ARVIND INFRASTRUCTURE LIMITED

Transcription

1 ARVIND INFRASTRUCTURE LIMITED (Our Company was incorporated as Arvind Infrastructure Limited on December 26, 2008 in Ahmedabad under the Companies Act, 1956 and obtained the Certificate of Commencement of Business dated January 6, 2009 under the Companies Act, 1956) Registered Office: Arvind Premises, Naroda Road Ahmedabad , Gujarat, India Tel: Fax: Website: Corporate Office: 24, Government Servant Society, adjacent to Municipal Market, CG Road, Navrangpura, Ahmedabad Tel: Fax: Contact Person: Prakash Makwana, Company Secretary and Compliance Officer INFORMATION MEMORANDUM FOR LISTING OF 2,58,24,307 EQUITY SHARES OF RS. 10 EACH ISSUED BY THE COMPANY PURSUANT TO THE SCHEME OF ARRANGEMENT NO EQUITY SHARES ARE PROPOSED TO BE SOLD OR OFFERED PURSUANT TO THIS INFORMATION MEMORANDUM OUR PROMOTERS- 1) Aura Securities Private Limited, 2) Sanjaybhai Shrenikbhai Lalbhai, 3) Punit Sanjaybhai Lalbhai, 4) Sanjaybhai Shrenikbhai Lalbhai (As trustee of Sanjay Family Trust) and 5) Jayshreeben Sanjaybhai Lalbhai GENERAL RISKS Investment in equity and equity related securities involve a degree of risk and investors should not invest in the equity shares of Arvind Infrastructure Limited unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in the shares of Arvind Infrastructure Limited. For taking an investment decision, investors must rely on their own examination of the Company including the risks involved. The securities have not been recommended or approved by Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors is invited to the Section Risk Factors given on page 10 of this Information Memorandum. ISSUER S ABSOLUTE RESPONSIBILITY Arvind Infrastructure Limited having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to Arvind Infrastructure Limited, which is material in the context of the issue of shares pursuant to the scheme, that the information contained in this Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares of Arvind Infrastructure Limited are proposed to be listed on BSE Limited (BSE), National Stock Exchange of India Limited (NSE) and Ahmedabad Stock Exchange Limited (ASE). The Company has submitted this Information Memorandum with BSE, NSE and ASE. The Information Memorandum would also be made available on the website of BSE ( NSE ( and ASE ( ). REGISTAR AND TRANSFER AGENT Sharepro Services (India) Private Limited 13 AB Samhita Warehousing Complex, Sakinaka Telephone Exchange Lane, 1

2 Sakinaka, Andheri (East) Mumbai: Tel: / Fax: Website: www. shareproservices.com Contact Person: Indira Karkera 2

3 TABLE OF CONTENTS SECTION I GENERAL... 4 DEFINITIONS AND ABBREVIATIONS... 4 CURRENCY OF PRESENTATION... 7 CERTAIN CONVENTIONS, USE OF MARKET DATA... 8 FORWARD LOOKING STATEMENTS... 9 SECTION II - RISK FACTORS SECTION III INTRODUCTION SUMMARY OF INDUSTRY SUMMARY OF OUR BUSINESS SUMMARY OF FINANCIAL INFORMATION GENERAL INFORMATION CAPITAL STRUCTURE SECTION IV- ABOUT THE LISTING OBJECTS AND RATIONALE OF THE SCHEME SALIENT FEATURES OF THE SCHEME STATEMENT OF TAX BENEFITS INDUSTRY SECTION V- ABOUT THE COMPANY OUR BUSINESS KEY REGULATIONS AND POLICIES HISTORY OF OUR COMPANY OUR MANAGEMENT OUR PROMOTERS AND PROMOTER GROUP OUR GROUP COMPANIES DIVIDEND POLICY SECTION VI FINANCIAL INFORMATION FINANCIAL INFORMATION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS171 SECTION VII LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATION, DEFAULTS AND MATERIAL DEVELOPMENTS GOVERNMENT AND OTHER APPROVALS OTHER REGULATORY AND STATUTORY DISCLOSURES SECTION VIII- MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION SECTION IX OTHER INFORMATION DOCUMENTS FOR INSPECTION DECLARATION

4 SECTION I GENERAL DEFINITIONS AND ABBREVIATIONS Unless the context otherwise indicates or implies, the following terms have the following meanings in this Information Memorandum and references to any statute or regulations or policies shall include amendments thereto, from time to time: Term AIL or Arvind Infrastructure or the Company or Transferee Company or Resulting Company or our Company or we or us or our Arvind Limited or Arvind or AL or Transferor Company or Demerged Company Real Estate Undertaking or Demerged Undertaking Remaining Undertaking Saleable Area Arvind Infrastructure Limited Arvind Limited Description Real Estate Undertaking of the Transferor Company, more specifically described in the Scheme of Arrangement All the businesses and activities of the Transferor Company other than the Demerged Undertaking That part of the area which is offerred for sale to our prospective cutomers of each of our project and for which consideration is charged Conventional and General Terms Term AGM Articles/Articles of Association/AOA Applicable Laws Appointed Date AS ASE Auditor Board/Board of Directors BSE Capital or Share Capital CDSL CEO CFO CIT Act / Companies Act Companies Act, 1956 Companies Act, 2013 Annual General Meeting Articles of Association of AIL Description Any statute, notification, bye-laws, rules, regulations, guidelines, Common law, policy code, directives, ordinance, schemes, notices, orders or instructions, laws enacted or issued or sanctioned by any appropriate authority in India including any modifications or re-enactment thereof for the time being in force. April 1, 2015 or such other date as may be approved by High Court of Gujarat at Ahmedabad Accounting Standards, as issued by the Institute of Chartered Accountants of India Ahmedabad Stock Exchange Limited The Statutory Auditors of AIL Board of Directors of AIL BSE Limited Share Capital of AIL Central Depository Services (India) Limited Chief Executive Officer Chief Financial Officer Commissioner of Income Tax The Companies Act, 1956 and/or the Companies Act, 2013, as applicable Companies Act, 1956, as amended The Companies Act, 2013 and any Rules issued thereunder 4

5 Term Description Court or High Court Hon ble High Court of Gujarat at Ahmedabad, as applicable, and shall include the National Company Law Tribunal, if applicable in case of Transferee Company CRM Customer Relationship Management CSR Corporate Social Responsibility DDT Dividend Distribution Tax Designated Stock Exchange BSE ( DSE ) Depositories Act The Depositories Act, 1996 and amendments thereto DP Depository Participant Effective Date Last of the dates on which the sanctions/ approvals or orders as specified in Clause No. 19 of this Scheme has been obtained and/ or filed by the Transferor Company and the Transferee Company with the Registrar of Companies, Gujarat and other Governmental Authorities. EGM Extraordinary General Meeting Eligible Shareholder(s) Eligible holder(s) of Equity Shares of AL as on the Record Date Equity Share(s) or Share(s) Fully paid up equity shares of AIL having a face value of `10 each unless otherwise specified in the context thereof ESI Act Employee s State Insurance Act, 1938 ESOP Employee Stock Ownership Plan FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 FI Financial Institutions FII(s) Foreign Institutional Investors registered with SEBI under applicable laws Financial Year/Fiscal/FY Period of twelve months ended March 31 of that particular year, unless otherwise stated FSI Floor Space Index GDP Gross Domestic Product GoI Government of India Governmental Authority Applicable Central, State or local Government, statutory, regulatory, departmental or public body or authority of relevant jurisdiction, legislative body or administrative authority, agency or commission or any court, tribunal, board, bureau or instrumentality thereof including Securities and Exchange Board of India, Stock Exchanges, Registrar of Companies, Regional Directors, Foreign Investment Promotion Board, Reserve Bank of India, or arbitration or arbitral body having jurisdiction, Courts and other government and India in each case. HR Human Resourse HUF Hindu Undivided Family IFRS International Financial Reporting Standards Indian GAAP Generally accepted accounting principles in India IT Act The Income Tax Act, 1961 and amendments thereto ITAT Income Tax Appellate Tribunal JD Joint Development JDA Joint Development Agreement JV Joint Venture KMP Key Managerial Personnel LLP Limited Liability Partnership LLPIN Limited Liability Partnership Identification Number Memorandum/Memorandum Memorandum of Association of AIL of Association/MOA MAT Minimum Alternate Tax 5

6 Term Description MoEF Ministry of Environment and Forest Mn Million Mn Sq.ft. Milion Square Feet N.A Non Applicable NBFC Non Banking Finance Company NOCs No Objection Certificates NR Non Resident NRI(s) Non Resident Indian(s) NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited PAN Permanent Account Number RBI The Reserve Bank of India Record Date May 29, 2015 Registrar and Share Transfer Sharepro Services (India) Private Limited Agent ROC Registrar of Companies Scheme or Scheme of Scheme of Arrangement under Sections 391 to 394 read with Sections 78, 100 to Arrangement or Scheme of Arrangement of Demerger or Demerger Scheme or 104 of the Companies Act, 1956 amongst Arvind Limited and Arvind Infrastructure Limited and their respective shareholders and creditors, sanctioned by the High Court of Gujarat at Ahmadabad on March 30, Scheme of Demerger SCRA Securities Contracts (Regulation) Act, 1956 and amendment thereto SCRR Securities Contracts Regulation (Rules), 1957 SEBI Securities and Exchange Board of India SEBI Act, 1992 Securities and Exchange Board of India Act, 1992 and amendments thereto SEBI (ICDR) Regulations SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and amendments thereto TAN Tax Deduction Account Number TIN Tax Information Network Takeover Code The SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011and amendments thereto USD United State Dollar VAT Value Added Tax Wealth Tax Act The Wealth Tax Act, 1957 and amendments thereto w.e.f With effect from 6

7 CURRENCY OF PRESENTATION In this Information Memorandum all references to Rupees or Rs. or ` are to Indian Rupees, the legal currency of the Republic of India. 7

8 CERTAIN CONVENTIONS, USE OF MARKET DATA Unless stated otherwise, the financial data in this Information Memorandum is derived from our financial statements. The fiscal year commences on April 1 and ends on March 31 of each year, so all references to a particular fiscal year are to the twelve month period ended March 31 of that year. In this Information Memorandum, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. All references to India contained in this Information Memorandum are to the Republic of India. All references to Rupees or Rs. or ` are to Indian Rupees, the official currency of the Republic of India. For additional definitions, please refer to the chapter titled Definitions and Abbreviations beginning on page 4 of this Information Memorandum. Unless stated otherwise, industry data used throughout this Information Memorandum has been obtained from the published data. Such published data generally states that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe that industry data used in this Information Memorandum is reliable, it has not been independently verified. The information included in this Information Memorandum about various other companies is based on their respective annual reports and information made available by the respective companies. 8

9 FORWARD LOOKING STATEMENTS We have included statements in this Information Memorandum which contain words or phrases such as will, aim, will likely result, believe, expect, will continue, anticipate, estimate, intend, plan contemplate, seek to, future, objective, goal, project, should will pursue and similar expressions or variations of such expressions, that are forward looking statements. Our forward looking statements contain information regarding, among other things, our financial condition, future plans and business strategy. We have based these forward looking statements on our current expectations and projections about future events. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include, among others: General economic and business conditions in India and other countries; Our ability to successfully implement our strategy, our growth and expansion plans; Delay or inability to obtain such permits, licenses or approvals or failure to otherwise comply with applicable laws, rules and regulations or changes in governmental policies or stricter or more burdensome regulations; Delays in the completion of our development or projects; Failure to maintain high levels of customer satisfaction. For further discussion of factors that could cause our actual results to differ, see the section titled Risk Factors beginning on page 10 of this Information Memorandum. By their nature, certain risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under Management s Discussion and Analysis of Financial Condition and Results of Operations Industry and Our Business beginning on page 171, 73 and 75 respectively of this Information Memorandum. We do not have any obligation to, and do not intend to, update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not materialize. 9

10 SECTION II - RISK FACTORS This is only a summary with Risk Factors related to investment in shares of the Company. The investors should read the following summary with the Risk Factors mentioned and the more detailed information about us and our financial statements included elsewhere in this Information Memorandum. Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial or other implication of any of the risks described in this section. The numbering of the risk factors has been done to facilitate ease of reading and reference and does not in any manner indicate the importance of one risk over another. INTERNAL RISKS Risks in relation to our Company 1. Our Company, promoters and some of our group companies are involved in certain legal proceedings. Our Company, promoters and some of our group companies are involved in certain legal proceedings which are pending at different levels of adjudication before various courts and tribunals. If any of the cases pending are decided or determined against us, our promoter or any of our group companies, such decision may have an adverse effect on our business, results of operations and financial condition. If any of the cases filed against AL with respect to the Real Estate Undertaking prior to the demerger are decided or determined against AL, our Company would be required to honour the liabilities arising out these litigations, such decision may have adverse effect on our business, results of operations and financial condition. For further details, please refer to the chapter titled Outstanding Litigation, Defaults and Material Developments' beginning on page 181 of this Information Memorandum. A classification of these legal and other proceedings are given in the following table: Particulars Criminal proceedings Civil proceedings Tax matters Total amount involved in ` in crore* Against our company By our company Against our promoters Against our group companies By our group companies Against our joint ventures * Amount quantified in case of tax matters only wherever possible. For the purpose of quantifying the amount involved, we have only considered the financial implication of litigation. 2. Some of our Group Companies and Subsidiaries have incurred losses during the past three financial years. The following Group Companies and Subsidiaries have incurred losses in the past three financial years, details of which are us under: (In ` Lacs) 10

11 Financial Information Sr. No. Name of the Group Company As on March 31, 2015 As on March 31, 2014 As on March 31, Shruti Tradelink Private Limited (0.20) (0.23) Aura Merchandise Private Limited (0.17) (0.07) (0.07) 3. Anukul Investments Private (3.91) (11.65) (5.55) Limited 4. Anagram Knowledge Academy (373.31) (297.35) (244.01) Limited Sr. No. Name of the Subsidiary 1. Arvind Altura LLP (0.18) (0.36) N.A. 2. Changodar Industrial (0.18) (0.21) N.A. Infrastructure (One) LLP 3. Ahmedabad Industrial (1.24) (2.57) N.A. Infrastructure (One) LLP 4. Ahmedabad East Infrastructure (90.84) (20.61) (0.60) LLP 5. Arvind Five Homes LLP (29.05) (0.24) N.A. 6. Arvind Infracon LLP (0.18) (0.19) N.A. 7. Arvind Beyond Five Club LLP (0.23) N.A. N.A. 8. Arvind Hebbal Homes Private Limited 9.15 (0.60) 0.74 Losses incurred by our Group Companies and Subsidiaries may be perceived adversely by external parties such as customers, bankers, and suppliers, which may affect our reputation. 3. We are yet to receive or renew certain approvals or licenses required in the ordinary course of business, and the failure to obtain them in a timely manner or at all may adversely affect our operations. We require certain statutory and regulatory permits, licenses and approvals to operate our business. We have made renewal applications for certain approvals or licenses that have expired or that are required for our business but have not yet received these approvals or licenses. If we fail to obtain the necessary approvals required by us to undertake our business, or if there is any delay in getting the necessary approvals, our business and our financial condition may be materially and adversely impacted. Also, we have not applied for any shops and establishment registration certificate for our corporate office. We cannot assure you that the relevant authority will not take any action against us in our inability to obtain the registration certificate. For details regarding the pending government approvals, please refer to the section titled Risk Factors beginning on page 10 of this Information Memorandum. 4. Our registered office has not been taken in the Company s name. The registered office of the Company is in the name of the parent company, AL. Our Company shares its registered office with other offices forming part of the Lalbhai Group. Our Company has entered into leave and license agreement dated May 11, 2015 with AL for the purposes of the same. 5. Our Company has limited operating history in the development of real estate. Our Company has forayed into the business of development of real estate since 2008 only and hence has a limited operating history in this sector. As such, this may involve risks and difficulties with which our Company may not be familiar. Our Company may not be successful in the business of development of real estate and we cannot provide you with any assurances as to the sustainability of our business and the timing and amount of any returns or benefits that we may receive from this business. Our inability to successfully expand our business may adversely affect our prospects and could constrain our long term growth prospects. 11

12 6. Some of our trademarks are not owned by our Company. Also many of our trade marks may not be registered and we may be subject to claims alleging breach of third-party intellectual property rights. Some of the trademarks used by our projects are owned by the parent company, AL. We have entered into an assignment deed dated January 19, 2015 with AL for the use of the said trademarks by our Company. Further, our Company has applied for the registration of our logo and word mark as well as other trademarks. As on date, we have 16 trademark applications pending before the Trade Marks Registry, Ahmedabad. There can be no assurance that our Company would be able to register the trademarks or that third parties will not infringe on our intellectual property or misuse the said names or logos, which may adversely affect our business, prospects and reputation. Further, we may become subject to claims by third parties if we use logos, names, or other such subjects in breach of any intellectual property rights registered by such third party. Any legal proceedings pursuant to such claims, or settlements thereunder, may divert management attention and require us to pay financial compensation to such third parties, as well as compel us to change our logo, or brand names of our products and services, which could adversely affect our business, prospects, results of operation and financial condition. 7. We are highly dependent on our senior management to manage our current operations and meet future business challenges. Our future success is highly dependent on expertise, experience and services of Company's senior management to maintain strategic direction, manage current operations and risk profile and meet future business challenges, including the planned expansion and the addition of new projects. Loss of, or inability to attract or retain, such persons could adversely affect our business and results of operations. If one or more of these key personnel are unwilling or unable to continue in their present positions, we may not be able to replace them with persons of comparable skill and expertise promptly or at all, and we may not be able to further augment our management team appropriately and this could have a materially adverse effect on our business, results of operations and financial condition. 8. We may suffer uninsured losses or experience losses exceeding our insurance limits. Our real estate projects could suffer physical damage from fire or other causes, resulting in losses, which may not be fully compensated by insurance. In addition, there are certain types of losses, such as those due to earthquakes, floods, other natural disasters, terrorism or acts of war, which may be uninsurable or are not insurable at a reasonable premium. The proceeds of any insurance claim with respect to insurance that either we or our contractors have taken may be insufficient to cover any expenses faced by us including higher rebuilding costs as a result of inflation, changes in building regulations, environmental issues as well as other factors. Should an uninsured loss or a loss in excess of insured limits occur, we may loose the capital invested in and the anticipated revenue from the affected property. If we suffer any losses, damages and liabilities in the course of our operations and real estate development, we may not have sufficient insurance or funds to cover any such losses. We may have to bear the costs associated with any damage suffered by us in respect of these uninsured projects or uninsured events. We have taken money insurance policy for money in transit and money in safe which also extends to cover loss arising out of riot, strike & terrorist activity for its corporate office. We have also taken tractor policy and vehicle insurance policy other than the contractor all risk insurance policy and workmen compensation policy among other insurance policy which are standard to our industry. 9. We have entered into related party transactions in the past and may continue to do so in future. Such transactions or any future transactions with related parties may potentially involve conflict of interest and impose certain liabilities on our Company. Further, certain of our related party transactions may not have been undertaken on an arm s length basis. We have, in the course of our business, entered into transactions with related parties. There can be no assurance that we could not have achieved more favourable terms had such transactions not been entered into with these related parties. Such related party transactions may give rise to potential conflicts of interest with respect to 12

13 dealings between us and the related parties. Furthermore, it is likely that we will continue to enter into related party transactions in the future and such transactions, individually or in the aggregate, may have an adverse effect on our financial condition, cash flows and results of operations. 10. If our employees unionize, we may be subject to industrial unrest, slowdowns and increased wage costs. India has stringent labour legislation that protects the interests of workers, including legislation that sets forth detailed procedures for the establishment of unions, dispute resolution and employee removal and legislation that imposes certain financial obligations on employers upon retrenchment. Although our employees are not currently unionized, there can be no assurance that they will not unionize in the future. If our employees unionize, it may become difficult for us to maintain flexible labour policies, and our business may be adversely affected. 11. Our contingent liabilities could adversely affect our financial condition. Our contingent liabilities as disclosed in our audited financial statements as on March 31, 2015 were as follow: Particulars Amount (In ` Lacs) Income Tax for AY Other commitments for supply of construction materials and labour Total We have experienced negative cash flows in prior periods and may continue to do so in the future, which could have a material adverse effect on our business, prospects, financial condition, cash flows and results of operations. We have experienced negative cash flows from operating, investing and financing activities in the past, the details of which are provided below: (in ` Lacs) Particulars For the year ended March Net cash from operating activities (414.93) (6,981.24) , Net cash from investing activities ( ) (308.56) (1,639.29) Net cash from financing activities 8, (3,046.84) (595.31) (609.72) Net Cash Flow 2, (10,336.64) (17.84) (63.73) We may incur negative cash flows in the future which may have a material adverse effect on our business, prospects, results of operations and financial condition. 13. We have taken certain loans including unsecured loans, which may be recalled by our lenders at any time. As on March 31, 2015 our total financial indebtedness is `2, Lacs. Out of that our secured indebtedness amounting to `23.49 Lacs which can t be recalled at any time except in case of failure of repayment. However, our unsecured loans amounting to `2, Lacs can be recalled by our lenders at any time. If our lenders exercise their right to recall a loan, it could have a material adverse effect on our financial position. 14. Our Company has not paid any dividends in the past in order to conserve the resources. However, the ability to pay dividends in the future will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures. Our Company has not paid annual dividends in the past in order to plough back the surplus. The management would put in place a distribution policy commensurate with future growth plans and available surplus. 13

14 However, the ability to pay dividends in the future will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures. Risks in Relation to our Business 15. Our business require certain permits from government and regulatory authorities in the ordinary course of business in relation to the environment and land development and any delay or inability to obtain them in a timely manner or at all may adversely affect our business, results of operations, financial condition and prospects. Our business model depends on our compliance with laws and regulations promulgated by central, state and local governments, which are responsible for land and development as well as obtaining requisite approvals, permissions, consents and NoCs from Gujarat Pollution Control Board (GPCB), and the MoEF amongst others, and/or receiving no objections for various activities proposed to be undertaken. Moreover, we may need to apply for additional approvals in the future. Further, we may need to renew some of the approvals, which may expire, from time to time, in the ordinary course. There can be no assurance that the approvals and permits issued to us will not be suspended or revoked in the event of non-compliance or alleged non-compliance with any term or condition thereof, or pursuant to any regulatory action. Further, if we fail to obtain or renew any applicable approvals and permits in a timely manner, our ability to undertake our businesses may be adversely impacted, which could adversely affect our results of operations and profitability. 16. We are dependent upon a few independent construction contractors and third party entities whom we do not control for the development and sale of our projects, and the inability or unwillingness or such third parties to provide their services to us on a timely and cost-efficient basis may adversely affect our results of operations. We enter into agreements with independent construction contractors and third party entities to design, construct and sell our projects in accordance with our specifications and quality standards and under the time frames provided by us. We require the services of other third parties, including architects, engineers, and other suppliers of labour and materials. If a contractor fails to perform its obligations satisfactorily or within the prescribed time periods with regard to a project, we may be unable to develop the project within the intended timeframe, at the intended cost, or at all. If this occurs, we may be required to incur additional cost or time to develop the property, which could result in reduced profits or in some cases, significant penalties and losses. We cannot assure you that the services rendered by any of our independent construction contractors will always be satisfactory or match our requirements for quality. Also, the timing and quality of construction of the projects we develop depends on the availability and skill of these third parties, as well as contingencies affecting them, including labour and raw material shortages and industrial action such as strikes and lockouts. We may only have limited control over the timing or quality of services and sophisticated machinery or supplies provided by such third parties and are highly dependent on the services of such third parties. We may not be able to identify appropriately experienced third parties and cannot assure you that skilled third parties will continue to be available at reasonable rates and in the areas in which we undertake our projects, or at all. As a result, we may be required to make additional investments or provide additional services to ensure the adequate performance and delivery of contracted services. Any consequent delay in project execution could adversely affect our profitability and reputation. 17. Work stoppages and other labour problems could adversely affect our business. We operate in a labour-intensive industry and we or our contractors may hire casual labour in relation to our projects. If we or our contractors are unable to negotiate with the workmen or the sub-contractors, it could result in work stoppages or increased operating costs as a result of higher than anticipated wages or benefits. In addition, it may be difficult to procure the required labour for existing or future projects. These factors could adversely affect our business, financial condition, results of operations and cash flows. 18. We may face stiff competition for procuring raw materials. Fluctuations and volatility in the prices of key raw materials may adversely affect the performance of the Company. 14

15 Some of the key raw materials for real estate development industry are cement, steel, bricks, sand, wood, alumunium doors and windows, sanitary wares, etc. and are subject to volatility of price on account of various economic factors which are beyond our control. If, for any reason, our primary suppliers of raw materials should curtail or discontinue their delivery of such materials to us in the quantities we need and at prices that are competitive, our ability to meet our material requirements for our projects could be impaired, our construction schedules could be disrupted, and we may not be able to complete our projects as per schedule. We have been in the real estate housing space for approximately half decade and have established relationship with the suppliers of various raw materials. The purchase department of our Company on a day-to-day basis monitors and ensures timely supply of materials in desired quantity, proper usage of the materials and progress of the work as per the project schedule and accordingly procure various raw materials. However, increase in raw material prices and short supplies of raw materials on account of various factors in the economy are beyond the control of our purchase department and management which may lead to either increase in the cost of raw materials or delay in the project schedule. 19. Increase in prices of, shortages of, or delays or disruptions in the supply of building materials could harm our results of operations and financial condition. We procure building materials for our properties, such as steel, cement, flooring products, hardware, bitumen, sand and aggregates, doors and windows, bathroom fixtures and other interior fittings from third party suppliers. The prices and supply of such building materials depend on factors not under our control, including general economic conditions, competition, production levels, and import duties. Our ability to develop and construct properties profitably is dependent upon our ability to source adequate building supplies for use by our construction contractors. During periods of shortages in building materials, especially cement and steel, we may not be able to complete properties according to our construction schedules, at our estimated property development cost, or at all, which could harm our results of operations and financial condition. In addition, during periods where the prices of building materials significantly increase, we may not be able to pass these price increases on to our customers, which could reduce or eliminate the profits we intend to attain with regard to our properties. Prices of certain building materials, such as cement and steel, in particular are susceptible to rapid increases. Additionally, our supply chain for these building supplies may be periodically interrupted by circumstances beyond our control, including work stoppages and labor disputes affecting our suppliers, their distributors, or the transporters of our supplies, including poor quality roads and other transportation related infrastructure problems, inclement weather, and road accidents. 20. Delays in the completion of our development of projects or complying with our construction contract schedules may impact our business. Property developments typically require substantial capital outlay during the construction period which may take an extended period of time to complete, and before a potential return can be generated. The time and costs required to complete a property development may be subject to substantial increases due to several factors, including shortages of, or price increases with respect to, construction materials (which may prove defective), equipment, technical skills and labor, purchase of land, construction delays, unanticipated cost increases, changes in the regulatory environment, adverse weather conditions, third party performance risks, environmental risks, changes in market conditions, delays in obtaining the requisite approvals and permits from the relevant authorities, court orders or notices or orders from regulatory authorities and other unforeseeable problems and circumstances. Any of these factors may lead to delays in, or prevent the completion of, a project and result in costs substantially exceeding those originally budgeted for. The cost overruns may not be adequately compensated by contractual indemnities, which may affect our business, financial condition and results of operations. In addition, any delays in completing our projects as scheduled could result in penalty payments to customers, dissatisfaction among our customers, resulting in negative publicity and lack of confidence among investors and potential residents. Additionally, we may not achieve the economic benefits expected of our development and failure to obtain expected economic benefits could adversely affect our 15

16 business, financial condition and results of operations. In the event there are any delays in the completion of our development projects, our business, financial condition and results of operations would be adversely affected. 21. We may incur losses on account of non-performance by external agencies. Our projects require the services of contractors, sub-contractors and various other parties including architects, engineers, and suppliers of labour and materials for our projects. External agencies as per the terms of their contract are required to complete the entrusted work within the given timeframe at agreed cost maintaining the quality of the work. However, at times due to certain unavoidable circumstances beyond the control of these external agencies, the work is not completed on time, which may lead to us incurring losses for a particular contract and may lead to overall reduction in the profitability of a particular project. We carry out all major activities on our own and issue certain work orders for petty activities only which do not have a major effect on the completion of our projects. 22. Our inability to identify and acquire land in locations with growth potential affects our business. Our ability to identify suitable parcels of land for development and subsequent sale forms an integral part of our business. Our strategy includes acquiring and developing land, therefore our ability to identify land in the right location is critical for a property development. Our decision to acquire land involves taking into account the size and location of the land, preferences of potential customers, economic potential of the region, the proximity of the land to civic amenities and urban infrastructure, the willingness of landowners to sell the land to us on terms which are favourable to us, the ability to enter into an agreement to buy land from multiple owners, the availability and cost of financing such acquisitions, encumbrances on targeted land, government directives on land use, and obtaining permits and approvals for land acquisition and development. Any failure to identify and acquire suitable parcels of land for development in a timely manner may reduce the number of properties that can be undertaken by us and thereby affect our business prospects, financial condition and results of operations. 23. We are dependent on the performance of, and the conditions affecting, the real estate market in Ahmedabad and Bengaluru. Historically, we focused our real estate development activities in and around the city of Ahmedabad, western part of India. To date, most of our completed properties and the majority of our properties under development are located in and around Ahmedabad and Bengaluru. As a result, our business, financial condition and results of operations have been and will continue to be heavily dependent on the performance of, and prevailing conditions affecting, the real estate market in Ahmedabad and Bengaluru. The real estate market in Ahmedabad and Bengaluru may perform differently from, and be subject to market and regulatory developments different from, real estate markets in other parts of India. We cannot assure you that the demand for our properties in Ahmedabad and Bengaluru will grow, or will not decrease, in the future. Real estate properties take a substantial amount of time to develop and we could incur losses if we purchase land during periods, when land prices are high, and we have to sell or lease our developed properties when land prices are relatively lower. The real estate market in Ahmedabad and Bengaluru may be affected by various factors beyond our control, including prevailing local economic conditions, changes in supply and demand for properties comparable to those we develop, and changes in applicable governmental schemes. These and other factors may negatively contribute to changes in real estate prices, the demand for and valuation of our current and future properties under development, may restrict the availability of land in Ahmedabad and Bengaluru, and may adversely affect our business, financial condition and results of operations. If property prices fall in Ahmedabad and Bengaluru, our business, financial condition and results of operations could be materially and adversely affected. 24. We face uncertainty of title to our lands. The difficulty of obtaining title guarantees in India means that title records provide only for presumptive rather than guaranteed title. The original title to lands may often be fragmented and the land may have multiple 16

17 owners. Some of these lands may have irregularities of title, such as non-execution or non registration of conveyance deeds and inadequate stamping and may be subject to encumbrances of which we may not be aware. Additionally, some of our properties are being executed through joint ventures in collaboration with third parties. In some of these properties, the title to the land may be owned by one or more of such third parties, and as such, in such instances, we cannot assure you that the persons with whom we enter into joint ventures or collaboration agreements have clear title to such lands. While we conduct due diligence and assessment exercises prior to acquiring land or entering into joint development agreements with land owners and undertaking a property development, we may not be able to assess or identify all risks and liabilities associated with the land, such as faulty or disputed title, unregistered encumbrances or adverse possession rights. As a result, most of these lands do not have guaranteed title and title has not been independently verified. The uncertainty of title to land makes the acquisition and development process more complicated, may impede the transfer of title, expose us to legal disputes and adversely affect our land valuations. Legal disputes in respect of land title can take several years and considerable expense to resolve if they become the subject of court proceedings and their outcome can be uncertain. If we or the owners of the land, with whom we enter into development agreements are unable to resolve such disputes with these claimants, we may lose our interest in the land. The failure to obtain good title to a particular plot of land may materially prejudice the success of a development for which that plot is a critical part and may require us to write off expenditures in respect of the development. In addition, lands for which we or entities which have granted us development rights, have entered into agreements to acquire but have not yet acquired form a significant part of our growth strategy and the failure to obtain good title to these lands could adversely impact our property valuations and prospects. 25. We conduct due diligence and assessment exercises prior to acquisition of land for undertaking development, but we may not be able to assess or identify certain risks and liabilities. We constantly acquire lands for our various development activities and these may be acquired either directly or through subsidiaries or entities identified by us for this purpose. We have an internal assessment process on land selection and acquisition which includes a due diligence exercise to assess the title of the land and preparation of feasibility reports to assess its development and marketability. Our internal assessment process is based on information that is available or accessible by us. There can be no assurance that such information is accurate, complete or current. Any decision based on inaccurate, incomplete or dated information may result in risks and liabilities associated with acquiring and owning such parcels of land, being passed onto us. This may adversely affect our business, financial condition and results of operations. 26. We compete in our businesses with a number of real estate development companies. We operate our businesses in an intensely competitive and highly fragmented industry with low entry barriers. We face significant competition in our business from a large number of Indian real estate development who also operate in the same regional markets as us. The extent of the competition we face in a potential property depends on a number of factors, such as the sector, the size and type of property development, contract value and potential margins, the complexity and location of the property development, the reputations of the customer and us, and the risks relating to revenue generation. Given the fragmented nature of the real estate development industry, we often do not have adequate information about the property developments our competitors are developing and accordingly, we run the risk of underestimating supply in the market. Our business plan is to expand across central and northern part of India, however, our operations have historically focused in the city of Ahmedabad and Bengaluru. As we seek to diversify our regional focus, we face the risk that some of our competitors, who are also engaged in real estate development, may be better known in other markets, enjoy better relationships with land-owners and international or domestic joint venture partners, may gain early access to information regarding attractive parcels of land and be better placed to acquire such land. 27. Our property developments are subject to various environmental regulations and other applicable legislation and instances of violations or non-compliance could adversely affect our properties. 17

18 We are required to conduct an environmental assessment of our properties before receiving regulatory approval for these properties. These environmental assessments may reveal material environmental problems, which could result in our not obtaining the required approvals. Further, we are also required to comply with various other regulations during the course of development of our properties. Additionally, if environmental problems are discovered during or after the development of a property, we may incur substantial liabilities relating to clean up and other remedial measures and the value of the relevant properties could be adversely affected. 28. There could be unscheduled delays and cost overruns in relation to our Ongoing and Upcoming Projects. There could be unscheduled delays and cost overruns in relation to our Ongoing and Upcoming Projects. We cannot assure you that we will be able to complete our properties, including those that may be undertaken in future, within the stipulated budget and time schedule. As we would incur the cost of delays or overruns, this could adversely affect our results of operations and financial condition. 29. If we are not able to manage our growth, our business and financial results could be adversely affected. We are embarking on a growth strategy which involves a substantial expansion and diversification of our current business. In furtherance of this strategy, we have recently acquired or entered into agreements to acquire large areas of land. Such a growth strategy will place significant demands on our management as well as our financial, accounting and operating systems. Further, as we scale-up and diversify our operations, we may not be able to execute our property developments efficiently, which could result in delays, increased costs and affect the quality of our developments, and may adversely affect our reputation. Such expansion also increases the challenges involved in preserving a uniform culture, set of values and work environment across our properties, developing and improving our internal administrative infrastructure, particularly our financial, operational, communications, internal control and other internal systems; recruiting, training and retaining sufficient skilled management, technical and marketing personnel; maintaining high levels of client satisfaction; and adhering to health, safety, and environmental standards. Our failure to manage our growth could have an adverse effect on our business, financial condition and results of operations. 30. Our operations and the work force on the property sites are exposed to various hazards. We conduct various site studies prior to the acquisition of any parcel of land and its construction and development. However, there are certain unanticipated or unforeseen risks that may arise due to adverse weather and geological conditions such as storms, outbreaks of disease, hurricanes, lightning, floods, landslides, rockslides and earthquakes and other reasons. Additionally, our operations are subject to hazards inherent in providing or hiring sub-contractors for architectural and construction services, such as risk of equipment failure, impact from falling objects, collision, work accidents, fire, or explosion, including hazards that may cause injury and loss of life, severe damage to and destruction of property and equipment, and environmental damage. If any one of these hazards or other hazards were to impact our business, our results of operations may be adversely affected. 31. Our business is heavily dependent on our ability and our customers ability to obtain real estate financing in India. The real estate market is significantly affected by changes in economic conditions, government policies, interest rates, income levels, demographic trends and employment, among other factors. These factors can negatively affect the demand for and valuation of our Ongoing Projects and Upcoming Projects. For example, lower interest rates may assist us in procuring borrowings at attractive terms for the purchase of land or development of our projects. Rising interest rates could discourage our customers from borrowing to finance real estate purchases as well as companies, such as us, from incurring indebtedness to purchase or develop land. As such, our business could be adversely affected if the demand for, or supply of, real estate financing at attractive rates and other terms were to be adversely affected. Additionally, stricter provisioning and risk weightage norms imposed by the RBI in relation to real estate loans by banks and finance companies could reduce the attractiveness of property or developer financing and the RBI or the GoI may take further measures designed to reduce or having the effect of reducing credit to the real estate 18

19 sector. In the event of any change in fiscal, monetary or other policies of the GoI and a consequent withdrawal of income tax benefits, our business and results of operations may be adversely affected. A large number of our customers, especially buyers of residential properties, finance their purchases by raising loans from banks and other lenders. The availing of home loans for residential properties has become particularly attractive due to income tax benefits and high disposable incomes. The availability of home loans may however, be affected if such income tax benefits are withdrawn or the interest rates on such loans continue to increase or there is a decrease in the availability of home loans. This may affect the ability of our customers to finance the purchase of their residential properties and may consequently affect the demand for our projects. 32. We face significant risks with respect to the length of time needed to complete each project. It may take several years following the acquisition of land before income or positive cash flows can be generated through the sale of a completed real estate development project. Generally, the time required to complete a real estate construction and development project is significant. Changes to the business environment during such time may affect the costs and revenues associated with the project and can ultimately affect the profitability of the project. For example, during this time there can be changes to the national, state and local business climate and regulatory environment, local real estate market conditions, perceptions of prospective customers with respect to the convenience and attractiveness of the project, and changes with respect to competition from other property developments. If such changes occur during the time it takes to complete a certain project, our returns on such project may be lower than expected and our financial performance may be adversely affected. 33. The success of our business is dependent on our ability to anticipate and respond to consumer requirements, both in terms of the type and location of our projects. The growing disposable income of India s middle and upper income classes, together with changes in lifestyles, has resulted in a substantial change in the nature of these consumers demands. Increasingly, consumers are seeking better housing and better amenities in new residential developments. Our focus on the development of high quality luxury and comfort residential accommodation requires us to satisfy these demanding consumer expectations. The range of amenities now demanded by consumers include those that have historically been uncommon in India s residential real estate market such as 24-hour electricity, gardens, community space, security systems, playgrounds, swimming pools, fitness centres, tennis courts, squash courts and golf courses. As a result, our ability to anticipate and understand the demands of the prospective customers is critical to the success of our real estate development business. If we fail to anticipate and respond to consumer requirements, we could lose current or potential clients to competitors, which in turn could adversely affect our business and prospects. The growth of the Indian economy has also led to changes in the way businesses operate in India resulting in a substantial change in the nature of these consumers demands. The growth and success of our commercial business depends on the provision of high quality office space to attract and retain clients who are willing and able to pay rent or purchase price at suitable levels, and on our ability to anticipate the future needs and expansion plans of these clients. Therefore our ability to anticipate and understand the demands of the prospective customers is critical to the success of our property development business. We believe that one of our key strengths is our ability to acquire land in new areas and the ability to develop projects in these areas in anticipation of consumer demand and deliver residential projects at very competitive margins. We may face the risk that our competitors may be better known in the markets that are new to us and gain early access to information regarding attractive parcels of land and be better placed to acquire such land. 34. If we are not able to implement our growth strategies or manage our growth, our business and financial results could be adversely affected. We are embarking on a growth strategy which involves a substantial expansion of our current business. Such a growth strategy will place significant demands on our management as well as our financial, accounting and operating systems. Even if we have successfully executed our business strategies in the past, there can be no 19

20 assurance that we will be able to execute our strategies on time and within the estimated budget, or that we will meet the expectations of targeted customers. Further, as we expand our operations, we may be unable to manage our business efficiently, which could result in delays, increased costs and affect the quality of our projects, and may adversely affect our reputation. Such expansion also increases the challenges involved in preserving a uniform culture, set of values and work environment across our business operations, developing and improving our internal administrative infrastructure, particularly our financial, operational, communications, internal control and other internal systems, recruiting, training and retaining management, technical and marketing personnel, maintaining high levels of client satisfaction, and adhering to health, safety, and environmental standards. Our failure to manage our growth could have an adverse effect on our business, financial condition and results of operations. 35. We may experience difficulties expanding our business into new geographic areas. As a part of our strategy we intend to expand our geographic reach to other locations in India. We initially concentrated our real estate business in the Ahmedabad region and later expanded our operations to include other cities such as Bengaluru. The level of competition, regulatory practices, business practices and customs, customer tastes, behavior and preferences in cities where we plan to expand our operations may differ from those in the Ahmedabad and Bengaluru region and our experience in such cities may not be applicable to new cities. In addition, as we enter new markets, we are likely to compete with local developers who have an established local presence, are more familiar with local regulations, business practices and customs, and have stronger relationships with local contractors and relevant government authorities, all of which may collectively or individually give them a competitive advantage over us. While expanding into various other regions, our business will be exposed to various additional challenges, including seeking governmental approvals from government bodies with which we have no previous working relationship, identifying and collaborating with local business partners, contractors and suppliers with whom we may have no previous working relationship, identifying and obtaining development rights over suitable properties, successfully gauging market conditions in local real estate markets with which we have no previous familiarity, attracting potential customers in a market in which we do not have significant experience, local taxation in additional geographic areas of India and adapting our marketing materials and operations to different regions of India in which other languages are spoken. We can provide no assurance that we will be successful in expanding our business to include other markets in India. Any failure by us to successfully carry out our plan to geographically diversify our business could have a material adverse effect on our revenues, earnings and financial condition and could constrain our long term growth and prospects. 36. The launch of new projects that prove to be unsuccessful could impact our growth plans and may adversely impact earnings. As part of our strategy, we introduce new project developments in the Indian market. Each of the elements of new project initiatives carries significant risks, as well as the possibility of unexpected consequences, including (1) acceptance by and sales of the new project initiatives to our customers may not be as high as we anticipate (2) our marketing strategies for the new projects may be less effective than planned and may fail to effectively reach the targeted consumer base or engender the desired consumption; (3) we may incur costs exceeding our expectations as a result of the continued development and launch of the new projects; (4) we may experience a decrease in sales of certain of our existing projects as a result of the introduction of nearby new projects; and (5) any delays or other difficulties impacting our ability, or the ability of our third party contractors and developers, to develop and construct projects in a timely manner in connection with launching the new project initiatives. Each of the risks referred to above could delay or impede our ability to achieve our growth objectives or we may not be successful in achieving our growth objectives at all through these means, which could have an adverse effect on our business, results of operations and financial condition. 20

21 37. Land is subject to compulsory acquisition by the government and compensation in lieu of such acquisition may be inadequate. The right to own property in India is subject to restrictions that may be imposed by the Government. In particular, the Government under the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and (the Land Acquisition Act ) has the right to compulsorily acquire any land if such acquisition is for a public purpose, after providing compensation to the owner. However, the compensation paid pursuant to such acquisition may not be adequate to compensate the owner for the loss of such property. The likelihood of such acquisitions may increase as central and state governments seek to acquire land for the development of infrastructure projects such as roads, railways, airports and townships. Additionally, we may face difficulties in interpreting and complying with the provisions of the Land Acquisition Act, due to limited jurisprudence on them in the event our interpretation differs from or contradicts any judicial pronouncements or clarifications issued by the government. In the future, we may face regulatory actions or we may be required to undertake remedial steps. Any such action in respect of any of the projects in which we are investing or may invest in the future may adversely affect our business, financial condition or results of operations. 38. Our business and growth plan could be adversely affected by the incidence and rate of taxes and stamp duties. As a property owning and development company, we are subject to the property tax regime in each state where our projects are located. These taxes could increase in the future, and new types of property taxes may be established which would increase our overall development and other costs. We also buy and sell properties throughout India; property conveyances are generally subject to stamp duty. If these duties increase, the cost of acquiring properties will rise, and sale values could also be affected. Additionally, if stamp duties were to be levied on instruments evidencing transactions which we believe are currently not subject to such duties, such as the grant or transfer of development rights, our acquisition costs and sale values would be affected, resulting in a reduction of our profitability. Any such changes in the incidence or rates of property taxes or stamp duties could have an adverse affect on our financial condition and results of operations. Also, the taxation system within India still remains complex. Each state in India has different local taxes and levies including sales tax / value added tax and octroi. Changes in these local taxes and levies may impact our profits and profitability. Any negative changes in the regulatory conditions in India or our other geographic markets could adversely affect our business operations or financial conditions. For further details, please refer to the chapter titled Statement of Tax Benefits beginning on page 62 of this Information Memorandum. 39. We depend on our information technology systems in managing our construction and development process, logistics and other integral parts of our business. Our information technology systems are important to our business. We utilise information technology systems in connection with overall project management, human resources and accounting. Any failure in our information technology systems could result in business interruption, adversely affecting our reputation and weakening of our competitive position and could have an adverse effect on our financial condition and results of operations. 40. Our established brand name may be adversely affected by events beyond our control. We believe the Arvind brand is recognisable amongst the populace in India due to its long presence in the Indian market and the diversified businesses in which the Lalbhai group operates. However, there can be no assurance that this established brand name will not be adversely affected in the future by events such as actions that are beyond our control, including customer complaints, developments in other businesses that use this brand or adverse publicity from any other source. Any damage to this brand name, if not immediately and sufficiently remedied, could have an adverse effect on our business, financial condition and results of operations. 21

22 41. The cyclical nature of the Indian real estate market could cause us to experience fluctuations in property values over time. Historically, the Indian real estate market has been cyclical, a phenomenon that can affect the optimal timing for both the acquisition of sites and the sale of our projects. We cannot assure you that real estate market cyclicality will not continue to affect the Indian real estate market in the future. As a result, we may experience fluctuations in property values over time which in turn may adversely affect our business, financial condition and results of operations. 42. The Company is subject to interest rate risk. To the extent that our Company incurs floating rate indebtedness for its projects in the real estate sector, changes in interest rates may increase its cost of borrowing, impacting its profitability and having an adverse effect on its ability to pay dividends to its shareholders. Interest rates are highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political conditions, and other factors beyond the Company s control. Interest rate increases could result in our Company s interest expense exceeding the income from its property portfolio, which may result in operating losses for the Company. EXTERNAL RISK FACTORS 43. A slowdown in economic growth in India could cause our business to suffer. Our performance and growth are dependent on the health of the Indian economy. The economy could be adversely affected by various factors such as political or regulatory action, including adverse changes in liberalization policies, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices and various other factors. Any slowdown in the Indian economy may adversely impact our business and financial performance and the price of our Shares. The Indian securities markets are smaller than securities markets in more developed economies. Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities. These exchanges have also experienced problems that have affected the market price and liquidity of the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities from trading, limited price movements and restricted margin requirements. Further, disputes have occurred on occasion between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment. If similar problems occur in the future, the market price and liquidity of the Shares could be adversely affected. 44. Financial instability in Indian financial markets could adversely affect our results of operations and financial condition. The Indian financial market and the Indian economy are influenced by economic and market conditions in other countries, particularly in Asian emerging market countries. Financial turmoil in Asia, the United States of America, Europe and elsewhere in the world in recent years has affected the Indian economy. Although economic conditions are different in each country, investors reactions to developments in one country can have adverse effects on the securities of companies in other countries, including India. A loss in investor confidence in the financial systems of other markets may increase volatility in Indian financial markets and, indirectly, in the Indian economy in general. 45. Hostilities, terrorist attacks, civil unrest and other acts of violence could adversely affect the financial markets and our business. Terrorist attacks and other acts of violence or war may adversely affect the Indian markets on which our Equity Shares will trade. These acts may result in a loss of business confidence, make travel and other services more difficult and have other consequences that could have an adverse effect on our business. In addition, any deterioration in international relations, especially between India and its neighbouring countries, may result in 22

23 investor concern regarding regional stability which could adversely affect the price of our Equity Shares. In addition, India has witnessed local civil disturbances in recent years and it is possible that future civil unrest as well as other adverse social, economic or political events in India could have an adverse impact on our business. Such incidents could also create a greater perception that investment in Indian companies involves a higher degree of risk and could have an adverse impact on our business and the market price of our Equity Shares. 46. Political instability or a change in economic liberalization and deregulation policies could seriously harm business and economic conditions in India generally and our business in particular. The Government of India has traditionally exercised and continues to exercise influence over many aspects of the economy. Our business and the market price and liquidity of our Equity Shares may be affected by interest rates, changes in Government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India. The rate of economic liberalization could change, and specific laws and policies affecting the real estate sector, foreign investment and other matters affecting investment in our securities could change as well. Any significant change in such liberalization and deregulation policies could adversely affect business and economic conditions in India, generally, and our business, prospects, financial condition and results of operations, in particular. 47. Restrictions on foreign investment in the real estate sector may hamper our ability to raise additional capital. The Consolidated FDI Policy (the "Policy") imposes certain conditions on investment in real estate sector in India. It permits foreign direct investment of up to 100% subject to the project fulfilling certain specified conditions. The Policy, however, is subject to differing interpretations. For example, foreign direct investment is subject to the condition that for joint ventures with Indian partners the "minimum capitalization" should be US$ 5 million. However, there is some ambiguity on what is meant by "minimum capitalization". In addition, although the Policy stipulates that funds have to be brought in within six months of "commencement of business of the Company", the term "commencement of business of the Company" has not been defined or explained and may also be subject to differing interpretations. There can be no assurance as to the position the Government of India will take in interpreting the provisions of the Policy. Further, while the Government of India has permitted FDI of up to 100% without prior regulatory approval in townships, housing, built-up infrastructure and construction and development projects, the same is subject to such investment with certain restrictions. Our Company's inability to raise additional capital as a result of these and other restrictions may adversely affect the business and prospects of our Company. 48. Any downgrading of India's debt rating by an international rating agency could have a negative impact on our business. Any adverse revision to India's credit ratings for domestic or international debt by international rating agencies may adversely impact our ability to raise additional financing and the interest rates and other commercial terms at which such funding is available. This could have an adverse effect on our business and future financial performance, our ability to obtain financing for capital expenditures and the trading price of our Equity Shares. 49. Any future issuance of Equity Shares may dilute the shareholding of the shareholders and sales of our Equity Shares by major shareholders may adversely affect the trading price of the Equity Shares. Any future equity issuances by us, may lead to the dilution of shareholding of the shareholders in our Company. Any future equity issuances by us or sales of our Equity Shares by major shareholders may adversely affect the trading price of the Equity Shares. In addition, any perception by investors that such issuances or sales might occur could also affect the trading price of our Equity Shares. 50. The price of our Equity Shares may be volatile. The trading price of our Equity Shares may fluctuate after the listing due to a variety of factors, including our results of operations, competitive conditions, general economic, political and social factors, the performance of the Indian and global economy and significant developments in India s fiscal regime, volatility in the Indian and 23

24 global securities market, performance of our competitors, the Indian capital markets, changes in the estimates of our performance or recommendations by financial analysts and announcements by us or others regarding contracts, acquisitions, strategic partnerships, joint ventures, or capital commitments. In addition, if the stock markets experience a loss of investor confidence, the trading price of our Equity Shares could decline for reasons unrelated to our business, financial condition or operating results. The trading price of our Equity Shares might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. Each of these factors, among others, could materially affect the price of our Equity Shares. PROMINENT NOTES 1. Our Company s Net Worth as on March 31, 2015 was `12, Lacs. For further details, please refer to the chapter titled Financial Information beginning on page 141 of this Information Memorandum. 2. As of March 31, 2015, the Net Asset Value of each Equity Share was `12.57 of `1 each. For further details, please refer to the chapter titled Financial Information beginning on page 141 of this Information Memorandum. 3. The average cost of acquisition per Equity Share of the Promoters is not applicable as shares were allotted pursuant to the Scheme. 4. Except as stated under the chapter titled "Capital Structure" beginning on page 37 of this Information Memorandum, our Company has not issued any Equity Shares for consideration other than cash. 5. For details about our transactions with our group companies, subsidiaries, joint venture during the last year, please refer to paragraph titled Related Party Transactions under chapter titled Financial Information beginning on page 141 of this Information Memorandum. 6. There has been no financing arrangement whereby our Promoter Group, the directors of our Promoters, our Directors, our Promoters and/or their relatives have financed the purchase by any other person of securities of our Company other than in the normal course of business of the financing entity during the period from six months immediately preceding the date of this Information Memorandum. 7. There has been no change in the name and object clause of the Memorandum of Association of our Company in the period of 3 years prior to the date of this Information Memorandum. 8. All grievances can be addressed to the Registrar and Transfer Agent. 24

25 SECTION III INTRODUCTION SUMMARY OF INDUSTRY India, the world's largest democracy having a population of an estimated 1,236 million, as of July 2014, had an estimated GDP on a purchasing power parity basis of approximately U.S.$4.99 trillion in This makes it the fourth largest economy by GDP in the world after the U.S., European Union and China. (Source CIA World Factbook) The Twelfth Five Year Plan lays special emphasis on development of the infrastructure sector, as the availability of quality infrastructure is important not only for sustaining high growth but also ensuring that the growth is inclusive. The total investment in the infrastructure sector during the Twelfth Five Year Plan, estimated at 56.3 lakh crore (approx. US$1trillion), will be nearly double that made during the Eleventh Five Year Plan. (Source Economic Survey - The housing shortage in rural India is estimated at 47.4 Million units, in Present levels of urban infrastructure are inadequate to meet the demands of the existing urban population. There is need for re-generation of urban areas in existing cities and the creation of new, inclusive smart cities to meet the demands of increasing population and migration from rural to urban areas. Future cities of India will require smart real estate and urban infrastructure. (Source: Make in India website, Government of India) The Government of India is in the process of launching a new urban development mission. This will help develop 500 cities, which include cities with a population of more than 100,000 and some cities of religious and tourist importance. These cities will be supported and encouraged to harness private capital and expertise through PPPs, to holster their infrastructure and services in the next 10 years. 100% FDI through the automatic route is permitted in townships, housing, built-up infrastructure and construction-development projects (including, but not restricted to housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure). (Source: Make in India website, Government of India) 25

26 SUMMARY OF OUR BUSINESS Some of the information contained in the following discussion, including information with respect to our plans and strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section Risk Factors for a discussion of certain factors that may affect our business, financial condition or results of operations. Our financial year ends on March 31 of each year, so all references to a particular FY are to the twelve months ended March 31 of that year. OVERVIEW We are a real estate development company primarily focused on the development of residential projects. Currently, our projects are located in Ahmedabad and Bengaluru which are at different stages of development, focusing on residential projects that include integrated townships. Our residential projects comprise of villas, apartments and plots targeted towards middle income and high income customers. Our existing integrated townships comprise of executive golf course with villas, apartments, retail, commercial and recreational areas. We also undertake commercial and industrial projects on a selective basis. Our commercial and industrial projects include shops, offices and industrial plots and industrial sheds. We follow a knowledge-based approach from internal and external sources for execution of our projects. We undertake our projects through our in-house team of professionals and by partnering with domestic and international companies for various operations like architecture, golf designing and development, project execution, detailed engineering and marketing activities. We have a dedicated team of customer relationship management (CRM), marketing and sales who regularly interact with our customers and channel partners to enable an educated, userfriendly purchasing experience for the customers. We strategically use the joint development model for developing projects, which entails entering into a development agreement with the owner(s) of the land parcel(s) sought to be developed. The development agreement generally states that the land owner(s) is entitled, as compensation, to a share in the developed property or a share of the revenues or profits generated from the sale of the developed property, or a combination thereof. Additionally, we also develop some of our projects through joint ventures with third parties. Selectively, we also acquire land for development of our projects. As on date, our project portfolio comprises of twelve (12) projects out of which four (4) are completed comprising of approximately 2 million sq.ft. ( Completed Projects ), six (6) are ongoing comprising of approximately million sq.ft. ( Ongoing Projects ) and two (2) are upcoming comprising of approximately 1.37 million sq.ft. ( Upcoming Projects ). The location and the estimated Saleable Area of our Completed, Ongoing and Upcoming Projects as on date is summarised in the table below: Project Product Location Estimated Saleable Area (in Mn Sq. ft) Land Construction Completed Projects Alcove Plots Ahmedabad Parishkar Apartments Ahmedabad Megatrade Commercial and retail spaces Ahmedabad Tradesquare Commercial and retail spaces Ahmedabad Ongoing Projects Uplands Integrated township with executive golf course, villas, apartments, Ahmedabad retail, commercial and recreational areas Beyond Five Residential township with villas, plots and executive golf course Ahmedabad Expansia Villas and apartments Bengaluru Sporcia Apartments Bengaluru Citadel Apartments Ahmedabad Megaestate Industrial sheds Ahmedabad Upcoming Projects 26

27 Project Product Location Estimated Saleable Area (in Mn Sq. ft) Land Construction Megapark Industrial Sheds and Industrial plots Ahmedabad E-city Apartments Bengaluru Our Company has won the Emerging Developer of the Year - Residential award and one of our projects, Uplands won Luxury Projects of the Year award by Realty Plus Excellence Awards (Gujarat) For the year ended March 31, 2013, 2014 and 2015, the Company s total revenue amounted to `2, Lacs, `4, Lacs and `6, Lacs respectively. For the year ended March 31, 2013, 2014 and 2015, the Company s total profit after tax amounted to ` Lacs, ` Lacs and `1, Lacs respectively. COMPETITIVE STRENGTHS Established brand name We are a part of the Lalbhai group of companies. We believe the Arvind brand is instantly recognisable amongst the populace in India due to its long presence in the Indian market, the diversified businesses in which the Lalbhai group operates and the trust we believe it has developed over eight decades. Our Company has won the Emerging Developer of the Year Residential award and one of our projects, Uplands won Luxury Projects of the Year award by Realty Plus Excellence Awards (Gujarat) We believe our established and recognisable brand is a differentiating factor for our customers, which helps establish customer confidence, influences buying decisions and has enabled us to achieve premium prices for our projects. Strong presence in Ahmedabad and Bengaluru We believe that we have good knowledge of the market and regulatory environment in areas in and around Ahmedabad that assists us in identifying opportunities for existing and upcoming locations in and around Ahmedabad. Most of our Completed, Ongoing and Upcoming Projects are located in Ahmedabad, which we believe is an attractive real estate market in terms of returns on investment, product positioning and depth of demand for real estate developments across segments and price points. Ahmedabad s real estate market has witnessed a rapid development as compared to other cities of India mostly driven by the high rate of industrial growth. Certain areas near Ahmedabad are expected to be developed as smart cities. With relatively low costs compared with other large cities in India coupled with the proactive development approach of the government and local authorities, Ahmedabad is poised to grow at a faster pace, providing ample opportunities in the real estate sector in near future. Further, in Bengalure, our Company has witnessed a strong brand recall which is reflected in our sales. Besides, the Lalbhai group is already having a strong presence in Bengaluru for its textile, garment business. We believe that we have attained good knowledge of the market and regulatory environment in Bengaluru. Asset light model through joint development agreements Our experience in land assessment, negotiations with land owners and obtaining requisite approvals helps us in securing land parcels in potential high growth areas. In this regard, we have a team of skilled researchers who focus on identification of geographical areas which have the potential to deliver significant appreciation in value. Thereafter, our team carries out the requisite land related searches which helps us to identify available land parcels and then negotiate commercial terms with the land owners. We believe our experience in securing joint development agreements with land owners helps us create a healthy project pipeline. We believe that our ability to secure such land parcels helps us to keep our balance sheet out of leverage pressure and enhancing our profitability margins. Existing project pipeline providing near term cash flow visibility Our existing project pipeline provides a near term cash flow visibility. We currently have 6 Ongoing and 2 Upcoming Projects, which are expected to provide a total Saleable Area of approximately million Sq.ft. We 27

28 expect to complete and deliver most of these projects over the next one to five years. In addition, we follow a sale model for our residential projects. For these projects we typically receive approximately 10-20% of the purchase price as down payment at the time of booking a particular unit and the remainder through periodic payments linked to certain milestones while the project is being developed. We generally launch such projects and commence the sales process for a portion of the total number of units to be sold around the time of commencing construction. Qualified and experienced management team We believe that our qualified and experienced management and technical teams have contributed to the growth of our operations and the development of in-house processes and competencies. We undertake our projects through our in-house team of professionals and by partnering with domestic and international companies for various operations like architecture, golf designing and development, project execution, detailed engineering and marketing activities. We have a dedicated team of customer relationship management (CRM), marketing and sales who regularly interact with our customers and channel partners to enable an educated, user-friendly purchasing experience. Our technical teams brings with it extensive experience in designing, engineering, marketing and construction of projects. Our senior management team is in charge of operations, finance, sales and marketing, business development and strategic planning and has extensive experience in the industry. We believe the strength and quality of our management team have been instrumental in implementing our business strategies. We believe that the strength of our management team and their understanding of the real estate market will enable us to continue to take advantage of current and future market opportunities. OUR STRATEGY Asset light business model Our primary focus will remain on residential projects mainly for two reasons. Firstly, residential projects need comparatively lesser capital for construction as significant portion of construction funding is received through construction linked payments by the customers. Secondly, residential projects are less prone to ups and downs of business cycle which makes project lifecycles comparatively shorter. Further, we will continue focusing on judicious mix of capital structuring options which include joint development (JD), joint venture (JV) and outright land purchases. Our Company can leverage its brand in the market to secure valuable land parcels on JD / JV basis and now has a proven track record of successfully running large projects on similar structuring. Such JD / JV arrangements have drastically reduced initial cash investments into the projects and we intend to continue the same capital structuring approach in future. Focused Geographical expansion We intend to continue to focus on the development of our projects in Ahmedabad and Bengaluru. We believe that Ahmedabad and Bengaluru are an attractive real estate market in terms of returns on investment, product positioning and depth of demand for real estate developments across segments and price points. Both these markets have significant untapped depth which can further propel our near and medium term growth. With relatively low costs compared with other large cities in India coupled with the proactive development approach of the government and local authorities, Ahmedabad is poised to grow at a faster pace, providing ample opportunities in the real estate sector in near future. Bengaluru continues to witness a steady stream of new product launches that were complemented by healthy take-up from end-users as well as investors alike. The Bengaluru market has witnessed an increased investor Interest that is attributable to the strong demand from the city s IT workforce, resulting in an increased off-take of residential units. Although we are strategically expanding in Ahmedabad and Bengaluru, we are also exploring development opportunities in other growing cities such as Pune, Jaipur and Surat. We believe that these cities have the potential to grow at a rapid pace and we intend to develop properties in such cities to take advantage of such potential. We actively seek to identify land in fast growing cities and suburbs which attract increasing economic activities. We believe that the economic growth in these cities will result in increased demand for residential housing. With a focused approach, we intend to gradually expand our projects in other cities which have the potential for growth. 28

29 However, we are taking a cautious approach towards expanding in newer geographies to ensure that enough local knowledge and critical mass of business is achieved in each of the new geographies we expand in. Diverse range of price segments with judicious mix of long and medium term projects We intend to focus on the development of residential projects across a diverse range of price segments. Our primary focus will be on the mid, high and luxury segments of residential products. We believe that these three segments have enough depth to achieve our target growth. Further, we intend to have a judicious mix of long and medium term projects. Long term projects typically have lower FSI utilization and are comparatively more horizontal products. They create long term value because of size and location of the land. Such projects are undertaken in the well-connected upcoming satellite areas of the cities. Medium term projects are undertaken in areas which are already developed and such projects will have comparatively shorter lead times and lifecycles. Such mix of projects will give stability to the business. Lean and efficient organization We intend to increase the scale of our operations while ensuring that we carry on our operations in a cost effective manner. Selective outsourcing enables us to undertake more developments while providing us with cost efficiencies. We intend to continue to outsource our construction activities in order to enable us to devote more time and effort to other aspects of our development activities and to better utilise our manpower and value engineering. We believe selective outsourcing activities enable us to reduce our operation costs and capital expenditures. While we maintain a lean organization by having in-house expertise in core and critical functions, we partner with world class service providers including architects, designers, town planners, engineering services, marketing and branding etc. to ensure that the end product is always designed, planned and executed on the :Best in Class basis. Product innovation We believe that we have developed a reputation for consistently developing projects known for innovation, high quality, uniqueness, reliability and convenience for our customers. We intend to continue to focus on product innovation in order to maximize customer satisfaction. We also intend to continue to use technologically advanced tools and processes without compromising on reliability or quality of our constructions. We also intend to continue to enhance our architectural, design, construction and development capabilities to enable us to provide innovative, modern and quality products and services to our customers. We already have set some very innovative theme based product concepts like Disney inspired living, Elements of Smaaash in our recreational clubs, Sports centric developments, Japanese Zen based meditation centers etc. 29

30 SUMMARY OF FINANCIAL INFORMATION The following tables set forth the summary financial statements derived from our audited financial information for and as of Fiscals 2015, 2014, 2013, 2012 and These financial statements have been prepared in accordance with Indian GAAP and the Companies Act and restated in accordance with the Companies Act and the SEBI ICDR Regulations and are presented in the chapter titled Financial Information on page 141 of this Information Memorandum. The summary financial statements presented below should be read in conjunction with our audited Financial Statements, the notes and annexures thereto and the chapter titled Management s Discussion and Analysis of Financial Condition and Results of Operations on page 171 of this Information Memorandum. SUMMARY OF STATEMENT OF ASSETS AND LIABILITIES Amount in ` As at Particulars March 31, 2015 March 31, 2014 March 31, 2013 March 31, 2012 March 31, 2011 EQUITY AND LIABILITIES Shareholders Fund Share Capital 10,05,00, ,05,00, ,05,00, ,00, ,00, Reserves and Surplus 1,16,29,86, ,05,31,49, ,03,02, ,78,99, ,55, ,26,34,86, ,15,36,49, ,08,02, ,83,99, ,55, Non-Current liabilities Long term borrowings 22,73,29, ,00,00, Deferred tax liabilities(net) ,31, ,46, ,55, ,14, Other Long term Liabilities 7,87, ,87, ,82, Long term provisions 32,58, ,26, ,63, ,18, ,13,75, ,44, ,92, ,73, ,05,14, Current liabilities Short term borrowings 4,76,52, ,52, ,14,00, ,60,00, Trade payables 39,67,23, ,95,93, ,74,69, ,67, ,13, Other current liabilities 10,13,48, ,09,72, ,13,34,67, ,40,10, ,14, Short term provisions 1,21,70, ,17,24, ,11, , ,78,96, ,22,80,43, ,49,51,49, ,87,60, ,33,28, Total 2,05,27,57, ,38,42,38, ,65,80,44, ,87,33, ,51,98, ASSETS Non-Current assets Fixed assets Tangible assets 2,02,08, ,30,96, ,24,21, ,37, ,99, Intangible assets 1,53, ,82, ,30, ,92, ,26, Capital Work in Progress Intangible assets under progress 1,72, , ,05,33, ,34,56, ,39,51, ,29, ,26, Non-Current Investment 8,94, ,44, ,00, ,49, ,49, Deferred Tax Assets 1,19, Long term Loans and Advances 37,75,18, ,06,23, ,49,82,

31 As at Particulars March 31, 2015 March 31, 2014 March 31, 2013 March 31, 2012 March 31, 2011 Other Non-Current Assets 6,02,47, ,12,33, ,90,96, ,87,79, ,27,01, ,42,78, ,49, ,49, Current Assets Inventories 79,28,57, ,66,21, ,95,56, ,62,94, ,76,96, Trade receivables 1,63,12, ,47, ,69,30, ,33, ,47, Cash & cash equivalents 1,81,35, ,22,15, ,10,46, ,70, ,55, Short term Loans & advances 76,40,83, ,50,66,96, ,22,79, ,64,86, ,32,71, Other Current Assets 20,55, ,70, ,53, ,59,34,44, ,93,80,80, ,22,98,13, ,06,54, ,85,23, Total 2,05,27,57, ,38,42,38, ,65,80,44, ,87,33, ,51,98, Particulars March 31, 2015 SUMMARY OF PROFIT AND LOSS March 31, 2014 For the year ended on March 31, 2013 March 31, 2012 Amount in ` March 31, 2011 REVENUE Revenue from operations 61 26,78, ,60,42, ,97,28, ,00,10, ,19,44, Other Income 28,69, ,77, ,37, ,31, ,00,53, Total Revenue 61,55,47, ,65,20, ,15,66, ,13,42, ,19,97, EXPENSES Project Development Expenses 61,49,35, ,90,67, ,07,89, ,55,44, ,10,50, Change in inventories (37,05,88,696.00) 11,62,45, (42,06,94,849.00) (6,85,98,304.00) 24,32,35, Employee benefits expenses 9,91,89, ,18,11, ,80,46, ,10,85, , Finance cost 7,63,79, ,22,21, ,26,70, ,20,68, ,45,96, Depreciation and Amortization 33,19, ,68, ,36, ,12, ,60, Other expenses 3,87,84, ,84,55, ,46,35, ,22,46, ,11, ,20,20, ,05,68, ,78,83, ,40,58, ,04,13, Less: Work- inprogress transferred (57,63,923.00) (7,83,359.00) (84,12,491.00) Total Expenses 45,62,56, ,97,85, ,94,71, ,40,58, ,04,13, Profit before Tax 15,92,90, ,67,34, ,20,94, ,72,84, ,84, Tax Expenses Current Tax (Including Income tax for earlier year `2,469/- (P.Y. ` NIL) 4,70,00, ,40,02, ,00, ,85, MAT Credit Entitlement 29,00, (29,00,000.00) Deferred Tax (4,51,118.00) (1,14,993.00) (3,08,283.00) 2,40, ,14,

32 Particulars For the year ended on March 31, March 31, March 31, March 31, March 31, ,94,48, ,38,87, (3,08,283.00) 2,40, ,99, Profit for the year after tax 10,98,41, ,28,47, ,24,03, ,70,43, ,84, Earning per Equity Share: Basic and diluted Particulars March 31, 2015 SUMMARY OF CASH FLOW March 31, 2014 For the year ended on March 31, 2013 March 31, 2012 Amount in ` March 31, 2011 [A] Cashflow from operating activities Profit/(Loss) for the year before taxation and exceptional items 15,92,90, ,67,32, ,20,94, ,72,84, ,84, Adjustments for: (Profit)/Loss from Limited Liability Partnership (2,60,87,713.00) (4,83,31,975.00) (1,84,77,721.00) (4,54,91,274.00) 96, Depreciation and Amortization 33,19, ,68, ,36, ,12, ,60, Loss on sale of Fixed Assets Finance Cost 7,63,79, ,22,21, ,26,70, ,20,68, ,45,96, Interest Income (2,93,64,639.00) (3,89,69,191.00) (5,36,78,631.00) (1,81,82,148.00) (1,31,39,848.00) Operating profit before working capital changes 18,36,58, ,44,20, ,50,46, (26,08,962.00) 1,32,98, Adjustments for: Trade and other receivables 73,90,53, (18,261,164.00) (6,97,19,029.00) 43,13, (61,47,098.00) Inventories (37,62,36,216.00) 10,29,35, (42,32,62,363.00) (6,85,98,304.00) 24,32,35, Short term loan and advances (7,57,54,196.00) (3,54,74,114.00) Trade payables and Other Liabilities 4,66,95, (2,11,39,455.00) 36,73,84, ,30,76, ,86, Cash generated from operations 59,31,71, (2,63,97,664.00) (69,80,28,832.00) 2,04,28, ,95,99,

33 March 31, 2015 March 31, 2014 For the year ended on March 31, 2013 March 31, 2012 March 31, 2011 Particulars Direct taxes Refund/(paid) (4,66,95,556.00) (1,50,95,740.00) (94,928.00) 10,83, (10,70,839.00) Net cash from operating activities [A] 54,64,75, (4,14,93,404.00) (69,81,23,760.00) 2,15,11, ,85,28, [B] Cash flow from investing activities Investments (50,000.00) (64,36,85,347.00) (6,54,74,189.00) (2,80,30,844.00) (16,66,03,964.00) Purchase of fixed assets (1,11,38,667.00) (22,72,897.00) (84,59,189.00) (31,15,872.00) (66,57,628.00) Sale of Fixed Assets 6,15, Profit/Loss from Limited Liability Partnership 2,60,87, ,83,31, ,84,77, ,54,91, (96,963.00) Interest received 82,94, ,68,17, ,45,99, ,18,90, ,29, Net cash used in investing activities [B] 2,38,09, (57,08,09,087.00) (3,08,56,452.00) 3,62,34, (16,39,28,924.00) [C] Cash flow from financing activities Issuer of Equity Share Capital ,00,00, ,00,00, Security Premium Received ,00,00, ,00,00, Procurement/(Rep ayment) of long/ short term borrowings 26,92,29, (56,47,200.00) (31,93,40,000.00) (3,00,00,000.00) (4,00,00,000.00) Finance Cost (1,97,26,736.00) (5,57,08,449.00) (8,53,44,940.00) (2,95,30,989.00) (2,09,72,096.00) Net cash flow from financial activities [C] 24,95,02, ,86,44, (30,46,84,940.00) (5,95,30,989.00) (6,09,72,096.00) Net Increase/(Decrease ) in cash and cash equivalents[a+b+ C] 81,97,87, ,63,41, (1,03,36,65,152.00) (17,84,427.00) (63,72,537.00) Cash and cash equivalents opening (80,16,52,431.00) (1,02,79,94,291.00) 56,70, ,55, ,38,27, Cash and cash equivalents closing 1,81,35, (80,16,52,431.00) (1,02,79,94, ) 56,70, ,55,

34 GENERAL INFORMATION Our Company was incorporated as Arvind Infrastructure Limited on December 26, 2008 under the provisions of the Companies Act, 1956 with the Registrar of Companies, Gujarat, Dadra and Nagar Haveli. Our Company received the Certificate of Commencement of Business on January 6, 2009 issued by the Assistant Registrar of Companies, Gujarat, Dadra and Nagar Havelli. Registered Office of the Company: Arvind Infrastructure Limited Arvind Premises, Naroda Road Ahmedabad Gujarat, India Tel: Fax: Contact person: Prakash Makwana Investor Designated -ID: Corporate Identification Number: U45201GJ2008PLC Corporate Office of the Company: Arvind Infrastructure Limited 24, Government Servant Society, adjacent to Municipal Market, CG Road, Navrangpura, Ahmedabad Tel: Fax: Address of the Registrar of Companies, Gujarat ROC Bhavan, Opposite Rupal Park Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad Gujarat Board of Directors The Board of Directors as on the date of filing the Information Memorandum: Sr. No. Name of the Director Designation 1. Sanjaybhai Shrenikbhai Lalbhai Chairman and Non-Executive Director 2. Kulin Sanjaybhai Lalbhai Non-Executive Director 3. Kamal Shamlal Singal Managing Director and Chief Executive Officer (CEO) 4. Pratul Krishnakant Shroff Non-Executive Independent Director 5. Prem Prakash Pushp Nath Pangotra Non-Executive Independent Director 6. Dr. Indira Jitendra Parikh Non-Executive Independent Director Company Secretary and Compliance Officer Prakash Makwana 34

35 Arvind Infrastructure Limited Arvind Premises, Naroda Road Ahmedabad Gujarat, India Tel: Fax: Bankers to the Company: HDFC Bank Limited Address: HDFC Bank House, near Navrangpura Jain Derasar, Mithakali Six Road, Ahemdabad Tel: Fax: Contact Person: Areez Kavina Website: Kotak Mahindra Bank Limited Address: Ground Floor Shop O 1, 2, 3 Part 4,General Bank Chambers, C.G. Road, Ahmedabad Tel: Fax: rahul.satta@kotak.com Contact Person: Rahul Satta Website: ICICI Bank Limited Address: JMC House, Opposite Parimal Gardens, off C.G. Road, Ambawadi, Ahmedabad Tel: Fax: sanjay.tanna@icicibank.com Contact Person: Sanjay Tanna Website: Axis Bank Limited Address: Sthapana opposite GHB complex, Ankur road, Naranpura, Ahmedabad Tel: Fax: naranpura.branchhead@axisbank.com Contact Person: Rohit Gautam Website: Registrar & Transfer Agents Sharepro Services (India) Private Limited Address: 13 AB Samhita Warehousing Complex, Sakinaka Telephone Exchange Lane, Sakinaka, Andheri (East) Mumbai: Tel: / Fax: sharepro@shareproservices.com Contact Person: Indira Karkera Statutory Auditors of the Company: G.K Choksi & Co. Madhuban, Near Madalpur Underbridge, Ellisbridge, Ahmedabad Tel: Fax: info@gkcco.com Firm Registration Number: W Chief Financial Officer Mehul Shah Arvind Infrastructure Limited Arvind Premises, Naroda Road 35

36 Ahmedabad Gujarat, India Tel: Fax:

37 CAPITAL STRUCTURE The Capital Structure of the Company as on March 31, Pre Scheme of Arrangement of Demerger Particulars Authorized share capital (27,00,00,000 equity shares of `1 each) Issued, Subscribed and paid-up share capital (10,05,00,000 equity shares of `1 each) Aggregate Nominal Value (`) 27,00,00,000 10,05,00,000 The Capital Structure of the Company- Post Scheme of Arrangement of Demerger Particulars Authorized share capital (2,70,00,000 equity shares of `10 each) Issued, Subscribed and paid-up share capital (2,58,24,307 equity shares of `10 each) Aggregate Nominal Value (`) 27,00,00,000 25,82,43,070 NOTES TO THE CAPITAL STRUCTURE: 1. Details of changes in the Authorised capital of the Company The Authorised share capital increased from `5,00,000 to `15,00,00,000 at the EGM held on February 12, 2013; Equity Shares of `10 each was sub-divided into 10 Equity Shares of `1 each at the EGM held on July 23, The authorized share capital was increased from `15,00,00,000 to `27,00,00,000 at the EGM held on July 23, Every 10 Equity Shares of `1 each were consolidated into 1 Equity Share of `10 each pursuant to the order of the High Court dated March 30, 2015 approving the Scheme of Arrangement. 2. Details of capital built-up of the Company since inception are as follows: Date of allotment No. of shares allotted Cumulative number of shares Face value (`) Cumulative paid-up capital Nature of Allotment/ Remarks Consideration December 19, ,000 50, ,00,000 Issued to Subscribers of the MOA 10,00,000 10,50, ,05,00,000 Further Allotment February 26, 2013 July 1, ,00,000 1,00,50, ,05,00,000* Further Allotment July 23, 2014 June 2, ,05,00,000 10,05,00, ,05,00,000* Sub division of share from Rs. 10 to Rs. 1 2,58,24,307 2,58,24, ,82,43,070 Allotment pursuant to Court Order Cash Cash Cash Other than cash Other than cash 37

38 *Initial issued and paid up equity share capital of Arvind Infrastructure Limited of `10,05,00,000 as held by Arvind Limited and its nominees stands cancelled pursuant to the Scheme. 3. Equity shares have been allotted in terms of Scheme approved under sections of the Companies Act, Details of the Scheme have been provided at page 48 of this Information Memorandum. 4. Except to the extent of any employee stock options under ESOP 2013 that may be exercised, our Company presently does not intend or propose to alter the capital structure for a period of six months from the date of this Information Memorandum, by way of split or consolidation of the denomination of Equity Shares or further issue of Equity Shares (including issue of securities convertible into or exchangeable, directly or indirectly for Equity Shares) whether on a preferential basis or issue of bonus or rights or further public issue of specified securities or qualified institutions placement or otherwise. However, if our Company enters into acquisitions, joint ventures or other arrangements, our Company may, subject to necessary approvals, consider raising additional capital to fund such activity or use Equity Shares as currency for acquisitions or participation in such joint ventures. 5. Capital build-up of Promoters as on date of filing this Information Memorandum: As on the date of this Information Memorandum, the Promoters of our Company, collectively hold 98,58,218 Equity Shares, equivalent to 38.17% of the issued, subscribed and paid-up Equity Share capital of our Company and out of the above 45,500 Equity Shares held by one of our Promoters are pledged. Set forth below are the details of the build up of our Promoters shareholding: Name of the Promoter Aura Securities Private Limited Sanjaybhai Shrenikbhai Lalbhai Jayshreeben Sanjaybhai Lalbhai Punit Sanjay Lalbhai Sanjay Family Trust (Sanjaybhai Shrenikbhai Nature of issue Allotmen t pursuant to Court Order Allotmen t pursuant to Court Order Allotmen t pursuant to Court Order Allotmen t pursuant to Court Order Allotmen t pursuant to Court Order Date of allotment June 2, 2015 June 2, 2015 June 2, 2015 June 2, 2015 June 2, 2015 Number of shares Face value Issue price/ consider ation 96,57, Other than cash 2,00, Other than cash Other than cash Other than cash Other than cash Date when the shares were made fully paid up* Percentag e of the total pre and post issue capital The lock in period, if any N.A ,64,86 2 Equity Shares are locked-in for 3 years Number and percentag e of pledged shares, if any 45,500; 0.47% N.A N.A. N.A. N.A N.A. N.A. N.A N.A. N.A. N.A N.A. N.A. 38

39 Name of the Promoter Nature of issue Date of allotment Lalbhai as a Trustee) *Shares were fully paid up at the time of issue Number of shares Face value Issue price/ consider ation Date when the shares were made fully paid up* Percentag e of the total pre and post issue capital The lock in period, if any Number and percentag e of pledged shares, if any 6. Aggregate Shareholding of our Promoters and Promoter Group in our Company after allotment of shares pursuant to the Scheme: Sr. No. Name of shareholder Number of shares held Percentage of shareholding Promoters 1. Aura Securities Private Limited 96,57, Jayshreeben Sanjaybhai Lalbhai Sanjaybhai Shrenikbhai Lalbhai 2,00, Sanjaybhai Shrenikbhai Lalbhai Punit Sanjaybhai Promoter Group Individuals 1. Samvegbhai Arvindbhai Lalbhai 21, Anamikaben Samveghbhai Lalbhai 4, Hansaben Niranjanbhai Lalbhai 3, Saumya Samvegbhai Lalbhai 2, Bhupendra M Shah 1, Swati S Lalbhai Badlani Manini Rajiv Taral S Lalbhai Sunil Siddharth Lalbhai Vimlaben S Lalbhai Kalpanaben Shripalbhai Morakhia Promoter Group Companies 1. AML Employees Welfare Trust 6,31, Atul Limited 4,12, Aeon Investments Private Limited 17, Adore Investments Private Limited 13, Anusandhan Investments Limited 11, Aagam Holdings Private Limited 1,87, Amazon Investments Private Limited 1,15, Amardeep Holdings Private Limited 9, Aayojan Resources Private Limited 8, Adhinami Investments Private Limited Akshita Holdings Private Limited Total 1,13,00, Details of Lock-in In terms of SEBI Circular CIR/CFD/DIL/5/2013 dated February 4, 2013, equity shares held by the promoters of the unlisted issuer that shall be listed pursuant to the Scheme of Arrangement shall be lockedin to the extent 20% of the post merger paid up capital of the unlisted issuer, for a period of three years from the date of listing of the shares of the unlisted issuer. Further, the balance of the entire pre-merger 39

40 capital of the unlisted issuer shall also be locked-in for a period of three years from the date of listing of the shares of the unlisted issuer. The equity shares held by Arvind Limited, before the Scheme of Arrangement became effective, has been cancelled and new Equity Shares of our Company have been issued to the shareholders of Arvind Limited pursuant to the Scheme of Arrangement. We have locked in our Promoter s shares to the extent of 20% of our post Scheme paid up capital for a period of three years from the date of listing of our Equity Shares. The details of such locked-in Equity Shares are set out in the following table: 8. Our Promoters, directors of our corporate promoters, our promoter group, our directors and their immediate relatives have not purchased or sold any equity shares of Arvind Infrastructure Limited within six months immediately preceding the date of filing of this Information Memorandum. 9. Our promoter group, directors of our corporate promoters, our directors and their relatives have not financed the purchase by any other person of our equity shares during the period of six months immediately preceding the date of filing of this Information Memorandum. 10. Our Company and our directors have not entered into any buy-back, standby or similar arrangements to purchase equity shares of the Company from any person. 11. Shareholding pattern of Arvind Infrastructure Limited pre Scheme: The entire pre-scheme equity share capital consisting of 10,05,00,000 equity shares was held by Arvind Limited and its nominees. 12. Shareholding pattern of Arvind Infrastructure Limited post the allotment of the shares under the Scheme as on date: Category Category of No of Total no of Number of Total shareholding as a % Shares pledged or Code Shareholder Shareholder shares shares in of total no of shares otherwise encumbered dematerialized As a As a No of As a form percentage of (A+B) percentage of (A+B+C) shares percentage (I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) = (VIII/IV) *100 (A) Promoter and Promoter group 1 Indian (a) (b) (c) (d) Name of the Promoter Number of Face Value (`) Percentage (%) of locked-in shares for 3 year Pre-Scheme Post-Scheme paid up paid up capital capital Aura Securities Private Limited 51,64, Total 51,64, Individuals/ Hindu Undivided Central govt/ State govt(s) Bodies Corporate Financial Institution/ 20 2,34,183 2,34, ,10,66,699 1,10,66, ,

41 Category Code Category of Shareholder No of Shareholder Total no of shares Number of shares in dematerialized form Total shareholding as a % of total no of shares As a As a percentage percentage of (A+B) of (A+B+C) Shares pledged or otherwise encumbered No of As a shares percentage banks (e) Others Trusts Directors Employee Welfare Trust Sub-total (A)(1) 2 Foreign (a) Individuals (Non Resident Individuals/ Foreign Individuals) ,13,00,882 1,13,00, , (b) Bodies Corporate (c) Institutions (d) Others Sub-Total (A)(2) Total Shareholding of Promoter and Promoter Group (A)=(A)(1) +(A)(2) 35 1,13,00,882 1,13,00, , (B) Public Shareholding 1 Institutions (a) Mutual Funds / UTI (b) Financial Institutions / banks (c) (d) (e) (f) (g) (h) Central govt/ State govt (s) Venture capital funds Insurance Companies Foreign Institutional Investors Foreign Ventures Capital investors 99 20,67,667 20,66, ,586 9, ,59,221 15,59, ,80,598 38,78, Others Trusts Not specified Sub-Total (B)(1) ,18,233 75,14, Non- Institutions (a) Bodies ,16,519 15,11, Corporate (b) Individuals 0 0 I. individual ,89,011 30,00, shareholders holding 41

42 Category Code (c) (B) (C) Category of Shareholder No of Shareholder Total no of shares Number of shares in dematerialized form Total shareholding as a % of total no of shares As a As a percentage percentage of (A+B) of (A+B+C) Shares pledged or otherwise encumbered No of As a shares percentage nominal share capital upto Rs. 1 lakh II. Individuals shareholders holding nominal share 17 3,89,718 3,36, capital in excess of Rs. 1 lakh Others Employees Non resident ,618 75, repatriates Non resident ,737 42, non repatriates Non domestic 29 15,40,112 15,40, companies Trusts 9 9,318 9, Others 341 1,26,159 1,26, Directors and their relatives and friends Foreign nationals Sub-Total (B)(2) Total public Shareholding (B)= (B)(1) + (B)(2) Total (A)+(B) Shares held by custodian and against which Depository Receipts have been issued Grand Total (A)+(B)+ (C) ,45,710 70,05,192 66,41, ,46,003 1,45,23,425 1,41,55, ,46,038 2,58,24,307 2,54,55, , ,46,038 2,58,24,307 2,54,55, , ,500 equity shares of the Company held by the Promoters are pledged. 14. The list of top 10 shareholders of the Company and the number of equity shares held by them: Top ten shareholders as on the date of this Information Memorandum: Sr. No. Name of the Shareholder No. of shares %of total shares Interest of shareholder 1. Aura Securities Private Limited 96,57, Promoter 2. Life Insurance Corporation of India 15,59, Multiples Private Equity FII I 8,06, AML Employee Welfare Trust 6,31, Promoter Group 42

43 Sr. No. Name of the Shareholder No. of shares %of total shares Interest of shareholder 5. Government Pension Fund Global 5,54, Atul Limited 4,12, Promoter Group 7. Dimensional Emerging Markets - 3,83, Value Fund 8. Multiples Private Equity Fund 2,73, Sundaram Mutual Fund A/C - 2,71, Sundaram Select Midcap 10. Reliance Strategic Investments - 2,56, Limited Total 1,48,06, Top ten shareholders as on 2 years prior to the date of the Information Memorandum: Sr. No. Name of the Shareholder No. of shares of `10 each %of total shares 1. Arvind Limited 1,00,50, Total 1,00,50, Top ten shareholders as on 10 days prior to the date of the Information Memorandum: Sr. No. Name of the Shareholder No. of shares %of total shares Interest of shareholder 1. Aura Securities Private Limited 96,57, Promoter 2. Life Insurance Corporation of India 15,59, Multiples Private Equity FII I 8,06, AML Employee Welfare Trust 6,31, Promoter Group 5. Government Pension Fund Global 5,54, Atul Limited 4,12, Promoter Group 7. Dimensional Emerging Markets Value - 3,83, Fund 8. Multiples Private Equity Fund 2,73, Sundaram Mutual Fund A/C Sundaram - 2,71, Select Midcap 10. Reliance Strategic Investments Limited 2,56, Total 1,48,06, There shall be only one denomination for the equity shares of the Company, subject to applicable regulations and Company shall comply with such disclosure and accounting norms specified by SEBI, from time to time. 18. The Demerged Company i.e. Arvind Limited had 1,89,703 members as on June 5, Employees and Employee Stock Option Scheme: Pursuant to the approval of our shareholders in the general meeting held on March 8, 2013, the Company had instituted the ESOP 2013 ( ESOP 2013 ) to enable our employees, including Directors, to participate in the Company s future growth. The options may vest not earlier than one year but not later than five years from the date of grant. All the vested options can be exercised not earlier than three years from the date of 43

44 vesting of options or date of listing company s equity shares whichever is earlier. Brief details of ESOP 2013 are set out below: No. Details March 31, 2014 March 31, 2015 Until May 29, 2015 Demerger Effect 1 Options Outstanding at the beginning of the 0 37,68,750 4,02,000 *10,32,972 year 2 Options granted during the year 3,76,875 2,51, Exercise Price (Rs) Options vested 0 0 2,13,563 5,48,767 5 Options exercised during the year Total number of shares arising as a result of exercise of option 7 Options lapsed during the year Variation of terms of options None None None None 9 Money realised by exercise of options (`) Total number of options in force as at the end of the year 11 Employee wise details of options granted to: 3,76,875 40,20,000 1,88,438 4,84,206 i ii iii Senior managerial personnel Kamal Singal 3,01, ,01,500 7,74,729 Jagdish Dalal 75,375 2,51,250 1,00,500 2,58,243 any other employee who receives a grant in any one year of options amounting to five per cent or more of options granted during that year; Kamal Singal 3,01, ,01,500 7,74,729 identified employees who were granted options, during any one year, equal to or exceeding one per cent of the issued capital (excluding outstanding warrants and conversions) of the issuer at the time of grant Kamal Singal 3,01, ,01,500 7,74,729 Jagdish Dalal ,58, Diluted Earnings Per Share (`) Not available Not available 44

45 No. Details March 31, 2014 March 31, 2015 Until May 29, 2015 Demerger Effect 13 Where the issuer has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the options and the impact of this difference on Impact on the Profits of the Company (`) (30,00,224) (44,98,561) (5,81,702) (14,94,733) 14a Impact on Basic Earnings Per Share of the (0.04) (0.04) Not available Not available Company (`) Impact on Diluted Earnings Per Share of the Company (`) (0.04) (0.04) Not available Not available Weighted average exercise prices of options whose Exercise price equals market price of stock Exercise price exceeds market price of stock b Exercise price is less than market price of stock Weighted average fair values of options whose Exercise price equals market price of stock Exercise price exceeds market price of stock Exercise price is less than market price of stock 15 A description of the method and significant assumptions used during the year to estimate the fair values of options, including weighted average information, namely, Risk free interest rate 7.74% 8.75% No grants made during Expected life (Years) the period Expected volatility 0% 0% Expected dividends Nil Nil No grants made during the period Price of underlying share in the market at the time of grant of option (`) 16 The impact on the following, for the last three years if the issuer had followed the accounting policies specified in clause 13 of the erstwhile Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 in respect of options granted in the last three years

46 No. Details March 31, March 31, Until May Demerger , 2015 Effect Impact on Profits of the Company (`) (30,00,224) (44,98,561) (5,81,702) (14,94,733) Impact on Basic Earnings per Share (`) (0.04) (0.04) Not available Not available Impact on Diluted Earnings per Share (`) (0.04) (0.04) Not available Not available 17 The intention of the holders of the equity shares allotted on exercise of options granted under an employee stock option scheme or allotted under an employee stock purchase scheme, to sell their equity shares within three months after the date of listing of the equity shares in the initial public offer (aggregate number of equity shares intended to be sold by the holders of options), if any. In case of an employee stock option scheme, this information same shall be disclosed regardless of whether equity shares arise out of options exercised before or after the initial public offer. 18 Specific disclosures about the intention to sell equity shares arising out of an employee stock option scheme or allotted under an employee stock purchase scheme within three months after the date of listing, by directors, senior managerial personnel and employees having equity shares issued under an employee stock option scheme or employee stock purchase scheme amounting to more than one per cent. of the issued capital (excluding outstanding warrants and conversions), which inter-alia shall include name, designation and quantum of the equity shares issued under an employee stock option scheme or employee stock purchase scheme and the quantum they intend to sell within three months. * - Adjusted due to change in the capital structure

47 SECTION IV- ABOUT THE LISTING OBJECTS AND RATIONALE OF THE SCHEME It has been realized by the Board of Directors of the De-merged/ Transferor Company that the Company has several commercial activities distinct and diverse from each other. In order to ensure sustainable long term growth, profitability, market share and continuous customer service it requires focused management attention, different set of skill and resources to meet competitive, regulatory environment and to mitigate to risk. With this objective in mind, it is proposed to transfer and vest the Real Estate Undertaking in the resulting/ Transferee Company. It is envisaged that the said proposal shall be in the larger interest of the shareholders, creditors and employees of the Transferor Company and help to achieve effective future growth of the Transferee Company. It is further envisaged to bring specific benefits as follows: The demerger will enable the Transferor Company to focus and enhance its residue core business operations by streamlining operations and cutting costs; ensure better and more efficient management control. The demerger will enable investors to separately hold investments which best suit their investment strategies and risk profiles; and As the activities of De-merged Undertaking and that of the Transferee Company are interrelated in nature, de-merger shall help to re-organise the De-merged Undertaking by consolidation and integration of its operations with the activities of the Transferee Company as a part of group restructuring. The Transferee Company would have a larger net worth base, and greater borrowing capacity, which would provide it a competitive edge over others, especially in view of the increasing competition. With the aforesaid objectives, it is proposed to demerge the Real Estate Undertaking of the Transferor Company to the Transferee Company. 47

48 SALIENT FEATURES OF THE SCHEME The Hon ble High Court of Gujarat at Ahmedabad pursuant to its order dated March 30, 2015 ( Order ) sanctioned the Scheme of Arrangement in the nature of Demerger of the Real Estate Undertaking of Arvind Limited to Arvind Infrastructure Limited ( Scheme ). The Order was filed with the Registrar of Companies, Gujarat on May 14, 2015 and then the Scheme became effective with May 14, 2015 with appointed date being April 1, Operation of the scheme: a) Real Estate Undertaking of the de-merged company is proposed to be demerged, pursuant to the applicable provisions of the Companies Act, 1956, and/or any other applicable laws and be transferred to the Transferee Company for achieving the above mentioned objectives. b) The Transferor Company will continue its interests in the Remaining Undertaking as is presently being carried out but with greater focus, to the growth opportunities, and the regulatory requirements, risks, etc. specific to its business. c) The Transferee Company shall issue and allot shares to all the shareholders of the De-merged Company as consideration for the transfer of the said undertaking in proportion to their shareholding in Transferor Company so as to result in the mirror image of the existing shareholding pattern. As a consequence, the Transferee Company shall cease to be a Wholly Owned Subsidiary of the Transferor Company. d) Various other matters consequential or otherwise integrally connected herewith, including the reorganization of the capital in form of the utilization Securities Premium Account of the Transferor Company and cancellation of the existing share capital of the Transferee Company shall form integral part of the scheme. e) The demerger of the Real Estate Undertaking in accordance with this Scheme shall take effect from the Appointed Date and shall be in accordance with Section 2(19AA) of the Income tax Act, The scheme shall be in compliance with the applicable SEBI guidelines including particularly the recent circulars being CIR/CFD/DIL/5/2013 dated February 4, 2013 and circular CIR/CFD/DIL/8/2013 dated May 21, 2013; and other applicable provisions of RBI guidelines as well as FEMA Regulations. Highlights of the Scheme and matters related thereto: Upon the coming into effect of the Scheme i.e. May 14, 2015 and with effect from the Appointed Date i.e. April 1, 2015, the Demerged Undertaking (including all the estate, assets, rights, claims, title, interest and authorities including accretions and appurtenances of the Demerged Undertaking) of the Demerged Company shall, subject to the provisions of this Clause in relation to the mode of transfer and vesting and pursuant to the provisions of Sections 391 to 394 of the Act and all other applicable provisions of applicable laws, rules and regulations for the time being in force, without any further act or deed, stand transferred to and be vested in or deemed to have been transferred to or vested in, as a going concern, into the Resulting Company together with all the estates, assets, titles, interest and Employees therein, subject however, to the provisions of this Scheme in relation to Encumbrances, if any, affecting the same or any part thereof. 1. DEFINITIONS: SCHEME OF ARRANGEMENT PART A In this Scheme, unless inconsistent with the subject or context, the following expressions shall have the meaning given hereunder:- 48

49 a) Act means the Companies Act, 1956 as may be applicable, including any statutory modifications, re-enactments or amendments thereof and shall include the relevant and corresponding sections under Companies Act, 2013, as and when the same are made applicable before the effective date of the Scheme. b) Appointed Date means 1 st April 2015 or such other date as may be approved by the High Court of Gujarat at Ahmedabad. c) Applicable Laws means any statute, notification, bye-laws, rules, regulations, guidelines, Common law, policy code, directives, ordinance, schemes, notices, orders or instructions, laws enacted or issued or sanctioned by any appropriate authority in India including any modifications or re-enactment thereof for the time being in force. d) Court or High Court means Hon ble High Court of Gujarat at Ahmedabad, as applicable, and shall include the National Company Law Tribunal, if applicable in case of Transferee Company. e) De-merged Company or Transferor Company means Arvind Limited incorporated under the Indian Companies Act, 1913 and having its Registered Office at Naroda Road, Ahmedabad in the state of Gujarat. f) Real Estate Undertaking or Demerged Undertaking shall mean Real Estate Undertaking of the Transferor Company and shall include; a) All the assets and properties as on the Appointed Date (hereinafter referred to as the said assets ) pertaining to the Real Estate Undertaking; b) All the debts, liabilities, duties and obligations including contingent liabilities pertaining to the Real Estate Undertaking; c) Without prejudice to the generality of above, the Real Estate Undertaking shall include rights over land, buildings, the movable rights covering plants and machinery if any, equipment, furniture, fixtures, vehicles, leasehold assets and other properties, real, corporeal and incorporeal, in possession or reversion, present and contingent assets (whether tangible or intangible) of whatsoever nature, assets including cash in hand, bank balance, bills of exchange, letter of intents, loans and advances, investments but other than those forming part of Remaining Undertakings, claims, powers, authorities, allotments, approvals, consents, letter of intent, registrations, licenses, contracts, agreements, engagements, arrangements, rights, credits, titles, interests, benefits, advantages, leasehold rights, sub-letting tenancy rights, with or without the consent of the landlord as may be required, goodwill, other intangibles, permits, authorizations, trademarks, trade names, labels, brands, patents, patent rights, copyrights, designs, and other industrial and intellectual properties and right of any nature whatsoever including labels, designs, know-how, domain names or any applications for the above, assignments and grants in respect thereof, import quotas and other quota rights, right to use and avail of telephones, telex, facsimile and other communication facilities, connections, installations and equipments, utilities, electricity, electric and all other services of every kind, nature and description whatsoever, provisions, funds, and benefits of all agreements, arrangements, deposits, advances, recoverable and receivables, whether from government, semi-government, local authorities or any other person including customers, contractors or other counter parties, etc. all earnest monies and/ or deposits, privileges, liberties, easements, advantages, benefits, exemptions permissions, and approvals of whatsoever nature (including but not limited to benefits of tax relief including under the Income-tax Act, 1961 such as credit for advance tax, taxes deducted at source minimum alternate tax etc. utilized deposits or credits, benefits under VAT/ Sales Tax Law, VAT/ sales tax set off, unutilized deposits or credits, benefits of any unutilized MODEVAT/CENVAT/Service tax credits, etc.) and wheresoever situate, belonging to or in the ownership, power or possession or control of or vested in or granted in favour of or enjoyed by the Real Estate Undertaking. 49

50 Any question that may arise as to whether a specific asset or liability pertains or does not pertain to the Real Estate Undertaking or whether it arises out of the activities or operations of Real Estate Undertaking shall be decided by mutual agreement between the Board Of Directors of Transferor Company and Transferee Company. g) Effective Date means the last of the dates on which the sanctions/ approvals or orders as specified in Clause No. 19 of this Scheme has been obtained and/ or filed by the Transferor Company and the Transferee Company with the Registrar of Companies, Gujarat and other Governmental Authorities. h) Governmental Authority means any applicable Central, State or local Government, statutory, regulatory, departmental or public body or authority of relevant jurisdiction, legislative body or administrative authority, agency or commission or any court, tribunal, board, bureau or instrumentality thereof including Securities and Exchange Board of India, Stock Exchanges, Registrar of Companies, Regional Directors, Foreign Investment Promotion Board, Reserve Bank of India, or arbitration or arbitral body having jurisdiction, Courts and other government and India in each case. i) Remaining Undertaking means all the businesses and activities of the Transferor Company other than the De-merged Undertaking. j) Scheme means this Composite Scheme of Arrangement in the nature of De-merger and Restructure of Share Capital in its present form including any modifications or amendments thereto, approved or imposed or directed by the Hon ble High Court of Gujarat at Ahmedabad or any other Governmental Authority and High Court and with all the Schedules appended thereto. k) Resulting Company or Transferee Company means Arvind Infrastructure Limited, a company incorporated under the Companies Act, 1956, having its registered office at Naroda Road, Ahmedabad in the state of Gujarat. l) Record Date means the date that Board of Directors of the Transferor and the Transferee Company shall determine which shall be later than the Effective Date, for issue and allotment of shares by the Transferee Company to the members of the Transferor Company. m) Stock Options Scheme means the Arvind Stock Option plan of the Demerged Company which was approved by Shareholders of the Demerged Company vide a Special resolution dated PART- B 3. DEMERGER, TRANSFER AND VESTING OF DE-MERGED UNDERTAKING: a) On and with effect from the Appointed Date and subject to the provisions of this Scheme and pursuant to the provisions of Section 394 of the Companies Act, 1956 and other applicable provisions of the Act and Applicable Laws and in relation to the mode of transfer and vesting, the de-merged undertaking of the Transferor Company shall without any further act, instrument or deed, be and the same shall stand transferred to and/ or vested in or be deemed to have been and stand transferred to or vested in the Transferee Company as a going concern so as to become as and from the Appointed Date, the estate, rights, authorizations, titles and interests and authorities including accretions and appurtenances thereto such as dividends, or other benefits receivable, that of the Transferee Company. b) With effect from the Appointed Date, and subject to the provisions of this Scheme, all the liabilities (including the contingent liabilities) of the said De-merged Undertaking of the Transferor Company shall stand transferred or deemed to have been transferred without any further act, instrument or deed of the Transferee Company, pursuant to the provisions of Section 394 of the Companies Act, 1956 and other applicable provisions of the Act and Applicable Laws so as to become as and from the Appointed Date, the debts, liabilities (including contingent liabilities), duties and obligations of the Transferee Company and further that it shall not be necessary to obtain consent of any third party or other person who is a party to 50

51 the contract or arrangements by virtue of which such debts, liabilities, duties and obligations have arisen, in order to give effect to the provisions of this Clause. c) With effect from the Appointed Date, and subject to the provisions of this Scheme, all the Assets (both the tangible and intangible assets) of the said De-merged Undertaking of the Transferor Company shall stand transferred or deemed to have been transferred without any further act, instrument or deed of the Transferee Company, pursuant to the provisions of Section 394 of the Companies Act, 1956 and other applicable provisions of the Act and Applicable Laws so as to become as and from the Appointed Date, the assets of the Transferee Company. d) With effect from the Appointed Date, all taxes paid, taxes refund due or receivable, carried forward losses, depreciation, capital losses, pending balances of amortizations etc. including application for rectification, appeals filed with tax authorities of the De-merged Undertaking of the Transferor Company shall also, pursuant to Section 394 of the Companies Act, 1956 and other applicable provisions of the Act and Applicable laws without any further act or deed, be transferred to or be deemed to be transferred to the Transferee Company, so as to become as from the Appointed Date the direct taxes paid, direct taxes refund due or receivable, (whether as per Books or as per Income tax) of the Transferee Company and it shall not be necessary to obtain the consent of any third party or other person, in order to give effect to the provision of this Sub-clause. e) All the employees of the De-merged Undertaking shall, without any further act, instrument or deed of the Transferee Company, pursuant to the provisions of Section 394 of the Companies Act, 1956 and other applicable provisions of the Act and the Applicable Laws, become as and from the Appointed Date, the employees of the Transferee Company and further that it shall not be necessary to obtain consent of any person, in order to give effect to the provisions of this Clause. f) Without prejudice to the other provisions of this Scheme and notwithstanding the fact that vesting of the De-merged Undertaking occurs by virtue of this Scheme itself, the Transferee Company may, at any time after the coming into effect of this Scheme in accordance with the provisions hereof, if so required under any law or otherwise, take such actions and execute such deeds (including deeds of adherence), confirmations or other writings or tripartite arrangements with any party to any contract or arrangement to which the Transferor Company is a party or any writings as may be necessary in order to give formal effect to the provisions of this Scheme. The Transferee Company shall be deemed to be authorized to execute any such writings on behalf of the Transferor Company and to carry out or perform all such formalities or compliances referred to above on the part of the Transferor Company to be carried out or performed. g) For the avoidance of doubt and without prejudice to the generality of the foregoing, it is clarified that upon the coming into effect of this Scheme, all consents, permissions, licenses, approvals, certificates, clearances, authorities, leases, tenancy, assignments, allotments, powers of attorney given by, claims, powers, authorities, allotments, approvals, consents, contracts, enactments, arrangements, rights, titles, interests, benefits, advantages, lease-hold rights and tenancies, and other intangible rights, hire purchase contracts and assets, lending contracts, employment contracts, distribution contracts, clearing and forwarding agency contracts, benefits of any security arrangements, reversions, permits, quotas, entitlements, registrations, licenses (industrial or otherwise), registrations under the applicable law, municipal/ local permissions, etc. issued to or executed in favour of the Transferor Company shall stand transferred to the extent it relates to and pertains to the De-merged Undertaking, to the Transferee Company in which the De-merged Undertaking shall vest by way of the demerger hereunder, as if the same were originally given by, issued to or executed in favour of the Transferee Company, and the Transferee Company shall be bound by the terms thereof, the obligations and duties there under, and the rights and benefits under the same shall be available to the Transferee Company. The Transferee Company shall make applications to and obtain relevant approvals, etc from the concerned authorities and/ or parties as may be necessary in this behalf and the Transferor Company shall co-operate and provide the required support wherever required. h) It is clarified that if any assets (estate, claims, rights, title, interest in or authorities relating to such assets) or any contract, deeds, bonds, arrangements, schemes, agreements or other instruments or whatsoever 51

52 nature in relation to the De-merged Undertaking, which the Transferor Company owns or to which the Transferor Company is the party and which cannot be transferred to the Transferee Company for any reason whatsoever, the Transferor Company shall hold such assets etc. in trust for benefit of the Transferee Company to which the de-merged Undertaking is being transferred in terms of this Scheme, in so far as it is permissible so to do, till such time as the transfer is effected and till such time the Transferee Company shall be entitled to utilize, operate, avail the same for the De-merged Undertaking s activities without any consideration. i) Where any of the debts, liabilities (including contingent liabilities), loans raised and used, liabilities and obligations incurred, duties and obligations of De-merged Undertaking of the Transferor Company as on the Appointed Date deemed to be transferred to the Transferee Company have been discharged by Demerged undertaking of the Transferor Company after the Appointed Date and prior to the Effective Date, such discharge shall be deemed to have been for and on account of the Transferee Company. j) All loans raised and used and all liabilities and obligations incurred by the Transferor Company for the operations of De-merged Undertaking after the Appointed Date and prior to the Effective Date, shall, subject to the terms of this scheme, be deemed to have been raised, used or incurred for and on behalf of the Transferee Company in which the De-merged Undertaking shall vest in terms of this Scheme and the extent they are outstanding on the Effective Date, shall also without any further act or deed be and stand transferred to and be deemed to be transferred to the Transferee Company and shall become the debts, liabilities, duties and obligations of the Transferee Company which shall meet discharge and satisfy the same. k) Without prejudice to clause (a) above, it is expressly provided that in respect of such assets belonging to and specific to the De-merged Undertaking of the Transferor Company as are movable in nature or are otherwise capable of transfer by manual delivery or by endorsement and delivery, the same shall be so transferred by the Transferor Company and shall become the property of the Transferee Company in pursuance of the provisions of the section 394 and other applicable provisions of the said Act. l) The De-merger and the transfer and vesting of the assets comprised in the De-merged Undertaking to and in the Resulting Company under this clause shall be subject to the mortgages and charges, if any. m) The Transferee Company may, if required, give notice in such form as it may deem fit and proper to each person, debtor or depositee that pursuant to the High Court of Gujarat, Ahmedabad, having sanctioned the Scheme, the said person, debtor or depositor should pay the debt, loan or advance or make good the same or hold the same to its account and that the right of the Transferee Company to recover or realize the same is in substitution of the right of the Transferor Company. n) Without prejudice to the provisions of the foregoing clauses and upon the effectiveness of this Scheme, the Transferor Company and the Transferee Company shall execute such instruments or documents or do all the acts and deeds as may be required, including the filing of necessary particulars and/ or modification(s) of charge, with the relevant regulatory authority and Governmental Authorities to give formal effect to the above provisions, if required. o) Upon the coming into effect of this Scheme, the Transferor Company alone shall be liable to perform all obligations in respect of the liabilities as on the Appointed Date, which have not been transferred to Transferee Company in terms of the Scheme, and the Transferor Company alone shall have all obligations in respect of such liabilities, and the Transferor Company shall indemnify the Transferee Company in relation to any claim, at any time, against the Transferee Company in respect of the liabilities which have been retained by the Transferor Company. p) Upon the coming into effect of this Scheme, the Transferee Company alone shall be liable to perform all obligations in respect of the liabilities (including contingent liabilities) from the Appointed Date, which have been incurred by the Transferor Company for and on behalf of the Transferee Company and in relation to the De-merged Undertaking in terms of the Scheme, and the Transferor Company shall not have any obligation in respect of such liabilities and the Transferee Company shall indemnify the Transferor 52

53 Company in relation to any claim, at any time, against the Transferor Company in respect of such liabilities. q) It is expressly provided that no other term or condition of the liabilities not transferred to the Transferee Company is modified by virtue of this Scheme except to the extent that such amendment is required by necessary implication. r) Subject to the necessary consents being obtained in accordance with the terms of this Scheme, the provisions of the clause 3 shall operate, notwithstanding anything to the contrary contained in any instrument, deed or writing or the terms of sanction or issue or any security document; all of which instruments, deeds or writings shall stand modified and/ or superseded by the foregoing provisions with effect from the Appointed Date or such other date as is specified herein above, as the case may be. 4. CONTRACTS, DEEDS AND OTHER INSTRUMENTS: Subject to the provisions of this Scheme, all contracts, deeds, bonds, agreements, arrangements and other instruments of whatsoever nature in relation to the De-merged Undertaking to which the Transferor Company is a party or to the benefit of which the Transferor Company may be eligible, and which are subsisting or having effect immediately before the Effective Date, shall continue in full force and effect against or in favour of the Transferee Company as the case may be and may be enforced as fully and effectively as if, instead of the Transferor Company, the Transferee Company had been party or beneficiary thereto. The Transferee Company shall enter into and/ or issue and/ or execute deeds, writings or confirmations or enter into a tripartite arrangement, confirmation or novation to which the Transferor Company will, if necessary, also be a party in order to give formal effect to this clause, if so required or become necessary. 5. LEGAL PROCEEDINGS: a) Upon coming into effect of this Scheme, all suits, claims, actions and/or proceedings by or against the Transferor Company, pertaining to the De-merged Undertaking of the Transferor Company, arising after the Appointed Date but before the Effective Date shall be continued and be enforced by or against the Transferee Company as effectually as if the same had been pending and/ or arising by or against the Transferee Company. b) The Transferee Company will undertake to have all legal, judicial or other proceedings initiated and/ or to be initiated after the Effective Date by or against the De-merged Undertaking of the Transferor Company referred to in sub-clause (a) above transferred to its name and to have the same continued, prosecuted and enforced by or against the Transferee Company. The Transferor Company and the Transferee Company shall make relevant applications in that behalf and the Transferor Company and the Transferee Company shall co-operate with each other in respect of any such legal and other proceedings. c) Upon coming into effect of this Scheme, all suits, claims, actions and/ or proceedings by or against the Demerged Undertaking of the Transferor Company pending on or pertaining to the period prior to the Appointed Date shall be continued and be enforced by or against the Transferee Company as effectually as if the same had been pending and/ or arising by or against the Transferee Company. 6. OPERATIVE DATE OF THE SCHEME: This Scheme though effective from the Appointed Date shall be operative from the Effective Date. 7. CONDUCT OF BUSINESS BY TRANSFEROR COMPANY AND TRANSFEREE COMPANY TILL EFFECTIVE DATE: With effect from the Appointed Date, and upto the Effective Date: 53

54 a) The Transferor Company shall carry on and shall be deemed to have carried on all the business and activities of the De-merged Undertaking as hitherto and shall be deemed to have held and stood possessed of the undertaking on account of, and for the benefit of and in trust for the Transferee Company. b) All the profits or income accruing or arising to the De-merged Undertaking of the Transferor Company or expenditure or losses arising or incurred (including the effect of taxes, if any, thereon) by the Demerged Undertaking of the Transferor Company shall, for all purposes be treated and be deemed to be accrued as the profits or income or incurred as the expenditure or losses or taxes of the Transferee Company, as the case may be. c) The Transferor Company shall carry on its business and activities of the De-merged Undertaking with reasonable diligence and business prudence. d) The Transferor Company shall not vary the terms and conditions and employment of permanent employees of the De-merged Undertaking except in the ordinary course of business or with prior written approval of the Transferee Company. e) The Transferor Company shall not, without prior written consent of the Transferee Company, take any major policy decisions in respect of management of the De-merged Undertaking except in the ordinary course of business. f) The Transferor Company and the Transferee Company shall co-operate with each other for smooth transfer of the De-merged Undertaking from the Transferor Company to the Transferee Company and any director of the Transferor Company and any director of the Transferee Company shall be empowered to give effect to the Scheme in all aspects as may be necessary or expedient including settling any question or difficulties arising in relation to the Scheme in such a manner as they deem fit to attain the objectives of this Scheme and their decision in this regard shall be final and binding. It is hereby agreed and clarified that whenever under this Scheme, the approval of the Transferor Company is required to be obtained, it shall be the approval of any one of the directors of the Transferor Company and whenever under this Scheme, the approval of the Transferee Company is required to be obtained, it shall be the approval of any one of the directors of the Transferee Company. 8. CONSIDERATION BY THE TRANSFEREE COMPANY: 8.1 Upon this Scheme becoming effective, Resulting/ Transferee Company shall without any further application or deed, issue and allot shares at par, credited as fully paid-up, to the extent indicated below to the shareholders of Transferor Company, holding shares in Transferor Company and whose name appear in the Register of Members on Record Date or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the respective Board of Directors in the following proportion: 1 (One) fully paid up Equity Share of `10/- each of Resulting Company shall be issued and allotted for every 10 (Ten) fully paid up Equity Shares of `10/- each held in Transferor Company. The Equity Shares issued and allotted by the Resulting Company in terms of this Scheme shall rank pari passu in all respects with the then existing equity shares of the Resulting Company. 8.2 No fractional certificate(s) shall be issued by the Resulting Company in respect of any fractions which the members of the De-merged Company may be entitled to on issue and allotment of new equity shares as aforesaid by the Company. The Board of Directors of the Resulting Company shall instead, consolidate to all such fractional entitlements and allot new equity shares in lieu thereof to a Director or an officer of the Resulting Company or such other person(s) as the Board of Directors of the Resulting Company shall appoint in this regard who shall hold the new equity shares in trust on behalf of the members entitled to 54

55 such fractional entitlements with express understanding that such director or officer or person(s) shall sell the same in market at such time(s) (not later than 6 months upon coming into effect of this Scheme) at such price(s) and to such person(s) as it/ he/ they may deem fit, and pay to the Resulting Company the net sale proceeds thereof. Thereupon the Resulting Company shall distribute the net sale proceeds, after deduction of applicable taxes / duties/ levies, if any, to the members entitled in proportion to their respective fractional entitlements. In case the number of such shares to be allotted to the Director/ officer by virtue of consolidation of fractional entitlements is a fraction, one additional equity share will be issued in the resulting Company to such Director/ officer. 8.3 Shares to be issued by the Resulting Company pursuant to Clause 8.1 in respect of any equity shares held by shareholder of Transferor Company which are held in abeyance under the provisions of Section 206A of the Act or otherwise shall, pending allotment or settlement of disputes by order of court or otherwise, also be held in abeyance by Resulting Company. 8.4 In so far as the issue of equity shares pursuant to Clause 8.1 is concerned, the same shall be issued and allotted in dematerialized form to those equity shareholders who hold equity shares in Transferor Company in dematerialized form, in to the account with the Depository Participant in which the equity shares of the Transferor Company are held or such other account with the Depository Participant as is intimated by the equity shareholders to Resulting Company before the Record Date. All those equity shareholders of Transferor Company who hold equity shares of the Transferor Company in physical form shall also have the option to receive the shares, as the case may be, in dematerialized form provided the details of their account with the Depository Participant are intimated in writing to the Resulting Company before the Record Date. In the event that Resulting Company has received notice from any equity shareholder of Transferor Company that equity shares are to be issued in physical form or if any member has not provided the requisite details relating to his/ her/ it s account with a Depository Participant or other confirmations as may be required or if the details furnished by any member do not permit electronic credit of the shares of Resulting Company, then Resulting Company shall issue equity shares of Resulting Company, in accordance with the Transferor Company Share Entitlement Ratio, as the case may be, in physical form to such equity shareholder. 8.5 In the event of their being any pending share transfers, whether lodged or outstanding, of any shareholder of Transferor Company, the board of directors or any committee thereof of Transferor Company shall be empowered in appropriate cases, prior to or even subsequent to the Record Date, to effectuate such transfer in Transferor Company as if such changes in registered holder were operative as on the Record Date, in order to remove any difficulties arising to the transfer of the share in Transferor Company and in relation to the shares issued by Resulting Company after the effectiveness of this Scheme. The board of directors of Transferor Company and Resulting Company shall be empowered to jointly remove such difficulties as may arise in the course of implementation of his Scheme and registration of new members in Resulting Company on account of difficulties faced in the transaction period. 8.6 The Resulting/ Transferee Company shall endeavor to ensure that the equity shares issued by it in terms of clause 8.1 of this Scheme, subject to applicable regulations, and subject to requisite compliances be listed and admitted to trading on the NSE and BSE, where the equity shares of Transferor Company are listed and are admitted to trading. The shares allotted by the Transferee Company pursuant to the Scheme shall remain frozen in the depositories system till listing/ trading permission is given by the NSE and BSE. 8.7 Approval of this Scheme by the shareholders of Resulting Company shall be deemed to be the due compliance of the provisions of Section 81(1A) of the Companies Act, 1956 or Section 62 of the Companies Act, 2013 and the other relevant and applicable provisions of the Act for the issue and allotment of equity shares by Resulting Company to the equity shareholders of Transferor Company, as provided in this Scheme. 8.8 Upon Scheme being effective and upon the issuance and allotment of the equity shares by the Transferee Company in accordance with the Clause 8.1, the existing issued and paid up equity share capital of the Transferee Company, comprising of 10,05,00,000 equity shares of `1/- each, aggregating to `10,05,00,000/- as held by the de-merged company and its nominees shall be cancelled. The share 55

56 certificates held by Transferor Company and its nominees representing the equity shares in the Transferee Company shall be deemed to be cancelled and non-est and not tradable form and after such cancellation. This will result in reduction of share capital (as provided in detail in Clause 14 herein below). 8.9 The Resulting Company shall, if and to the extent required to, apply for and obtain any approvals from the concerned regulatory authority including the Reserve Bank of India, for the issue and allotment of new equity shares by the Resulting Company to the equity shareholders of the Transferor Company. The Resulting Company shall comply with the relevant and applicable rules and regulations including provisions of FEMA to enable it to issue shares pursuant to this Scheme. 9. ACCOUNTING TREATMENT: (A) Accounting treatment in the books of the De-merged/ Transferor Company: 9.1 Upon Scheme being effective, the respective book values of the assets and liabilities of the de-merged undertaking shall be adjusted in the books of accounts of the de-merged company in compliance with the applicable Accounting standards. 9.2 Upon the Scheme being effective, the difference between the book value of assets and liabilities of the Demerged Undertaking transferred pursuant to the Scheme shall be adjusted in the books of Transferor Company against its Securities premium Account as provided in detail in Clause 14 herein below. 9.3 Upon the Scheme being effective and upon cancellation of shares held by the De-merged Company in the Resulting/ Transferee Company, such amount of investment by the Transferor Company in the cancelled share capital of Transferee Company shall be written off as provided in Clause 14 herein below. (B) Accounting treatment in the books of the Resulting/ Transferee Company: 9.4 Upon coming into effect of this Scheme and upon the arrangement becoming operative, the Transferee Company shall record the assets and liabilities transferred to and vested in them pursuant to this Scheme, at the book values of the respective assets and liabilities as recorded in the books of account of the Transferor Company as on the Appointed Date. The same shall be in compliance with the applicable Accounting standards. The Transferee Company may also decide to record the assets and liabilities transferred to and vested in them at fair value if advised by the Auditors and if it is in compliance with applicable accounting standards. 9.5 The Transferee Company shall credit its Share Capital Account with the aggregate face value of the equity shares issued to the shareholders of Transferor Company pursuant to Clause 8.1 of this Scheme. 9.6 Upon Scheme being effective, and upon the issue and allotment of the new shares of the Transferee Company to the shareholders of the De-merged Company, the existing shares of the Transferee Company as held by the De-merged Company and its nominees shall stand cancelled simultaneously (as provided vide Clause 14 herein below). 9.7 The amount of difference in the net value of the assets transferred pursuant to the Scheme and the amount of consideration as issued pursuant to Clause 8.1 of the Scheme, netted by existing share capital cancelled in terms of Clause 9.6 hereinabove of the scheme, shall be adjusted against Securities Premium Account. 10. EMPLOYEES: 10.1 On the scheme taking effect as aforesaid, all employees of the Transferor Company engaged in or in the relation to the Real Estate Undertaking shall be engaged by the Transferee Company, without any interruption of services and on such terms and condition, as are no less favourable than those on which they are currently engaged by Transferor Company. 56

57 10.2 With regard to Provident fund, employee state insurance contribution, gratuity funds, superannuation fund, staff welfare scheme or any other special schemes or benefits created or existing for the benefit of such employees of Transferor Company, the Transferee Company shall, upon this Scheme becoming effective and with effect from the Appointed Date, stand substituted for Transferor Company for all purposes whatsoever, including with regard to the obligation to make contribution to the said funds and schemes, in accordance with the provisions of such schemes or funds in the respective trust deeds or other documents. The existing provident fund, employee state insurance contribution, gratuity fund, superannuation fund, the staff welfare scheme and any other schemes or benefits created by the Transferor Company for such employees of the Real Estate Undertaking shall be continued on the same terms and conditions or be transferred to the existing provident fund, employee state insurance contribution. gratuity fund, superannuation funds, staff welfare scheme,etc., being maintained by the Transferee company. Pending such transfer, the contributions required to be made in respect of such employees shall continue to be made by the Transferee Company to the existing funds maintained by Transferor Company The Transferee Company agrees that for the purpose of payment of any retrenchment compensation, gratuity and other terminal benefits to the permanent employees engaged in or in relation to the Real Estate Undertaking, the past services of such employees with Transferor Company shall also be taken into account and agrees and undertakes to pay the same as and when payable. 11. SAVING OF CONCLUDED TRANSACTIONS: The transfer of the De-merged Undertaking above and the continuance of proceedings by or against the Transferor Company pertaining to De-merged Undertaking or the Transferee Company above shall not affect any transaction or proceedings already concluded in Transferor Company, in relation to the Demerged undertaking on or after the Appointed Date till the Effective Date, if any, to the end and intent that the Transferee Company accept and adopt all acts, deeds and things done and executed by Transferor Company, in relation to the De-merged Undertaking in respect thereto as done and executed on their behalf. 12. TAX CREDIT/ DUTIES/ CESS ETC: If the Transferor Company is entitled to any benefits under Incentive Schemes and Policies relating to the De-merged Undertaking, it is declared that the benefits under all such Incentive Schemes and Policies shall be transferred to and vested in the Transferee Company. Upon this Scheme being effective, both the Transferor Company and the Transferee Company, if required, are expressly permitted to revise and file their respective income tax returns and other statutory returns, including tax deducted/ collected at source returns, service tax returns, excise tax returns, sales tax/ VAT returns, as may be applicable and has expressly reserved the right to make such provision in its returns and to claim refunds or credits etc. if any. Such returns may be revised and filed notwithstanding that the statutory period for such revision and filing may have expired. 13. REMAINING UNDERTAKING: The Remaining Undertaking of the De-merged/ Transferor Company and all the assets, liabilities and obligations pertaining thereto shall continue to belong to and be vested in and be managed by the Transferor Company. 14. RESTRUCTURE OF SHARE CAPITAL: PART C A. RESTRUCTURE OF SHARE CAPITAL OF THE DE-MERGED/ TRANSFEROR COMPANY- 57

58 14.1 Upon the Scheme being effective, the amount of difference in book value of assets and the book value of liabilities transferred pursuant to the Scheme shall be adjusted against the Securities Premium Account, as envisaged vide Clause 9.2 hereinabove Upon the Scheme being effective, and upon the issue of shares by the Transferee Company to the shareholders of the De-merged/ Transferor Company, and upon cancellation of the shares of the Transferee Company as held by the De-merged Company, the amount of such investment in the books of de-merged company shall be written off against the Securities Premium Account, as envisaged vide Clause 9.3 hereinabove The above referred adjustment against the Securities Premium Account of the De-merged Company shall not exceed ` crores save and except an adjustment as may be required to be made due to any increase or decrease in the net assets value of De-merged Undertaking to be transferred on Appointed Date. This restructure amounts to reduction of capital under Section 78 read with Sections 100 to 103 of the Act. However, the same is consequential in nature and is proposed to be effected as an integral part of the Scheme. The approval of the members of the De-merged/ Transferor Company to the proposed Scheme shall be deemed to be their approval under the provisions of Section 78 and 100 and all other applicable provisions of the Act and the Transferor Company shall not be required to undertake any separate procedure for the same. The order of the Hon ble High Court sanctioning the Scheme shall be deemed to be an Order under Section 102 of the Act. In view of the same, the Transferor Company shall not be required to separately comply with Section 100 or any other provisions of Act Further, since the above restruc ture involving the utilization of Securities Premium Account of the company is only deemed reduction under Section 78 read with Section 100 of the Act and there is no actual Reduction of Issued, Subscribed and Paid up Share Capital of the company, the Transferor Company shall not be required to add the suffix and reduced to its name. B. RESTRUCTURE OF SHARE CAPITAL OF THE RESULTING/ TRANSFEREE COMPANY Upon Scheme being effective, the Authorized Share Capital of the Transferee Company shall be restructured by consolidation of 10 shares of `1/- each into 1(one) share of `10/- each. Hence the same shall stand as `27,00,00,000/- consisting of 2,70,00,000 shares of `10/- each. Clause V of the Memorandum of Association shall be accordingly amended Upon Scheme being effective, and upon the issue and allotment of new shares of the Transferee Company to the shareholders of the De-merged Company, the existing shares of the Transferee Company as held by the De-merged Company and its nominees shall stand cancelled simultaneously, as envisaged vide clause 9.6 hereinabove. This will result in reduction of the issued, subscribed and paid up capital of the Transferee Company to the extent of `10,05,00,000/ However, considering the issue of new shares to the shareholders of the De-merged Company as envisaged under clause 8.1 hereinabove, there shall not be any net reduction of the share capital The aforesaid restructure of capital viz. Consolidation of Equity Shares of `1/- to that of `10/- each; Cancellation of the shares held by the De-merged Company and upon issue and allotment of new shares resultant increase of share capital etc is consequential in nature and is proposed to be effected as an integral part of the Scheme. The approval of the members of the Transferee Company to the proposed Scheme shall be deemed to be their approval under the provisions of Section 16, 100 and all other applicable provisions of the Companies Act, 1956 or the applicable provisions of the Companies Act, 2013 and the Transferee Company shall not be required to undertake any separate procedure for the same. Since there is no net reduction of the share capital, the Transferee Company shall not be required to separately comply with Section 100 or any other provisions of the Act. Further, since there is no actual Reduction of Issued, Subscribed and Paid up Share Capital of the company, the Transferee Company shall not be required to add the suffix and reduced to its name. 58

59 14.9 The above referred adjustment as in clause 9.7 against the Securities Premium Account of the Transferee Company amounts to reduction of capital under Section 78 read with Sections 100 to 103 of the Act. However, the same is consequential in nature and proposed to be effected as an integral part of the Scheme. The approval of the members of the Transferee Company to the proposed Scheme shall be deemed to be their approval under the provisions of Section 78 and 100 and all other applicable provisions of the Act and the Transferee Company shall not be required to undertake any separate procedure for the same. The order of the Hon ble High Court sanctioning the Scheme shall be deemed to be an Order under Section 102 of the Act. In view of the same, the Transferee Company shall not be required to separately comply with Section 100 or any other provisions of Act. GENERAL TERMS AND CONDITIONS 15. APPLICATIONS TO THE HIGH COURT: PART D The Transferor Company and the Transferee Company shall make all applications/ petitions under Section 391 to 394 read with sections 78 and 100 to 103 of the Companies Act, 1956 and other applicable provisions of the Act and Applicable Laws to the High Court of Gujarat and the Governmental Authority, as applicable, for sanctioning of this Scheme for carrying this Scheme into effect and obtain all approvals as may be required under law. 16. ESOPs BY THE TRANSFEREE COMPANY: The Transferee Company has given certain ESOPs to eligible persons and will continue to be ESOPs even after the Company is listed under the Scheme subject to compliance with SEBI guidelines if applicable. 17. MODIFICATIONS, AMENDMENTS TO THE SCHEME: The Transferor Company (by its Directors) and the Transferee Company (by its directors) may in their full and absolute discretion assent from time to time on behalf of all persons concerned to any modifications or amendments or addition to this Scheme or to any conditions or limitations which the Hon ble High Court of Gujarat at Ahmedabad or any authorities under the Law may deem fit to approve of or impose and/ or to resolve any doubt or difficulties (including ascertainment of assets and liabilities of De-merged Undertaking) that may arise for carrying out this Scheme and to do and execute all such acts, deeds, matters and things as may be necessary, desirable or proper for carrying the Scheme into effect. For the purpose of giving effect of this Scheme or to any modifications or amendments, thereof, any of the Directors of the Transferor Company and any of the Directors of the Transferee Company may give and are authorized to give all such directions that are necessary or are desirable including directions for settling any doubts or difficulties that may arise. Further any of the Directors of the Transferor Company and any of the Directors of the Transferee Company shall be entitled to modify any of the terms of this Scheme in future to settle any of the difficulties or to implement the provisions of this Scheme smoothly and hassle free manner, if such need arises and for all purposes the Effective Date for such subsequent modified scheme shall be the same as specified in this Scheme. 18. SEVERABILITY: If any part of this Scheme is found to be unworkable for any reason whatsoever, the same shall not, subject to the mutual agreement of the Transferor Company and the Transferee Company, affect the validity or implementation of the other parts and/ or provisions of this Scheme. 59

60 19. SCHEME CONDITIONAL UPON APPROVALS/ SANCTIONS: This Scheme is specifically conditional upon and subject to- (a) The Scheme being approved by the requisite majority of the respective members and such class of persons of the De-merged Company in compliance with guidelines issued by SEBI and in particular vide Circular CIR/CFD/DIL/5/2013 dated February 4, 2013 and Circular CIR/CFD/DIL/8/2013 dated May 21, (b) The Scheme being approved by the requisite majority in number and value of such classes of persons including the respective members and/ or creditors of De-merged Company and Resulting Company as may be directed by the High Court. (c) The sanctions of the Hon ble High Court of Gujarat at Ahmedabad being obtained under Sections 391 to 394 and other applicable provisions of the Companies Act, 1956 or any other Governmental Authorities if so required on behalf of the Transferor Company and the Transferee Company. (d) The certified copies of the High Court orders referred to in this Scheme being filed with the Registrar of Companies, Ahmedabad, Gujarat, as applicable. (e) The requisite consent, approval or permission of the Government Authority or any other statutory authority, which by law may be necessary for the implementation of this scheme. 20. EFFECTIVE DATE OF THE SCHEME: This Scheme although to come into operation from the Appointed Date shall not come into effect until the last date viz: (a) The date on which the last of all consents, approvals, permissions, resolutions, sanctions and/ or orders as are hereinabove referred to have been obtained or passed; and (b) The date on which all necessary certified copies of the order under Sections 391 to 394 of the Companies Act, 1956 are duly filed with the Registrar of Companies, Ahmedabad, Gujarat and such date shall be referred to as Effective Date for the purpose of this Scheme. All other compliances relating to filing and stamp duty etc, if applicable shall be done on or after the Effective Date subject to Clause 21. However the Effective Date shall not be affected by any of the modifications that might be required to be made as provided under Clause 17 and the Effective Date for such modified scheme shall be the same as mentioned in the above paragraphs. It is the intention and understanding of the parties hereto that the economic effect of the Scheme shall take effect from the Appointed Date despite the Scheme becoming effective from Effective Date under the relevant laws. 21. EFFECT OF NON-RECEIPT OF APPROVAL/ SANCTION: In the event of any of the said sanctions and/ or approvals referred to in the preceding clause no. 19 above not being obtained and/ or the Scheme not being sanctioned by the Hon ble High Court or any other Governmental Authorities and/ or the Order(s) not being passed or sanctions not being granted as aforesaid, the Board of Directors of the Transferor Company and the Transferee Company are hereby empowered and authorized, this Scheme shall stand revoked, cancelled and be of no effect save and except in respect of any act or deed done prior thereto as is contemplated hereunder or as to any right, obligation and/ or liabilities which might have arisen or accrued pursuant thereto and which shall be governed and be preserved or worked out as is specifically provided in this Scheme and or otherwise arise as per Law. 22. EXPENSES CONNECTED WITH THE SCHEME: 60

61 All costs, charges and expenses, including any taxes and duties of the Transferor Company and the Transferee Company respectively in relation to or in connection with or incidental to this Scheme and of carrying out and completing the terms of this Scheme shall be borne and paid by the Transferor Company. 61

62 STATEMENT OF TAX BENEFITS To, The Board of Directors Arvind Infrastructure Limited Ahmedabad Dear Sirs, Re: Note on possible Direct Tax benefits We hereby enclose a Note (refer annexure) that states the possible general tax benefits available to Arvind Infrastructure Limited (the Company ) and its shareholders under the current tax laws in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions which, based on business imperatives the Company faces in the future, the Company may or may not choose to fulfil. The benefits discussed in the annexure are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance whether: a. the Company or its shareholders will continue to obtain these benefits in future; or b. the conditions prescribed for availing the benefits have been or would be met with. The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company. Our views expressed herein are based on the facts and assumptions indicated by you. No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such changes. We shall not be liable to Arvind Infrastructure Limited for any claims, liabilities or expenses relating to this assignment except to the extent of fees relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or intentional misconduct. This note has been prepared solely in connection with the proposed listing of Equity shares by the Company under the Securities and Exchange Board of India ( SEBI ) (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the Offering). We hereby agree to this Note to be included in any offering document prepared in connection with the Offering and including references to us with respect to the note and no additional consent will be required for any such reference or reproduction. For M/s. G. K. Chokshi & Co., Chartered Accountants Firm Registration No.:101895W Rohit K Choksi Partner Membership No: Place: Ahmedabad Date: June 3,

63 NOTE ON POSSIBLE TAX BENEFITS AVAILABLE TO ARVIND INFRASTRUCTURE LIMITED (INCLUDING ITS INDIAN SUBSIDIARIES) AND TO ITS SHAREHOLDERS UNDER THE INCOME TAX ACT, 1961 (the IT Act) Arvind Infrastructure Limited (herein referred to as AIL or the Company ) is Indian Company subject to tax in India. The company is taxed on its profits. Profits are computed after allowing all reasonable business expenditure including depreciation. Considering the activities and the business of AIL, the following benefits may be available. I. SPECIAL TAX BENEFITS AVAILABLE TO THE COMPANY There are no special tax benefits available to the Company except the following:- 1. The Company will be entitled to claim of deduction in respect of capital expenditure incurred, wholly and exclusively for the purpose of any specified business as per section 35AD of the IT Act. Specified business for the purpose of section 35AD includes the following: Developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central or State Government. Developing and building a housing project under a scheme for affordable housing framed by the Central or State Government. II. SPECIAL TAX BENEFITS AVAILABLE TO THE SHAREHOLDERS There are no special tax benefits available to the shareholders. III. GENERAL TAX BENEFITS AVAILABLE TO THE COMPANY 1. The provisions of section 2(22)(e) of the IT Act which has the effect of taxing certain payments in the nature of loan or advance, by a company to a shareholder or to any concern in which such shareholder is a member and has substantial interest, as deemed dividend, would not apply to a company in which public are substantially interested. 2. Under section 24(a) of the IT Act, the Company will be eligible for deduction of thirty % of the annual value of the property (i.e. actual rent received or receivable on the property or any part of the property which is let out or deemed to be let out). 3. Subject to compliance of certain conditions laid down in Section 32 of the IT Act, the Company will be entitled to a deduction for depreciation in respect of tangible assets and, intangible assets being in the nature of know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature acquired on or after 1st day of April, 1998 at the rates prescribed under the Income-tax Rules, The Company will be entitled for exemption under section 10(2A) of the I.T. Act for the share of profits received from the Indian partnership firm in which the company is a partner. As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. 5. The company will be entitled to amortize preliminary expenses being the expenditure incurred on public issue of shares, under Section 35D(2)(c)(iv) of the IT Act, subject to the nature of expenses and the limit specified in Section 35D(3). 6. Under section 35DD of the IT Act, for any expenditure incurred wholly and exclusively for the purposes of amalgamation or demerger, the Company is eligible for deduction of an amount equal to one fifth of such expenditure for each of the five successive years beginning with the year in which amalgamation or demerger takes place. 63

64 7. The Company will be entitled to claim expenditure incurred in respect of voluntary retirement scheme under scheme 35DDA of the IT Act in five equal annual instalments. 8. Under section 71 of the IT Act, business loss suffered by the Company during the year is allowed to be setoff against income from any other head. Balance loss, if any, could be carried forward under section 72 for eight years for claiming set-off against subsequent years business income. If the accumulated loss suffered by a company comprises unabsorbed depreciation, then such unabsorbed depreciation shall be carried forward to subsequent years indefinitely. 9. Under section 79 of the IT Act, the carry forward and set off of business losses of a company in which public are substantially interested, would not be impacted on a change in shareholding pattern of the Company. 10. Where any tax is paid under section 115JB(1) of the IT Act (hereinafter referred to as Minimum Alternate Tax or MAT ), for any assessment year commencing on the 1st day of April 2006, then section 115JAA(1A) provides that credit in respect of tax so paid shall be allowed to the Company in accordance with the provisions of the IT Act. Tax credit eligible to be carried forward will be the difference between the MAT paid and the tax computed as per the normal provisions of the IT Act for that assessment year. Such MAT credit is allowed to be carried forward for set off purposes for up to 10 years succeeding the year in which the MAT credit is allowed. 11. Under section 115-O of the IT Act, the Company will be liable to pay Dividend Distribution Tax (DDT) on the dividend declared, distributed or paid. For the purpose of payment of DDT on the dividends, the dividends so declared, distributed or paid by the domestic company shall be reduced by- the dividends received from its Indian subsidiary provided such subsidiary has paid DDT on the same. the dividend received from its foreign subsidiary provided such dividend is taxable under section 115BBD of the IT Act. For the said purpose, a company shall be a subsidiary of another company, if such other company, holds more than half in nominal value of the equity share capital of the company. For the purposes of determining the tax on distributed profits, net distributed profits shall be increased to such amount as would, after reduction of the tax on such increased amount be equal to the net distributed profits 12. Tax on distributed income to shareholders on buy back of shares under section 115QA of the IT Act shall not be applicable to shares listed in recognized stock exchange. Income from distributed profits 1. As per the provisions of Section 10(34) of the IT Act, any income by way of dividends referred to in Section 115 O (i.e. dividends declared, distributed or paid on or after 1 April, 2003) received from domestic company is exempt from income-tax. As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. 2. As per Section 10(35) of the IT Act, the following income will be exempt in the hands of the Company: a. Income received in respect of the units of a Mutual Fund specified under clause (23D) of Section 10; or b. Income received in respect of units from the Administrator of the specified undertaking; or c. Income received in respect of units from the specified company However, this exemption does not apply to any income arising from transfer of such units by the unit holder. For this purpose (i) Administrator means the Administrator as referred to in Section 2(a) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 and (ii) Specified Company means a Company as referred to in Section 2(h) of the said Act. 64

65 As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. Capital Gains 1. Under Section 10(33) of the IT Act, any income arising from the transfer of a capital asset, being a unit of the Unit Scheme, 1964 referred to in Schedule I to the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) and where the transfer of such asset takes place on or after the 1 st day of April 2002 is exempt. As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. 2. As per Section 10(38) of the IT Act, capital gains arising to the Company on transfer of long term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit of business trust (except those which were acquired in consideration of a transfer referred to in clause xvii of section 47) will be exempt in the hands of the Company, provided such transaction is chargeable to securities transaction tax. For this purpose, Equity Oriented Fund means a fund a. where the investible funds are invested by way of equity shares in domestic companies to the extent of more than sixty five % of the total proceeds of such funds; and b. which has been set up under a scheme of a Mutual Fund specified under Section 10(23D) of the IT Act. The long term capital gains exempt under Section 10(38) would be liable to book profit tax under Section 115JB of the IT Act. As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. 3. Under the Second Proviso to Section 48 of the IT Act, long term capital gains of the Company arising on the transfer of capital assets other than bonds and debentures (not being capital indexed bonds) will be computed after applying the relevant indexation on the cost of acquisition and cost of improvement. The resulting long term capital gains would be 20% (plus applicable surcharge and education cess) as per Section 112 of the IT Act. Alternatively, at the option of the company, in respect of long term capital gains from the sale of listed securities or units or zero coupon bonds where the tax payable in respect of any such long term capital gains exceeds 10% of the amount of capital gains arrived at without indexing the cost, the capital gains is charged at a concessional rate of 10% (plus applicable surcharge and education cess). 4. Under Section 54EC of the IT Act and subject to the conditions and to the extent specified therein, longterm capital gains (in cases not covered under Section 10(38) of the IT Act) arising on the transfer of a long-term capital asset will be exempt from capital gains tax if the capital gains are invested in a long term specified asset within a period of six months after the date of such transfer. If only part of the capital gain is so reinvested, exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money. Long term specified asset for the purpose of making investment under Section 54EC of the IT Act, means any bond, redeemable after three years and issued on or after the 1st day of April 2007: a. by the National Highways Authority of India constituted under Section 3 of the National Highways Authority of India Act, 1988 or; b. by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act,

66 If only part of the capital gain is so reinvested, exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. However, in case the long term specified asset is transferred or converted into money within three years from the date of its acquisition, the amount so exempted shall be chargeable to tax during the year such transfer or conversion into money takes place. The investment in the Long Term Specified Asset made by the Shareholder on or after April 1, 2007 during the FY should not exceed `50 Lac. Provided further that the investment in the long-term specified asset during the financial year in which the original asset or assets are transferred and in the subsequent financial year should not exceed fifty lakh rupees. 5. Under Section 111A of the IT Act, short term capital gains arising to the Company from the sale of a short term capital asset being an equity share or a unit of an equity oriented fund will be taxable at the rate of 15% (plus applicable surcharge and education cess) where such transaction is chargeable to securities transaction tax. Short Term Capital Gains arising from transfer of shares in a Company, other than those covered by Section 111A of the IT Act, would be subject to tax as calculated under the normal provisions of the IT Act. For this purpose, equity oriented fund would have the same meaning as specified in section 10(38) above. 6. As per section 70, short-term capital loss suffered by the Company during the year is allowed to be set off against short-term as well as long-term capital gains of the said year. Balance loss, if any, could be carried forward under section 74 for eight years for claiming set-off against subsequent years long term/short term capital gains. Long-term capital loss suffered during the year is allowed to be set-off against long-term capital gains. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years long-term capital gains. IV. GENERAL TAX BENEFITS AVAILABLE TO RESIDENT SHAREHOLDERS 1. As per the provisions of Section 10(34) of the IT Act, any income by way of dividends referred to in Section 115 O (i.e. dividends declared, distributed or paid on or after 1 April, 2003) received from domestic company is exempt from income tax in the hands of shareholder. As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. 2. As per the provisions of Section 10(38) of the IT Act, long term capital gains arising on sale of equity shares in the Company would be exempt from tax where the sale transaction has been subjected to securities transaction tax. As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. 3. As per provisions of Section 36(1)(xv) of the IT Act, securities transaction tax paid in respect of the taxable securities transactions entered into in the course of the business is allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head Profit and gains of business or profession. Where such deduction is claimed, no further deduction in respect of the said amount is allowed while determining the income chargeable to tax as capital gains. 4. Under Second Proviso to Section 48 of the IT Act, long term capital gains of the shareholder arising on the transfer of capital assets other than bonds and debentures (not being capital indexed bonds) will be computed after applying the relevant indexation on the cost of acquisition and cost of improvement. The resulting long term capital gains would be 20% (plus applicable surcharge and education cess) as per Section 112 of the IT Act. Alternatively, at the option of the shareholder, in respect of long term capital gains from the sale of listed securities (which are not exempt u/s 10 (38) of the IT Act) or units or zero coupon bonds where the tax payable in respect of 66

67 any such long term capital gains exceeds 10% of the amount of capital gains arrived at without indexing the cost, the capital gains is charged at a concessional rate of 10% (plus applicable surcharge and education cess). 5. As per the provisions of Section 54EC of the IT Act and subject to the conditions and to the extent specified therein, long-term capital gains (which are not exempt under Section 10(38) of the IT Act) would be exempt from tax to the extent such capital gains are invested in long term specified assets within six months from the date of such transfer in the bonds issued by: a. National Highway Authority of India constituted under Section 3 of The National Highway Authority of India Act, 1988: b. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956; If only part of the capital gain is so reinvested, exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. However, in case the long term specified asset is transferred or converted into money within three years from the date of its acquisition, the amount so exempted shall be chargeable to tax during the year such transfer or conversion into money takes place. The investment in the Long Term Specified Asset made by the Shareholder on or after April 1, 2007 during the FY should not exceed `50 Lac. The cost of the long term specified assets, which has been considered under this Section for calculating capital gain, shall not be allowed as a deduction from the income tax under Section 80C for any assessment year beginning on or after 1 April, As per the provisions of Section 54F of the IT Act and subject to the conditions specified therein, long term capital gains (which are not exempt under Section 10(38) of the IT Act) arising to an individual or a Hindu Undivided Family ( HUF ) on transfer of shares of the Company will be exempt from capital gains tax if the sale proceeds from transfer of such shares are used for purchase of residential house property within a period of one year before or two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of such transfer. 7. As per section 70, short-term capital loss suffered during the year is allowed to be set-off against short term as well as long-term capital gains of the said year. Balance loss, if any, could be carried forward under section 74 for eight years for claiming set-off against subsequent years long-term/short term capital gains. Long-term capital loss suffered during the year is allowed to be set-off against long-term capital gains. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years long-term capital gains. 8. Where the resident shareholder is a corporate assessee, then, to the extent its business consists of purchase and sale of shares of other companies, the provisions of Explanation to Section 73 may be attracted. In other words, the losses arising on the purchase and sale of such shares shall be allowed to be set off only against the profits arising on the sale of such shares. The unabsorbed losses, if any, shall be allowed to be carried forward for a period not exceeding four assessment years immediately succeeding the assessment year in which the loss is first computed and set off against the profits arising from the sale of such shares. 9. As per the provisions of Section 111A of the IT Act, short-term capital gains from the sale of an equity share of the Company would be taxable at a rate of 15 % (plus applicable surcharge and education cess) where such transaction of sale is entered on a recognized stock exchange in India and is liable to securities transaction tax. Short Term Capital Gains arising from transfer of Shares in a Company, other than those covered by Section 111A of the IT Act, would be subject to tax as calculated under the normal provisions of the IT Act. V. GENERAL TAX BENEFITS AVAILABLE TO NON-RESIDENTS/ NON-RESIDENT INDIAN SHAREHOLDERS (OTHER THAN MUTUAL FUNDS, FIIs AND FOREIGN VENTURE CAPITAL INVESTORS) 67

68 1. As per the provisions of Section 10(34) of the IT Act, any income by way of dividends referred to in Section 115-O (i.e. dividends declared, distributed or paid on or after 1 April, 2003) received on the shares of any company is exempted from tax and is not subject to any deduction of tax at source. As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. 2. As per the provisions of Section 10(38) of the IT Act, long-term capital gains arising on transfer of equity shares in the Company would be exempt from tax provided the transaction is chargeable to securities transaction tax. As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. 3. As per provisions of Section 36(1)(xv) of the IT Act, securities transaction tax paid in respect of the taxable securities transactions entered into in the course of the business is allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head Profit and gains of business or profession. Where such deduction is claimed, no further deduction in respect of the said amount is allowed while determining the income chargeable to tax as capital gains. 4. Under Section 111A of the IT Act, short-term capital gains arising from the sale of an equity share, being a short term capital asset in the company, would be taxable at a concessional rate of 15 % (plus applicable surcharge and education cess) where such transaction is liable to securities transaction tax. Short Term Capital Gains arising from transfer of shares in the company, other than those covered by Section 111A of the IT Act, would be subject to tax as calculated under the normal provisions of the IT Act. 5. In terms of the first proviso to Section 48 of the IT Act, in case of a non-resident, while computing the capital gains arising from transfer of shares in or debentures of the company acquired in convertible foreign exchange (as per exchange control regulations), protection is provided from fluctuations in the value of rupee in terms of foreign currency in which the original investment was made. Cost indexation benefits will not be available in such a case. The capital gains/loss in such a case is computed by converting the cost of acquisition, sales consideration and expenditure incurred wholly and exclusively in connection with such transfer into same foreign currency which was utilized in the purchase of shares. 6. As per the provisions of Section 54EC of the IT Act and subject to the conditions and to the extent specified therein, long-term capital gains (which are not exempt under Section 10(38) of the IT Act) would not be chargeable to tax to the extent such capital gains are invested in long term specified assets within six months from the date of transfer and held for a period of three years, from the date of acquisition, in bonds issued by: a. National Highway Authority of India constituted under Section 3 of the National Highway Authority of India Act, 1988; b. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956; If only part of the capital gain is so reinvested, exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. However, in case the long term specified asset is transferred or converted into money within three years from the date of its acquisition, the amount so exempted shall be chargeable to tax during the year such transfer or conversion into money takes place. The investment in the Long Term Specified Asset made by the Shareholder on or after April 1, 2007 during the FY should not exceed `50 Lac. Provided further that the investment in the long-term specified asset during the financial year in which the original asset or assets are transferred and in the subsequent financial year should not exceed fifty lakh rupees. 68

69 The cost of long term specified assets, which has been considered under this Section for calculating capital gain, shall not be allowed as a deduction from the income tax under Section 80C for any assessment year beginning on or after 1 April, As per the provisions of Section 54F of the IT Act and subject to the conditions specified therein, long term capital gains (which are not exempt under Section 10(38) of the IT Act) arising to an individual on transfer of shares of the Company will be exempt from capital gains tax if the sale proceeds from such shares are used for purchase of residential house property within a period of one year before or two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of such transfer. 8. As per Section 90(2) of the IT Act, provisions of the Double Taxation Avoidance Agreement between India and the country of residence of the Non-Resident/ Non-Resident Indian would prevail over the provisions of the IT Act to the extent they are more beneficial to the Non-Resident/ Non-Resident Indian subject to Tax Residency Certificate being furnished as per prescribed format. 9. As per provisions of Section 115E of the IT Act, Long Term Capital Gain arising to a Non-Resident Indian from transfer of specified foreign exchange assets is taxable at the rate of 10% (plus applicable surcharge and cess). Further, income from investments and Long term capital gain from assets (other than specified foreign exchange assets) arising to a Non-Resident Indian is taxable at the rate of 20% (plus applicable surcharge and cess. No deduction is allowed from such income in respect of any expenditure or allowance or deductions under Chapter VI-A of the IT Act. Further the benefit of first proviso to section 48 shall not be available. 10. As per provisions of Section 115F of the IT Act, Long term capital gain arising to a Non-Resident Indian on transfer of a foreign exchange asset is exempt from tax if the net consideration from such transfer is invested in the specified assets or savings certificates within six months from the date of such transfer, subject to the extent and conditions specified in that section. 11. As per provisions of Section 115G of the IT Act, where the total income of a Non-Resident Indian consists only of investment income / Long term capital gain from such foreign exchange asset / specified asset and tax thereon has been deducted at source in accordance with the Act, the Non-Resident Indian is not required to file a return of income. 12. As per provisions of Section 115H of the IT Act, where a person who is a Non-Resident Indian in any previous year, becomes assessable as a resident in India in respect of the total income of any subsequent year, he / she may furnish a declaration in writing to the assessing officer, along with his / her return of income under Section 139 of the IT Act for the assessment year in which he / she is first assessable as a resident, to the effect that the provisions of the Chapter XII-A (Special provisions relating to certain incomes of non-residents) shall continue to apply to him / her in relation to investment income derived from the specified assets for that year and subsequent years until such assets are transferred or converted into money. 13. As per provisions of Section 115-I of the IT Act, a Non-Resident Indian can opt not to be governed by the provisions of Chapter XII-A (Special provisions relating to certain incomes of non-residents) for any assessment year by furnishing return of income for that assessment year under Section 139 of the IT Act, declaring therein that the provisions of the chapter shall not apply for that assessment year. In such a situation, the other provisions of the IT Act shall be applicable while determining the taxable income and tax liability arising thereon. VI. GENERAL TAX BENEFITS AVAILABLE TO MUTUAL FUNDS As per Section 10(23D) of the IT Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made thereunder, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorised by the Reserve Bank of India will be exempt from income tax, subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf. 69

70 VII. GENERAL TAX BENEFITS AVAILABLE TO FOREIGN INSTITUTIONAL INVESTORS ( FIIs ) 1. As per the provisions of Section 10(34) of the IT Act, dividend income (referred to in Section of the IT Act) would be exempt from tax in the hands of the shareholders of the Company and are not subjected to deduction of tax at source. As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. 2. As per the provisions of Section 10(38) of the IT Act, long term capital gains arising on transfer of equity shares of the Company would be exempt from tax where the sale transaction has been entered into on a recognized stock exchange of India and is liable to securities transaction tax. As per provisions of Section 14A of the IT Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. 3. As per provisions of Section 36(1)(xv) of the IT Act, securities transaction tax paid in respect of the taxable securities transactions entered into in the course of the business is allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head Profit and gains of business or profession. Where such deduction is claimed, no further deduction in respect of the said amount is allowed while determining the income chargeable to tax as capital gains. 4. As per the provisions of Section 54EC of the IT Act and subject to the conditions and to the extent specified therein, long-term capital gains (which are not exempt under Section 10(38) of the IT Act) would not be chargeable to tax to the extent such capital gains are invested in long term specified assets within six months from the date of transfer and held for a period of three years, from the date of acquisition, in bonds issued by: a. National Highway Authority of India constituted under Section 3 of The National Highway Authority of India Act, 1988; b. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act,1956; If only part of the capital gain is so reinvested, exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. However, in case the long term specified asset is transferred or converted into money within three years from the date of its acquisition, the amount so exempted shall be chargeable to tax during the year such transfer or conversion into money takes place. The investment in the Long Term Specified Asset made by the Shareholder on or after April 1, 2007 during the FY should not exceed `50 Lac. Provided further that the investment in the long-term specified asset during the financial year in which the original asset or assets are transferred and in the subsequent financial year should not exceed fifty lakh rupees. 5. Where the Foreign Institutional Investor is a corporate assessee, to the extent its business consists of purchase and sale of shares of other companies, provisions of Explanation to Section 73 may be attracted. In other words, the losses arising on the purchase and sale of such shares shall be allowed to be set off only against the profits arising on the sale of such shares. The unabsorbed losses, if any, shall be allowed to be carried forward for a period not exceeding four assessment years immediately succeeding the assessment year in which the loss is first computed and set off against the profits arising from the sale of such shares. 6. As per Section 90(2) of the IT Act, provisions of the Double Taxation Avoidance Agreement between India and the country of residence of the FII would prevail over the provisions of the IT Act to the extent they are more beneficial to the FII subject to furnishing of Tax Residency Certificate and Form No. 10F as applicable. 70

71 7. Under the provisions of Section 111A of the IT Act, short-term capital gains arising from transfer of equity share in the Company would be taxable at a concessional rate of 15 % (plus applicable surcharge and education cess) where such transaction which has been subjected to securities transaction tax. 8. As per the provisions of Section 115AD of the IT Act, income (other than income by way of dividends referred to in Section 115-O of the IT Act) of FIIs arising from securities (other than the units purchased in foreign currency referred to Section 115AB of the IT Act) would be taxed at concessional rates, as follows: Nature of income Rate of tax (%) Income in respect of securities 20 Interest referred to in section 194LD 5 Long term capital gains 10 Short term capital gains (Other than short term capital gain referred to in Section 111A) 30 The above tax rates would be increased by the applicable surcharge and education cess. The benefits of indexation and foreign currency fluctuation protection as provided under Section 48 of the IT Act are not available. GENERAL TAX BENEFITS AVAILABLE TO VENTURE CAPITAL COMPANIES / FUNDS 1. As per Section 10(23FB) of the IT Act, any income of a Venture Capital Company or Venture Capital Fund from investment in a Venture capital undertaking would be exempted from income tax subject to the fulfillment of conditions specified. 2. Under Section 90(2) of the IT Act, provisions of the Double Taxation Avoidance Agreement (DTAA) between India and the country of residence of the Fund/company (if non- resident) would prevail over the provisions of the IT Act to the extent the DTAA is more beneficial to the non-resident. NEW AMENDMENTS UNDER THE IT ACT The Government of India has recently made amendments in the existing income tax laws to incorporate provisions relating to General Anti-Avoidance Rules (GAAR). GAAR would be effective from assessment year commencing on 1st April 2018 or thereafter. UNDER THE WEALTH TAX ACT, 1957 Assets as defined under Section 2(ea) of the Wealth tax Act, 1957 does not include shares in companies and hence, shares of the Company held by the shareholders would not be liable to wealth tax. Further the provisions of wealth tax has been abolished by Finance Act, UNDER THE GIFT- TAX ACT Gift tax is not leviable in respect of gifts made on or after 1st October, Notes: a. The above statement of Possible Direct Tax Benefits sets out the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of equity shares. b. The above statement of Possible Direct Tax Benefits sets out the possible tax benefits available to the Company and its shareholders under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. c. Legislation, its judicial interpretations and the policies of the regulatory authorities are subject to change from time to time, and these may have a bearing on the above. Accordingly, any change or amendment in the law or relevant regulations would necessitate a review of the above. Unless specifically requested, we have no 71

72 responsibility to carry out any review of our comments for changes in laws or regulations occurring after the date of issue of this note. d. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences, the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue. e. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to any benefits available under the Double Taxation Avoidance Agreement, if any, between India and the country in which the non-resident has fiscal domicile. The statement of possible tax benefits enumerated above is as per the Income Tax Act, 1961 as amended by the Finance Act This note has been prepared solely in connection with the proposed listing of Equity shares by the Company under the Securities and Exchange Board of India ( SEBI ) (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the Offering). For Ms. G. K. Choksi & Co., Chartered Accountants Firm Registration No.:101895W Rohit K Choksi Partner Membership No: Place: Ahmedabad Date: June 3,

73 INDUSTRY India, the world's largest democracy having a population of an estimated 1,236 million, as of July 2014, had an estimated GDP on a purchasing power parity basis of approximately U.S.$4.99 trillion in This makes it the fourth largest economy by GDP in the world after the U.S., European Union and China. (Source CIA World Factbook) The Twelfth Five Year Plan lays special emphasis on development of the infrastructure sector, as the availability of quality infrastructure is important not only for sustaining high growth but also ensuring that the growth is inclusive. The total investment in the infrastructure sector during the Twelfth Five Year Plan, estimated at 56.3 lakh crore (approx. US$1trillion), will be nearly double that made during the Eleventh Five Year Plan. (Source Economic Survey - The housing shortage in rural India is estimated at 47.4 Million units, in Present levels of urban infrastructure are inadequate to meet the demands of the existing urban population. There is need for re-generation of urban areas in existing cities and the creation of new, inclusive smart cities to meet the demands of increasing population and migration from rural to urban areas. Future cities of India will require smart real estate and urban infrastructure. (Source: Make in India website, Government of India) The Government of India is in the process of launching a new urban development mission. This will help develop 500 cities, which include cities with a population of more than 100,000 and some cities of religious and tourist importance. These cities will be supported and encouraged to harness private capital and expertise through PPPs, to holster their infrastructure and services in the next 10 years. 100% FDI through the automatic route is permitted in townships, housing, built-up infrastructure and construction-development projects (including, but not restricted to housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure). (Source: Make in India website, Government of India) The International Monetary Fund (IMF), in the World Economic Outlook (October 2014), has noted that increases in public infrastructure investment, if efficiently implemented, affects the economy in two ways. In the short run it boosts aggregate demand and crowds in private investment due to the complementary nature of infrastructure services. In the long run, a supply side effect also kicks in as the infrastructure built feeds into the productive capacity of the economy. Econometric exercises reported by the IMF confirm that public investment increases can have positive effects on output. The medium term public investment multiplier for developing economies is estimated to be between 0.5 and a little lower than that estimated for advanced economies. However, the magnitudes depend on the efficiency of implementation. (Source: Economic Survey Report by Ministry of Finance, Department of Economic Affairs< Economic Division, February ( Summary of the Facts: USD 1,000 Billion investments for infrastructure sector projected in 12th five year plan ( ). USD 650 Billion investments in urban infrastructure estimated over next 20 years. 100% FDI permitted through the automatic route for townships, cities. 10% of India s GDP is based on construction activity. Reasons to Invest in Construction Sector: An investment of USD 1,000 Billion has been projected for the infrastructure sector until 2017, 40% of which is to be funded by the private sector. 45% of infrastructure investment will be funneled into construction activity and 20% set to modernise the construction industry. The Indian government has undertaken a number of measures to ease access to funding for the sector. Construction activities contribute more than 10% of India s GDP. The construction industry in India has seen sustained demand from the industrial and real estate sector. Housing for seniors has seen increased interest levels from corporates, the hospitality and healthcare industries over the last few years. 73

74 (Source: Make in India website, Government of India) 74

75 SECTION V- ABOUT THE COMPANY OUR BUSINESS Some of the information contained in the following discussion, including information with respect to our plans and strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section Risk Factors for a discussion of certain factors that may affect our business, financial condition or results of operations. Our financial year ends on March 31 of each year, so all references to a particular FY are to the twelve months ended March 31 of that year. OVERVIEW We are a real estate development company primarily focused on the development of residential projects. Currently, our projects are located in Ahmedabad and Bengaluru which are at different stages of development, focusing on residential projects that include integrated townships. Our residential projects comprise of villas, apartments and plots targeted towards middle income and high income customers. Our existing integrated townships comprise of executive golf course with villas, apartments, retail, commercial and recreational areas. We also undertake commercial and industrial projects on a selective basis. Our commercial and industrial projects include shops, offices and industrial plots and industrial sheds. We follow a knowledge-based approach from internal and external sources for execution of our projects. We undertake our projects through our in-house team of professionals and by partnering with domestic and international companies for various operations like architecture, golf designing and development, project execution, detailed engineering and marketing activities. We have a dedicated team of customer relationship management (CRM), marketing and sales who regularly interact with our customers and channel partners to enable an educated, userfriendly purchasing experience for the customers. We strategically use the joint development model for developing projects, which entails entering into a development agreement with the owner(s) of the land parcel(s) sought to be developed. The development agreement generally states that the land owner(s) is entitled, as compensation, to a share in the developed property or a share of the revenues or profits generated from the sale of the developed property, or a combination thereof. Additionally, we also develop some of our projects through joint ventures with third parties. Selectively, we also acquire land for development of our projects. As on date, our project portfolio comprises of twelve (12) projects out of which four (4) are completed comprising of approximately 2 million sq.ft. ( Completed Projects ), six (6) are ongoing comprising of approximately million sq.ft. ( Ongoing Projects ) and two (2) are upcoming comprising of approximately 1.37 million sq.ft. ( Upcoming Projects ). The location and the estimated Saleable Area of our Completed, Ongoing and Upcoming Projects as of on date is summarised in the table below: Project Product Location Estimated Saleable Area (in Mn Sq. ft) Land Construction Completed Projects Alcove Plots Ahmedabad Parishkar Apartments Ahmedabad Megatrade Commercial and retail spaces Ahmedabad Tradesquare Commercial and retail spaces Ahmedabad Ongoing Projects Uplands Integrated township with executive golf course, villas, apartments, Ahmedabad retail, commercial and recreational areas Beyond Five Residential township with villas, plots and executive golf course Ahmedabad Expansia Villas and apartments Bengaluru Sporcia Apartments Bengaluru Citadel Apartments Ahmedabad

76 Project Product Location Estimated Saleable Area (in Mn Sq. ft) Land Construction Megaestate Industrial sheds Ahmedabad Upcoming Projects Megapark Industrial Sheds and Industrial plots Ahmedabad E-city Apartments Bengaluru Our Company has won the Emerging Developer of the Year - Residential award and one of our projects, Uplands won Luxury Projects of the Year award by Realty Plus Excellence Awards (Gujarat) For the year ended March 31, 2013, 2014 and 2015, the Company s total revenue amounted to `2, Lacs, `4, Lacs and `6, Lacs respectively. For the year ended March 31, 2013, 2014 and 2015, the Company s total profit after tax amounted to ` Lacs, ` Lacs and `1, Lacs respectively. COMPETITIVE STRENGTHS Established brand name We are a part of the Lalbhai group of companies. We believe the Arvind brand is instantly recognisable amongst the populace in India due to its long presence in the Indian market, the diversified businesses in which the Lalbhai group operates and the trust we believe it has developed over eight decades. Our Company has won the Emerging Developer of the Year Residential award and one of our projects, Uplands won Luxury Projects of the Year award by Realty Plus Excellence Awards (Gujarat) We believe our established and recognisable brand is a differentiating factor for our customers, which helps establish customer confidence, influences buying decisions and has enabled us to achieve premium prices for our projects. Strong presence in Ahmedabad and Bangalore We believe that we have good knowledge of the market and regulatory environment in areas in and around Ahmedabad that assists us in identifying opportunities for existing and upcoming locations in and around Ahmedabad. Most of our Completed, Ongoing and Upcoming Projects are located in Ahmedabad, which we believe is an attractive real estate market in terms of returns on investment, product positioning and depth of demand for real estate developments across segments and price points. Ahmedabad s real estate market has witnessed a rapid development as compared to other cities of India mostly driven by the high rate of industrial growth. Certain areas near Ahmedabad are expected to be developed as smart cities. With relatively low costs compared with other large cities in India coupled with the proactive development approach of the government and local authorities, Ahmedabad is poised to grow at a faster pace, providing ample opportunities in the real estate sector in near future. Further, in Bengalure, our Company has witnessed a strong brand recall which is reflected in our sales. Besides, the Lalbhai group is already having a strong presence in Bengaluru for its textile, garment business. We believe that we have attained good knowledge of the market and regulatory environment in Bengaluru. Asset light model through joint development agreements Our experience in land assessment, negotiations with land owners and obtaining requisite approvals helps us in securing land parcels in potential high growth areas. In this regard, we have a team of skilled researchers who focus on identification of geographical areas which have the potential to deliver significant appreciation in value. Thereafter, our team carries out the requisite land related searches which helps us to identify available land parcels and then negotiate commercial terms with the land owners. We believe our experience in securing joint development agreements with land owners helps us create a healthy project pipeline. We believe that our ability to secure such land parcels helps us to keep our balance sheet out of leverage pressure and enhancing our profitability margins. Existing project pipeline providing near term cash flow visibility 76

77 Our existing project pipeline provides a near term cash flow visibility. We currently have 6 Ongoing and 2 Upcoming Projects, which are expected to provide a total Saleable Area of approximately million Sq.ft. We expect to complete and deliver most of these projects over the next one to five years. In addition, we follow a sale model for our residential projects. For these projects we typically receive approximately 10-20% of the purchase price as down payment at the time of booking a particular unit and the remainder through periodic payments linked to certain milestones while the project is being developed. We generally launch such projects and commence the sales process for a portion of the total number of units to be sold around the time of commencing construction. Qualified and experienced management team We believe that our qualified and experienced management and technical teams have contributed to the growth of our operations and the development of in-house processes and competencies. We undertake our projects through our in-house team of professionals and by partnering with domestic and international companies for various operations like architecture, golf designing and development, project execution, detailed engineering and marketing activities. We have a dedicated team of customer relationship management (CRM), marketing and sales who regularly interact with our customers and channel partners to enable an educated, user-friendly purchasing experience. Our technical teams brings with it extensive experience in designing, engineering, marketing and construction of projects. Our senior management team is in charge of operations, finance, sales and marketing, business development and strategic planning and has extensive experience in the industry. We believe the strength and quality of our management team have been instrumental in implementing our business strategies. We believe that the strength of our management team and their understanding of the real estate market will enable us to continue to take advantage of current and future market opportunities. OUR STRATEGY OUR STRATEGIES Asset light business model Our primary focus will remain on residential projects mainly for two reasons. Firstly, residential projects need comparatively lesser capital for construction as significant portion of construction funding is received through construction linked payments by the customers. Secondly, residential projects are less prone to ups and downs of business cycle which makes project lifecycles comparatively shorter. Further, we will continue focusing on judicious mix of capital structuring options which include joint development (JD), joint venture (JV) and outright land purchases. Our Company can leverage its brand in the market to secure valuable land parcels on JD / JV basis and now has a proven track record of successfully running large projects on similar structuring. Such JD / JV arrangements have drastically reduced initial cash investments into the projects and we intend to continue the same capital structuring approach in future. Focused Geographical expansion We intend to continue to focus on the development of our projects in Ahmedabad and Bengaluru. We believe that Ahmedabad and Bengaluru are an attractive real estate market in terms of returns on investment, product positioning and depth of demand for real estate developments across segments and price points. Both these markets have significant untapped depth which can further propel our near and medium term growth. With relatively low costs compared with other large cities in India coupled with the proactive development approach of the government and local authorities, Ahmedabad is poised to grow at a faster pace, providing ample opportunities in the real estate sector in near future. Bengaluru continues to witness a steady stream of new product launches that were complemented by healthy take-up from end-users as well as investors alike. The Bengaluru market has witnessed an increased investor Interest that is attributable to the strong demand from the city s IT workforce, resulting in an increased off-take of residential units. Although we are strategically expanding in Ahmedabad and Bengaluru, we are also exploring development opportunities in other growing cities such as Pune, Jaipur and Surat. We believe that these cities have the potential to 77

78 grow at a rapid pace and we intend to develop properties in such cities to take advantage of such potential. We actively seek to identify land in fast growing cities and suburbs which attract increasing economic activities. We believe that the economic growth in these cities will result in increased demand for residential housing. With a focused approach, we intend to gradually expand our projects in other cities which have the potential for growth. However, we are taking a cautious approach towards expanding in newer geographies to ensure that enough local knowledge and critical mass of business is achieved in each of the new geographies we expand in. Diverse range of price segments with judicious mix of long and medium term projects We intend to focus on the development of residential projects across a diverse range of price segments. Our primary focus will be on the mid, high and luxury segments of residential products. We believe that these three segments have enough depth to achieve our target growth. Further, we intend to have a judicious mix of long and medium term projects. Long term projects typically have lower FSI utilization and are comparatively more horizontal products. They create long term value because of size and location of the land. Such projects are undertaken in the well-connected upcoming satellite areas of the cities. Medium term projects are undertaken in areas which are already developed and such projects will have comparatively shorter lead times and lifecycles. Such mix of projects will give stability to the business. Lean and efficient organization We intend to increase the scale of our operations while ensuring that we carry on our operations in a cost effective manner. Selective outsourcing enables us to undertake more developments while providing us with cost efficiencies. We intend to continue to outsource our construction activities in order to enable us to devote more time and effort to other aspects of our development activities and to better utilise our manpower and value engineering. We believe selective outsourcing activities enable us to reduce our operation costs and capital expenditures. While we maintain a lean organization by having in-house expertise in core and critical functions, we partner with world class service providers including architects, designers, town planners, engineering services, marketing and branding etc. to ensure that the end product is always designed, planned and executed on the :Best in Class basis. Product innovation We believe that we have developed a reputation for consistently developing projects known for innovation, high quality, uniqueness, reliability and convenience for our customers. We intend to continue to focus on product innovation in order to maximize customer satisfaction. We also intend to continue to use technologically advanced tools and processes without compromising on reliability or quality of our constructions. We also intend to continue to enhance our architectural, design, construction and development capabilities to enable us to provide innovative, modern and quality products and services to our customers. We already have set some very innovative theme based product concepts like Disney inspired living, Elements of Smaaash in our recreational clubs, Sports centric developments, Japanese Zen based meditation centers etc. OUR OPERATIONS We commenced our journey in real estate with two projects Alcove and Parishkaar, a joint venture with BSafal group in Alcove a plotted development in the vicinity of Ahmedabad was an immediate success and the joint venture with BSafal on our land parcel acted as a knowledge platform. Bsafal is one of the most trusted and established real estate company in Ahmedabad. BSafal s in-depth understanding of real estate development, quality of execution, well planned construction gave us real insights into the business and helped us in exploring our potentials in different real estate business functions such as sales / marketing, CRM and Construction Management. Thereafter, we entered into a joint venture with Tata Housing Development Company on our land for development of affordable housing in Ahmedabad. The project was well received in Ahmedabad and is successful. Our knowhow of business were further strengthened with the execution of this project with TATAs. Today, our presence in real estate market is thoughtful with a reputed brand name. We are considered an established real estate player with its methodological process driven approach, strong management team and project mix. We 78

79 take definite and poised steps in evaluating new project opportunities and are able to strategically secure land parcels using joint developments on our own. We currently have a judicious mix of projects across the price-segments with in-house capability to plan, design, execute and competitively sell the projects. Our projects may be broadly classified into completed projects, which are projects for which building use permission (BUA/occupation certificate (OC) has been received and/or possession has been handed over ( Completed Project ), ongoing projects, which are projects for which all or certain initial approvals have been granted by the relevant authority ( Ongoing Projects ), and upcoming projects, which are projects for which (i) land has been acquired or an agreement for development has been executed; (ii) conversion from agricultural land has been completed, if necessary, or an application for change in status to nonagricultural/commercial/residential use has been submitted, or is in the process of being submitted to the relevant authority; and (iii) internal project development plans are complete ( Upcoming Projects ). (i) Completed Projects As on date, we had completed four (4) projects comprising of 2 million sq.ft. ( Completed Projects ). The type of project, year of completion, the entity through which such projects were developed and our economic interest are as set forth below: Project Products Year of completion Developer Economic Interest Alcove Plots 2011 Company 100% Parishkar Apartments 2014 Arvind B safal Homes LLP 41% Megatrade Commercial and retail spaces 2014 Company 100% Tradequare Commercial and retail spaces 2014 Arvind B safal Homes LLP 41% The detailed description of our Completed Projects is as follows:- Alcove Location: 28, Village Shanavad, Kalol, Gandhinagar Alcove comprises of fully developed residential plots for weekend homes including paved roads, gardens and clubhouses with modern amenities. The club house is functional with a well equipped gym, restaurant, indoor games, and swimming pool along with seven hotel suites for its customers. Alcove also provides its customers four contemporary designs of houses which can be extended from studio house to 1 BHK/ 2 BHK or 3 BHK. These designs along with complete architectural details shall be provided free of costs to the Alcove customers in case they wish to build a house as per one of them. The Alcove customers are also free to build and design houses as per their own preference. Alcove is situated on land which is converted for residential use vide Gandhinagar Zila Panchayat Order dated March 28, 2009 and Talluka Panchayat Order dated August 9, Area comprising the Alcove project has now been extended within the AUDA limits. Accordingly, any construction on the plots shall require specific plan approval from AUDA, a process that needs to be undertaken by a plot buyer. The commencement letter for Alcove from Shanavad Gram Panchayat is received vide letter dated February 21, Parishkar Location: Arvind Avenue, Khokra Circle, Maninagar East, Ahmedabad Parishkar project is developed by our Company through one of its joint ventures, Arvind Bsafal Home LLP and comprises of high rise apartments. It has 720 residential units that is spread across 5.1 acres of land in Arvind Avenue campus at Khokra. The residential units comprise of 2 BHK and 3 BHK apartments which have various amenities such as landscaped garden, play area for toddlers, gymnasium, jogging track, swimming pool etc. The project is located within 1.5 km from Kankaria lake, a one of its kind lake front development with leisure and 79

80 amusement activities. The building use certificate for Parishkar project is received from Ahmedabad Municipal Corporation vide letter dated August 30, Megatrade Location: Naroda Road, Ahmedabad Megatrade is a commercial complex that will take your business to the next level. Comprising of 234 exclusive shops and offices, this spacious complex is located at Naroda Road in the vicinity of the business hub of Kalupur. Its aesthetically-designed structures and ambience create an environment conducive to business and productivity. It is a low rise building offering various sizes of shops and offices along with offices having terraces over-looking main Naroda Road. The building use certificate for Megatrade project was received from Ahmedabad Municipal Corporation vide letter dated August 7, Tradesquare Location: Arvind Avenue, Khokra Circle, Maninagar East, Ahmedabad Tradesquare is developed by our Company through one of its joint ventures, Arvind Bsafal Home LLP and comprises of retail, commercial and office spaces. It has 183 commercial shops, showrooms and office units located on the main Khokra circle on a land area of 1 acre of Arvind Avenue campus at Khokra. The commercial spaces are suitable for showrooms, multiplex, banks, offices, grocery store, ice-cream parlour, beauty salon, etc. The building use certificate for Tradesquare was received from Ahmedabad Municipal Corporation vide letter dated August 30, (ii) Ongoing Projects As on date, we have six (6) ongoing projects. The type of project, expected year of completion, the entity through which such projects were developed and our economic interest are as set forth below: Project Uplands Beyond Five Product Integrated township with executive golf course, villas, apartments, retail, commercial and recreational areas Residential township with villas, plots and Expected Year of completion Developer 2020 Ahmedabad East Infrastructure LLP Economic Interest 75% 2019 Arvind Five Homes LLP 45% executive golf course Expansia Villas and Apartments 2015 Company 100% Sporcia Apartments 2018 Company 100% Citadel Apartments 2016 Company 100% Megaestate Industrial Sheds 2018 Ahmedabad Industrial Infrastructure (One) LLP The detailed description of our Ongoing Projects is as follows:- Uplands Location: Nasmed & Adhana Village, Kalol, Gandhinagar Uplands is a premium golf based township consisting of 282 Villas in Phase 1. The project consists of a 9-hole executive golf course in the centre of the township.uplands has three clubs for different purposes and age groups. The golf club houses sports facilities, cafes & restaurant, gym, banquet hall, conference facilities, spa, indoor games and hotel rooms. The Fun club is a Disney inspired kids garden having various rides and facilities for the kids. The 100% 80

81 Zen club is specially designed for meditation purposes based on the concept of Japanese Zen Philosophy. There are different sizes of plot with 4, 5 and 6 BHK villas attached to them. These villas are contemporary in design by international architects WOODS BAGOT. The in-principal township approval has been received from Ahmedabad Urban Development Authority vide letter dated August 16, Beyond Five Location: Motidevti Village, Ahmedabad Beyond Five is a premium project consisting of golf based weekend homes and plots comprising of 814 units. The project has features like a 9- hole executive golf course and a fully- equipped exclusive members club. The club has indoor as well as outdoor sports facilities, a large banquet hall and a restaurant with support facilities, spa, library, gym, meeting rooms, and kids play areas. The club will also have hotel rooms for guest to spend weekend leisure time, organize functions and celebrate during festivals. The main attraction of the club is SMAAASH. It s a combination of real cricket played with virtual international players of our wish. Expansia Location: 55 Puttapa Estate, Opposite HP STSD Campus, Mahadevpura, Whitefield Road, Bengaluru Expansia comprises of 22 Villas having private front and back gardens. These are 5 BHK villas extendable upto 7 BHK. It also has three independent five storey apartment blocks consisting of 4 BHK units. There are in all 28 such 4 BHK units designed as 2 units per floor having an advantage of three sides open and the campus provides various amenities such as children s play area, club amenities swimming pool, library, gymnasium etc. The project is having a large central garden designed as a vehicle free area having basement parking for both villa owners as well as apartment owners. Expansia has IT offices, shopping malls, hospitals, schools etc. in its vicinity on the main Whitefield Road. The commencement letter for Expansia from Bangalore Development Authority is received vide letter dated February 16, Sporcia Location: Behind Manyata Tech-park, Rachenahalli, Bengaluru Sporcia comprises of high rise residential apartments consisting of 2 BHK, 2.5 BHK and 3 BHK units. There are 456 apartments in total with a large basement for parking. Sporcia has a dedicated club house building having various amenities such as children s play area, sports, amenities, restaurant, swimming pool, library, gymnasium etc. It has a large central landscaped garden where most of the apartments will be facing. The commencement letter for Sporcia from Bruhat Bengaluru Mahanagara Palika was received vide letter dated October 18, Citadel Location: Plot no. 162, Off C.G.Road, Navrangpura, Ahmedabad Located in the heart of Ahmedabad city off CG Road, Citadel is at a five minutes distance from the business centers, offices, schools, malls, supermarkets, hotels, hospitals. Citadel is a low rise project comprising of 58 units. It has predominantly 3BHK, 4BHK apartments and a couple of 2 BHK apartments with all modern facilities. The project is designed with no vehicular movement on the ground for its residents to enjoy a safe and pollution free campus. The commencement letter for Citadel from Ahmedabad Municipal Corporation was received vide letter dated April 3, Megaestate Location: Ashoka Mill Premises, Naroda Road, Ahmedabad Arvind Megaestate is a mid size mixed-used commercial development spread over 30 acres of land on the main Naroda Road which comprises of 53 units, Phase - 1. This world-class development is envisaged to be a self- 81

82 sufficient and integrated business zone of East Ahmedabad. Surrounded by textile mills, paper industries, jewellery units, packaging units etc. it will help small entrepreneurs to scale their business. These sheds are 16 feet in height with a full office floor above it. (iii) Upcoming Projects As on date, we have 2 Upcoming Projects. In relation to all the Upcoming Projects mentioned in the table below, the relevant agreements for development has been executed. The process of making applications for approvals for commencing construction and development have commenced or are yet to commence in relation to these projects. Project Megapark E-city Product Industrial sheds and Industrial Plots Apartments OUR CORPORATE STRUCTURE The following diagram illustrates our corporate structure: OUR DEVELOPMENT MODEL We typically develop our projects (1) through joint development agreements with land-owners, in terms of which we acquire the development rights to the underlying land; (2) through joint ventures with third parties, with whom we establish SPVs for the purposes of developing projects through such joint venture SPVs; or (3) Selectively, through acquiring land for development of the projects. Our joint development agreements In terms of each joint development agreement we conclude with land-owners, the land-owner contributes the underlying land, and we, as the project developers, either directly through our Company, Subsidiaries or an SPV are responsible for the cost and execution of the development of the project on the land contributed by the land-owner, as well as the marketing, branding and sale of the project upon launch or completion. The joint development agreement also typically sets out the economic interest of each of the land-owner and developer, which is expressed as a percentage of the sales revenue from the project. percentage of revenue or profit share to each of land owner and developer depends on numerous parameters such as land location and area, floor space index, product mix and its cost, market prices and project duration. We have have entered into joint 82

83 development agreement for our Upcoming Projects, Uplands and Beyond Five. In a joint development agreement we retain designing, planning & developing, marketing, branding and selling rights of the project with us. Our joint venture agreements Each party's economic interest, or share in the joint venture, is based on a number of parameters which vary depending on the project being developed, but which typically include factors such as the size of the land being developed, its location and the total achievable floor space index for the project. When developing a project through a joint venture, we typically enter into a joint venture agreement with a partner for development of our projects. In terms of each joint venture agreement we conclude with a partner, an SPV is incorporated in which each party to the joint venture invests a stipulated amount of equity capital. The equity investment constitutes each party's economic interest in the project, and which translates to a percentage of the total area to be developed in respect of which each party is entitled to the sale proceeds which are distributed to the joint venture partners in the form of a profit or dividend distribution. Accordingly, our economic interest in a given project developed pursuant to a joint venture represents the percentage of sale proceeds from the area to be developed, that we are entitled to receive as a distribution from the SPV company in which we are a shareholder. We also undertake projects through joint venture SPVs which may enter into joint development agreements. In such cases, our economic interest is represented by our share of the joint venture SPV's economic interest in the joint development. We had entered into joint venture agreements for our Completed Projects, Parishkar and Tradesquare. Acquisition of land Selectively, we purchase land directly from titleholders, we execute conveyance deeds in respect of such properties in order to acquire clear title to the property. We solely develop and execute the projects along with branding, marketing and sale of project. REAL ESTATE DEVELOPMENT PROCESS Identification of Potential Projects and Land One of the key factors in the real estate development sector is the ability to assess the potential of a location after evaluating its demographic trends. We rely on our experience and ability of our senior management to identify and evaluate potential locations, and conduct comprehensive market research and analysis of proposed projects to analyze absorption trends, competitive factors, market prices and product gaps. The process of land identification starts from the stage of selecting an appropriate land parcel which has growth potential. This is done by our business development team which gathers market data on possible prospects while selecting a land parcel for development which is verified with the information that we have already collated. We also obtain a title opinion of the proposed lands, and consult with local real estate marketing professionals. Thereafter, a survey is conducted at the proposed site and a preliminary feasibility report is prepared. The report is based on an analysis of specific criteria, including, among other things (a) the financial viability of the project, (b) the available or planned infrastructure surrounding the land that we have identified for our project, (c) the standard of living and disposable income of the population of the location, and (d) the growth prospects of the cities and towns in terms of trade and industry. The next step, after area identification, involves identifying the type of project to be undertaken in that particular area and deciding on the scale of the project. Typically, decisions at this stage involve examining the viability of developing residential or commercial project and its product mix on the identified project site. The final decision on the location, nature, financial feasibility and scale of each project is taken by our senior management. Evaluation of applicable laws and obtaining of requisite approvals When assessing the feasibility of a new project, it is imperative to become familiar with the legal regime governing the land on which the new project will be developed, since legal regimes vary in each location depending on 83

84 whether it falls under municipal limits or gram panchayat. We also evaluate the factors which affect the obtaining of the approvals required for the development and implementation of the project. The approvals which are typically required for a real estate development project include approvals for building plans, the conversion of agricultural lands to non-agricultural lands (where applicable), the approval of lay-outs and approvals relating to certain infrastructure facilities such as power and water. Similarly, approvals from various government authorities, including from the relevant environmental authorities, airport authorities and fire authorities are required for buildings above a certain stipulated height. Building completion certificates are obtained in accordance with applicable law from the appropriate authorities after the projects have been completed. Acquisition of land or purchase of development rights We follow both approaches to developing projects in our business depending on feasibility of the proposed project in both the scenarios. In case of joint developments, we acquire the right to develop properties through collaboration with other entities that hold title to the land. Typically, we negotiate an agreement with the other party pursuant to which we conceive, develop and market the project. The titleholder is typically given the option, as consideration for granting the development rights, to share in a portion of the sale proceeds. When we purchase land directly from titleholders, we execute conveyance deeds in respect of such properties in order to acquire clear title to the property. Project Development The design and planning of our projects is conducted by reputable external architects (international as well as domestic) and structural consultants engaged by us in collaboration with our in-house planning department. The majority of external architects and structural consultants are engaged for a specific project and are people whom we deem to be best suited for projects of similar nature. The external architect & consultants provides the master planning, various drawings, layouts, structural designs etc. of the project; however, estimates of the requirements for manpower, materials and machinery are always provided by our in-house planning department. Once the design and the estimates for the project have been finalized, we set up a project team under the supervision of a senior engineer which is dedicated to that particular project, and a project coordinator who is responsible for centralized coordination and reports to our senior management. The purchase of materials is centralized and is based on the estimates given by the planning department or the architect, as the case may be. We are not dependent on any single contractor, builder or supplier for our construction activities. The orders are placed by us on the basis of arms-length negotiations and we conduct tender and bidding processes accordingly. We seek to ensure that raw materials and other goods and services sourced from third party vendors are delivered in a timely and cost effective manner, that payment is made to suppliers promptly, and that any scrap or waste from project sites is effectively disposed of. We have a dedicated Commercial & Controls department which regularly circulates reports to our senior management and provides feedback / confirms deadlines / adheres to stricter quality or control measures with the concerned department. We have developed a system of internal reporting in order to monitor the status and progress of all the projects being developed by us on a regular basis. The system helps us to reduce time and cost overruns. We deploy representatives of our head office at the sites of our projects to deal with issues related to manpower planning, including the welfare of the workers, as well as security and administration of the site. These representatives travel from site to site in order to oversee such issues. As we do not employ site labor, we insist on our contractors ensuring compliance with relevant regulatory and statutory obligations in relation to their labor force. Pricing The prices of our properties are determined principally by market forces of supply and demand. We price our properties by reference to market rates for similar types of properties in their locality. The sale prices of our properties will therefore depend on the location, number, square footage and mix of properties we sell during each 84

85 fiscal period, and on prevailing market supply and demand conditions. Supply and demand conditions in the real estate market in the areas in which we operate, and hence the prices we may charge for our properties, are affected by various factors outside our control, including prevailing local economic, income and demographic conditions, interest rates available to purchasers requiring financing, the availability of comparable properties completed or under development, changes in governmental policies relating to zoning and land use, changes in applicable regulatory schemes, and competition from other real estate development firms. In light of the above market forces, we price our projects for sale by taking the following factors into account: (1) Cost of the land and final estimated construction costs; (2) a premium, depending on the location of the project (e.g.: we typically include a higher premium where a project is situated in a suburban area or a central business district) and by reference to our targeted internal rates of return; (3) the prevailing market for similar developments in that segment; and (4) the maximum premium on a project which we believe to be achievable in the segment of the particular project. We ordinarily conduct this pricing exercise prior to pre-launch marketing of a project, and review the prices reached by considering the above factors on a periodic basis. Marketing and Sales Our sales and distribution efforts are conducted through two main channels: direct sales through our sales executives and indirect sales through channel partner network. For our residential projects, we typically follow a pre-sale model, whereby we offer units for sale prior to completion. Sales generally are conducted by our sales staff on the project site or office, as well as through third party channel partners /brokers. In line with industry practice in India, we access a large network of real estate agents who transact business for us and other developers and builders. Project Completion and Hand-Over Once construction has been completed, we convey the relevant title or interest in the property to the customer. We ensure that the entire consideration is paid to us prior to the transfer of title or before possession is handed over, whichever is earlier. SALES AND MARKETING For our residential projects, we typically follow a pre-sale model, whereby we offer units for sale prior to completion. Sales generally are conducted by our sales staff on the project site, as well as through third party channel partners /brokers. We conduct our sales and marketing through our dedicated sales and marketing team, which also works closely with our CRM team. The primary responsibility of our marketing team is to generate customer enquiries on our products and to convert a potential customer to a client. We undertake direct sales efforts, either through our sales team, which comprises of 20 professionals as on date, or through our external network of accredited marketing associates. Our CRM was established in with the objective of assisting our potential customer or client. Additionally, our CRM team keeps customers informed of the progress of the respective projects, provides any other services that our customers may require after the completion of the sales process. Our CRM team interacts internally with various departments, to monitor timely completion of projects and ensure customer satisfaction. OUR COMPETITORS We face significant competition from other entities engaged in the real estate development business, many of which undertake projects similar to ours in the same regional markets in which our projects are located. We face competition from the real estate developers in the locations where our projects are being developed. Moreover, as we seek to diversify into new geographies, we face the risk that some of our competitors have a pan-india presence while our other competitors have a strong presence in certain regional markets may be better known in other markets, enjoy better relationships with local land owners gain earlier access to information regarding attractive parcels of land and are better placed to acquire such land. Our competitors include both large corporate and small real estate developers in the regions where we operate. AWARDS Our Company has won the Emerging Developer of the Year - Residential award and one of our projects, Uplands won Luxury Projects of the Year award by Realty Plus Excellence Awards (Gujarat)

86 EMPLOYEES We consider our human resources as a critical factor to our success and engage in a human resource strategy that addresses key aspects of human resource development and focuses heavily on recruiting, training and retaining our employees, as well as offering them competitive compensation. As on date we have 104 employees. In addition to a base salary and performance-linked incentives, we provide a number of benefits to our employees, such as medical expenses, healthcare, and group gratuity schemes. Our employees are also covered under specific insurance schemes. Our employee policies aim to recruit a talented and qualified work force, facilitate their integration and encourage development of their skills in order to facilitate the growth of our operations. We are also committed to providing an empowering environment that motivates and facilitates growth and rewards contribution. We also engage contract labour depending on our requirements and the number of contract labour varies from time to time based on various factors. SITE SAFETY We are committed to the safety of our workers. We maintain a safety management system that defines the guiding principles and standards for safety of its workers and site staffs at construction sites for all our project. Safety awareness training is being imparted at regular intervals to all workers and site staffs. Appropriate safety equipment is provided to all workers. The workers are made aware of the safety provisions with respect to the activity in which they are involved. A periodic inspection is conducted to ensure compliance for areas in which they operate, as well as for compliance with safety management system. Also any health and safety incidents/ accidents are investigated and corrective actions developed. INTELLECTUAL PROPERTY Our Company has applied for the registration of its logo before the Trade Marks Registry, Ahmedabad. As on date, we have 16 trademark applications pending before the Trade Marks Registry, Ahmedabad. Further, some of the trademarks used by our projects are owned by the parent company, AL. We have entered into an assignment deed dated January 19, 2015 with AL for the use of the said trademarks by our Company. There can be no assurance that our Company would be able to register the trademarks or that third parties will not infringe on our intellectual property or misuse the said names or logos, which may adversely affect our business, prospects and reputation OUR PROPERTY Our registered office is owned by the parent company, AL. Our corporate office is situated at C.G. road, Ahmedabad which pursuant to Scheme of Demerger has now been transferred in the name of our Company. Our regional office is situated at V.S. Raju road, Bengaluru which has been taken on lease for a period of 36 months commencing from November 16, 2013 to November 15, INSURANCE We maintain insurance cover for our assets to cover all normal risks associated with operations of our business and have obtained all risks policy. We have taken money insurance policy for money in transit and money in safe which also extends to cover loss arising out of riot, strike & terrorist activity for its corporate office. We have also taken tractor policy and vehicle insurance policy and group mediclaim policies for our employees other than the contractor all risk insurance policy and workmen compensation policy among other insurance policy which are standard to our industry. 86

87 Although we believe that the amount of insurance currently maintained by us represents an appropriate level of coverage required to insure our business and operations, and is in accordance with industry standards in India, such insurance may not provide adequate coverage in certain circumstances and is subject to certain deductibles, exclusions and limits on coverage. 87

88 KEY REGULATIONS AND POLICIES The following description is a summary of certain sector specific laws and regulations in India, which are applicable to our Company. The information detailed in this section has been obtained from various statues, rules and regulations and/or local legislations that are available in the public domain. The regulations set out below may not be exhaustive, and are only intended to provide general information to the investors and are neither designed nor intended to be a substitute for professional legal advice. The statements below are based on the current provisions of Indian law, which are subject to change or modification by subsequent legislative, regulatory, administrative or judicial decisions. Real Estate Laws in India Each state and city has its own set of laws, which govern planned development and rules for construction (such as floor area ratio or floor space index limits). The various authorities that govern building activities in states are the town and country planning department, municipal corporations and urban development departments where projects are undertaken on lands that form part of the approved layout plans and/or fall within municipal limits of a town, generally the building plans of the projects have to be approved from concerned municipal or developmental authority. Building plans are required to be approved for each building within the project area. Clearances with respect to other aspects of development such as fire, civil aviation and pollution control are required from appropriate authorities, depending on the nature, size and height of the projects. Land can be classified into various categories such as residential, commercial or agricultural and the land classified under a specific category is permitted to be used only for such specified purpose. If an agricultural land is required to be used for any other purpose except agriculture, the classification of the land is required to be converted into residential, commercial or industrial purpose, by making an application to the relevant municipal or town and country planning authorities. The acquisition of agricultural land is regulated by state land reform laws, which prescribe limits up to which an entity may acquire agricultural land, unless provided otherwise. Any transfer of land which results in the aggregate land holdings of the acquirer in the state to exceed this ceiling is void, and the surplus land is vested in the State Government free of all encumbrances. While granting license for the development of townships, the authorities generally levy proportional development charges for the provision of services such as laying down of main lines, water supply etc. Such licenses require approvals of layout plans for development and building plans for construction activities. The following is an overview of some of the important laws and regulations, which are relevant to our business: Real Estate Regulation and Development Bill, 2013 The Real Estate Regulation and Development Bill, 2013 (the Real Estate Bill ) was approved by the Union Cabinet and tabled before the Rajya Sabha on August 14, In April, 2015, Union Cabinet gave its approval to amendments to the Real Estate Bill pending in the Rajya Sabha, and approved amendments proposed in the Bill. The recommendations of the Standing Committee of Parliament on Urban Development and suggestions of various stakeholders (consumer organizations, industry associations, academia, experts etc.) have also been included after extensive consultations. The Real Estate Bill will require the approval of both houses of the Indian Parliament as well as the assent of the President of India, and publication in the Official Gazette prior to becoming law. The Real Estate Bill regulates the transactions between buyers and promoters of residential real estate projects and sets forth the following proposals: establish one or more real estate regulatory authority in each state or union territory for the regulation and promotion of the real estate sector and to ensure the sale of land, apartments and buildings in an efficient and transparent manner and to protect the interest of consumers in the real estate sector; establish an appellate tribunal to adjudicate disputes and hear appeals from the decisions or orders of the real estate regulatory authority and for matter connected therewith; mandatory registration of certain real estate projects and agents with real estate regulatory authority; 88

89 imposing restrictions on accepting a sum of money greater than 10% of the cost of the property sought to be sold as advance payment or an application fee from any proposed buyer without first entering into a written agreement for sale with such buyer in the form as may be prescribed; prohibiting real estate promoters from issuing or publishing any advertisement or prospectus or inviting any members of the public to buy or make bookings in any projects proposed to be developed or taking advances or deposits with respect to such projects without registering such project with the relevant real estate regulatory authority; the real estate regulatory authority to maintain a website containing details of the proposed projects that have been duly registered with the relevant real estate development authority, containing specified information including the sanctions obtained, nature of the title to the property, the agreement executed for the development of the proposed project, and details of all encumbrances on the land; and refund of any amount paid with respect to such properties, the payment of penalty and other sums of money to the proposed buyers in the event of failure to complete the project and deliver possession of the plot or building in accordance with the agreed terms. There is no certainty on whether the Real Estate Bill will be approved in its current form or amended again or enacted at all. The Finance Bill, 2014 and the Union Budget 2014 The Ministry of Finance, Government of India had proposed in the Union Budget 2014 following proposals that may impact the real estate sector including the following: Smart Cities The Finance Minister announced a proposal to develop new smart cities to accommodate increasing migration from rural areas. Such smart cities are envisaged to consist of satellite towns of larger cities, and modernized existing midsize cities. These smart cities are proposed to provide affordable housing to the middle class. Projects which commit at least 30% of the total project cost for low cost affordable housing, will be exempted from minimum built up area and capitalisation requirements. However, investment in such projects is proposed to be locked-in for a three year period. Increase in FDI limit for real estate projects The Finance Minister proposed that the built up area and capital conditions for FDI be reduced from 50,000 square metres to 20,000 square metres and from USD 10 million to USD 5 million respectively with a three-year post completion lock in. Allocation to National Housing Bank The Finance Minister announced a proposal to allocate `80 billion for the National Housing Bank ( NHB ) to benefit rural populations that avail credit through the Rural Housing Fund. With respect to urban housing, `40 billion has been allocated to the NHB to increase the availability of cheaper credit for affordable housing to the urban poor/ economically weaker section/ low income group segment. Extension of advance ruling facility to residents Currently, an advance ruling can be obtained with respect to the tax liability arising out of transactions involving nonresidents, residents having transactions with non-residents and public sector companies as notified in the official Gazette. The Finance Minister announced a proposal to make this facility available to resident taxpayers with respect to liability above a fixed threshold. The introduction of this facility to residents is expected to assist resident companies to ascertain and quantify their tax liabilities on various transactions in advance. Disallowance of expenditure for non-withholding of tax 89

90 Presently, 100% of the expenditure on which tax was required to be withheld is disallowed, if tax is not withheld/deposited within the prescribed time in case of specified payments (such as interest, commission, rent, royalty, etc.) to residents. It is proposed that such disallowance would be restricted to only 30% of the expenses incurred during the relevant period. Issue of Long Term Bonds by banks to finance infrastructure and affordable housing The Finance Minister announced a proposal to permit banks to raise long term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and Priority Sector Lending. Pursuant to a circular dated July 15, 2014, RBI noted that apart from what is technically defined as infrastructure, affordable housing is another segment of the economy which both requires long term funding and is of critical importance, and permitted banks to issue longterm bonds with a minimum maturity of seven years to raise resources for lending to (i) long term projects in infrastructure sub-sectors, and (ii) affordable housing. SEBI (Real Estate Investment Trust) Regulations, 2014 On September 26, 2014, SEBI notified the SEBI (Real Estate Investment Trusts) Regulations 2014 ( SEBI REIT Regulations ) providing a detailed regulatory framework for establishment and operations of Real Estate Investment Trust ( REIT ) in India. The REITs shall be governed by the trust deed (registered under the Registration Act, 1908), the SEBI REIT Regulations and since REITs are in the nature of private trusts, by Indian Trusts Act, The REITs can only invest directly in real estate assets or properties, securities, transferable development rights in India or indirectly in all of the above through SPVs. Further, an REIT is required to invest in at least 2 projects and the maximum threshold limit for a single project is 60% of the value of REIT s assets. REITs are prohibited from investing in other REITs, vacant land, agricultural land and mortgages other than mortgage backed securities. However, this does not include any land which is contiguous and extension of an existing project being implemented in stages. Although SEBI REIT Regulations allow subscription of units by foreign investors, FDI in trusts other than venture capital funds is prohibited under the present FDI Policy. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, as amended ( 2013 Land Acquisition Act ) has replaced the Land Acquisition Act, 1894 and aims at establishing a participative, informed and transparent process for land acquisition for industrialization, development of essential infrastructural facilities and urbanization. While aiming to cause least disturbance to land owners and other affected families, it contains provisions aimed at ensuring just and fair compensation to the affected families whose land has been acquired or is proposed to be acquired. It provides for rehabilitation and resettlement of such affected persons. The Transfer of Property Act, 1882 The Transfer of Property Act, 1882, as amended establishes the general principles relating to transfer of property in India. It forms a basis for identifying the categories of property that are capable of being transferred, the persons competent to transfer property, the validity of restrictions and conditions imposed on the transfer and the creation of contingent and vested interest in the property. It also provides for the rights and liabilities of the vendor and purchaser in a transaction of sale of land. The Registration Act, 1908 The Registration Act, 1908, as amended (the Registration Act ) has been enacted with the objective of providing public notice of the execution of documents affecting, inter alia, the transfer of interest in immovable property. The purpose of the Registration Act is the conservation of evidence, assurances, title and publication of documents and prevention of fraud. It details the formalities for registering an instrument. Section 17 of the Registration Act identifies documents for which registration is compulsory to bring the transaction to effect and includes, among other things, any non-testamentary instrument which purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, in any 90

91 immovable property of the value of one hundred rupees or more, and a lease of immovable property for any term exceeding one year or reserving a yearly rent. The Indian Stamp Act, 1899 Under the Indian Stamp Act, 1899, as amended (the Stamp Act ), stamp duty is payable on instruments evidencing a transfer or creation or extinguishment of any right, title or interest in immovable property. Stamp duty must be paid on all instruments specified under the Stamp Act at the rates specified in the schedules to the Stamp Act. The applicable rates for stamp duty on instruments chargeable with duty vary from state to state. Instruments chargeable to duty under the Stamp Act, which are not duly stamped, are incapable of being admitted in court as evidence of the transaction contained therein and it also provides for impounding of instruments that are not sufficiently stamped or not stamped at all. However, the instruments which have not been properly stamped can, in certain cases, be validated by paying the penalty as prescribed under the Stamp Act. The Indian Easements Act, 1882 An easement is a right which the owner or occupier of land possesses for the beneficial enjoyment of that land and which permits him to do or to prevent something from being done, in or upon, other land not his own. Under the Indian Easements Act, 1882, as amended, a license is defined as a right to use property without any interest in favour of the licensee. The period and incident may be revoked and grounds for the same may be provided in the license agreement entered in between the licensee and the licensor. The Consumer Protection Act, 1986 The Consumer Protection Act, 1986 ( CP Act ) was enacted to provide for better protection of the interests of consumers and contains provisions for establishment of consumer councils and other authorities for the settlement of consumers' disputes and for matters connected therewith. It provides a simpler and quicker access to the redressal of consumer grievances. It also provides means to protect consumers from getting cheated or harassed by the suppliers. The CP Act has provided machinery whereby consumers can file their complaints which will be entertained by the Consumer Forums with special powers so that action can be taken against erring suppliers and the possible compensation may be awarded to consumers for the hardships undergone by them. Laws relating to Employment The employment of construction workers is regulated by a wide variety of generally applicable labour laws, including the Contract Labour (Regulation and Abolition) Act, 1970, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, Payment of Wages Act, 1936 and Workmen (Regulation of Employment and Condition of Service) Act, The laws governing other employees of the Company include Employees State Insurance Act, 1948, Payment of Gratuity Act, 1972, Employees Provident Fund and Miscellaneous Provisions Act, 1952, Maternity Benefit Act, 1961 and the Income Tax Act, Laws relating to Environment The three major statutes in India which seek to regulate and protect the environment against pollution and related activities in India are the Water (Prevention and Control of Pollution) Act 1974, the Air (Prevention and Control of Pollution) Act, 1981 and the Environment (Protection) Act, The basic purpose of these statutes is to control, abate and prevent pollution. In order to achieve these objectives, Pollution Control Boards (the PCB ) which are vested with diverse powers to deal with water and air pollution, have been set up in each state. The PCBs are responsible for setting the standards for maintenance of clean air and water, directing the installation of pollution control devices in industries and undertaking investigations to ensure that industries are functioning in compliance with the standards prescribed. These authorities also have the power of search, seizure, and investigation if the authorities are aware of or suspect pollution. 91

92 The Environment (Protection) Act, 1986 confers extensive powers on the Ministry of Environment and Forests to lay down rules for, inter alia, the standards of quality of air, water or soil for various areas and purposes and the prohibition and restriction on the location of industries and carrying on of processes and operations in different areas, towards the prevention, control and abatement of environmental pollution. Laws relating to Foreign Investment Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of the Government of India and Foreign Exchange Management Act, 1999 ( FEMA ). While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all sectors of Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. The government bodies responsible for granting foreign investment approvals are Foreign Investment Promotion Board ( FIPB ) and the Reserve Bank of India ( RBI ). The Government has from time to time made policy pronouncements on FDI through press notes and press releases. The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India ( DIPP ), issued Consolidated FDI Policy Circular of 2015, which with effect from May 12, 2015 which consolidates and supersedes all previous press notes, press releases and clarifications on FDI issued by the DIPP that were in force and effect as on May 11, The Government proposes to update the consolidated circular on FDI Policy once every year and therefore, Consolidated FDI Policy Circular of 2015 will be valid until the DIPP issues an updated circular. The Government proposes to update the consolidated circular on FDI Policy once every year and therefore, Consolidated FDI Policy Circular of 2015 will be valid until the DIPP issues an updated circular. The transfer of shares between an Indian resident and a non-resident does not require the prior approval of the FIPB or the RBI, provided that (i) the activities of the investee company are under the automatic route under the FDI Policy and transfer does not attract the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (ii) the non-resident shareholding is within the sectoral limits under the FDI policy; and (iii) the pricing is in accordance with the guidelines prescribed by the Securities and Exchange Board of India/RBI. On October 29, 2014, the Union Cabinet approved the proposal for amending the FDI Policy on the construction development sector. Among others, following are the important modifications in the FDI policy: 100 per cent FDI under automatic route will be permitted in the construction development sector; Investment will be subject to the following conditions; Minimum area to be developed under each project would be: - In case of development of serviced plots, there is no condition of minimum land, -In case of construction-development projects, a minimum floor area of 20,000 sq. meters, -In case of a combination project, any one of the aforestated two conditions will need to be complied with. The investee company will be required to bring minimum FDI of US$ 5 million within six months of commencement of the project. The commencement of the project will be the date of approval of the building plan/lay out plan by the relevant statutory authority. Subsequent tranches of FDI can be brought till the period of ten years from the commencement of the project or before the completion of the project, whichever expires earlier. Other Laws In addition to the above, our Company is also required to comply with the provisions of the Companies Act 2013, the Companies Act, 1956 (to the extent still applicable), SEBI Regulations different state legislations, various tax related legislations and other applicable statutes for its day-to-day operations. 92

93 HISTORY OF OUR COMPANY Brief History of our Company Our Company was incorporated as Arvind Infrastructure Limited on December 26, 2008 in Ahmedabad as a wholly owned subsidiary of Arvind Limited under the provisions of the Companies Act, Our Company obtained the Certificate of Commencement of Business dated January 6, 2009 under the Companies Act, Our Company was incorporated with the objective of doing real estate/infrastructure development business. Details of the Scheme The Scheme of Arrangement provides for the demerger of the De-merged Undertaking viz. Real Estate Undertaking of Arvind Limited as a going concern into Arvind Infrastructure Limited. In accordance with the Scheme of Arrangement, the entire Demerged Undertaking stands transferred to and vested with Arvind Infrastructure Limited w.e.f. April 1, 2015 (the Appointed Date ) pursuant to Section 391 to 394 read with Sections 78, 100 to 104 of the Companies Act, For more details relating to the Scheme and demerger please refer to the chapter titled "Salient Features of the Scheme" beginning on page 48 of this Information Memorandum. Main Objects of our Company 1. To carry on business as builders, contractors, developers and to engage in development of land and/or building property of any tenure, nature or kind, and to engage in organization, purchase, trading, salelease, exchange of property, and to construct, maintain, repair, renovate property, itself or through other agencies, and to hold property for development, construction, sale, lease, hire or exchange and to participate in joint ventures for development of property and to provide services for development of land and or building, property, real estate consultancy, real estate brokerage, construction management, architecture, engineering and other technical services, interior design services and to carry on and undertake the business of ownership, operation, maintenance, management, administration, protection and upkeep of service apartments, building, colonies townships compelexes, houses, schools, depatmental stores, hotels, restaurants, resorts, clubs, recreational facilities, parks, roads, basements, open spaces common areas, common facolities and to provide infrastructural facilities. Changes in name of our Company There has been no change in the name of our Company since incorporation. Changes in the Registered Office of our Company There has been no change in the Registered Office of our Company since incorporation. Change in the Memorandum of Association Since incorporation, the following amendments have been made to the Memorandum of Association of our Company: Sr. No. Date Particulars 1. February 12, 2013 Increase in Authorised Share Capital from `5,00,000 to `15,00,00, July 23, 2014 Sub-division of equity shares of `10 each into equity shares of `1 each Increase in Authorised Share Capital from `15,00,00,000 to `27,00,00, May 14, 2015 Consolidation of every 10 Equity Shares of `1/- each into 1 Equity Share of `10/- each pursuant to the Order of High court of Gujarat dated March 30,

94 Major events in the history of our Company The table below sets forth some of the major events in the history of our Company since incorporation: Year Particulars 2008 Incorporation of the Company 2010 Entered into JV with Bsafal for construction of high rise residential apartment project in eastern Ahmedabad 2011 Successful delivery of our first residential project- Alcove 2012 Launched first project in Bengaluru Entered into MoU for our premium low rise golf centric villa township project named Uplands in western Ahmedabad 2014 First real estate developer in Gujarat to partner with Disney for project Uplands 2015 Demerged from Arvind Limited purusuant to Scheme of Demerger Awards The table below sets forth some of the awards received by us: Sr. No. Particulars 1. Our Company has won the Emerging Developer of the Year - Residential award and one of our projects, Uplands won Luxury Projects of the Year award by Realty Plus Excellence Awards (Gujarat) Our Company was awarded the Best Stall Overall at GIHED Property Exhibition 2014 and Best Stall Overall at Divya Bhaskar Property Exhibition, Other Details regarding our Company Details regarding the description of our Company s activities, services, products, market, growth, technology, managerial competence, standing with reference to prominent competitors, major suppliers, distributors and customers, segment, capacity/facility creation, location of manufacturing facilities, marketing and competition, please refer to the chapters titled Our Business, Our Management and Industry beginning on pages 75, 105, and 73, respectively, of this Information Memorandum. Injunction or Restraining Order Our Company is not operating under any injunction or restraining order. Our Shareholders As on the date of this Information Memorandum, there are 1,46,038 shareholders in our Company. For further details of our shareholding pattern, please refer to the chapter titled Capital Structure beginning on page 37 of this Information Memorandum Raising of capital form of equity or debt Other than as disclosed under the chapter titled Capital Structure of this Information Memorandum, our Company has not raised any capital in the form of equity. For details of outstanding debt as on date, please refer to the chapter titled Financial Information beginning on page 141 of this Information Memorandum. Revaluation of assets Our Company has not revalued its assets since incorporation and has not issued any Equity Shares (including bonus shares) by capitalizing any revaluation reserves. 94

95 Time and Cost Overrun Our Company has not experienced any significant time and cost overrun in relation to our projects. Changes in the activities of our Company during the last five years We have not changed the activity of our Company since its incorporation. Defaults or Rescheduling of Borrowings with Financial Institutions/ Banks There are no defaults or rescheduling of borrowings from financial institutions or banks or conversion of loans into equity in relation to our Company. Lock-out or Strikes There have been no lock-outs or strikes in our Company since inception. Holding Company As on the date of this Information Memorandum, our Company does not have a holding company. Our Subsidiaries As on the date of submission of this Information Memorandum, following are the subsidiaries of our Company, the details of which are provided below: 1. Arvind Alcove LLP 2. Arvind Altura LLP 3. Changodar Industrial Infrastructure (One) LLP 4. Ahmedabad Industrial Infrastructure (One) LLP 5. Ahmedabad East Infrastructure LLP 6. Arvind Five Homes LLP 7. Arvind Infracon LLP 8. Arvind Beyond Five Club LLP 9. Arvind Hebbal Homes Private Limited 1. Arvind Alcove LLP ( Arvind Alcove ) Corporate Information Arvind Alcove was incorporated on November 1, 2012 under the provisions of Limited Liability Partnership Act, LLP Agreement dated November 26, 2012 was entered into by and between Arvind Infrastructure Limited and Mr Jagdish Dalal. The LLPIN of Arvind Alcove is AAB The registered office of Arvind Alcove is 24, Government Servant Society, near Municipal Market, Off C.G. Road, Navrangpura, Ahmedabad , Gujarat. Current Nature of Activities Arvind Alcove is currently engaged in the maintenance of our project named Arvind Alcove. Designated Partners and Partners The designated partners of Arvind Alcove are: 1. Mr. Jagdish Dalal 2. Mr. Kamal Singal 95

96 The partners of Arvind Alcove are: 1. Arvind Infrastructure Limited 2. Arvind Hebbal Homes Private Limited Contribution and Share of Profits As on the date of this Information Memorandum, the Contribution and Share of Profits of Arvind Alcove is as follows: Sr. No. Name of Partner Contribution (in `) Percentage of Contribution (%) 1. Arvind Infrastructure Limited 99, Arvind Hebbal Homes Private Limited 1, Total 1,00, Financial Information (in ` Lacs) Particulars As on March 31, 2015 As on March 31, 2014 As on March 31, 2013 Fixed Capital Contribution Sales and other income Nil Nil Nil Profit/Loss after tax Nil Nil Nil 2. Arvind Altura LLP ( Arvind Altura ) Corporate Information Arvind Altura was incorporated on October 30, 2012 under the provisions of the Limited Liability Partnership Act, LLP Agreement dated November 26, 2012 was entered into by and between Arvind Infrastructure Limited and Mr Jagdish Dalal. The LLPIN of Arvind Altura is AAB The registered office of Arvind Altura is 24, Government Servant Society, near Municipal Market, Off C.G. Road, Navrangpura, Ahmedabad , Gujarat. Current Nature of Activities Arvind Altura is currently not engaged in any business activities.. Designated Partners and Partners The designated partners of the Arvind Altura are: 1. Mr. Jagdish Dalal 2. Mr. Kamal Singal The partners of Arvind Altura are: 1. Arvind Infrastructure Limited 2. Arvind Hebbal Homes Private Limited Contribution and Share of Profits As on the date of this Information Memorandum, the Contribution and Share of Profits of Arvind Altura is as follows: Sr. No. Name of Partner Contribution (in `) Percentage of Contribution (%) 96

97 Sr. No. Name of Partner Contribution (in `) Percentage of Contribution (%) 1. Arvind Infrastructure Limited 99, Arvind Hebbal Homes Private Limited 1, Total 1,00, Financial Information (in ` Lacs) Particulars As on March 31, 2015 As on March 31, 2014 As on March 31, 2013 Fixed Capital Contribution N.A. Sales and other income Nil Nil N.A. Profit/Loss after tax (0.18) (0.36) N.A. 3. Changodar Industrial Infrastructure (One) LLP ( Changodar ) Corporate Information Changodar was incorporated on November 21, 2013 under the provisions of the Limited Liability Partnership Act, LLP Agreement dated November 23, 2013 was entered into by and between Arvind Infrastructure Limited and Arvind Infrabuild LLP. The LLPIN of Changodar is AAB The registered office of Changodar is 24, Government Servant Society, near Municipal Market, Off C.G. Road, Navrangpura, Ahmedabad , Gujarat. Current Nature of Activities Changodar is currently not engaged in any business activities. Designated Partners The designated partners of Changodar are: 1. Mr. Kamal Singal 2. Mr. Jagdish Dalal The partners of Changodar are: 1. Arvind Infrastructure Limited 2. Arvind Hebbal Homes Private Limited Contribution and Share of Profits As on the date of this Information Memorandum, the Contribution and Share of Profits of Changodar is as follows: Sr. No. Name of Partner Contribution (in `) Percentage of Contribution (%) 1. Arvind Infrastructure Limited 99, Arvind Hebbal Homes Private Limited 1, Total 1,00, Financial Information (In ` Lacs) Particulars As on March 31, 2015 As on March 31, 2014 As on March 31, 2013 Fixed Capital Contribution N.A. Sales and other income Nil Nil N.A. Profit/Loss after tax (0.18) (0.21) N.A. 97

98 4. Ahmedabad Industrial Infrastructure (One) LLP ( Ahmedabad Industrial Infrastructure ) Corporate Information Ahmedabad Industrial Infrastructure was incorporated on October 17, 2013 under the provisions of the Limited Liability Partnership Act, LLP Agreement dated October 19, 2013 was entered into by and between Arvind Infrastructure Limited and Arvind Altura LLP. The LLPIN of Ahmedabad Industrial Infrastructure is AAB The registered office of Ahmedabad Industrial Infrastructure is 24, Government Servant Society, near Municipal Market, Off C.G. Road, Navrangpura, Ahmedabad , Gujarat. Current Nature of Activities Ahmedabad Industrial Infrastructure has got development rights on a piece of land situated on Naroda Road during year 2014 from Arvind Limited. Currently, Ahmedabad Industrial Infrastructure is constructing industrial sheds in the name of Arvind Mega Estate on the said premises. Designated Partners and Partners The designated partners of the Ahmedabad Industrial Infrastructure are: 1. Mr. Jagdish Dalal 2. Mr. Kamal Singal The partners of Ahmedabad Industrial Infrastructure are: 1. Arvind Infrastructure Limited 2. Arvind Hebbal Homes Private Limited Contribution and Share of Profits As on the date of this Information Memorandum, the Contribution and Share of Profits of Ahmedabad Industrial Infrastructure is as follows: Sr. No. Name of Partner Contribution (in `) Percentage of Contribution (%) 1. Arvind Infrastructure Limited 99, Arvind Hebbal Homes Private Limited 1, Total 1,00, Financial Information (in ` Lacs) Particulars As on March 31, 2015 As on March 31, 2014 As on March 31, 2013 Fixed Capital Contribution N.A. Sales and other income Nil Nil N.A. Profit/Loss after tax (1.24) (2.57) N.A. 5. Ahmedabad East Infrastructure LLP ( Ahmedabad East Infrastructure ) Corporate Information Ahmedabad East Infrastructure was incorporated on June 12, 2010 under the provisions of the Limited Liability Partnership Act, LLP Agreement dated April 16, 2012 was entered into by and between Arvind Infrastructure Limited and Arvind Brands and Retail Limited (erstwhile Silverstone Properties Limited). The LLPIN of the 98

99 Ahmedabad East Infrastructure is AAA The registered office of the Ahmedabad East Infrastructure is 24, Government Servant Society, near Municipal Market, Off C.G. Road, Navrangpura, Ahmedabad , Gujarat. Current Nature of Activities Ahmedabad East Infrastructure is currently engaged in the business of constructing luxurious villas in the name of Uplands in the outskirts of Ahmedabad. Designated Partners and Partners The designated partners of the Ahmedabad East Infrastructure are:- 1. Mr. Jagdish Dalal 2. Mr. Kamal Singal 3. Mr. Prakash Makwana 4. Mr. Sharad Patel The partners of Ahmedabad East Infrastructure are:- 1. Arvind Infrastructure Limited 2. Arvind Limited 3. Arvind Infrabuild LLP 4. Sharadbhai Govindbhai Patel 5. Dineshbhai Jashrajji Jain Contribution and Share of Profits* As on the date of this Information Memorandum, the Contribution and Share of Profits of Ahmedabad East Infrastructure is as follows: Sr. No. Name of Partner Contribution (in `) Percentage of Contribution (%) 1. Arvind Infrastructure Limited 51, Arvind Limited 7, Arvind Infrabuild LLP 2, Sharadbhai Govindbhai Patel 20, Dineshbhai Jashrajji Jain 20, *Sharing of profits is as per the agreed formula between the partners. Financial Information (In ` Lacs) Particulars As on March 31, 2015 As on March 31, 2014 As on March 31, 2013 Fixed Capital Contribution Sales and other income Nil Nil Nil Profit/Loss after tax (90.84) (20.61) (0.60) 6. Arvind Five Homes LLP ( Arvind Five Homes ) Corporate Information Arvind Five Homes was incorporated on August 21, 2012 under the provisions of the Limited Liability Partnership Act, LLP Agreement dated September 3, 2012 was entered into by and between Arvind Infrastructure Limited and Citygold Estate Organisers Private Limited. The LLPIN of Arvind Five Homes is AAB The registered office of Arvind Five Homes is 24, Government Servant Society, near Municipal Market, Off C.G. Road, Navrangpura, Ahmedabad , Gujarat. 99

100 Current Nature of Activities Arvind Five Homes is currently constructing a project named Beyond Five in the outskirts of Ahmedabad. Designated Partners and Partners The designated partners of the Arvind Five Homes are: 1. Mr. Jagdish Dalal 2. Mr. Kamal Singal The partners of Arvind Five Homes are: 1. Arvind Infrastructure Limited 2. Arvind Hebbal Homes Private Limited Contribution and Share of Profits As on the date of this Information Memorandum, the Contribution and Share of Profits of Arvind Five Homes is as follows: Sr. No. Name of Partner Contribution (in `) Percentage of Contribution (%) 1. Arvind Infrastructure Limited 99, Arvind Hebbal Homes Private Limited 1, Total 1,00, Financial Information (in ` Lacs) Particulars As on March 31, 2015 As on March 31, 2014 As on March 31, 2013 Fixed Capital Contribution N.A. Sales and other income Nil Nil N.A. Profit/Loss after tax (29.05) (0.24) N.A. 7. Arvind Infracon LLP ( Arvind Infracon ) Corporate Information Arvind Infracon was incorporated on March 4, 2014 under the provisions of the Limited Liability Partnership Act, LLP Agreement dated March entered into by and between Arvind Infrastructure Limited and Arvind Hebbal Homes Private Limited. The LLPIN of Arvind Infracon is AAC The registered office of Arvind Infracon is 24, Government Servant Society, near Municipal Market, Off C.G. Road, Navrangpura, Ahmedabad , Gujarat. Current Nature of Activities Arvind Infracon is currently not engaged in any business activities. Designated Partners and Partners The designated partners of Arvind Infracon are: 1. Mr. Jagdish Dalal 2. Mr. Kamal Singal 100

101 The partners of Arvind Infracon are: 1. Arvind Infrastructure Limited 2. Arvind Hebbal Homes Private Limited Contribution and Share of Profits As on the date of this Information Memorandum, the Contribution and Share of Profits of Arvind Infracon is as follows: Sr. No. Name of Partner Contribution (in `) Percentage of Contribution (%) 1. Arvind Infrastructure Limited 99, Arvind Hebbal Homes Private Limited 1, Total 1,00, Financial Information (in ` Lacs) Particulars As on March 31, 2015 As on March 31, 2014 As on March 31, 2013 Fixed Capital Contribution N.A. Sales and other income Nil Nil N.A. Profit/Loss after tax (0.18) (0.19) N.A. 8. Arvind Beyond Five Club LLP ( Arvind Beyond Five Club ) Corporate Information Arvind Beyond Five Club was incorporated on June 12, 2014 under the provisions of the Limited Liability Partnership Act, 2008, LLP Agreement dated June 17, 2014 was entered into by and between Arvind Infrastructure Limited and Arvind Hebbal Homes Private Limited. The LLPIN of Arvind Beyond Five Club is AAC The registered office of Arvind Beyond Five Club is 24, Government Servant Society, near Municipal Market, Off C.G. Road, Navrangpura, Ahmedabad , Gujarat. Current Nature of Activities Arvind Beyond Five Club is currently not engaged in any business activities. Designated Partners and Partners The designated partners of Arvind Beyond Five Club are: 1. Mr. Jagdish Dalal 2. Mr. Kamal Singal The partners of Arvind Beyond Five Club are: 1. Arvind Infrastructure Limited 2. Arvind Hebbal Homes Private Limited Contribution and Share of Profits As on the date of this Information Memorandum, the Contribution and Share of Profits of Arvind Beyond Five Club is as follows: 101

102 Sr. No. Name of Partner Contribution (in `) Percentage of Contribution (%) 1. Arvind Infrastructure Limited 99, Arvind Hebbal Homes Private Limited 1, Total 1,00, Financial Information (in ` Lacs) Particulars As on March 31, 2015 As on March 31, 2014 As on March 31, 2013 Fixed Capital Contribution 1.00 N.A. N.A. Sales and other income Nil N.A. N.A. Profit/Loss after tax (0.23) N.A. N.A. 9. Arvind Hebbal Homes Private Limited ( Arvind Hebbal Homes ) Corporate Information Arvind Hebbal Homes was incorporated on June 22, 2011 in the name of Sangani Infrabuild Private Limited under the provisions of the Companies Act, The name of the company subsequently changed to its existing name Arvind Hebbal Homes Private Limited on March 4, The CIN of Arvind Hebbal Homes is U45200GJ2011PTC The registered office of Arvind Hebbal Homes is located at 24, Government Servant Society, near Municipal Market, Off C.G. Road, Navrangpura, Ahmedabad , Gujarat. Arvind Hebbal Homes became our wholly owned subsidiary w.e.f. October, Current Nature of Activities Arvind Hebbal Homes is currently not engaged in any business activities. However, Arvind Hebbal Homes has sold development rights of its land to the Company for Sporcia Project during financial year Board of Directors The Board of Directors of Arvind Hebbal Homes consists of: 1. Mr. Kamal Singal 2. Mr. Jagdish Dalal. Shareholding pattern As Arvind Hebbal Homes is our wholly-owned subsidiary, its entire shareholding (i.e. `1,00,000 divided into 10,000 equity shares of `10 each) is held by our Company. Financial Information (In ` Lacs) Particulars As on March 31, 2015 As on March 31, 2014 As on March 31, 2013 Equity Capital Sales and other income 4, Nil Profit/Loss after tax 9.15 (0.60) 0.74 Reserves (excluding revalution reserves) and Surplus Earning per share (in `) (6.05) 7.39 Diluted Earning per share (in (6.05) 7.39 `) Net Asset Value per share

103 Interest of our Subsidiaries in our Company Our Subsidiaries does not have any interest in our Company s business other than as stated in the chapters Our Business and Financial Information, on pages 75 and 141, respectively of this Information Memorandum. Amount of accumulated profit/ (losses) not accounted for by our Company There are no profits or losses of our Subsidiaries not accounted for by our Company. Our Joint Venture Arvind Bsafal Homes LLP is our joint venture, the details of which are provided below: 1. Arvind Bsafal Homes LLP ( Arvind Bsafal Homes ) Corporate Information Arvind Bsafal Homes was incorporated on August 10, 2010 under the provisions of the Limited Liability Partnership Act, LLP Agreement dated September 24, 2010 was entered into by and between Ahmedabad East Infrastructure LLP and Safal Homes LLP. The LLPIN of Arvind Bsafal Homes is AAA The registered office of Arvind Bsafal Homes is Khokhra Mehmedabad, Ahmedabad , Gujarat. Current Nature of Activities Arvind Bsafal Homes constructed residential project named Parishkaar-I and commercial project named Trade Square at Ahmedabad. These projects are completely sold off as on date. Designated Partners and Partners The designated partners of Arvind Bsafal Homes are: 1. Mr. Kamal Singal 2. Mr. Rajesh Brahmbhatt The partners of Arvind Bsafal Homes are: 1. Arvind Infrastructure Limited 2. Safal Homes LLP Contribution and Share of Profits As on the date of this Information Memorandum, the Contribution and Share of Profits of Arvind Bsafal Homes is as follows: Sr. No. Name of Partner Contribution (in `) Percentage of Contribution (%) 1. Arvind Infrastructure Limited 50, Safal Homes LLP 50, Total 1,00, Financial Information (in ` Lacs) Particulars As at March 31, 2015 As on March 31, 2014 As on March 31, 2013 Fixed Capital Contribution

104 Particulars As at March 31, 2015 As on March 31, 2014 As on March 31, 2013 Sales and other income 7, , , Profit/Loss after tax , Interest of our Joint Venture in our Company Our Joint Venture does not have any interest in our Company s business other than as stated in the chapters Our Business and Financial Statements, on pages 75 and 141, respectively of this Information Memorandum. Amount of accumulated profit/ (losses) not accounted for by our Company There are no profits or losses of our Joint Venture not accounted for by our Company. Shareholders Agreement There is no shareholders agreement executed between any shareholder and our Company. Strategic / Financial Partners and other Material Contracts Our Company does not have any strategic/financial partners and has not entered into any material contracts other than in the ordinary course of business. 104

105 OUR MANAGEMENT Our Board consists of 6 (six) directors of which 1 (one) being executive director and 5 (five) being non-executive directors out of which 3 (three) are independent directors. Our Chairman is a Non-executive director. The composition of the Board of Directors is governed by the provisions of the Companies Act, 2013 and erstwhile Companies Act, Board of Directors Name, DIN No., Age Sanjaybhai Shrenikbhai Lalbhai DIN No Occupation: Industrialist Age: 61 years Date of appointment and tenure March 28, 2015 liable to retire by rotation Designation Address Directorship in other Companies Chairman Non- Executive Director & Lalbaug, Shahibaug, Ahmedabad , Gujarat, India Public Limited Companies 1. Arvind Limited; 2. Arvind Brands & Retail Limited; 3. Arvind Lifestyle Brands Limited; 4. Amol Dicalite Limited; 5. Adani Ports & Special Economic Zone Limited. Private Limited Companies Animesh Holdings Private Limited. Bodies Corporate Kulin Lalbhai Sanjay DIN No Occupation: Industrialist Age: 29 years March 29, 2013, liable to retire by rotation Non- Executive Director Lalbaug, Shahibaug, Ahmedabad , Gujarat, India 1. Arvind Worldwide Inc., USA; 2. Arvind Textile Mills Limited, Bangladesh 3. Arvind Worldwide (M) Inc Public Limited Companies 1. Arvind Limited; 2. Arvind Internet Limited; 3. Anagram Knowledge Academy Limited; 4. Arvind Fashion Brands Limited; 5. Arvind Sports Lifestyle Limited. Private Limited Companies Kamal Sham Lal Singal DIN No: Occupation: Professional Age: 43 years May 8, 2015, for the term of five years from June 1, 2015 till May 31, 2020 Managing Director and Chief Executive Officer E-1103, Safal Parivesh, Near Pralhadnagar Garden, 100 Foot Road, Vejalpur, Ahmedabad , Gujarat Arvind Goodhill suit Mfg. Private Limited. Public Limited Companies Nil Private Limited Companies Arvind Hebbal Homes Private Limited Body Corporate 1. Arvind Bsafal Homes LLP 2. Kausalya Realserve LLP 3. Arvind Five Homes LLP 105

106 Name, DIN No., Age Pratul Krishnakant Shroff DIN No Occupation: Business Age: 62 years Date of appointment and tenure March 28, 2015, for the term of five years Designation Address Directorship in other Companies Non- Executive Independent Director 10, Rushil Bunglows, Near Judges' Bunglow, Bodakdev, Ahmedabad , Gujarat, India 4. Arvind Altura LLP 5. Arvind Alcove LLP 6. Karnavati Infracon LLP 7. Ahmedabad Industrial Infrastructure (One) LLP 8. Changodar Industrial Infrastruture (One) LLP 9. Arvind Infracon LLP 10. Arvind beyond five club LLP 11. Arvind Infrabuild LLP 12. Milan Farms 13. Ahmedabad East Infrastructure LLP Public Limited Companies 1. e-infochips Limited; Private Limited Companies 1. Smart Guard Systems Private Limited; 2. Ngin Technologies Private Limited; 3. Digilogue Communications Private Limited; 4. C3po Avionics Private Limited; 5. Shroff Wholesome Living Farms Private Limited. Foundations Prem Prakash Pushp Nath Pangotra DIN No Occupation: Professor March 28, 2015, for the term of five years Non- Executive Independent Director House No. T- 22, I.I.M. Campus, Vastrapur, Ahmedabad , Gujarat, India 1. Calorx Education and Research Foundation; 2. E-Infochips Institute of Training Research and Acadamics; 3. Lenio Charitable Foundation. Nil Age: 63 years Dr. Indira Jitendra Parikh DIN No Occupation: March 28, 2015, for the term of five years Non- Executive Independent Director Koregaon Park, Lane No. 7, Oxford Hallmark, "B" Building, Flat No. 1001, Pune, Public Limited Companies 1. Sintex Industries Limited; 2. Anil Limited; 3. Amanta Healthcare Limited; 4. Zydus Wellness Limited; 106

107 Name, DIN No., Age Professional Age: 71 years Date of appointment and tenure Designation Address Directorship in other Companies , Maharashtra, India. 5. Foseco India Limited; 6. Deepak Nitrate Limited; 7. Force Motors Limited; 8. Hitachi Home & Life Solutions (India) Limited. Shareholding of Directors in the Company as on date of this Information Memorandum: Sanjaybhai Lalbhai holds 2,00,155 Equity Shares in our Company, out of which 10 Equity Shares is held by him in the capacity as Trustee of Sanjay Family Trust. Except this, none of our Directors, on the date of this Information Memorandum hold any shares in our Company. Brief Profile of the Directors Sanjaybhai Lalbhai, aged 61 years, is a Chairman& Non-Executive Director on our Board and one of the Promoters of our Company. He is the Chairman and Managing Director of the Arvind Limited. He is a Science graduate with a Master's degree in Business Management and has been associated with the Lalbhai group for more than 35 years. It was under his leadership that Arvind Limited has become one of the largest manufacturers of woven textiles in India, and one of the largest denim fabric manufacturers in the world. He was also responsible for acquiring India s first denim brand Flying Machine in 1981 and for guiding the process of building Arvind s current impressive apparel brand portfolio. He also holds directorships in Arvind Lifestyle Brands Limited, Arvind Brands & Retail Limited, Amol Decalite Limited, Adani Ports & Special Economic Zone Limited, Arvind Worldwide Inc., USA, Arvind Worldwide (M) Inc. and Arvind Textile Mills Limited, Bangladesh. He has a total experience of 35 years in the field of textile. He provides strategic leadership to Arvind s CSR initiatives as Trustee to The Strategic Help Alliance for Relief to Distressed Areas trust (SHARDA Trust) which is the CSR arm of the Lalbhai Group. Kulin Lalbhai, aged 29 years, is a Non-Executive Director on the Board of our Company. Currently, he is also serving as the Executive Director at Arvind Limited. He is in-charge of new initiatives and also plays an active role in the overall corporate strategy for the Lalbhai group, with particular focus on the B2C businesses. He holds a degree in Master s in Business Administration from the Harvard Business School and has a Bachelor s degree in Electrical Engineering from Stanford University, USA. Prior to his current role, he worked in the capacity of Chief Manager - Retail at Arvind Limited, and before that he had a stint in management consulting with McKinsey & Co. He has a total experience of 7 years in the field of consumer brands and retail and strategy. Kamal Singal, aged 43 years, is the Managing Director and Chief Executive Officer of the Company. He was appointed as Chief Executive Officer on March 28, 2015 and as Managing Director on May 8, 2015 in the Company. He holds an Executive Post Graduate Diploma in Management of Indian Institute of Management, Indore. He has been associated with Lalbhai Group since 2001 in various capacities. Prior to joining Lalbhai group, he worked for 9 years in different capacities in DCM Textiles Limited. He was elevated to head the real estate business of the Lalbhai Group since He is responsible for giving strategic direction to the real estate business and also identifying new business opportunities and to further expand the product portfolio of the real estate business. Pratul Shroff, aged 62 years, is a Non-Executive Independent Director on the Board of our Company. He holds a Bachelor s degree in Electronics Engineering from Birla Institute of Technology and Science, Pilani and a Master s degree in Computer Engineering from Cornell, USA. He also earned a Masters degree in Business Administration from Indian Institute of Management, Ahmedabad. He is the founder and Chief Executive Officer of Einfochips Limited. He was also awarded the Outstanding IT Entrepreneur of the Year by Mr. N. R. Narayana Murthy Chairman of Infosys at an Ahmedabad Management Association (AMA) event in He specializes on Information, Communication and Technology (ICT). He has a total experience of over 35 years in the field of electronic design services and product development. 107

108 Prem Prakash Pangotra, aged 63 years is a Non-Executive Independent Director on the Board of our Company. He is a professor at the Indian Institute of Management, Ahmedabad. He is currently chairperson of the Public Systems Group. He has also served as a member of the Indian Institute of Management, Ahmedabad Board of Governors and as chairperson of the Centre for Infrastructure Policy and Regulation. Prior to joining the Indian Institute of Management, Ahmedabad, he held faculty positions at the University of Kansas at Lawrence, USA; the California Polytechnic State University at San Luis Obispo, USA; and was Director, School of Planning (CEPT) at Ahmedabad. He specialises in urban management, urban economics, environment management, and public finance and has a total experience of 32 years in this field. Dr. Indira Parikh, aged 71 years is a Non-Executive Independent Director on the Board of our Company. She has done M. Ed from University of Rochester, New York, USA and the Doctorate from Gujarat University. She was a faculty at Indian Institute of Management, Ahmedabad for over 30 years and was the Dean from 2002 to She is the Founder President of Foundation for Liberal and Management Education at present. She has also taught at INSEAD (European Institute of Business Administration), Fontainebleau and Texas A&M (Agricultural & Mechanical) University. She specializes in organization development and design and institution building and has a total experience of 41 years in this field. Kulin Lalbhai is son of Sanjaybhai Lalbhai. Except as stated herein, none of our Directors are related to each other. Details of current and past directorship(s) in listed companies whose shares have been/ were suspended from being traded on the BSE/ NSE and reasons for suspension None of our Directors are currently or have been, in the past five years, on the board of directors of a listed company whose shares have been or were suspended from being traded on the BSE or NSE. Details of current and past directorship(s) in listed companies which have been/ were delisted from the stock exchange(s) and reasons for delisting None of our Directors are currently or have been on the board of directors of a public listed company whose shares have been or were delisted from any stock exchange. Borrowing Powers of Board of Directors The borrowing powers of our Directors are regulated by Article 82 of the Articles of Association of our Company, subject to provisions of the Companies Act, The Board of Directors of our Company has power to borrow up to `1,000 crores as per the members resolution passed in the EGM of our Company held on September 15, Arrangements with major shareholders, customers, suppliers and others There is no arrangement or understanding between our Company and major shareholders, customers, suppliers or others, pursuant to which of any of the Directors of our Company was selected as a Director or member of senior management of our Company. Details of service contracts Our Company has not entered into any service contracts with any of our Directors for providing benefits upon termination of employment. Compensation of Managing Director Terms and conditions of appointment and remuneration of Kamal Singal: Particulars Remuneration 108

109 Particulars Basic Salary Perquisites and Allowances Remuneration `3,00,000 per month with such increase as may be decided by the Board of Director (which includes any committee thereof) from time to time, but subject to maximum salary of `10,00,000 per month. Category A Other Allowances, Personal Accident Insurance and Medical expenses (i) Other Allowances, Personal Accident Insurance and Medical Insurance as per the Company s policy. (ii) Club Fees The Company shall reimburse annual fees for one club. The aggregate value of perquisites for (i) to (ii) above for each year shall be computed as per the provisions of the Income Tax Act, In case of benefits for which no specific rule of valuation is provided under the Income Tax Act, the perquisites value of such benefit shall be taken at actual cost. Category B (i) The Company shall contribute towards Provident Fund provided that such contributions either singly or put together shall not exceed the tax-free limit prescribed under the Income Tax Act. (ii) (iii) The Company shall pay gratuity as per rules of the Company. Leave on full pay and allowances, as per rules of the Company, but not more than one month s leave for every eleven months of service. However, the leave accumulated but not availed of will be allowed to be encashed at the end of the term as per rules of the Company. The above shall not be included in the computation of ceiling on remuneration or perquisites aforesaid. Category C (i) The Company shall provide car(s) at the cost of the Company for use on (ii) Non-Executive Director s Compensation Company s business and the same will not be considered as perquisites. The Company shall provide telephone and other communication facilities to the Managing Director & CEO at the cost of the Company. Category D The Managing Director & CEO shall be entitled to Performance Linked Variable Pay/Special Allowance/Role Award/ Bonus/Commission on profits etc. or in any other form as the Nomination and Remuneration Committee and the Board of Directors may determine from time to time within the overall limit of 5% of the net profits and the overall limits of remuneration prescribed under Section 197 and other applicable provisions of the Companies Act, The Board and/or committee of the Board may from time to time determine, every year the amount of commission within the limit of 1% of the net profit and the same be apportioned amongst the Non-Executive Directors (other than the Managing Director and Whole-time Director) in such manner as the Board and/ or committee may deem fit for a period from April 1, 2015 till March 31, The payment of remuneration by way of commission to Non- Executive Directors will be in addition to the sitting fees of `10,000 payable to them for attending each meeting of the Board/Committee. Corporate Governance: Corporate Governance is administered through our Board and the Committees of the Board. In compliance with the Clause 49 of the Listing Agreement with the Stock Exchanges, we have the following Board Level Committees in our Company: 109

110 Audit Committee Stakeholders Relationship Committee Nomination and Remuneration Committee Corporate Social Responsibility Committee (i) Audit Committee The composition of Audit Committee is as under: Name of Director Designation in the Committee Nature of Directorship Pratul Shroff Chairman Non-executive Independent Director Prem Prakash Pangotra Member Non-executive Independent Director Dr. Indira Parikh Member Non-executive Independent Director Terms of reference: 1. Oversight of the company s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible; 2. Recommendation for appointment, remuneration and terms of appointment of auditors of the company; 3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors; 4. Reviewing, with the management, the annual financial statements and auditor's report thereon before submission to the board for approval, with particular reference to: a. Matters required to be included in the Director s Responsibility Statement to be included in the Board s report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013; b. Changes, if any, in accounting policies and practices and reasons for the same; c. Major accounting entries involving estimates based on the exercise of judgment by management; d. Significant adjustments made in the financial statements arising out of audit findings; e. Compliance with listing and other legal requirements relating to financial statements; f. Disclosure of any related party transactions; g. Qualifications in the draft audit report; 5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval; 6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter; 7. Review and monitor the auditor s independence and performance, and effectiveness of audit process; 8. Approval or any subsequent modification of transactions of the company with related parties; 110

111 9. Scrutiny of inter-corporate loans and investments; 10. Valuation of undertakings or assets of the company, wherever it is necessary; 11. Evaluation of internal financial controls and risk management systems; 12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; 13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit; 14. Discussion with internal auditors of any significant findings and follow up there on; 15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board; 16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; 17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; 18. To review the functioning of the Whistle Blower mechanism; 19. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate; 20. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. The Audit Committee will have the powers necessary including the following to discharge its above terms of reference effectively: 1. To investigate any activity within its terms of reference; 2. To seek information from any employee; 3. To obtain outside legal or other professional advice; 4. To secure attendance of outsiders with relevant expertise, if it considers necessary. The Audit Committee shall mandatorily review the following information: 1. Management discussion and analysis of financial condition and results of operations; 2. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management; 3. Management letters / letters of internal control weaknesses issued by the statutory auditors; 4. Internal audit reports relating to internal control weaknesses; and 111

112 5. The appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the Audit Committee. In addition to the above, the Audit Committee shall have such functions/role/powers as may be specified in the Companies Act, 2013 or any other applicable law. (ii) Stakeholders Relationship Committee The composition of Stakeholders Relationship Committee is as under: Name of Director Designation in the Committee Nature of Directorship Sanjaybhai Lalbhai Chairman Non-Executive Director Pratul Shroff Member Non-Executive Independent Director Prem Prakash Pangotra Member Non-Executive Independent Director Terms of reference: The terms of reference of the Stakeholders Relationship Committee are as under: 1. To specifically look into the redressal of Investors Grievances pertaining to: Transfer of shares and debentures; Non-receipt of declared dividends, interests and redemption proceeds of debentures; Dematerialization of Shares and debentures; Replacement of lost, stolen, mutilated share and debenture certificates; Non-receipt of rights, bonus, split share and debenture certificates; and Non-receipt of balance sheet. 2. To look into other related issues towards strengthening investors relations. 3. To consider and approve issuance of share / debenture certificates including duplicate share/debenture certificates. 4. To look into the reasons for any defaults in the payment to the Depositors, Debenture holders, Shareholders (in case of non-payment of declared dividends) and Creditors. (iii) Nomination and Remuneration Committee The composition of Nomination and Remuneration Committee is as under: Name of Director Designation in the Committee Nature of Directorship Prem Prakash Pangotra Chairman Non-executive Independent Director Sanjaybhai Lalbhai Member Non-executive director Pratul Shroff Member Non-executive Independent Director Terms of reference: The functions/ role/ powers of this Committee shall include the following: Nomination of Directors / Key Managerial Personnel / Senior Management* 1. To evaluate and recommend the composition of the Board of Directors; 112

113 2. To identify persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down by the Committee; 3. Consider and recommend to the Board appointment and removal of directors, other persons in senior management and key managerial personnel (KMP); 4. Determining processes for evaluating the effectiveness of individual directors and the Board as a whole and evaluating the performance of individual Directors; 5. To administer and supervise Employee Stock Options Schemes (ESOS) including framing of policies related to ESOS and reviewing grant of ESOS; 6. Formulate the criteria for determining qualifications, positive attributes and independence of a Director; 7. To review HR Policies and Initiatives. Remuneration of Directors / Key Managerial Personnel / Senior Management*/ other Employees: 1. Evolve the principles, criteria and basis of Remuneration policy and recommend to the Board a policy relating to the remuneration for all the Directors, KMP, senior management and other employees of the Company and to review the same from time to time. 2. The Committee shall, while formulating the policy, ensure the following : (a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully; (b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and (c) remuneration to Directors, KMP and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals. *Senior Management for the above purpose shall mean personnel of the Company who are members of its core management team excluding Board of Directors comprising all members of management one level below the executive directors, including the functional heads. (iv) Corporate Social Responsibility Committee The composition of Corporate Social Responsibility Committee is as under: Name of Director Designation in the Committee Nature of Directorship Sanjaybhai Lalbhai Chairman Non-executive Director Prem Prakash Pangotra Member Non-executive Independent Director Dr. Indira Parikh Member Non-executive Independent Director Terms of reference: 1. formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII to the Companies Act, 2013; 2. to finalise a list of CSR projects or programs or initiatives proposed to be undertaken periodically including the modalities for their execution / implementation schedules and to review the same from time to time in accordance with requirements of section 135 of the Companies Act 2013; 113

114 3. recommend the amount of expenditure to be incurred on the activities referred to in clause (a); 4. monitor the Corporate Social Responsibility Policy of the company from time to time; 5. review the CSR report and other disclosures on CSR matters for the approval of the Board for their inclusion in the Board report; Interest of our Directors All of our Directors may be deemed to be interested to the extent of remuneration and fees payable to them for services rendered as Directors of our Company such as attending meetings of the Board or a committee thereof and to the extent of other reimbursement of expenses payable to them under our Articles of Association. Some of our Directors may be deemed to be interested to the extent of transactions carried out with such related parties, consideration received / paid or any loan or advances provided to any body corporate including companies and firms and trusts, in which they are interested as directors, members, partners or trustees. Our Directors may also be regarded as interested in the Equity Shares, if any, held by them or that may be subscribed by and allotted to the companies, firms, and trusts, if any, in which they are interested as directors, members, promoters, and /or trustees pursuant to this Information Memorandum. Except for Sanjaybhai Lalbhai, who is also our Promoter, none of our Directors are interested in the promotion of our Company. Our Directors have no interest in any property acquired by us within two years of the date of this Information Memorandum. Changes in our Board during the last three years Name of Director Date of change Reason for change Kulin Lalbhai March 29, 2013 Appointment as additional director September 16, 2013 Change in designation as Non-executive director Sanjaybhai Lalbhai March 28, 2015 Appointment as Additional Director May 11, 2015 Change in designation as Chairman (Non-executive director) Prem Prakash Pangotra March 28, 2015 Appointment as Non-executive Independent Director Pratul Shroff March 28, 2015 Appointment as Non-executive Independent Director Dr. Indira Parikh March 28, 2015 Appointment as Non-executive Independent-Woman Director Jayesh Shah March 29, 2013 Cessation as director Jagdishchandra Dalal March 28, 2015 Cessation as director Hiren Hariprasad Rao March 28, 2015 Cessation as director 114

115 Organisation Chart 115