A2Z Infra Engineering Ltd.
|BSE: 533292||Sector: Engineering|
|NSE: A2ZINFRA||ISIN Code: INE619I01012|
|BSE LIVE 13:49 | 28 Feb||40.70||
|NSE LIVE 13:51 | 28 Feb||40.65||
|Mkt Cap.(Rs cr)||533.21|
|Mkt Cap.(Rs cr)||533.21|
A2Z Infra Engineering Ltd. (A2ZINFRA) - Director Report
Company director report
The Members of
A2Z Infra Engineering Limited
(Formerly known as A2Z Maintenance & Engineering Services Limited)
The Directors take pleasure in presenting the Fifteenth Annual Report together with theannual audited financial statements for the year ended March 31 2016.
1. Financial summary or highlights/Performance of the Company
The highlights of financial results on Standalone and Consolidated basis for thefinancial year ended on March 312016 are as follows:
(Rs. in Million)
Operations Review Standalone:
During the year under review the turnover of the Company has shown a phenomenalincrease as compared to that of the previous year figure by 338.66%.The Company hasachieved turnover of Rs. 9613.88 Million as against Rs. 2191.67 Million in the previousyear. The Company has made net loss after tax of Rs. 446.82 Million as against a loss ofRs. 1238.83 Million in the previous year.
The Net Worth of the Company has increased to Rs. 8066.86 Million as at the end of thecurrent year from Rs. 7904.64 Million as at the end of the previous year representing amarginal increase in Net Worth by 0.93%.
The Debt Equity ratio of the Company has gone up to 1.17 as at the end of the currentyear as compared to 1.15 as at the end of the previous year.
The consolidated Turnover of the Company for the current financial year is Rs.13488.15 Million as against Rs. 5944.39 Million in the previous year representing anincrease in Turnover by 126.91%. The Company on consolidated basis has made a net Lossafter minority interest and extra ordinary items of Rs. 1330.46 Million as against Rs.2087.32 Million in the previous year.
The consolidated Net Worth of the Company has come down to Rs. 4850.88 Million as atthe end of the current year from Rs. 5569.05 Million as at the end of previous year.
The consolidated Debt Equity ratio of the Company has gone up to 3.29 as at the end ofthe current year compared to 2.73 as at the end of previous year.
2. Consolidated Financial Statements
The Audited Consolidated Financial Statements of your Company as on March 31 2016have been prepared in accordance with the relevant Accounting Standards issued by theInstitute of Chartered Accountants of India and Regulation 33 of Securities and ExchangeBoard of India (Listing obligations and disclosure requirements) Regulations 2015 andprovisions of the Companies Act 2013.
In accordance with Section 129(3) of the Companies Act 2013 and schedule V ofSecurities and Exchange Board of India (Listing obligations and disclosure requirements)Regulations 2015 entered into with the Stock Exchanges the Consolidated FinancialStatements of the Company including the financial details of all the subsidiary companiesof the Company forms part of this Annual Report.
On account of the losses reported by the Company during the current year nooperational profit was generated for recommendation of dividend for the financial yearended March 31 2016.
4. Operational highlights
The key highlights of the Company's various businesses are as follows:
Power Transmission & Distribution:
Your Company is one of the leading players in India's Engineering & UrbanInfrastructure Services sector. As part of the services the Company provides integrateddesign testing installation construction and commissioning services on a turn-key basisto its clients. The Company's projects include rural electrification railway overheadelectrification reduction of AT&C losses feeder renovation underground cablingfeeder segregation installing High Voltage Distribution System ("HVDS") and LowVoltage
Distribution System ("LVDS") distribution lines and transmission lines.TheCompany has strong capabilities to build:
Substations & Switchyards up to 765 kV
Transmission lines up to 765 kV
11 / 33 kV distribution lines comprising of Feeder Renovation Projects HighVoltage Distribution System AT&C Loss Reduction Tube Well Connection Segregation ofDomestic and Agriculture load Augmentation of Lines Providing Laying of HT & LTAerial Bunched Cables and Offering BPL Connections.
Company has it's presence out of India in Zambia Uganda and Kenya.
Telecom Infrastructure EPC
The Company has a strong presence in this potential business of Telecom Infrastructureprojects on EPC basis. Your Company is currently executing orders for EPC work fortrenching laying Installation Testing of Optical Fiber Cable PLB Duct and Accessoriesfor construction of Exclusive Optical NLD Backbone and Optical Access routes on turnkeybasis for Defense Networks.
Waste to Energy
The Company being an Infrastructure Company provides solutions that promote Clean andGreen Energy. The Company is attempting to build scale in Green Technology solutions inall areas of the power sector starting from generation of power to its distribution toend consumers. Towards it the Company has taken significant steps for generation of powerfrom renewable energy sources like RDF & biomass. The Company has entered intocollaboration with sugar mills for setting up three power plants on Built Own Operateand Transfer (BOOT) basis for a period of 15 years in the state of Punjab.
5. Change in the nature of business
There has been no change in the nature of business of the Company during the year underreview. However after the period under review the Memorandum of Association("MoA") of the Company has been amended by inserting new sub-clauses 9 & 10in the Main object clause under Part- A of Clause III to undertake the manufacture orproduction and otherwise dealing in all kinds of telecom equipment's for all type ofwireline and wireless networks etc.
6. Material Changes and Commitments
There were no Material changes and commitments affecting the financial position of theCompany Which have occurred between the end of the financial year of the Company and thedate of the report.
7. Updates on Corporate Debt Restructuring (CDR)
As approved by Corporate Debt Restructuring Empowered Group ("CDR EG")Corporate Debt Restructuring (CDR) package of Company for restructuring of its debts hasbeen successfully implemented. Company has duly complied and continues to comply with theterms and conditions of approved CDR package. The CDR Lenders of the Company haveappointed SBICAP Trustee Company Limited (SBICAP)
as their Security Trustee on the terms and conditions contained in Security TrusteeAgreement executed on March 27 2014 among the Company Lenders and the Security Trustee.For securing the due repayment discharge and redemption of all the Facilities by theCompany to the CDR Lenders together with interest additional interest liquidateddamages and other monies in accordance with the Master Restructuring Agreement (MRA) thesecurity creation by way of charge on the assets of the Company and pledge of shares ofthe Promoter/Promoter Group in favour of the security trustee for and on behalf of the CDRLenders have been successfully completed.
Your Company is committed to honour its debt obligation in time and has alwaysmaintained very good relations with all its lenders but due to delayed realization of pastreceivables from Govt Agencies/ PSUs and also slowdown in its operations and fall inrevenue caused severe liquidity crunch at times and as a resultthere has been delay attimes in debt servicing to Lenders. However the management of the Company is exploringvarious options and is making its best effort for meeting debt service obligations.
8. Scheme of Arrangement / Reconstruction / Re-Organization
The Scheme of Arrangement/Reconstruction/
Re-Organization ("the Scheme") between your Company and its Secured Creditorsunder Sections 391 to 394 of the Companies Act 1956 for implementation of the CorporateDebt Restructuring Package ("CDR Package") as approved by the Corporate DebtRestructuring Empowered Group ("CDR EG") on all the Secured Creditors of theCompany was earlier approved by the Board of Directors during the F.Y. 2014-15.
The Company's Petition for first Motion has been disposed of by the Hon'ble High Courtof Punjab & Haryana at Chandigarh and the Company has filed a Petition for secondMotion in connection with the Company's earlier Petition in this matter.
The matter is presently sub-judice with the Hon'ble High Court of Punjab & Haryanaat Chandigarh.
During the year under review the Company has not accepted any deposits within themeaning of Sections 2(31) and 73 of the Companies Act 2013 and the Rules framedthereunder and any re-enactments thereof and as such no amount of principal or interestwas outstanding as of the Balance Sheet date.
10. Significant and Material Orders passed by the Regulators or Courts or Tribunals
There are no significant material orders passed by the Regulators or Courts or Tribunalwhich would impact the going concern status of the Company and its future operations.
11. Internal Financial Controls and systems:
Your Company has in place adequate financial control system and framework in place toensure:
- The orderly and efficient conduct of its business;
- Safeguarding of its assets;
- The prevention and detection of frauds and errors;
- The accuracy and completeness of the accounting records; and
- The timely preparation of reliable financial information.
Significant observations including recommendations for improvement of the businessprocesses are reviewed by the Management before reporting to the Audit Committee. TheAudit Committee then reviews the Internal Audit reports and the status of implementationof the agreed action plan. This system of internal control facilitates effectivecompliance of Section 138 of the Companies Act 2013 and the Securities and Exchange Boardof India (Listing obligations and disclosure requirements) Regulations 2015.
The internal auditor of the company checks and verifies the internal control andmonitors them in accordance with the policy adopted by the company. The Board regularlyreviews the effectiveness of controls and takes necessary corrective actions whereweaknesses are identified as a result of such reviews. This review covers entity levelcontrols process level controls fraud risk controls. Based on this evaluation there isnothing that has come to the attention of the Directors to indicate any material breakdown in the functioning of these controls procedures or systems during the year. Therehave been no significant events during the year that have materially affected or arereasonably likely to materially affect our internal financial controls.
12. Secretarial Standards of ICSI
Pursuant to the approval given on April 10 2015 by Central Government to theSecretarial Standards specified by the Institute of Company Secretaries of India theSecretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings(SS-2) came into effect from July 012015. The Company is in compliance with the same.
13. Share Capital Authorised Share Capital:
During the year under review the Authorised Share Capital of the Company has beenincreased from Rs.1260000000 (One Billion Two Hundred and Sixty Million) divided into126000000 (One Hundred Twenty Six million) equity shares of 10/- (Rupees Ten only) eachto Rs.1600000000 (One Billion Six Hundred Million) divided into 160000000 (OneHundred Sixty million) equity shares of Rs. 10/- (Rupees Ten only) each ranking pari-passuwith the rights and liabilities of the existing Equity Shares pursuant to the ordinaryresolution passed by the shareholders of the Company in the Extra Ordinary General Meetingduly held on August 17 2015.
Paid Up Share Capital:
During the year following allotments were made: -
1. The Board of Directors in their meeting duly held on May 09 2015 have allotted22200000 (Twenty Two Million Two Hundred Thousand) Equity Shares at a price of Rs. 10/-(Ten) per share to M/s. Mestric Consultants Private Limited (a Promoter Group Company)pursuant to approved CDR package of the Company under the Preferential Issue.
2. (a) The Board of Directors in its meeting duly held on September 17 2015 hasallotted 8100000 (Eight Million One Hundred Thousand) Equity Shares on preferentialbasis to ICICI Bank Limited as per SEBI (ICDR) Regulations 2009 as amended from time totime on the conversion of Funded Interest Term Loan (FITL) as per approved CDR Package ofthe Company and in terms of approval granted by the shareholders of the Company by the wayof Postal Ballot the result of which were declared on June 24 2014.
(b) The Nomination & Remuneration Committee of the Board of Directors of theCompany in its meeting duly held on September 17 2015 has allotted 1648000 (One MillionSix Hundred Forty Eight Thousand) equity shares of face value of Rs. 10/- each to theeligible Employees of the Company who have exercised their stock options under the A2ZEmployee Stock Option Plan 2013.
(c) Further the Board of Directors in its meeting duly held on September 17 2015 hasallotted 24695780 (Twenty Four Million Six Hundred Ninety Five Thousand Seven Hundredand Eighty) warrants convertible into equal no. of equity shares of Rs. 10/- each(exercisable in one or more tranches) at the option of the holder thereof at any timewithin 18 (eighteen) months after the allotment i.e. September 17 2015 at an issue priceof Rs. 21.66/- each on preferential basis to persons other than the promoters and Promotergroup as per SEBI (ICDR) Regulations 2009 as amended from time to time in terms ofapproval granted by the shareholders of the Company in the extra ordinary general meetingduly held on August 17 2015.
As at March 31 2016 out of the issued warrants 8250786 (Eight Million Two HundredFifty Thousand Seven Hundred and Eighty Six) Warrants were converted into equal no. of theEquity shares of the Company.
3. Further the Nomination & Remuneration Committee of the Board of Directors ofthe Company in their meeting duly held on March 19 2016 has allotted 177500 (One HundredSeventy Seven Thousand Five Hundred) equity shares of face value of Rs. 10/- each to theeligible Employees of the Company who have exercised their stock options under the A2ZEmployee Stock Option Plan 2013.
Consequent to the allotments as above the paid up share capital of the Company wasincreased to Rs. 1268939800 (One Billion Two Hundred Sixty Eight Million Nine HundredThirty Nine Thousand Eight Hundred) divided into 126893980 (One Hundred Twenty SixMillion Eight Hundred Ninety Three Thousand Nine Hundred and Eighty) equity shares of Rs.10/- each as at March 31 2016.
14. Subsidiaries Joint Ventures and Associate Companies
As on March 31 2016 the Company had 31 (Thirty One) direct and step down subsidiaryCompanies. Further the Company has entered into joint venture agreements withun-incorporated JV's for bidding of tenders & contracts the details of which is givenin the note no. 37 & 38 to the standalone and note no. 37 & 38 to the consolidatedfinancial statements. Also the Company is a member of an association of person (AOP) inwhich Company is having 60% sharing in profits.
As per sub-section (3) of Section 129 of the Companies Act 2013 read with Rule 5 ofthe Companies (Accounts) Rules 2014 a statement containing salient features of thefinancial statements and performance of the Company's subsidiaries and associate companyfor the year ended March 312016 is included as per the prescribed format in this AnnualReport. The Annual Accounts of these subsidiaries are uploaded on the website of theCompany in compliance with Section 136 of the Companies Act 2013. The Annual Accounts ofthese subsidiaries and the other related detailed information will be made available toany Member of the Company/its subsidiary(ies) seeking such information at any point oftime and are also available for inspection by any Member at the Registered Office of theCompany on all working days during business hours upto the date of the Annual GeneralMeeting.
During FY 15-16 there has been no major change in the nature of business of yourCompany and its subsidiaries. During the year under review two direct subsidiaries i.e.A2Z Singapore Waste Management Holdings Private Limited & A2Z Maintenance &Engineering Services (Uganda) Private Limited have ceased to be a subsidiary of theCompany.
In terms of the Regulation 46(2)(h) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the policy for determining material subsidiaries isplaced on the website of the Company at www.a2zgroup.co.in.
Report on the performance and financial position of each of the subsidiaries has beenprovided in Form AOC-1 and is forming part of the Annual Report as Annexure A.
Statutory Auditors and Auditors' Report
M/s. Walker Chandiok & Co LLP (Firm Registration No. 001076N/N500013) CharteredAccountants were appointed as statutory auditors of the Company from the conclusion ofthe Thirteenth Annual General Meeting (AGM) of the Company held on September 27 2014 tothe conclusion of the Eighteenth Annual General Meeting to be held for the Financial Year2018-19 subject to ratification of their appointment at every Annual General Meeting(AGM). In view of the provisions of Section 139 of the Companies Act 2013 and Companies(Audit and Auditors) Rules 2014 the Company has received a letter from Walker Chandiok& Co LLP to the effect that their appointment if made would be within the limitsprescribed under Section 141 of the Companies Act 2013 and the Rules framed there underand that they are not disqualified for such appointment within the meaning of the saidAct.
The Board of Directors recommends to the Members to pass the resolution ratifying theappointment of Walker Chandiok & Co LLP as the Statutory Auditors of the Company asstated in Item No. 3 of the Notice convening the ensuing Annual General Meeting.
The auditor's report presented by M/s Walker Chandiok & Co LLP Statutory Auditorson the accounts of the company for the financial year ended March 31 2016 isselfexplanatory and requires no comments and the Management replies to the auditobservations are as under:
Explanation to Para 9(i) of Auditor's report on Consolidated Financials of A2Z InfraEngineering Limited its subsidiaries joint ventures and associates & Para 9(i) ofAuditor's report on Standalone Financials of A2Z Infra Engineering Limited
The management has performed impairment assessment of three cogeneration power plantsset up in collaboration with certain sugar mills on Built Own Operate and Transfer(BOOT) basis for a period of 15 years. As at March 312016 such plants have a powergeneration capacity of 15 MW each. The assessment has been done on the basis ofassumptions of useful life of assets discounted cash flows with significant underlyingassumptions achievement of certain operating capacity and the ability of new technologyto perform on a consistent basis.
Based on the assessment and advice from an independent legal counsel on theavailability of concession period including renewal period by exercising the option forrenewal/ extension of the concession period the management is confidentthat thereexists reasonable certainty that arrangement shall be extended for a term of five (5)years. The management believes that the estimates of the useful lives are reasonable andno impairment exists in the carrying value of power generation plants.
Explanation to para 9(ii) of Auditor's report on Consolidated Financials of A2Z InfraEngineering Limited its subsidiaries joint ventures and associates & para 9(ii) ofAuditor's report on Standalone Financials of A2Z Infra Engineering Limited
Contract revenue in excess of billings include unbilled receivables amounting to Rs.1204118263/- pertains to revenue recognized by the Company during earlier yearsrepresenting amounts billable to and receivable from the customers towards work done oncertain EPC contracts under execution by the Company in accordance with the terms implicitin the contract. The delay in billing of these amounts is on account of conclusion ofreconciliations with the customers pending joint measurement/ survey of the work donetill date and non-achievement of milestones as per the contractual terms. Management is indiscussions with the customers and expects to bill these amounts at the earliest andbelieves that whilst it may take some time to bill and recover the amounts owing tocompletion of certain administrative and contractual matters no adjustments are requiredin respect of these unbilled receivables.
Explanation to para 9(iii) of Auditor's report on Consolidated Financials of A2Z InfraEngineering Limited its subsidiaries joint ventures and associates & para 9(iii) ofAuditor's report on Standalone Financials of A2Z Infra Engineering Limited
The Income tax authorities conducted a search and survey at certain premises of theCompany under section 132 and 133 of the Income Tax Act 1961 in April 2012. During theyear ended March 31 2015 the Company received the Assessment Orders for the assessmentyears 2007-08 to 2013-14 from the Deputy Commissioner of Income Tax (DCIT) demandingadditional tax liability of Rs.199216987. The Company had filed appeals withCommissioner of Income Tax (CIT) (Appeals) challenging these orders against which the saidauthority has granted partial relief to the Company. The Company has further filed appealswith Income Tax Appellate Tribunal (ITAT) challenging the Orders for these assessmentyears.
Based on their assessment and upon consideration of advice from the independent legalcounsel the management believes that the Company has reasonable chances of succeedingbefore the ITAT and does not foresee any material liability. Pending final decision onthese matters no adjustment has been made in the financial statements.
Explanation to Point (vii)(a) (b) & (viii) of Auditor's report on StandaloneFinancials of A2Z Infra Engineering Limited
In respect of auditor's observation in Standalone financial statements regardingcertain default in payment of interest and repayment of dues of banks and delay indepositing statutory dues.
It is clarified that the delay arose on account of delayed realization of tradereceivables coupled with delays in commencement of commercial production at its biomassbased power generation plants. The approved CDR package of the Company which gotimplemented in March 2015 only envisages the due payment towards statutory dues of theCompany. Further the Company has requested all its lenders to expedite the GAP fundingproposal and has also fasten its process for realization of fund from old completedprojects which will result in better cash flow position from the projects.The managementbelieves that by that way Company shall be able to regularise the Bank's dues anddepositing of Statutory dues.
In terms of Section 143(8) of the Companies Act 2013 read with Rule 12 of theCompanies (Audit and Auditors) Rules 2014 the audit of the accounts of the branchoffices of the Company located outside India is required to be conducted by the person(s)or firm(s) qualified to act as Branch Auditors in accordance with laws of that country.The Board of Directors seeks approval of the Members to authorize the Audit Committee toappoint Auditors for the branch office(s) of the Company and also to fix theirremuneration. The Board of Directors recommends to the Members to pass the resolution asstated in Item No. 5 of the Notice convening the forthcoming Annual General Meeting.
In terms of the provisions of Section 204 of the Companies Act 2013 and Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhad appointed M/s. DR Associates Practising Company Secretaries as Secretarial Auditorsto conduct Secretarial Audit for the Financial Year 2015-16. The Secretarial Audit Reportgiven by Mr. Suchitta Koley a partner of M/s DR Associates Company Secretaries inpractice New Delhi is given as an Annexure B (Form MR-3) which forms part of thisreport.
The said Secretarial Audit Report does not contain any qualification reservation oradverseremark or disclaimer made by the secretarial auditor.
Pursuant to the provisions of Section 148 of the Companies Act 2013 read with Rule 14of the Companies (Audit and Auditors) Rules 2014 the cost records in respect of road andconstruction activity need to be audited. In compliance to the above the Board ofDirectors upon the recommendation of the Audit Committee had appointed M/s H A M &Associates as the Cost Auditors of the Company for the Financial Year ended March 312016. In accordance with the above provisions the remuneration payable to the cost auditorshould be ratified by the Members. Accordingly the Board of Directors recommends to theMembers to pass the resolution as stated in Item No. 6 of the Notice convening theforthcoming Annual General Meeting.
16. Corporate Social Responsibility
In accordance with the provisions of Section 135 of the Companies Act 2013 and Rulesframed thereunder the Company has constituted a Corporate Social Responsibility Committee(CSR Committee) of the Board of Directors on August 14 2014. The CSR Committee comprisesof three Directors viz. Mr. Amit Mittal Mr. Surender Kumar Tuteja and Ms. Dipali Mittalas members of the committee.
The average net profits calculated as per provisions of Section 198 of the CompaniesAct 2013 for of the preceding three (3) financial years being negative and also due tothe financial crunches in the last few years the Company was not under any obligation tospend any amount on CSR.
17. DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointment & Resignation ofDirectors/KMP's
1. Mr. Ratan Kishore Bajaj who was appointed as an Additional Director of the Companyw.e.f. February 10 2015 in the category of Independent Director resigned from hisposition w.e.f. July 06 2015 on account of his preoccupation. The Board placed on recordits appreciation for the valuable services rendered by Mr. Ratan Kishore Bajaj during hisshort stint with the Company.
2. Mr. Gaurav Jain who was working as a Chief Financial Officer (KMP) of the Companyresigned from his position as such on September 22 2015. The Board of Directors of theCompany in recognition to his excellent performance during his service period on therecommendation of the Nomination and Remuneration Committee at its meeting duly held onSeptember 17 2015 appointed Mr. Gaurav Jain as an Additional Director of the Company tohold office upto the date of the ensuing Annual General Meeting. Your Company has receivednotice from a member of the Company under section 160 of the Companies Act 2013proposing the candidature of Mr. Gaurav Jain as Directorof the Company liable to retireby rotation.
3. Mr. Lalit Mohan Gulati has been appointed as Chief Financial Officer (KMP) of theCompany effective from September 23 2015.
4. Ms. Dipali Mittal has been appointed as Whole-time Director of the Company effectivefrom April 01 2015.
5. Retire by Rotation
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Rajesh Jain Director retires by rotation at theforthcoming Annual General Meeting of the Company and being eligible offers himself forre-appointment.
6. Pursuant to the provisions of sub-section (51) of Section 2 and Section 203 of theCompanies Act 2013 read with the Rules framed thereunder the Key Managerial Personnel's(KMP's) of the Company are:
1. Mr. Amit Mittal Managing Director
2. Mr. Rajesh Jain Whole Time Director and CEO
3. Mr. Lalit Mohan Gulati Chief Financial Officer
4. Mr. Atul Kumar Agarwal Vice President & Company Secretary
18. Policy on Directors' appointment and Remuneration
As on March 312016 the Board consists of eight members four of whom are executive orwhole time directors one is non-executive and non-independent director and other threeare independent directors.
The Policy of the Company on Directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters as required under sub section (3) of section 178 of the Companies Act2013 is available on the Company's website. There has been no change in the policy sincethe last financial year. We affirm that the remuneration paid to directors is as per termslaid out in the nomination and remuneration policy of the Company.
19. Declaration by Independent Director(s)
The Company has received necessary declaration from each of the Independent Directorsunder section 149(7) of the Companies Act 2013 that he meets the criteria of independenceas laid down in section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI(Listing Obligations and Disclosures Requirements) Regulations 2015.
20. Annual evaluation of Board Performance and Performance of its committees andIndividual Directors
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual directors pursuant to the provisions of the Companies Act2013 and the corporate governance requirements as prescribed by Securities and ExchangeBoard of India ("SEBI") under Listing Regulations.
The performance of the Board was evaluated by the members of the Board on the basis ofthe criteria such as the Board composition and structure effectiveness of boardprocesses information and functioning Board culture and dynamics quality ofrelationship between the Board and the Management and efficacy of communication withexternal stakeholders etc. Feedback was also taken from every director on his assessmentof the performance of each of the other Directors.
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.
The Board and the Nomination & Remuneration Committee ("NRC") reviewedthe performance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof his role.
In a separate meeting of independent Directors performance of non-independentdirectors performance of the board as a whole and performance of the Chairman wasevaluated taking into account the views of executive directors and nonexecutivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent Directors at which the performance of the Board its committees andindividual directors was also discussed.
21. Number of meetings of the Board of Directors
During the year ten meetings of the members of Board and one meeting of independentdirectors were held the details of which are given in Corporate Governance Report. Theprovisions of Companies Act 2013 and Listing Regulations were adhered to whileconsidering the time gap between two consecutive meetings.
22. Disclosures Related to Committees and Policies
a. Audit Committee
The composition of the Audit Committee is in conformity with the provisions of Section177 of the Companies Act 2013 and Regulation 18 of the SEBI (Listing Obligations andDisclosure Requirements) Regulation 2015. The Audit Committee comprises of:
1. Mr. Surender Kumar Tuteja Chairman
2. Dr. Ashok Kumar Member
3. Mr. Suresh Prasad Yadav Member
4. Ms. Dipali Mittal Member
During the year under review the Board of Directors of the Company had accepted allthe recommendations of the Committee.
b. Nomination and Remuneration Committee
The Nomination and Remuneration Committee of Directors was reconstituted by the Boardof Directors of the Company in accordance with the requirements of Section 178 of theCompanies Act 2013 & Regulation 19 of the SEBI (Listing Obligations and DisclosureRequirements) Regulation 2015. The Nomination and
Remuneration Committee comprises of the following directors:
1. Mr. Suresh Prasad Yadav Chairman
2. Mr. Surender Kumar Tuteja Member
3. Dr. Ashok Kumar Member
c. Stakeholders Relationship Committee
Pursuant to Section 178 of the Companies Act 2013 and Regulation 20 of SEBI (ListingObligations and Disclosure Requirements) 2015 the Board of Directors of the Company hasconstituted the Stakeholders Relationship Committee comprising of the followingDirectors:
1. Dr. Ashok Kumar Chairman
2. Mr. Suresh Prasad Yadav Member
3. Ms. Dipali Mittal Member
23. Remuneration Policy for the Directors Key Managerial Personnel and other employees
In terms of the provisions of Section 178(3) of the Act and Para A of Part D underSchedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulation2015 the Nomination & Remuneration Committee is responsible for formulating thecriteria for determining qualification positive attributes and independence of aDirector. The Nomination & Remuneration Committee is also responsible for recommendingto the Board a policy relating to the remuneration of the Directors Key ManagerialPersonnel and other employees. In line with this requirement the Board has on therecommendation of the Nomination & Remuneration Committee has framed a policy forselection and appointment of Directors KMP and Senior Management and their remuneration.
The Remuneration Policy of the Company is attached herewith and marked as AnnexureC.
24. Vigil Mechanism / Whistle Blower Policy
The Board has pursuant to the provisions of Section 177(9) & (10) of the CompaniesAct 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules 2014and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulation2015 framed "Vigil Mechanism (Whistle Blower) Policy" ("the Policy")'to deal with instances of fraud and mismanagement if any. This Policy has formulated toprovide Vigil Mechanism for employees including directors of the Company to report genuineconcerns. The said policy is placed on the website of the Companyand may be accessed at alink http:// a2zgroup.co.in/pdf/Whistle_Blowe_13_Apr_2015.pdf.
This vigil mechanism of the Company is overseen by the Audit Committee and providesadequate safeguard against victimization of employees and directors who avail of the vigilmechanism and also provide direct access to the Chairperson of the Audit Committee inexceptional circumstances.
25. Particulars of Loans Guarantees or Investments under Section 186
Particulars of loans guarantees investments covered under section 186 of theCompanies Act 2013 form part of the notes to the Financial Statements provided in thisAnnual Report. All the loans guarantees and investments made are in compliance with theprovisions of the Companies Act 2013.
26. Related party transactions:
Related party transactions that were entered into during the financial year were in theordinary course of business and on an arm's length basis.
The particulars of the contract or arrangements with related parties during thefinancial year 2015-16 are disclosed in Form No. AOC -2 which forms part of theAnnual Report as an Annexure D. Except as stated in the disclosure there were nomaterially significant related party transactions made by the Company with its PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.
The Policy on materiality of related party transactions as also dealing with relatedparty transactions as approved by the Board may be accessed on the Company's website atthe link: http://a2zgroup.co.in/pdf/Related_Party_Policy_13_Apr_2015.pdf.
All Related Party Transactions which were in the ordinary course of business and onarm's length basis were placed before the Audit Committee for their approval. Prioromnibus approval of the Audit Committee is obtained on a quarterly basis for thetransactions which are of a foreseen and repetitive nature. The transactions entered intopursuant to the omnibus approval so granted are audited and a statement giving details ofall related party transactions is placed before the Audit Committee and the Board ofDirectors for their approval on a quarterly basis.
27. Employee Stock Option Plan
The Nomination & Remuneration Committee of the Board of Directors of the Companyinter alia administers and monitors the A2Z Stock Option Plan 2010 (ESOP 2010) A2ZEmployees Stock Option Plan 2013 (ESOP 2013) and A2Z Employees Stock Option Plan 2014(ESOP 2014) of the Company in accordance with the applicable SEBI Guidelines.
The applicable disclosures as stipulated under the SEBI Guidelines as on 31stMarch 2016 with regard to the ESOP 2010 ESOP 2013 and ESOP 2014 are provided in AnnexureE to this Report.
The certificate from the Auditors of the Company that the Scheme has been implementedin accordance with the SEBI Guidelines / SEBI SBEB Regulations and the resolution passedby the members would be placed at the Annual General Meeting for inspection by members.
28. Extract of Annual Return
Pursuant to the provisions of Section 134(3)(a) of the Companies Act 2013 Extract ofthe Annual Return for the financial year ended March 31 2016 made under the provisions ofSection 92(3) of the Act is attached as Annexure F which forms part of this Report.
29. Prevention of Sexual Harassment at Workplace:
As per the requirement of The Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 read with rules made thereunder your Company hasconstituted Internal Complaints Committee which is responsible for redressal of complaintsrelated to sexual harassment. During the year under review there were no complaintspertaining to sexual harassment.
30. Particulars of Employees and Related Disclosures
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are given in Annexure G.
31. Conservation of Energy Technology absorption Foreign Exchange Earnings and Outgo
Pursuant to provisions of Section 134 of the Companies Act 2013 read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 the details of Conservation of Energy TechnologyAbsorption Foreign Exchange Earnings and Outgo are attached as Annexure H whichforms part of this report.
32. Disclosure requirements
a. As per Clause 27 of the listing regulations corporate governance report withauditors' certificate thereon and management discussion and analysis are attached whichform part of as this report.
b. Details of the familiarization programme of the independent directors are availableon the website of the Company (URL: www.a2zgroup.co.in).
c. In terms of Regulation 17(8) of the Listing Regulations the Chief Executive Officerand the Chief Financial Officer furnished a certificate to the Boardof Directors in theprescribed format for the yearunder review which has been reviewed by the AuditCommitteeand taken on record by the Board.
The Securities and Exchange Board of India (SEBI) on September 22015 issued SEBI(Listing Obligations and Disclosure Requirements) Regulation 2015 with the aim toconsolidate and streamline the provisions of the Listing Agreement for different segmentsof capital markets to ensure better enforceability. The said regulations were effectivefrom December 1 2015. Accordingly all listed entities were required to comply therequirements of SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015within six months from the effective date. The Company entered into fresh ListingAgreement with BSE Limited and the National Stock Exchange of India Limited as requiredunder LODR. The stipulated listing fees for FY 2015-16 has been paid to the StockExchanges.
34. Risk Management Policy
Risk management forms an integral part of the business planning and review cycle. TheCompany's Risk Management Policy is designed to provide reasonable assurance thatobjectives are met by integrating management control into the daily operations byensuring compliance with legal requirements and by safeguarding the integrity of theCompany's financial reporting and its related disclosures.
Therefore in accordance with the provisions of Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board members were informedabout risk assessment and minimization procedures after which the Board formally adoptedsteps for framing implementing and monitoring the risk management policy for the companyin their meeting held on November 13 2014.
The main objective of this policy is to ensure sustainable business growth withstability and to promote a pro-active approach in reporting evaluating and resolvingrisks associated with the business. In order to achieve the key objective the policyestablishes a structured and disciplined approach to Risk Management in order to guidedecisions on risk related issues.
In today's challenging and competitive environment strategies for mitigating inherentrisks in accomplishing the growth plans of the Company are imperative. The common risksinter alia are: Competition Business risk Technology obsolescence Investmentsretention of talent and expansion of facilities. Business risk inter-alia furtherincludes financial risk political risk fidelity risk legal risk.
As a matter of policy these risks are assessed and steps as appropriate are taken tomitigate the same.
35. Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the board of directors to thebest of their knowledge and ability confirm that:
a. In the preparation of the annual accounts for the Financial Year ended 31st March2016 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
b. The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at March 31 2016 and of the profit andloss of the company for that period;
c. The directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d. The directors have prepared the annual accounts on a going concern basis; and
e. The directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
f. The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
36. Fraud Reporting
There was no fraud reported by the Auditors of the Company under Section 143(12) of theCompanies Act 2013 to the Audit Committee or the Board of directors during the yearunder review.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions/instances on these items during the yearunder review:
1. No profits were transferred to any Reserves.
2. Voluntary revision of Financial Statements or Board's Report.
3. No director is in receipt of commission from the Company and Neither the ManagingDirector nor the Whole-time Directors of the Company received any remuneration orcommission from any of its subsidiary Companies.
Your Directors wish to place on record the support assistance and guidance provided bythe financial institutions banks customers suppliers and other business associates. Wewould like to thank our Company's employees for their tireless efforts and high degree ofcommitment and dedication. Your Directors especially appreciate the continuedunderstanding and confidence of the Members.
For and on behalf of Board of Directors
(Surender Kumar Tuteja)
Date : August 23 2016