Housing Development and Infrastructure

The Directors are pleased to present the 12th Annual Report on the
 business and operations of the Company along with the audited accounts
 for the financial year ended 31st March, 2008. It is indeed a great
 pleasure to present the first report since your Company entered the
 capital market with the maiden public issue of its Equity Shares which
 was met with overwhelming response from all the investors.  It has
 brought with it the onerous responsibility and challenge to meet
 shareholders expectations and your Directors shall endeavour to meet it
 as one of the largest Real Estate Companies in India.
 
 PERFORMANCE OF THE COMPANY
 
 Financial results
 
 For the year 2007-08, your Company achieved an overall turnover growth
 of 99.94%; profi t after tax grew by 160.33% and net worth increased by
 over 400%. The growth for last three fi nancial years has been over
 100% with respect to revenue and profi tability.
 
 The summarized results are given below:
                                                         (Rs. in crores)
 Parameters                                       2007-08     2006-07
 
 Gross sales and other receipts                  2,432.32    1,216.51
 Profi t before interest, depreciation, 
 amortisation and taxation                       1,742.49      663.67
 Interest                                          138.49       44.50
 Depreciation and Amortisation                       1.87        0.63
 Operational profi t before tax                  1,602.13      618.18
 Less: Provision for Tax                           191.62       76.37
 Profi t after taxation                          1,410.51      541.81
 Balance brought forward                           487.63      103.02
 Less: Transferred to General Reserve              487.63       59.20
 Less: Debentures Redemption Reserve               712.50         - 
 Less: Dividend including dividend Tax             124.34         -
 Less: Utilised for issue of Bonus Shares             -         98.00
 Profi t carried to Balance sheet                  573.67      487.63
 Net Worth                                       3,635.68      708.78
 
 Dividend
 
 Your Directors have declared and paid an interim dividend of Rs. 2/-
 per Equity Share on 21,00,00,000 Equity Shares of Rs.10/- each in
 August 2007, the total cash outfl ow on account of this dividend
 including tax on it was Rs. 49.14 crores.
 
 Your Directors at the Meeting held on 21st May, 2008 have recommended a
 fi nal dividend of Rs. 3/- per Equity Share on 21,42,72,081 Equity
 Shares of Rs. 10/- each for the fi nancial year ended 31st March, 2008
 and seek your approval for the same. If approved the total amount of
 dividend to be paid to the equity shareholders will be Rs.75.2 crores
 (including tax on dividend of Rs.10.92 crores) and shall be paid to the
 members holding shares as on record date fi xed for the same.
 
 Industry structure and developments
 
 Real Estate Industry consists of players engaged in diversifi ed
 projects such as Commercial Building, Residential Townships, IT Parks
 Hospitality, Retail Ventures etc. In view of the India’s growing
 economy and demand for better living, craving for better infrastructure
 is ever increasing. The Company is engaged in all spheres of the
 Industry and is engaged in commercial constructions, hospitality
 projects, cyber city and infrastructure development.
 
 In residential sector there is a housing shortage of 19.4 million units
 out of which 6.7 million are in urban India. The increase in purchasing
 power and exposure to organised retail formats has redefi ned the
 consumption pattern. As a result the country has experienced
 mushrooming of retail projects across the cities.
 
 India is now gaining global recognition as one of the world’s fastest
 growing economies. What is equally well known is that lack of
 infrastructure as one of the biggest bottlenecks hampering growth.
 Your Company is working closely with several statutory agencies to
 enable the creation of infrastructure within the city of Mumbai.  The
 sky concept of rehabilitation makes creation of infrastructure a
 reality.
 
 Business Performance
 
 Your Company has emerged as one of the largest Real Estate Companies in
 India. The Company has signifi cant presence in Mumbai Metropolitan
 Region (MMR) and has expanded its operations to Hyderabad, Kochi and
 Pune. The Company has emerged as a strong corporate brand post listing
 and has diversified into sectors like Infrastructure, Entertainment,
 Hospitality and Energy.
 
 The Company has been rated as one of the fastest growing Real Estate
 Company in India by Construction world-NICMAR in October 2007.
 
 2007-08 was a year of achievement for the Company. Your Company came
 out with an Initial Public Offer of Equity Shares aggregating to
 Rs.1,698.60 crores. The issue received an overwhelming response and was
 over subscribed by 5.6 times with the QIB portion over subscribed
 nearly 10 times. The shares of the Company are listed at Bombay Stock
 Exchange Limited (BSE) and National Stock Exchange of India Limited
 (NSE).
 
 From the business point of view our land bank has increased from 112.5
 million sq. ft. to 192 million sq. ft., with more than 87% of land bank
 in Mumbai Metropolitan Region making it largest listed Realty Company
 in the Mumbai Metropolitan Region.
 
 Major Achievements during the year
 
 1.  HDIL lists on BSE and NSE on 24th July, 2007.
 
 2.  HDIL short listed for prestigious Dharavi Slum Rehabilitation
 projects after technical evaluations in September 2007.
 
 3.  HDIL awarded contract from MIAL (Mumbai International Airport
 Limited) for Rehabilitation of approximately 85,000 slum dwellers under
 expansion and modernisation of Mumbai airport in October 2007.
 
 4.  Awarded Fastest Growing Real Estate Company in India in October
 2007 by Construction World, NICMAR.
 
 5.  Acquired industrial plots for redevelopment in Navi Mumbai, Mulund
 and Bhandup aggregating close to 35 acres during November 2007 to
 February 2008.
 
 6.  Launched HDIL Cyber City in Kochi for construction in January 2008.
 Developable size of 8.00 million sq. ft. with 5.5 million sq. ft. for
 IT/ITES. Investment size of around Rs.2,000 crores.
 
 7.  HDIL enters the Entertainment Sector with 100% subsidiary and
 launch of First three screens Multiplex in Vasai under the brand name
 BROADWAY in February 2008.
 
 8.  Turnover and Profi tability grew by more than 100 % in 2008 as
 compared to 2007, maintaining last three years growth of more than
 100%.
 
 9.  More than 60% increase in land bank as compared to last year, with
 87% land reserves in Mumbai Metropolitan Region.
 
 10.  Diversifi cation into Energy, Hospitality and SEZs sector.
 
 Inorganic Growth
 
 With a view to consolidate our land bank and maintain our leadership in
 MMR, we have acquired 60% stake in Ravijyot Leasing and Financial
 Services Private Limited. Due to this inorganic growth we will be able
 to add substantial land bank to our land reserves.
 
 Further we have made Blue Star Realtors Private Limited as 100%
 subsidiary during last year. Blue Star Realtors Private Limited is
 currently executing one of the largest cyber city in Kochi with
 developable space of 8 million sq. ft.
 
 Diversifi cation
 
 1.  Infrastructure
 
 a) Special Economic Zone (SEZ)
 
 Your Company is currently developing a multi product SEZ in Virar (part
 of Thane district) of 5,000 acres through its 100% subsidiary Privilege
 Power & Infrastructure Private Limited (PPIPL). PPIPL has already
 received an In-principle approval from Government of India to develop
 Virar multi product SEZ. We have acquired approximately 2,300 acres of
 land till date.
 
 Your Company has also received an In-principle approval for a multi
 services SEZ in Vasai for approximately 450 acres. Currently land
 acquisition and feasibility studies are under process.
 
 b) Townships
 
 Your Company plans to develop townships projects on the outskirts of
 Mumbai and other locations in India. We are currently executing
 township projects in Hyderabad and Kochi.
 
 2.  Entertainment
 
 Your Company has incorporated a 100% subsidiary HDIL Entertainment
 Private Limited, to explore the opportunities in the entertainment
 sector. We have started our operations by entering the Multiplex
 Business for our retail malls. We have launched our fi rst three
 screens multiplex in Vasai under the brand name “BROADWAY” in February
 2008 and are looking to consolidate our position by both organic and
 inorganic growth.
 
 3.  Hospitality
 
 Real Estate offers an excellent opportunity to enter the hospitality
 sector and considering the huge land bank at various strategic
 locations, we have incorporated HDIL Leisure Private Limited, wholly
 owned subsidiary in April 2008. HDIL Leisure has a vision to become
 India’s leading hospitality and lifestyle development company, amongst
 the largest such companies globally. HDIL Leisure will own, develop and
 manage branded hotels, residential and mix-use projects by leveraging
 its real estate capabilities to build and own India’s luxury chain of
 hospitality and premium lifestyle assets.
 
 4.  Energy Sector
 
 Your Company as a part of its diversifi cation strategy has decided to
 enter into the energy sector. With worldwide energy consumption
 projected to rise more than 50% by 2030, with most of the demand coming
 from emerging economies such of those in China and India.
 
 Government of India has announced a new round of exploration bid with
 57 blocks under NELP VII. With this strategy, Company has fl oated a
 subsidiary, HDIL Oil & Gas Private Limited to explore opportunities in
 fi eld of exploration, production and refi ning.
 
 Subsidiaries
 
 Your Company has the following subsidiaries:
 
 1.  Privilege Power and Infrastructure Private Limited
 
 2.  HDIL Entertainment Private Limited
 
 3.  HDIL Infra Projects Private Limited
 
 4.  HDIL Oil & Gas Private Limited
 
 5.  Blue Star Realtors Private Limited
 
 6.  Ravijyot Finance and Leasing Private Limited
 
 7.  HDIL Leisure Private Limited (Incorporated on 5.4.2008)
 
 A statement pursuant to Section 212 of the Companies Act, 1956, related
 to the Subsidiary companies is annexed. The audited statements of
 accounts, along with the report of the Board of Directors relating to
 the Company’s subsidiaries and respective Auditor’s Report thereon for
 the year ended March 31, 2008 are annexed.
 
 Finance
 
 During the year, the Company raised long-term loan from Banks and
 Financial Institutions and short-term funds from Banks to meet its
 working capital requirements. Funds requirement of the Company has been
 met with mix of Equity, Debt and Internal Accruals.
 
 Share Capital
 
 During the year under review, the Authorised Share Capital of the
 Company has been increased from Rs. 250 crores to Rs. 500 crores.
 
 In June 2007 your Company came up with the Initial Public Offer of
 Rs.1,698.60 crores comprising of 29,700,000 Equity Shares of face value
 of Rs. 10/- per Equity Share at a premium of Rs. 490/- per Equity Share
 aggregating to Rs. 1,485.00 crores and 42,72,081 Equity Shares of face
 value of Rs. 10/- per Equity Share at a premium of Rs. 490/- per Equity
 Share issued under green shoe option aggregating to Rs. 213.60 crores.
 The Equity Shares of your Company stand listed on the Bombay Stock
 Exchange Limited (BSE) and National Stock Exchange of India Limited
 (NSE). Besides the IPO, the Company had placed 3,00,000 Equity Shares
 on private placement basis at a premium of Rs. 490/- per Equity Share
 aggregating to Rs.  15.00 crores. During the year under review your
 Company has allotted 3,42,72,081 Equity Shares of face value of Rs.
 10/- each. With this, the paid-up, issued and subscribed capital of the
 Company is Rs. 214.27 crores.
 
 The paid-up Capital of the Company will be Rs. 275.49 crores, after
 approval of issue of Bonus Shares in the ratio of two shares for every
 seven shares held by the members at the Annual General Meeting.
 
 As per the SEBI Guidelines, Industrial Development Bank of India, is
 the monitoring agency to review and submit their report on utilisation
 of public issue proceeds. As on 21st May, 2008, following is the
 position of IPO proceeds:
 
                                              (Rs. in crores.)
 Sr. No.  Particulars                          Amount
 
 A Funds Raised                                1,698.60
 
 B Utilisation
 Issue Expenses                                   89.38
 Acquisition of land and land
 development rights                            1,188.18
 
 Construction on ongoing projects                421.04
 
 C Total Utilisation                           1,698.60
 
 Debentures
 
 Your Company has issued both secured and unsecured Non- Convertible
 Redeemable Debentures aggregating to Rs. 1,175.00 crores to various fi
 nancial institutions/banks on private placement basis for various
 projects of the Company, of which secured debentures amounting to Rs.
 875.00 crores are listed at Bombay Stock Exchange Ltd. (BSE).
 
 Transfer to reserves
 
 Your Directors have proposed to transfer Rs. 712.50 crores to Debenture
 Redemption Reserve and Rs. 487.63 crores to the General Reserves out of
 the balances available for appropriation, therefore after the proposed
 dividend payout and transfer to general reserves, the balance of Profi
 t and Loss Account would stand at Rs.  573.67 crores at the end of fi
 nancial year, the total reserves of the Company stood at Rs. 3,422.95
 crores.
 
 Consolidated Financial Statements
 
 In compliance with the Accounting Standard 21 and the Listing Agreement
 entered into with the Bombay Stock Exchange Limited and the National
 Stock Exchange of India Limited, this Annual Report includes the
 consolidated fi nancial statements of Housing Development and
 Infrastructure Limited and its subsidiaries for the fi nancial year
 2007-08.
 
 Cash Flow Statement
 
 In conformity with the provisions of Clause 32 of the Listing Agreement
 with the Stock Exchanges, the cash fl ow statement for the year ended
 31st March, 2008 is annexed hereto.
 
 Directors
 
 Pursuant to the provisions of Section 259 of the Companies Act, 1956
 Company made an application to Central Government for its approval to
 increase the number of directors from the permissible limit of 12
 (twelve) to 20 (twenty) and received the approval on 14.5.2008.
 
 Pursuant to the provisions of Section 260 of the Companies Act, 1956
 Mr. Ramesh Chander Kapoor and Mr. Raj Kumar Aggarwal were appointed as
 an Additional Directors of the Company with effect from 21st May, 2008.
 Mr. Ramesh Chander Kapoor and Mr. Raj Kumar Aggarwal would hold offi ce
 up to the date of ensuing Annual General Meeting. The Company has
 received a notice in writing from a member proposing the candidature of
 Mr. Ramesh Chander Kapoor and Mr. Raj Kumar Aggarwal for the offi ce of
 Director, liable to retire by rotation. Subsequent to the approval of
 the share holders, Mr. Rakesh Kumar Wadhawan has assumed offi ce of
 Executive Chairman w.e.f. 1st April, 2008.
 
 In accordance with the provisions of the Companies Act, 1956, and the
 Articles of Association of the Company, Mr. Satya Pal Talwar, Mr. Shyam
 Sunder Dawra, Mr. Sunil Behari Mathur and Mr. Lalit Mohan Mehta, retire
 by rotation at the forthcoming Annual General Meeting and, being
 eligible, have offered themselves for re-appointment.
 
 Fixed deposits
 
 The Company has not accepted any deposits from the public or its
 employees within the meaning of Section 58A of the Companies Act, 1956,
 during the year under review.
 
 Directors’ Responsibility Statement
 
 In terms of provisions of Section 217(2AA) of the Companies Act, 1956,
 your Directors confi rm that:
 
 a) In the preparation of the annual accounts for the year ended 31st
 March, 2008, the applicable accounting standards have been followed and
 no material departures have been made from the same;
 
 b) They have selected such accounting polices and applied them
 consistently and made judgements and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company at the end of the fi nancial year and of the profi t of the
 Company for the year under review;
 
 c) They have taken proper and suffi cient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956, for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities;
 
 d) They have prepared the annual accounts for the year ended 31st
 March, 2008 on a going concern basis.
 
 Corporate Governance
 
 Your Company is committed to maintaining the highest standards of
 Corporate Governance so as to be a responsible corporate citizen and to
 serve in the best interests of all the stakeholders, viz., the
 employees, shareholders, customers, vendors and society at large.  The
 Company believes it can achieve this by being transparent in its
 business dealings by disclosures of all relevant information in an
 easily understandable manner.
 
 The report of Corporate Governance as stipulated under Clause 49 of the
 Listing Agreement forms part of Annual Report. The Managing Director’s
 declaration regarding compliance of Code of Business Conduct and Ethics
 for Board members and senior management personnel forms part of Report
 on Corporate Governance.
 
 The requisite certifi cate from the Auditors of the Company, M/s. Thar
 & Co., Chartered Accountants, Mumbai confi rming the compliance with
 the conditions of Corporate Governance as stipulated under the
 aforesaid Clause 49 of the Listing Agreement, is annexed to this
 report.
 
 Electronic fi ling
 
 Since SEBI has stipulated an electronic fi ling of the annual report
 including Corporate Governance report, shareholding pattern etc.  on
 the website of SEBI i.e. www.sebiedifar.nic.in statements of your
 company would also be accessible at this website. These statements are
 displayed on the Company’s website i.e. www.hdil.in.
 
 Listing fees
 
 The Equity Shares of the Company are listed on the Bombay Stock
 Exchange Limited and the National Stock Exchange of India Limited. The
 Company has paid the applicable listing fees to the above Stock
 Exchanges up to date. The Company’s shares are also traded in the
 dematerialised segment for all investors compulsorily and the Company
 has entered into agreements with the Central Depository Services
 (India) Limited and National Securities Depository Limited for trading
 in electronic form.
 
 Auditors
 
 M/s. Thar & Co., Chartered Accountants, the Statutory Auditors of the
 Company, holds offi ce up to the conclusion of the forthcoming Annual
 General Meeting and has given their consent for re-appointment. It is
 proposed to re-appoint them as auditors for the fi nancial year 2008-09
 and fi x their remuneration.
 
 The Company has received a written confi rmation from M/s. Thar & Co.
 to the effect that their appointment, if made, would be in conformity
 with the limits prescribed in Section 224 (1B) of the Companies Act,
 1956 and that they are not disqualifi ed for such re-appointment within
 the meaning of Section 226 of the Companies Act, 1956.
 
 Internal Control Systems and their Adequacy
 
 Internal Control Systems are implemented:
 
 - to safeguard the Company’s assets from loss or damage
 
 - to keep constant check on the cost structure
 
 - to prevent revenue leakages
 
 - to provide adequate fi nancial and accounting controls and implement
 accounting standards.
 
 The Audit committee actively reviews internal audit reports and
 effectiveness of internal control systems.
 
 Conservation of energy, research and development, technological
 absorption, foreign exchange earnings and outgo
 
 The particulars as prescribed under Section 217(1) (e) read with Rule 2
 of the Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988, are set out in the Annexure ‘A forming part of
 this report.
 
 Employee relations
 
 Relations between employees and the management continued to be cordial
 during the year. Your Company has strength of over 505 permanent
 employees, making up its most valuable asset. Your Company conducted
 surveys across various categories of employee satisfaction. This survey
 indicated a high degree of respect for the organisation while
 highlighting some areas of concern. Based on the feedback, appropriate
 initiatives were launched and actions were initiated. The Corporate
 Human Resources Department is committed to improve employee
 satisfaction at all levels and create a motivated, responsive and
 accountable organisation.
 
 Information as per Section 217(2A) of the Companies Act, 1956, (the
 Act) read with the Companies (Particulars of Employees) Rules, 1975,
 are set out in the Annexure ‘B’ forming part of this report.
 
 Acknowledgement
 
 Your Directors wish to convey their appreciation to the Banks,
 Financial Institutions, Government Authorities, customers and other
 business associates for the excellent assistance and co-operation
 received and the members for their trust and support and all the
 employees of the Company for their outstanding contribution to the
 operations during the year.
 
                                On behalf of the Board of Directors
 
 Place: Mumbai                                Rakesh Kumar Wadhawan
 Date : 21st May, 2008                           Executive Chairman