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Gayatri Projects Ltd.

BSE: 532767 Sector: Infrastructure
NSE: GAYAPROJ ISIN Code: INE336H01023
BSE LIVE 13:33 | 14 Dec 201.50 -5.40
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OPEN 208.10
PREVIOUS CLOSE 206.90
VOLUME 3592
52-Week high 220.65
52-Week low 118.00
P/E 29.85
Mkt Cap.(Rs cr) 3,572
Buy Price 201.45
Buy Qty 100.00
Sell Price 202.35
Sell Qty 45.00
OPEN 208.10
CLOSE 206.90
VOLUME 3592
52-Week high 220.65
52-Week low 118.00
P/E 29.85
Mkt Cap.(Rs cr) 3,572
Buy Price 201.45
Buy Qty 100.00
Sell Price 202.35
Sell Qty 45.00

Gayatri Projects Ltd. (GAYAPROJ) - Director Report

Company director report

To

The Members

The Directors have pleasure in presenting before you the Directors Report of theCompany together with the Audited Statements of Accounts for the year ended 31stMarch 2016.

FINANCIAL RESULTS (Standalone) : Rs. in Lakhs
Particulars 2015-16 2014-15
Turnover 181221.25 160114.16
Profit Before Interest Depreciation and Taxes 26605.83 21196.12
Less: Interest and Finance Charges 15792.93 14867.18
Profit before Interest and Deprecation 10812.90 6328.94
Less: Depreciation 3747.47 2820.08
Profit before Tax 7065.43 3508.86
Provision for Tax 1200.59 1303.54
Profit after Tax 5864.84 2205.32
Profit brought forward 27887.46 26730.03
Profit available for appropriation 33752.30 28935.35
Appropriations:
Proposed Dividend at Rs. 2.00 per share (20%) 709.01 302.27
Dividend Tax on proposed Dividend 144.34 51.37
Other Adjustments 42.16 194.25
Transfer to General Reserve 500.00 500.00
Surplus carried to Balance sheet 32356.79 27887.46

Review of Operations :

Our revenue from operations on a standalone basis increased to Rs. 181221.25 lakhsfrom Rs. 160114.16 lakhs in the previous year at a growth rate of 13.18%. Out of totalrevenue 62.54% came from road works 20.65% from industrial works 15.42% from irrigationworks and 1.39% from other works.

Our operating profits before depreciation and finance cost on standalone basis amountedto Rs. 26605.83 lakhs (14.68% revenue) as against Rs. 21196.12 lakhs (13.24% revenue)in the previous year. Direct cost was 83.73% of our revenue for the year ending 31stMarch 2016 as compared to 85.02% in the previous year. The profit before tax was Rs.7065.43 lakhs (3.90% of revenue) during the year as compared to Rs. 3508.86 lakhs (2.19%of revenue) in the previous year. The net profit after tax was Rs. 5864.84 lakhs (3.24%of revenue) during the year as against Rs. 2205.32 lakhs (1.38% of revenue) in theprevious year.

Our Company has an outstanding order book of Rs. 1037572 lakhs as on 31stMarch 2016 and we have received new orders valued about Rs. 139944 lakhs so far duringthe current financial year. The total order book including new works is about Rs.1177516 lakhs.

In general the progress of the works being executed by the company is in line with thetime lines given by the clients. We have obtained extension of the time wherever requiredand progress of the work is satisfactory.

Future Outlook :

The International agencies are forecasting huge growth in the Indian constructionsector. The Indian construction sector is estimated to grow at an average rate of 8.50%annually. The Union Budget announcement in 2016 has given great boost to the constructionsector. Spending in infrastructure sectors including both current and capitalexpenditures is expected to increase significantly by 16 percent. The budget alsoproposed Rs. 221246 crores total outlay for infrastructure development including thedevelopment of smart cities Rs. 97000 crores investment in the road sector and approvednearly 10000 kms of National Highways in 2016-17. The future outlook of Indianconstruction sector is positive and bright and our company as leading player inconstruction industry is in advantageous position to get more orders revenues andprofits.

Dividend:

Despite the difficult economic conditions your directors are pleased to recommend adividend of Rs. 2.00 per equity share (20%) of the face value of Rs. 10/- for the periodended 31st March 2016.

The dividend subject to approval at the AGM on 28th day of September 2016will be paid to the shareholders; whose names appear on the Register of Members on 22ndSeptember 2016.

It is proposed to transfer Rs. 500.00 Lakhs to the General Reserves of the Company fromthe current year profits.

Share Capital:

The paid up equity share capital of the company has increased from Rs. 30.22 Crs to Rs.35.45 Crs pursuant to the allotment of 3604000 equity shares to Foreign InstitutionalInvestors (deemed FPI’s) and 1619386 equity shares to promoters by way ofpreferential allotment.

Material Changes and Commitments Affecting the Financial Position of the Company:

There are no material changes and commitments affecting Financial position of thecompany between the end of the financial year to which these statements relate and thedate of this Board’s Report except that the Board has approved Composite Scheme ofArrangement between M/s. Gayatri Projects Limited M/s. Gayatri Infra Ventures Limited andM/s. Gayatri Domicile Private Limited providing for:

a) Transfer of investments in Sai Maatarini Tollways Limited from Gayatri ProjectsLimited to Gayatri Domicile Private Limited at book value. The lump-sum consideration ofRs. 1801603000 (One Hundred and Eighty Crores Sixteen Lacs Three Thousand only) will bepaid in the form of 12460000 (One Crore Twenty-Four Lacs Sixty Thousand) equity sharesof Rs. 10 each (fully paid) and 167700300 (Sixteen Crore Seventy-Seven Lacs ThreeHundred) redeemable preference shares of Rs. 10 each (fully paid) of Gayatri DomicilePrivate Limited;

b) Post transfer of investments merger of Gayatri Infra Ventures Limited with GayatriProjects Limited;

c) Post merger of Gayatri Infra Ventures Limited with Gayatri Projects Limitedtransfer of Infrastructure Road BOT Assets Business from

Gayatri Projects Limited to Gayatri Domicile Private Limited

Pursuant to the above company had filed Scheme of Arrangement along with requisiteannexure’s with Stock Exchanges on 05th August 2016.

There is no change in the nature of business of the Company during the year underreview.

Board Meetings:

The Board of Directors met 8 times in the Financial Year 2015–16 on 30thMay 2015 16th June 2015 11th August 2015 14thAugust 2015 03rd September 2015 14th November 2015 28thNovember 2015 and 13th February 2016.

Directors and Key Managerial Personnel:

During the year under review the Company has:

1. Re-appointed Mr. J. Brij Mohan Reddy as Executive Director of the Company for afurther period of 3 years w.e.f 01.10.2015.

2. Appointed Mr. Umakant. K. Bijapur as a director Nominee of Bank of Baroda on03.09.2015 further Mr. Venkateswarlu Kakkera was appointed as Nominee Director on13.02.2016 replacing Mr. Umakant K. Bijapur.

3. Appointed Mr. J. N. Karamchetti as Independent Director of the Company on14.11.2015.

The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149(6).

Composition of Audit Committee:

The Audit Committee of the Board of Directors is as follows:

Mr. Ch Hari Vittal Rao – Chairman
Dr. V. L. Moorthy – Member
Mr. G Siva Kumar Reddy – Member
Mr. J.N. Karamchetti – Member

Policy Laid Down by the Nomination and Remuneration Committee for Remuneration ofDirectors KMP & other Employees:

The Remuneration policy of the Company is performance driven and is structured tomotivate Employees. Recognize their merits and achievements and promote excellence intheir performance. The Nomination Remuneration and Evaluation Policy of the company isenclosed at Annexure-I of this report.

Manner in Which Formal Annual Evaluation has been made by the Board of its OwnPerformance and that of its Committees and Individual Directors:

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out evaluation of (i) itsown performance (ii) the directors individually and (iii) working of its Committees. Themanner in which the evaluation was carried out as detailed below:

(a) Nomination & Remuneration Committee:

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Nomination and Remuneration Committee hasformulated the criteria for evaluation of directors and evaluated every director. Astructured questionnaire was prepared after taking into consideration various parameterssuch as attendance and participation in meetings monitoring corporate governancepractices independence of judgment safeguarding the interests of the company etc. andaccordingly the evaluation was made. The Members of the Committee evaluated the individualdirectors at its meeting held on 13.02.2016.

The Nomination and Remuneration Committee decided that since the performance of thedirectors has been excellent it is decided to continue with the term of the directorsthe Managing Director and the Executive Director.

(b) Separate Meeting of Independent Directors:

The Independent directors of the Company at its meeting held on 13.02.2016 (a) reviewedthe performance of the non-independent directors and Board (b) reviewed the performanceof the Chairperson of the Company and (c) assessed the quality quantity and timeliness offlow of information between the company management and the Board. All the IndependentDirectors attended the meeting.

A structured questionnaire was prepared after taking into consideration variousparameters such as attendance and participation in meetings monitoring corporategovernance practices independence of judgment safeguarding the interests of the companyetc. and accordingly the evaluation was made. The independent directors evaluated thenon-Independent directors.

The Independent Directors decided that since the performance of the Non-IndependentDirectors (including Managing Director and Whole time Director) is excellent the term oftheir appointment be continued.

The Independent Directors after review of the performance of the Chairman decided thatthe Chairman has good experience knowledge and understanding of the Board’sfunctioning and his performance is excellent. The Independent Directors decided that theinformation flow between the Company’s Management and the Board is excellent.

(c) Evaluation by Board:

The Board has carried out the annual performance evaluation of its own performance theDirectors individually (excluding the director being evaluated) as well as the evaluationof the working of its Committees. A structured questionnaire was prepared after takinginto consideration various aspects of the Board’s functioning such as adequacy of thecomposition of the Board and its Committees effectiveness in developing Corporategovernance structure to fulfil its responsibilities execution and performance of specificduties etc. The Board decided that the performance of individual directors its ownperformance and working of the committees is excellent.

Director’s Responsibility Statement:

In pursuance of section 134 (5) of the Companies Act 2013 the Directors herebyconfirm that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had 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 the end of the financial year and ofthe profit and loss of the company for that period;

(c) the directors had 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 had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively

Subsidiaries Companies Associates and Joint Ventures:

The Company has six subsidiary companies (including step down subsidiaries) as on 31stMarch 2016 as per the Companies Act 2013.

As per the provisions of Section 129 of the Companies Act 2013 read with Companies(Accounts) Rules 2014 a separate statement containing the salient features of thefinancial statements of the subsidiary Companies/ Associate Companies/Joint Ventures isprepared in Form AOC-1 are given in Annexure- II.

Further the Company after 31st March 2016 has acquired 100% shareholding inM/s. Gayatri Domicile Private Limited as a part of proposed restructuring of the Companypursuant to which M/s. Gayatri Domicile Private Limited is a wholly owned subsidiary ofthe Company.

The Company will make available the Annual Accounts of the subsidiary companies and therelated information to any member of the Company who may be interested in obtaining thesame. The annual accounts of the subsidiary companies will also be kept open forinspection by any member at the Registered Office of the Company and that of therespective subsidiary companies.

The company has adopted the policy for determining ‘material’ subsidiariesand the same has been placed on the website of the company at http://www.gayatri.co.in/Investors/Corporate Governance/Policies.

Extract of Annual Return:

As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in MGT9 as a part of this Annual Report is annexed as

Annexure III.

Consolidated Financial Statements:

The Consolidated Financial Statements of the Company prepared in accordance withrelevant Accounting Standards (AS) viz. AS 21 AS 23 and AS 27 issued by the Institute ofChartered Accountants of India form part of this Annual Report.

Statutory Auditors and their Report:

The Auditors M/s. M O S & Associates LLP Chartered Accountants Hyderabad retireat the ensuing Annual General Meeting and being eligible; offer themselves forreappointment for a period of one year from the conclusion of this Annual General Meeting[AGM] till the conclusion of next AGM. Your Board of Directors have recommended theirreappointment based on the recommendation of the Audit Committee to the members for theirapproval at the forthcoming Annual General Meeting for a term of one year till theconclusion of the next AGM.

The Independent Auditors of M/s Gayatri Infra Ventures Limited (GIVL) a subsidiary ofthe company in their audit report on consolidated financial statements have qualifiedthat they are unable to comment upon the consequential effects on the disinvestment of itsentire equity stake amounting to Rs. 4606.09 Lakhs held in Western UP Tollways Limited ajointly controlled entity of GIVL. The management is in the process of renegotiating theconsideration for the sale of investment and also making arrangements for meeting theother conditions stipulated in the sale agreement. Pending the final outcome of the saidprocess the management is unable to comment upon the consequential effects if any ofthe said matter on the financial statements of GIVL. The consequential effects if anyon the disinvestment will be accounted in the year in which the disinvestment process iscompleted.

Secretarial Audit:

As per the provisions of the Section 204(1) of the Companies Act 2013 the Company hasappointed Mr. Y. Koteswara Rao Practising Company Secretary to conduct Secretarial Auditof the records and documents of the Company The Secretarial Audit Report for the FinancialYear ended 31st March 2016 in Form No MR-3 is annexed to the Directors Reportas Annexure - IV and forms part of this Report. The Secretarial Auditors’ Report tothe Members of the Company for the Financial Year ended March 31 2016 does not containany qualification(s) or adverse observations

Disclosures:

a) Deposits

Company has not accepted any deposits covered under Chapter V of the Companies Act2013

b) Conservation of energy

The Company’s main line of activity is civil construction which is not powerintensive. However the Company is taking all efforts to conserve the usage of power.

(i) Use of alternate sources of energy is not applicable to the Company.

(ii) Capital investment on energy conservation equipment for its main line of activityis not applicable to the Company.

c) R & D Technology absorption

The Company main line of activity is civil construction and hence R &D andtechnology absorption is not applicable to the Company.

d) Foreign exchange earnings - NIL

e) Foreign exchange outgo

Sr No Nature of Payment Amount in Rs. Lacs
1 Foreign Travel 20.92
2 Repayment of ECB Loan 1718.22
3 Repayment of ECB Interest 811.95
4 Plant & Machinery purchase 1155.67

Details of Adequacy of Internal Financial Controls:

The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company’s policies andinternal financial controls laid down by the Company.

Particulars of Loans Guarantees or Investments:

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements. Alsopursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the particulars of Loans/Advances given to Subsidiaries have beendisclosed in the notes to the Financial Statements.

Management Discussion & Analysis:

Management Discussion and Analysis Report is annexed which forms part of this Report asAnnexure –V.

Risk Management Policy:

The Company has been addressing various risks impacting the Company and developed riskpolicy and procedures to inform Board members about the risk assessment and minimizationprocedures.

Whistle Blower Policy/Vigil Mechanism:

Pursuant to Section 177 of the Companies Act 2013 and the Rules framed there under andpursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theCompany has established a mechanism through which all the stakeholders can report thesuspected frauds and genuine grievances to the appropriate authority. The Whistle BlowerPolicy which has been approved by the Board of Directors of the Company has been hosted onthe website of the Company at http://www.gayatri.co.in/ Investors/CorporateGovernance/Policies.

Disclosure as per Section 22 of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013:

Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013 read with Rules thereunder theCompany has not received any complaint of sexual harassment during the year under review.

Corporate Social Responsibility Policy:

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure-VI of this report in the format prescribed in the Companies (CorporateSocial Responsibility Policy) Rules 2014. The policy is available on the website of theCompany at http://www.gayatri.co.in/Investors/Corporate Governance/Policies.

Significant & Material Orders Passed by the Regulators:

There are no significant and material orders passed against the Company by theregulators impacting the Company’s operation in the future.

Contracts or Arrangements with Related Parties:

All related party transactions that were entered during the financial year were in theordinary course of the business of the Company and were on arm’s length basis. Therewere no materially significant related party transactions entered by the Company duringthe year with Promoters Directors Key Managerial Personnel or other persons which mayhave a potential conflict with the interest of the Company. Further the Company hasentered materially significant related party transactions with related parties which wereon arms length basis as disclosed in AOC-2 annexed as Annexure -VII

The policy on dealing with Related Party Transactions is disseminated on the website ofthe company at http:// www.gayatri.co.in/Investors/ Corporate Governance/ Policies.

Fixed Deposits:

Your Company has not accepted or renewed any deposit from public during the year underreview.

Cost Audit:

M/s. N.S.V. KRISHNA RAO & Co. Cost Auditors were appointed as cost auditor to auditthe cost records of the Company for the F.Y 2015-16 and re-appointed for the FinancialYear 2016-17.

Particulars of Employees:

Details in respect of remuneration paid to employees as required under Section 197 (12)of the Companies Act 2013 read with Rule 5(2) & (3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 as amended forms part of thisreport. In terms of Section 136 of the Companies Act 2013 the same is open for inspectionat the Registered Office of the Company. Copies of this statement may be obtained by themembers by writing to the Company Secretary at the Registered Office of the Company.

The ratio of the remuneration of each Director to the median employee’sremuneration and other details in terms of Section 197(12) of the Companies Act 2013 readwith Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are enclosed in Annexure – VIII and forms part of this Report.

Listing with Stock Exchanges:

The Company confirms that it has paid the Annual Listing Fees for the year 2016-2017 toNSE and BSE where the Company’s Shares are listed.

Corporate Governance and Shareholders Information:

Your Company has taken adequate steps to adhere to all the stipulations laid down inRegulation 34 read with Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. A report on Corporate Governance is included as a part ofthis Annual Report as Annexure -IX. Certificate from the practicing Company Secretaryconfirming the compliance with the conditions of Corporate Governance as stipulated underaforesaid regulations is attached to this report.

Developments during the year with regard to wholly owned subsidiary M/s. Gayatri EnergyVentures Pvt. Ltd (GEVPL):

a. Launched Power Complex at Krishnapatnam.

GEVPL along with its JV partner Sembcorp Industries launched its 2640 MW SembcorpGayatri Power Complex on 27th February 2016. Built at a total project cost of US$3billion (Rs. 20000 crore) the power complex is the largest foreign directinvestment-driven project on a single site in the thermal energy sector in India to date.The complex houses two 1320-megawatt supercritical coal-fired power plants - ThermalPowertech Corporation India (TPCIL) first power plant successfully completed andcommenced full commercial operation in September 2015 while Sembcorp Gayatri PowerLimited (Formerly NCCPPL) second plant is expected to be fully operational in 2016.

b. Call option agreement with its JV partner Sembcorp Utilities.

GEVPL has entered a call option agreement with its JV partner Sembcorp Utilities toincrease its stake up to 30% in Thermal Powertech Corporation India Limited over the next5 years.

Acknowledgement:

Your Directors would like to acknowledge and place on record their sincere appreciationto all stakeholders –clients financial institutions Banks Central and StateGovernments the Companies’ valued investors and all other business partners fortheir continued co-operation and excellent support received during the year.

Yours Directors recognize and appreciate the efforts and hard work of all the employeesof the Company and their continued contribution to its progress.

For and on behalf of the Board
(T. INDIRA SUBBARAMI REDDY) (T.V.SANDEEP KUMAR REDDY)
Chairperson Managing Director
(DIN : 00009906) (DIN : 00005573)
Place : Hyderabad (P. SREEDHAR BABU) ( I.V. LAKSHMI)
Date : 26th August 2016 Chief Financial Officer Company Secretary &Compliance Officer