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IL&FS Engineering & Construction Co Ltd.

BSE: 532907 Sector: Infrastructure
NSE: IL&FSENGG ISIN Code: INE369I01014
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VOLUME 15513
52-Week high 65.95
52-Week low 31.00
P/E
Mkt Cap.(Rs cr) 601
Buy Price 45.80
Buy Qty 450.00
Sell Price 0.00
Sell Qty 0.00
OPEN 47.35
CLOSE 45.65
VOLUME 15513
52-Week high 65.95
52-Week low 31.00
P/E
Mkt Cap.(Rs cr) 601
Buy Price 45.80
Buy Qty 450.00
Sell Price 0.00
Sell Qty 0.00

IL&FS Engineering & Construction Co Ltd. (IL&FSENGG) - Director Report

Company director report

The Members

IL&FS Engineering and Construction Company Limited

Your Directors take pleasure in presenting the Twenty-Eighth Annual Report along withthe Audited Financial Statements for the

Financial Year Ended March 31 2017

I. FINANCIAL RESULTS :

(Rs in Crore)

STANDALONE

Particulars

FY 2017

FY 2016

Gross Income 2015.55 1983.16
Profit/ (Loss) before Interest Depreciation Exceptional Items and Tax 378.15 159.20
Interest and Finance Charges 327.88 304.06
Depreciation 47.97 43.66
Profit/ (Loss) before Exceptional Items Tax and Prior Period Items 2.30 (188.52)
Exceptional Items (net) - -
Profit/ (Loss) before Tax and Prior Period Items 2.30 (188.52)
Provision for Taxes - -
Less: Prior Period Expenses ( net) - -
Profit/ (Loss) after Tax 2.30 (188.52)
Paid up Equity Capital 131.12 121.16
Preference Share Capital 39.75 92.75
Reserves and Surplus (44.97) (90.31)
Net Worth 125.90 123.60
Earnings per share (In Rupees)
- Basic (0.05) (16.65)
- Diluted (0.05) (16.65)

II. DIVIDEND :

During FY 2017 the Company earned Net Profit of Rs 2.30 crore which is inadequate fordeclaration of dividend. Your Directors therefore express their inability to recommendany dividend for the year on Preference as well as Equity Shares

III. FINANCIAL PERFORMANCE REVIEW :

Your Company achieved a turnover of Rs 1820.22 crore on standalone basis for FY 2017as against Rs 1844.87 crore in FY

2016. The marginal decrease in revenue was due to delay in handing over of work frontby clients environmental clearances etc The Net Profit for the year amounted to Rs 2.30crore as against loss of Rs 188.52 crore in FY 2016. The increase in profit was due torecognition of contractual claims and profit on sale of fixed assets

IV. RESERVES :

Due to inadequacy of profits no amount is recommended for transfer to Reserves of theCompany for FY 2017

V. THE STATE OF AFFAIRS OF THE COMPANY :

During the year under review your Company had bagged various orders in the RoadsBuildings & Structures Power and Oil & Gas Sectors. The Orders received duringthe year under review amounted to Rs 2776 crore. Also the Company already had ordersworth Rs 10026 crore at the beginning of the year. Out of the total orders in hand theunexecuted order value stands at Rs. 10649 crore (approx.) at the end of the year

Your Company is having operations beyond the territorial limits of India and is nowoperating from Saudi Arabia under a separate Joint Venture Subsidiary and throughCompany's branches in Fujairah and Abu Dhabi The Board of Directors is hopeful of securingsizeable orders in the future and is confident works in the order book

VI. SHARE CAPITAL :

During the year under review in terms of the provisions of the Companies Act 2013SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations) and SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009(SEBI (ICDR) Regulations) your Company allotted 9962407 equity shares of Rs. 10/- eachat a price of Rs. 53.20 per share on Preferential Basis to the following entities on March24 2017

# Name of the Entity

Number of Shares

Total amount paid incl. premium (in Rs.)
1 Infrastructure Leasing and Financial Services Limited- Promoter 4981203 265000000.00
2 IL&FS Financial Services Limited- Promoter Group 4981204 265000052.80
TOTAL 9962407 530000052.80

Accordingly the movement in the Paid-up Equity Share Capital of the Company is asunder:

Particulars

Number of Shares

Amount (in Rs.)

Opening Balance as on April 1 2016 121158671 1211586710
Add: Allotment under Preferential issue 9962407 99624070
Closing Balance as on March 31 2017 131121078 1311210780

The Company received the Listing Approvals for 9962407 Equity Shares of the Companyfrom BSE Limited (BSE) on April 5 2017 and National Stock Exchange of India Limited (NSE)on March 29 2017. Thereafter necessary Corporate Action Forms for credit of the saidshares to Promoter and Promoter Group were submitted with NSDL and CDSL (Depositories) onApril 6 2017. After receipt of confirmation of credit of shares necessary applicationswere filed by the Company with NSE and BSE for obtaining their trading approval. NSE andBSE vide their letters dated April 12 2017 granted trading approval for 9962407 equityshares which was effective from April 13 2017

During the year under review your Company had redeemed preference shares amounting toRs 53 crore out of the proceeds of the said preferential issue and the movement is shownbelow :

Particulars

No. of 6% OCCRPS*

Amount (in Rs.)

No. of 6% CRPS**

Amount (in Rs.)

Opening Balance as on April 1 2016 8750000 875000000 525000 52500000
Less: Redeemed on March 28 2017 (5000000) (500000000) (300000) (30000000)
Closing Balance as on March 31 2017 3750000 375000000 225000 22500000

*OCCRPS: Optionally Convertible Cumulative Redeemable Preference Shares

**CRPS: Cumulative Redeemable Preference Shares

Shares held by Directors :

Mr Karunakaran Ramchand Non-Executive Chairman of the Company holds 40000 EquityShares of the Company. No other

Non-Executive Director of the Company holds any Shares or convertible instruments ofthe Company

VII. DEPOSITS :

During the year under review your Company had not accepted any deposit from publicunder Chapter V of the Companies Act 2013

VIII. DIRECTORS AND KEY MANAGERIAL PERSONNEL :

During the year under review following changes took place in the composition of Boardof Directors and Key Managerial Personnel:

Appointments :

(a) Mr Sushil Dudeja was appointed as the Company Secretary and Key ManagerialPersonnel of the Company with effect from April 4 2016

(b) Mr Debabrata Sarkar was appointed as an Additional and Non-Executive IndependentDirector of the Company at the Board Meeting held on August 11 2016. Further hisappointment was approved by the Members of the Company at the Twenty Seventh AnnualGeneral Meeting held on September 23 2016. He was appointed for a period of 5 years witheffect from August 11 2016

(c) Mr Ganapathi Ramachandran Mr Rajiv Sarin and Ms Sutapa Banerjee were appointed asAdditional and Non-Executive Independent Directors of the Company for a period of 5 yearswith effect from October 6 2016

(d) Mr Ahmad Mohamad Dabbous was also appointed as Additional and Non-ExecutiveDirector with effect from October 6 2016

(e) Mr Mukund Sapre was appointed as Managing Director of the Company with effect fromOctober 7 2016 for a period of 5 years

(f) Mr Bhaskar Chatterjee was appointed as an Additional and Non-Executive IndependentDirector of the Company with effect from November 2 2016 for a period of five years

Resignations / Cessation :

(a) Mr Dhananjay Mungale Non-Executive Independent Director of the Company resignedfrom the Directorship of the Company with effect from July 1 2016

(b) Mr El Mouhtaz El Sawwaf Non-Executive Director of the Company resigned from theDirectorship of the Company with effect from September 1 2016. Consequent to hisresignation Mr Ahmad Mohamad Dabbous Alternate director to Mr Sawwaf ceased to beAlternate Director of the Company with effect from September 1 2016

(c) Mr Ved Jain and Mr Anil Agarwal Non-Executive Independent Directors of the Companyresigned from the Directorship of the Company with effect from September 2 2016

(d) Ms Kanika Tandon Bhal and Ms Alpa Sheth Non-Executive Independent Directors of theCompany resigned from the Directorships of the Company with effect from September 12 2016and September 16 2016 respectively

(e) Mr Murli Dhar Khattar resigned from the position of Managing Director as well asfrom the Directorship of the Company with effect from October 6 2016

(f) Mr Ahmad Mohamad Dabbous Additional and Non-Executive Director of the Companyresigned from the Directorship of the Company with effect from March 28 2017

The Board of Directors took note of the aforementioned resignations / cessation of theDirectors and placed on record sincere appreciation of the contribution made by themtowards the Company

Further Mr Rajiv Sarin Additional and Non-Executive Independent Director of theCompany had passed away on May 11 2017.

Your Directors express their deepest sorrow on the sad demise of Mr Sarin and place onrecord its sincere appreciation on the contribution made by him during his short stintwith the Company

Mr Saleh Mohammed A Binladen Non-Executive Director of the Company shall retire byrotation at the ensuing Annual

General Meeting in terms of the provisions of the Companies Act 2013 and beingeligible offers himself for re-appointment.

Further necessary resolutions for approval of appointment of Mr GanapathiRamachandran Ms Sutapa Banerjee Mr Bhaskar Chatterjee and Mr Mukund Sapre as Directorsof the Company are included in the Notice of Annual General Meeting along with their briefprofile and other details as required under the Listing Regulations and SecretarialStandard-2 for appointment and re-appointment of Directors. Your Directors recommend theappointment and re-appointment of aforementioned Directors of the Company at the ensuingAnnual General Meeting of the Company

None of the Directors of the Company are inter-se related to each other

Statement on Declaration given by Independent Directors :

The Independent Directors of the Company have given their declaration of Independencein terms of sub-section (6) of Section 149 of the Companies Act 2013 read with rules madethereunder and Regulation 16 of Listing Regulations.

Familiarization Programme of Independent Directors :

The Company through its Managing Director and Senior Management conducts programmes/presentations periodically to familiarize the Independent Directors with the strategyoperations and functions of the Company. The programmes/ presentations also familiarizesthe Independent Directors with their roles rights and responsibilities. The details offamiliarization programmes imparted to Independent Directors of the Company during FY 2017is available on the website of the Company at: http://www.ilfsengg.com/Document/FamiliarizationProgramme.pdf

Non-Executive Directors :

The Non-Executive Directors are entitled for sitting fee for attending the Meetings ofthe Board and/or Committee thereof. During the year under review with effect from March1 2017 the sitting fees payable to the Directors for attending Board and other CommitteeMeetings had been revised from Rs. 20000 to Rs 30000 per Meeting. Additionally theactual out of pocket expenses incurred by the Non-Executive Directors for attending themeetings are also borne by the Company. Except as mentioned above no other payment ismade by the Company to the Non-Executive Directors and the Company does not have anypecuniary relationship or transactions with the Non-Executive Directors. The details ofamount paid to the Directors of the Company towards Sitting Fee are mentioned in theCorporate Governance Section of this Annual Report

Performance Evaluation :

In terms of the provisions of the Companies Act 2013 and Listing Regulations theBoard of Directors of the Company had at its Meeting held on November 10 2014 approvedthe policy on Performance Evaluation of the Board of Directors which laid down thecriteria for performance evaluation of Board of Directors its Committees ExecutiveDirectors Independent Directors and Individual Directors. As per the policy the Board ofDirectors had at its Meeting held on May 29 2017 evaluated the performance of its ownall its Committees Executive Directors Independent Directors and Individual Directors(excluding the Director being evaluated) as satisfactory. The manner of performanceevaluation process followed by the Board is given in detail in the Corporate GovernanceReport. The policy on performance evaluation is available on the website of the Company athttp://www.ilfsengg.com/html/policies/PerformanceEvaluationPolicy.pdf

Managerial Remuneration Policy :

In terms of the provisions of Section 178 of the Companies Act 2013 read with Rulesmade thereunder and Regulation 19 of Listing Regulations the Board of Directors of theCompany had framed Managerial Remuneration Policy which includes the criteria fordetermining qualifications positive attributes independence of directors and othermatters as specified under Section 178(3) of the Companies Act 2013 and Regulation 19read with Part D of Schedule II of Listing Regulations. The policy is available on thewebsite of the Company at http://www.ilfsengg.com/html/policies.php

IX. DIRECTORS RESPONSIBILITY STATEMENT :

In terms of Section 134 (5) of the Companies Act 2013 the Board of Directors wish tostate 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

(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;

(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; and

(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

X. Details of conservation of energy technology absorption foreign exchange earningsand outgo :

(A) Conservation of energy
i) The steps taken or impact on conservation of energy; The conservation of energy in all the possible areas is undertaken as an important means of achieving cost reduction. Savings in electricity fuel and power consumption receive due attention of the management on a continuous basis
ii) The steps taken by the Company for utilizing alternate sources of energy; NIL
iii) The capital investment on energy conservation equipments; NIL
(B) Technology absorption
i) the efforts made towards technology absorption; Timely completion of the projects as well as meeting the budgetary requirements are the two critical areas where different techniques help to a great extent. Many innovative techniques have been developed and put to effective use in the past and the efforts to develop new techniques continue unabated.
ii) the benefits derived like product improvement cost reduction product development or import substitution; NIL
iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) -
a. the details of technology imported; NIL
b. the year of import;
c. whether the technology been fully absorbed
d. if not fully absorbed areas where absorption has not taken place and the reasons thereof; NA
iv) The expenditure incurred on Research and Development NIL
(C) FOREIGN EXCHANGE
Foreign Exchange earned in terms of actual inflows during the year NIL
Foreign Exchange Outgo during the year in terms of actual outflows Rs 0.42 crore

XI. BOARD AND ITS COMMITTEES :

(a) Board of Directors :

During the year under review the Board of Directors of the Company met five times onMay 30 2016 August 11 2016 October 6 2016 November 02 2016 and February 10 2017.The attendance along with such other details as required of each of the Directors ismentioned in the Corporate Governance Report section of this Annual Report

(b) Audit Committee :

The Audit Committee of the Board of Directors of the Company consists of four membersof which majority are Independent

Directors. In view of the resignations of Mr Ved Jain Mr Anil Agarwal Mr DhananjayMungale and Mr Murli Dhar Khattar from the Board of the Company Mr Jain Mr Agarwal MrMungale and Mr Khattar ceased to be the Members of the Audit

Committee

The Board of Directors of the Company in its Meeting held on August 11 2016 inductedMr Debabrata Sarkar as a Member of the Audit Committee. Further the Board of Directorshad at its Meeting held on October 6 2016 reconstituted the Audit

Committee and appointed Mr Debabrata Sarkar as the Chairman of the Committee and MrGanapathi Ramachandran Ms Sutapa Banerjee and Mr Mukund Sapre as other Members of theCommittee. The attendance of Members in the Meetings of Audit Committee and other detailsare mentioned in the Corporate Governance Report section of this Annual Report

All the recommendations of the Audit Committee were accepted by the Board of Directorsduring the year under review. Further the Committee comprises with majority ofIndependent Directors including its Chairman all of whom have the ability to read andunderstand the Financial Statements

(c) Corporate Social Responsibility Committee :

The Board of Directors of the Company had constituted Corporate Social Responsibility(CSR) Committee on March 18 2014 and had formulated a policy on CSR which is available onthe website of the Company at www.ilfsengg.com. In view of the resignations of Mr AnilAgarwal Mr Murli Dhar Khattar and Ms Alpa Sheth from the Board of Directors of theCompany they ceased to be the Members of the CSR Committee

Further the Board of Directors had at its Meeting held on October 6 2016reconstituted the CSR Committee and appointed Ms Sutapa Banerjee as Chairperson of theCommittee and Mr Rajiv Sarin and Mr Mukund Sapre as the other Members of the Committee.However in view of sudden demise of Mr Rajiv Sarin the Board of Directors hadreconstituted the CSR Committee at its Meeting held on May 29 2017 and inducted MrDebabrata Sarkar as a Member of CSR Committee in place of Mr Sarin

The Company is required to spend two percent of the average net profits for precedingthree financial years as per Section 135(5) of the Companies Act 2013. However no CSRactivities have been conducted during the year as the Company has incurred losses inprevious years. The details of CSR policy and other details as per Rule 9 of Companies(Corporate Social Responsibility) Rules 2014 are enclosed as Annexure 1 to thisReport

(d) Other Committees :

The details of composition number of Meetings and such other information as requiredregarding Nomination and Remuneration Committee and Stakeholders Relationship Committeeare mentioned in the Corporate Governance section of this Annual Report

XII. RISK MANAGEMENT :

The Board of Directors had in its Meeting held on February 11 2015 formulated a RiskManagement Policy consisting of various elements of risk and mitigation measures

The Board of Directors had in its Meeting held on May 29 2017 constituted the RiskManagement Committee comprising of

Mr Debabrata Sarkar Mr Ganapathi Ramachandran Ms Sutapa Banerjee Mr BhaskarChatterjee – Directors and Mr Mukund Sapre Managing Director of the Company. TheRisk Management Committee of the Company is responsible for overseeing the implementationof the Policy. The Chief Internal Auditor of the Company acts as Chief Risk Coordinator.In the opinion of the

Board the policy on Risk Management addresses the risks associated with the businessincluding identification of elements of risk which may threaten the existence of theCompany. The Board of Directors / Audit Committee reviews the risk assessment andmitigation procedures across the entity from time to time. As on March 31 2017 therewere no risks which may threaten the existence of the Company

XIII. SUBSIDIARIES :

As per Section 129 (3) of the Companies Act 2013 and Regulation 34 of the ListingRegulations the Consolidated Financial

Statements of the Company forms part of this Report. The copies of Audited FinancialStatements of the Subsidiaries are available on the website of the Company atwww.ilfsengg.com and a copy of the same will be provided upon written request to theCompany Secretary

SUBSIDIARIES :

Following are the Subsidiaries of your Company:

Angeerasa Greenfields Private Limited

Ekadanta Greenfields Private Limited

Saptaswara Agro-farms Private Limited

Maytas Infra Assets Limited

Maytas Metro Limited

Maytas Vasishta Varadhi Limited

Maytas Infra Saudi Arabia Company (Foreign Subsidiary)

ASSOCIATES & JOINT VENTURES :

During the year under review the following have been Associates and Joint Ventures ofyour Company:

Associate :

Hill County Properties Limited

Joint Ventures (Association of Persons) :

NCC-Maytas (JV)

NEC-NCC-Maytas (JV)

Maytas-NCC (JV)

NCC-Maytas (JV) (Singapore Classtownship)

Maytas-CTR (JV)

NCC-Maytas-ZVS (JV)

Joint Ventures (Jointly Controlled Operations) :

Maytas- KBL (JV)

Maytas KCCPL Flow More (JV)

Maytas MEIL KBL (JV)

Maytas MEIL ABB AAG (JV)

MEIL Maytas ABB AAG (JV)

MEIL Maytas KBL (JV)

MEIL Maytas WPIL (JV)

MEIL Maytas AAG (JV)

MEIL- SEW-Maytas-BHEL (JV)

L&T KBL Maytas (JV)

Maytas Ritwik (JV)

Maytas Sushee (JV)

Maytas Gayatri (JV)

IL&FS Engg-Kalindee (JV)

AMR-Maytas-KBL-WEG (JV)

ITDC-Maytas JV

Further none of the entities have been associated / disassociated as Joint Ventures ofyour Company during the year under review

The performance and financial position of the Subsidiaries Joint Venture and AssociateCompanies are enclosed as Annexure 2 to this Report

XIV. AUDITORS AND AUDITORS' REPORT :

(a) Statutory Auditors :

S. R. Batliboi and Associates LLP Chartered Accountants were appointed as StatutoryAuditors of the Company to hold office from the conclusion of 25th Annual General Meeting(AGM) of the Company till the conclusion of 28th AGM of the Company to be held in the year2017. Accordingly their term of appointment shall expire at the ensuing AGM

In terms of provisions of Section 139 of the Companies Act 2013 read with Rules madethereunder the Audit Committee and the Board of Directors had recommended the appointmentof BSR & Associates LLP Chartered Accountants (Firm Registration Number116231W/W-100024) and M Bhaskara Rao & Co Chartered Accountants (Firm RegistrationNumber 000459S) as the Joint Statutory Auditors of the Company to hold office from theconclusion of 28th AGM till the conclusion of 33rd AGM of the Company to be held in theyear 2022. Necessary resolution for appointment of BSR & Associates LLP and M BhaskaraRao & Co. as Joint Statutory Auditors of the Company is included in the Notice of AGM

The Board noted that there are following qualifications in the Auditor's Report for theStandalone and Consolidated Financial Statements for the Year Ended March 31 2017:

(1) Standalone Financial Statements :

The Company has investment amounting to Rs. 33.19 Crores made in an overseassubsidiary. Based on the unaudited financial statements of the aforesaid subsidiary as onMarch 31 2017 the net worth of the subsidiary is fully eroded and the Company may havepotential obligation to share further liabilities of the said subsidiary which ispresently under negotiation and hence undeterminable. Based on the reasons fully explainedin the aforesaid note the management is of the view that no provision is required fordiminution in the value of such investment/ potential obligation as the Company isevaluating options to restore the carrying value of the investment. However in theabsence of sufficient appropriate audit evidence we are unable to comment on the carryingvalue of such investment potential obligation and any other consequential impacts ifany that may be required in this regard in the standalone financial statements

(2) Consolidated Financial Statements :

The accompanying consolidated financial statements include aggregate assets of Rs.12.23 crores aggregate revenues of Rs. 0.33 crore and net cash outflows amounting toRs.0.00 Crore of an overseas subsidiary consolidated based on its unaudited financialstatements. The adjustments if any that may have been required had the audited financialstatements of the subsidiary for the year ended March 31 2017 been available andaccordingly we are unable to comment on the same

(3) Internal Financial Controls :

The following material weaknesses has been identified in the operating effectiveness ofthe Company's internal financial controls over financial reporting as at March 31 2017

Standalone Financial Statements :

The Company's internal financial controls system over estimation of diminution in thecarrying value of investments and accrual of potential obligation in case of an overseassubsidiary was not operating effectively which could potentially result in misstatement financialstatementsby way of Company not providing for adjustments/ the provisions if any that may berequired

Consolidated Financial Statements :

The Holding Company's internal financial control system over preparation ofconsolidated financial statements was not operating effectively as the consolidatedfinancial statements were prepared based on un-audited financial statements of an overseassubsidiary which could result in potential misstatements / adjustments if any in theconsolidated financial statements

The Board of Directors explanation on the aforementioned qualification is given below:

(i) Qualification on Standalone Financial Statements :

The Management of the Company is in discussion with the other shareholder of theSubsidiary on various options and is confident to restore the carrying value of theinvestment and therefore no provision is required for diminution in the value of suchinvestment / potential obligation. Accordingly any adverse impact on the

Financials of the Company is unlikely

(ii) Qualification on Consolidated Financial Statements :

The Board is of the view that adjustment if any that may have been required had theaudited financial statements of the subsidiary been available would not be material.Accordingly any adverse impact on the Financials of the Company is unlikely

(b) Cost Auditors :

In terms of the provisions of the Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Rules 2014 as amended the Board of Directors on therecommendation of Audit Committee appointed S

Mahadevan & Co as the Cost Auditors of the Company for FY 2017 and the remunerationpayable to them was approved by the Members at the Twenty Seventh AGM of the Company heldon September 23 2016. The Cost Auditors have submitted their report for FY 2017 to theBoard of Directors at its Meeting held on May 29 2017

Further on the recommendation of Audit Committee the Board of Directors in itsMeeting held on May 29 2017 appointed

Narasimha Murthy & Co Cost Accountants as the Cost Auditors of the Company.Necessary resolution for approval of their remuneration in terms of the provisions of theCompanies Act 2013 read with Rules made there under is included in the Notice of AGM

(c) Secretarial Auditor :

In terms of the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors had appointed Mr. Y. Ravi Prasada Reddy Practising Company Secretary to conductthe Secretarial Audit for FY 2017. The Secretarial Audit Report for the Financial YearEnded March 31 2017 is enclosed as Annexure 3 to this report. The SecretarialAudit Report does not contain any qualification reservation or adverse remark

The Board of Directors of the Company had at its Meeting held on May 29 2017appointed RPR & Associates Company Secretaries as the Secretarial Auditor of theCompany for FY 2018

XV. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES :

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis and are in compliance with the applicable provisions of the

Companies Act 2013 and Listing Regulations. During the year the Company had notentered into any contract / arrangement / transaction with related parties which could beconsidered material in terms of Section 188 of the Companies Act 2013 read with Rulesmade there under and accordingly the disclosure of related party transactions as requiredunder Section 134 of the

Companies Act 2013 read with Rules 8(2) of the Companies (Accounts) Rules 2014 inForm AOC-2 is not required

The Company had framed Related Party Transaction Policy for the purpose of approval andidentification of Related Party

Transactions. All Related Party Transactions entered into by the Company in terms ofthe Policy are placed before the Audit Committee for its approval from time to time. TheRelated Party Transaction Policy approved by the Board of Directors is uploaded on thewebsite of the Company at www.ilfsengg.com

XVI. EMPLOYEE STOCK OPTION SCHEME :

During the year under review the Company has not granted any stock options to theEmployees. Further the Company has received a certificate from the Statutory Auditors ofthe Company that the ESOP scheme has been implemented in accordance with the SEBIGuidelines and the resolution passed by the Members. The Certificate is enclosed as Annexure4 with this report Further the disclosure as required under SEBI (Share BasedEmployee Benefits) Regulations 2014 relating to ESOP 2009 scheme of the Company isavailable on the website of the Company at www.ilfsengg.com

XVII. MANAGEMENT DISCUSSION AND ANALYSIS :

A separate section titled “Management Discussion and Analysis” consisting ofdetails in compliance with Regulation 34 read with Schedule V of the Listing Regulationsis covered under separate section titled “Management Discussion and AnalysisReport” in this Annual Report

XVIII. CORPORATE GOVERNANCE:

A separate section titled “Report on Corporate Governance” including acertificate from the Practising Company Secretary confirming compliance with theconditions of Corporate Governance as stipulated under Listing Regulations is enclosed tothe Report on Corporate Governance and forms part of this Annual Report

Further the declaration signed by the Managing Director affirming the compliance withCode of Conduct for Board of Directors and Senior Management Personnel is enclosed to theReport on Corporate Governance

DISCLOSURES :

(a) Extract of Annual Return :

The extract of Annual Return as per Section 92(3) of the Companies Act 2013 and Rule12 (1) of the Companies (Management and Administration) Rules 2014 is enclosed as Annexure5 to this Report

(b) Vigil Mechanism :

The Company had established a Vigil Mechanism which incorporates Whistle Blower Policyto identify and report fraud.

Please refer to the Corporate Governance section of the Annual Report for furtherdetails

(c) Policy on Prevention of Sexual Harassment :

The Company had formulated and implemented a policy for Prevention of Sexual Harassmentof Women at workplace.

The Company time to time conducts workshops or awareness programmes against sexualharassment at works place. During the year under review the Company has not received anycomplaints under the policy The Company has many systems processes and policies to ensureprofessional ethics and harmonious working environment. The Company follows Zero Tolerancetowards Corruption and unethical conduct. These are ensured through Whistle Blower PolicySexual Harassment Policy and Redressal Guidelines

(d) Particulars of Loans guarantees or investments under Section 186 :

Your Company is into the business of providing Infrastructure Facilities. Accordinglythe provisions of Section 186 pertaining to providing Loan or Guarantee to othercorporates are exempted. All information regarding Loans Guarantees and Investments arementioned in the notes to financial statements for FY 2017 which are -explanatory Furtherduring FY 2017 your Company has not made any investments covered under Section 186 of theCompanies Act 2013 and hence the provisions of Section 186 are not attracted

However the Company had sought approval of the Members of the Company to invest inMaytas Infra Saudi Arabia

Foreign Subsidiary upto SAR 30 Million which was approved by the Members of theCompany by way of postal ballot and e-voting on March 20 2017

(e) Particulars of employees and related disclosures :

The disclosures relating ratio of remuneration of each directors to the medianemployee's remuneration and other details as per Section 197 (12) of the Companies Act2013 read with Rule 5 (1) of the Companies (Appointment and remuneration of ManagerialPersonnel) Rules 2014 is enclosed as Annexure 6 to this Report The disclosurepertaining to remuneration and other details as required under Section 197 (12) of the Actread with rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is enclosed as Annexure 7 to this Report

(f) Material changes and comments if any affecting the financial position of theCompany : Nil

(g) Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status of the Company : During the year underview no significant and material orders passed by any Regulator or Courts or Tribunalwhich may impact the going concern status of the Company

(h) Details in respect of adequacy of internal financial controls : The details ofinternal financial controls and their adequacy is given in Management Discussion andAnalysis Report

XIX. ACKNOWLEDGMENTS :

Your Directors place on record their gratitude to the Bankers Media FinancialInstitutions various agencies of the State and the Central Government AuthoritiesClients Consultants Suppliers Sub-Contractors Members and the Employees for theirvaluable support and co-operation and look forward to continued enriched relationships inthe years to come.

By order of the Board
For IL&FS Engineering and Construction Company Ltd
Sd/-
Karunakaran Ramchand
Place: Mumbai Chairman
Date: May 29 2017 DIN: 00051769