India ('SEBI') on September 29, 2009 for its Initial Public Offering comprising of fresh issue equity shares aggregating up to Rs. 38,500 million and an Offer for Sale by Citigroup Venture Capital Investment Ebene Limited and its nominee Trusts. SEBI had also issued its observations on the DRHP on February 18, 2010. However, in view of prevailing capital market conditions, the Board of Directors of the Company had decided to re-file the DRHP with SEBI with revised issue size of upto Rs. 25,000 million, subject to the requisite approval of regulatory authorities, if required. EMPLOYEE STOCK OPTION SCHEME The Employee Stock Option Plan of 2009 which was approved by the Shareholders on September 25, 2009 has not yet been implemented and no options have been granted. The Plan is proposed to be implemented subsequent to listing of the equity shares on the Stock Exchange pursuant to the Initial Public Offering of the Company. SUBSIDIARIES As on March 31, 2010, the Company has various subsidiaries, which are owned directly or indirectly. The names of such subsidiaries are mentioned in 'Annexure-A' to this Director's Report. The Company has applied to the Central Government under section 212(8) of the Companies Act, 1956, seeking an exemption from attaching copy of the Balance Sheet, Profit & Loss Account, Directors' Report and Auditors' Report of the subsidiary companies and other documents required to be attached under section 212(1) of the Companies Act, 1956 to the Balance sheet of the Company. Accordingly, the said documents are not being attached with the Balance sheet of the Company. The Annual Accounts of the subsidiary Companies are available for inspection by any member/investor and the Company will make available these documents/details upon request by any member of the Company or its subsidiaries interested in obtaining the same. The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with Accounting Standards issued by the Institute of Chartered Accountants of India, form part of the Annual Report. DIRECTORS Mr. Abhiram Seth was appointed as Additional Director of the Company w.e.f. December 28, 2009. During the year, Mr. Guido R. Haschke resigned from the directorship of the Company due to personal reasons. Mr. Ahmed Jamal Jawa, Mr. Hussain AlQemzi, Mr. Pradip Kumar Khaitan and Mr. Aman Mehta will retire by rotation at the ensuing Annual General Meeting and are eligible of re-appointment. MANAGERIAL REMUNERATION Due to global meltdown and adverse market sentiments in the real estate industry, the Company had incurred loss in financial year 2008-09. For the financial year 2009-10, the Company has started recovering from the global meltdown and uneven real estate market and recorded profit of Rs. 738 million as compared to previous year loss of 982 million. However, due to accumulated losses of previous year, the Company had incurred a loss of Rs. 547 million in the financial year 2009-10 in terms of Section 349 of the Companies Act, 1956 and accordingly, the managerial remuneration paid by the Company to its managerial personnel during the financial year 2009-10 was in excess of the limits prescribed under the provisions of the Act. The Company is proposing to file an application with Ministry of Corporate Affairs, Government of India, for waiver of recovery of excess remuneration paid to the managerial personnel in the financial year 2009-10. AUDIT COMMITTEE The composition of the Audit Committee of the Company, constituted under section 292A of the Companies Act, 1956, is as under: Name of the Director Status Mr. Anil Bhalla (Chairman) Independent and Non-Executive Director Mr. Aman Mehta Independent and Non-Executive Director Mr. Ghyanendra Nath Bajpai Independent and Non-Executive Director Mr. Gautam Khaitan Non-Independent and Non-Executive Director FIXED DEPOSITS The Company has not invited or accepted any deposits from the public within the meaning of Section 58A of the Companies Act, 1956 during the financial year ended on March 31, 2010. AUDITORS M/s S.R. Batliboi & Co., Chartered Accountants, will retire at the ensuing Annual General Meeting and are eligible for re-appointment as Statutory Auditors. A certificate from the auditors has been received to the effect that the reappointment, if made, would be in accordance with Section 224(1B) of the Companies Act, 1956. AUDITORS' REPORT The Notes to Accounts appearing in Schedule 24 of the annual accounts read with Auditors' Report are selfexplanatory and therefore do not call any further comments under Section 217(3) of the Companies Act, 1956 PARTICULARS OF EMPLOYEES The information required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this report as 'Annexure - B'. Except for Mr. Shravan Gupta, Executive Vice Chairman and Managing Director and Mr. Siddharth Gupta, Executive Director, none of the employee of the Company is relative of any of the director of the Company. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The Company is engaged in the business of construction, maintenance and development of residential houses, commercial complexes, flats, hotels, buildings and other properties. The Company does not own any manufacturing facility and is not covered under the type of industries as prescribed in Schedule to Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. The requirement of disclosure of particulars relating to conservation of energy, research and development and technology absorption as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with the said Rules are not applicable to the Company. During the year, the Foreign Exchange used and earned is as under: (Rs. in millions) Foreign Exchange Earnings Nil Foreign Exchange Outgo 1,865.01 DIRECTORS RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibilities Statement, it is hereby confirmed that: (i) In the preparation of the Annual Report for the period ended March 31, 2010, the applicable accounting standards had been followed along with proper explanation relating to material departures; (ii) The Directors had 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 of the Company for the year under review; (iii) The Directors had taken proper and sufficient care 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 (iv) The Directors had prepared the accounts for the period ended March 31, 2010 on a going concern' basis. ACKNOWLEDGEMENT The Board acknowledges with gratitude, the co-operation and assistance provided to your Company by its Bankers, Financial Institutions, and Government as well as Non-Government agencies. The Directors thanks the customers, clients, vendors and other business associates for their continued support. The relationship with the employees remained cordial during the period and your Directors wish to place on record their appreciation for the contribution made by the employees at all levels. For and on behalf of the Board of Directors Sd/- Sd/- Shravan Gupta Siddharth Gupta Executive Vice-Chairman & Executive Director Managing Director (DIN : 00002715) (DIN : 00002707) Place : New Delhi Dated : July 20, 2010. Annexure-A Name of subsidiaries directly owned by the Company: 1. Arma Buildmore Private Limited 2. Budget Hotels India Private Limited 3. Easel Propbuild Private Limited 4. Edenic Propbuild Private Limited 5. Educt Propbuild Private Limited 6. Emaar MGF Construction Private Limited 7. Emaar MGF Hospitality Private Limited 8. Emaar MGF Projects Private Limited 9. Emaar MGF Services Private Limited 10. Enamel Propbuild Private Limited 11. Epitome Propbuild Private Limited 12. Fabworth Promoters Private Limited 13. Gurkul Promoters Private Limited 14. Kudos Propbuild Private Limited 15. Lotus Technobuild Private Limited 16. Nandita Promoters Private Limited 17. Pratham Promoters Private Limited 18. Prayas Buildcon Private Limited 19. Raksha Buildtech Private Limited 20. Vitality Conbuild Private Limited 21. Wembley Estates Private Limited Name of subsidiaries indirectly owned by the Company: 1. Aashirwad Conbuild Private Limited 2. Abbey Properties Private Limited 3. Abbot Builders Private Limited 4. Abhinav Projects Private Limited 5. Abyss Properties Private Limited 6. Accession Buildwell Private Limited 7. Accordion Buildwell Private Limited 8. Achates Buildcon Private Limited 9. Acorn Buildmart Private Limited 10. Acorn Developers Private Limited 11. Active Promoters Private Limited 12. Active Securities Limited 13. Acutech Estates Private Limited 14. Adze Properties Private Limited 15. Allegiance Conbuild Private Limited 16. Allied Realty Private Limited 17. Alpine Buildcon Private Limited 18. Amar Gyan Developments Private Limited 19. Amardeep Buildcon Private Limited 20. Aparajit Promoters Private Limited 21. Archit Promoters Private Limited 22. Ardor Conbuild Private Limited 23. Arman Promoters Private Limited 24. Armour Properties Private Limited 25. Auspicious Realtors Private Limited 26. Authentic Properties Private Limited 27. Avinashi Buildtech Private Limited 28. Bailiwick Builders Private Limited 29. Balalaika Builders Private Limited 30. Ballad Conbuild Private Limited 31. Bhavishya Buildcon Private Limited 32. Bhavya Conbuild Pvt. Ltd. 33. Bhumika Promoters Private Limited 34. Brijbasi Projects Private Limited 35. Brilliant Build tech Private Limited 36. Camarederie Properties Private Limited 37. Camellia Properties Private Limited 38. Capex Projects Private Limited 39. Casing Properties Private Limited 40. Cassock Properties Private Limited 41. Cats Eye Properties Private Limited 42. Charbhuja Properties Private Limited 43. Charismatic Realtors Private Limited 44. Chhavi Buildtech Private Limited 45. Chintz Conbuild Private Limited 46. Chirayu Buildtech Private Limited 47. Choir Developers Private Limited 48. Chum Properties Private Limited 49. Compact Projects Private Limited 50. Consummate Properties Private Limited 51. Crock Buildwell Private Limited 52. Crocus Builders Private Limited 53. Crony Builders Private Limited 54. Deep Jyoti Projects Private Limited 55. Divit Estates Private Limited 56. Dove Promoters Private Limited 57. Ducat Builders Private Limited 58. Dumdum Builders Private Limited 59. Easter Conbuild Private Limited 60. Ecliptic Conbuild Private Limited 61. Eclogue Conbuild Private Limited 62. Ecru Builders Private Limited 63. Ecstasy Conbuild Private Limited 64. Eddy Conbuild Private Limited 65. Edge Conbuild Private Limited 66. Edict Conbuild Private Limited 67. Edifice Conbuild Private Limited 68. Edit Estates Private Limited 69. Effusion Conbuild Private Limited 70. Elan Conbuild Private Limited 71. Elegant Propbuild Private Limited 72. Elite Conbuild Private Limited 73. Elixir Conbuild Private Limited 74. Elver Conbuild Private Limited 75. Eminence Conbuild Private Limited 76. Enigma Properties Private Limited 77. Estuary Conbuild Private Limited 78. Eternal Buildtech Private Limited 79. Ether Conbuild Private Limited 80. Ethic Conbuild Private Limited 81. Ethnic Properties Private Limited 82. Everwel Estates Private Limited 83. Expanse Conbuild Private Limited 84. Exponent Conbuild Private Limited 85. Extremity Conbuild Private Limited 86. Fable Conbuild Private Limited 87. Faade Conbuild Private Limited 88. Facet Estates Private Limited 89. Flick Propbuild Private Limited 90. Fling Propbuild Private Limited 91. Flip Propbuild Private Limited 92. Floret Propbuild Private Limited 93. Flotilla Propbuild Private Limited 94. Flounce Propbuild Private Limited 95. Flue Propbuild Private Limited 96. Fluff Propbuild Private Limited 97. Fluke Propbuild Private Limited 98. Foal Propbuild Private Limited 99. Fondant Propbuild Private Limited 100. Foray Propbuild Private Limited 101. Forsythia Propbuild Private Limited 102. Fount Propbuild Private Limited 103. Foyer Propbuild Private Limited 104. Fray Propbuild Private Limited 105. Frieze Propbuild Private Limited 106. Frisson Propbuild Private Limited 107. Frond Propbuild Private Limited 108. Froth Propbuild Private Limited 109. Futuristic Buildwell Private Limited 110. Gable Propbuild Private Limited 111. Gadget Propbuild Private Limited 112. Gaff Propbuild Private Limited 113. Gaiety Propbuild Private Limited 114. Gait Propbuild Private Limited 115. Galleon Propbuild Private Limited 116. Gallery Propbuild Private Limited 117. Gallium Propbuild Private Limited 118. Gambit Propbuild Private Limited 119. Gamete Propbuild Private Limited 120. Gamut Propbuild Private Limited 121. Garland Estate Private Limited 122. Garnet Propbuild Private Limited 123. Garuda Properties Private Limited 124. Gateau Propbuild Private Limited 125. Gaucho Propbuild Private Limited 126. Gauge Propbuild Private Limited 127. Gauntlet Propbuild Private Limited 128. Gavel Properties Private Limited 129. Gems Buildcon Private Limited 130. Genre Propbuild Private Limited 131. Gentian Propbuild Private Limited 132. Gentry Propbuild Private Limited 133. Geodesy Properties Private Limited 134. Gibbon Propbuild Private Limited 135. Girder Propbuild Private Limited 136. Glade Propbuild Private Limited 137. Glaze Estates Private Limited 138. Glen Propbuild Private Limited 139. Glen Propbuild Private Limited 140. Glimpse Propbuild Private Limited 141. Glitz Propbuild Private Limited 142. Globule Propbuild Private Limited 143. Gloss Propbuild Private Limited 144. Glove Propbuild Private Limited 145. Godawari Buildwell Private Limited 146. Godson Propbuild Private Limited 147. Golliwog Propbuild Private Limited 148. Gracious Technobuild Private Limited 149. Gradient Developers Private Limited 150. Grail Propbuild Private Limited 151. Grampus Propbuild Private Limited 152. Gran Propbuild Private Limited 153. Granar Propbuild Private Limited 154. Grange Propbuild Private Limited 155. Granule Propbuild Private Limited 156. Grapeshot Propbuild Private Limited 157. Grassroot Promoters Private Limited 158. Gravel Propbuild Private Limited 159. Grebe Propbuild Private Limited 160. Griddle Propbuild Private Limited 161. Grog Propbuild Private Limited 162. Grove Propbuild Private Limited 163. Grunge Propbuild Private Limited 164. Guffaw Propbuild Private Limited 165. Gull Propbuild Private Limited 166. Guru Rakha Projects Private Limited 167. Gyan Jyoti Estates Private Limited 168. Gyankunj Constructions Private Limited 169. Haddock Propbuild Private Limited 170. Haft Propbuild Private Limited 171. Hake Developers Private Limited 172. Halibut Developers Private Limited 173. Hamlet Buildwell Private Limited 174. Hammock Buildwell Private Limited 175. Hartej Estates Private Limited 176. Hope Promoters Private Limited 177. Immense Realtors Private Limited 178. Jamb Propbuild Private Limited 179. Janitor Propbuild Private Limited 180. Jasper Propbuild Private Limited 181. Jaunt Propbuild Private Limited 182. Jay Propbuild Private Limited 183. Jemmy Propbuild Private Limited 184. Jerkin Propbuild Private Limited 185. Jetty Propbuild Private Limited 186. Jig Propbuild Private Limited 187. Jive Propbuild Private Limited 188. Juhi Promoters Private Limited 189. Kamdhenu Projects Private Limited 190. Kartikay Buildwell Private Limited 191. Kayak Propbuild Private Limited 192. Kedge Propbuild Private Limited 193. Kestrel Propbuild Private Limited 194. Kismet Propbuild Private Limited 195. Knoll Propbuild Private Limited 196. Ladle Propbuild Private Limited 197. Lavish Propbuild Private Limited 198. Legend Buildcon Private Limited 199. Legend Buildwell Private Limited 200. Lifeline Build Tech Private Limited 201. Locus Propbuild Private Limited 202. Logical Developers Private Limited 203. Logical Estates Private Limited 204. Maestro Estates Private Limited 205. Mahonia Estates Private Limited 206. Mansarovar Projects Private Limited 207. Markwel Promoters Private Limited 208. Mega City Promoters Private Limited 209. MG Colonizers Private Limited 210. Milky Way Realtors Private Limited 211. Modular Estates Private Limited 212. Monarch Buildcon Private Limited 213. Monga Properties Private Limited 214. Multitude Infrastructures Private Limited 215. Naam Promoters Private Limited 216. Navrattan Buildcon Private Limited 217. Nayas Projects Private Limited 218. Nettle Propbuild Private Limited 219. Newt Propbuild Private Limited 220. Nipper Propbuild Private Limited 221. Nishkarsh Estates Private Limited 222. Notch Propbuild Private Limited 223. Pansy Buildcons Private Limited 224. Paving Propbuild Private Limited 225. Perch Conbuild Private Limited 226. Perpetual Realtors Private Limited 227. Pipalashray Estate Private Limited 228. Potential Propbuild Private Limited 229. Pragya Buildcon Private Limited 230. Pratiksha Buildcon Private Limited 231. Prezzie Buildcon Private Limited 232. Progeny Buildcon Private Limited 233. Prosperous Buildcon Private Limited 234. Prosperous Constructions Private Limited 235. Pukhraj Realtors Private Limited 236. Pulse Estates Private Limited 237. Pushkar Projects Private Limited 238. Ram Ban Projects Private Limited 239. Rolex Estates Private Limited 240. Rose Gate Estates Private Limited 241. Rudraksha Realtors Private Limited 242. Sacred Estates Private Limited 243. Sambhavee Projects Private Limited 244. Sandesh Buildcon Private Limited 245. Sankalp Buildtech Private Limited 246. Sankalp Promoters Private Limited 247. Sanskar Buildcon Private Limited 248. Sanskar Buildwell Private Limited 249. Sanyukta Promoters Private Limited 250. Sapphire & Sands Private Limited 251. Sarvodaya Buildcon Private Limited 252. Sarvpriya Realtors Private Limited 253. Seriel Buildtech Private Limited 254. Sewak Developers Private Limited 255. Sharyans Buildcon Private Limited 256. Shaurya Propbuild Private Limited 257. Shitij Buildcon Private Limited 258. Shrestha Conbuild Private Limited 259. Shrey Promoters Private Limited 260. Sidhant Buildcon Private Limited 261. Sidhivinayak Buildcon Private Limited 262. Sidhivinayak Durobuild Private Limited 263. Signages Properties Private Limited 264. Silver Sea Vessel Management Private Limited 265. Smridhi Technobuild Private Limited 266. Snow White Buildcon Private Limited 267. Sonex Projects Private Limited 268. Sparsh Promoters Private Limited 269. Spiritual Realtors Private Limited 270. Sprouting Properties Private Limited 271. Spurt Projects Private Limited 272. Sriyam Estates Private Limited 273. Stash Propbuild Private Limited 274. Stave Propbuild Private Limited 275. Stein Propbuild Private Limited 276. Stent Propbuild Private Limited 277. Strut Propbuild Private Limited 278. Sukhda Promoters Private Limited 279. Sukhjit Projects Private Limited 280. Tacery Builders Private Limited 281. Tanmay Developers Private Limited 282. TCI Project Management Private Limited 283. Tinnitus Builders Private Limited 284. Tocsin Builders Private Limited 285. Toff Builders Private Limited 286. Tome Builders Private Limited 287. Tomtom Builders Private Limited 288. Trattoria Properties Private Limited 289. Trawler Properties Private Limited 290. Triad Properties Private Limited 291. True Value Build-Con Private Limited 292. Tushar Projects Private Limited 293. Utility Estates Private Limited 294. Utkarsh Buildcon Private Limited 295. Versatile Conbuild Private Limited 296. Virasat Buildcon Private Limited 297. VPG Developers Private Limited 298. Waif Propbuild Private Limited 299. Whelsh Properties Private Limited 300. Winkle Properties Private Limited 301. Yeti Properties Private Limited 302. Yogiraj Promoters Private Limited 303. Yukti Projects Private Limited 304. Zing Properties Private Limited 305. Zither Buildwell Private Limited 306. Zonex Developers Private Limited 307. Zonex Estates Private Limited 308. Zulu Properties Private Limited.