Your Directors hereby submit the ninth (9th) report of the business andoperations of the Company (the Company' or PEBS Pennar') along with auditedfinancial statements for the financial year ended March 31 2017.
1. Results and Operations
Financial Results and Performance:
Pennar Engineered Building Systems Limited
|Particulars ||2016-2017 ||2015-2016 |
|Revenue from operations (Gross) ||54761 ||49121 |
|Less: Excise duty ||4503 ||4429 |
|Revenue from pperations (Net) ||50258 ||44692 |
|Less: Total expenditure except depreciation ||46910 ||39328 |
|Profit from operations before depreciation other income ||3348 ||5364 |
|Less: Depreciation ||546 ||612 |
|Profit from operations before other income ||2802 ||4752 |
|Add: Other income ||571 ||186 |
|Profit before tax ||3373 ||4937 |
|Tax Expenses || || |
|Current tax ||1312 ||1767 |
|Tax pertaining to earlier years ||(335) ||185 |
|Deferred tax ||(44) ||(30) |
|Profit for the year ||2440 ||3016 |
Review of Business and Company Affairs:
The gross revenues of the Company for the current financial year are ` 54761.00 Lakhsand net revenues are ` 50258.00 Lakhs. EBITDA for the current financial year is `5635.00 Lakhs and profit after tax is ` 2440.00 Lakhs.
The Company has received new major orders from Shahi Exports TATA Projects SG PharmaGreenko Group Hindustan Coca Cola Beverages Technico-Vithalapur JSW Cement JSW PaintToyo Engineering Amplus Energy Solutions Aequs SEZ Walmart India AK Bandhus NandiPrinters
Amyraah Properties RKV Developers SOBISCO Amazon and Freight Systems.
Projects were executed for Shapoorji Pallonji & Co. KMV Projects Limited AzurePower UltraTech Cement Limited RCC Infra Bhagwat Chattels RKV Developers IndusProjects Hetero Labs and VEE Rubber.
Repeat orders were received from Shahi Exports Greenko Group Hindustan Coca ColaBeverages Technico-Vithalapur JSW Cement Shapoorji Pallonji & Co. Aequs SEZ AGIGlass PAC Avenue Supermart Hetero Drugs HIL Limited RCC Infra L&T and UltraTech.
New initiatives were taken in developing Telecom Towers Model for Reliance Phase II.The Company has signed a MOU with Ramboll (Denmark MNC) specialised in designing towers.The Company has developed models for toilets using steel structures for Thane MunicipalCorporation.
The company has commenced the production from its leased Baroda facility. The Companyis now in the leading position in India in PEB business.
The utilisation of IPO proceeds of the Company as on March 31 2017 is as follows:
|Particulars ||Objects of the issue as per prospectus ||Utilised up to March 31 2017 ||Unutilised up to March 31 2017 |
|1 Repayment/prepayment in full or part of certain working capital facilities availed by our Company ||3400 ||3400 ||- |
|2 Financing the procurement of infrastructure (including software and hardware) for the expansion of our design and engineering services ||800 ||214 ||586 |
|3 General corporate purposes ||1079 ||1079 ||- |
|4 Issue related expenses * ||521 ||517 ||4 |
|Total ||5800 ||5210 ||590 |
As on March 31 2017 unutilised funds have been temporarily invested in short-termliquid scheme of mutual funds and in bank balances.
Change in the nature of business if any:
There was no change in the nature of business of the Company
Dividend: Considering future prospects of the Company to become the leading playerin providing engineered building system services and considering the investment requiredfor future projects the Board has not recommended any Dividend to shareholders for thefinancial year 2016-2017.
Reserves: The Board does not propose to transfer any amount to reserves this year.
Deposits: The Company has not accepted any deposits and as such no amount ofprincipal or interest was outstanding as of the balance sheet date.
Particulars of loans guarantees or investments
Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the Notes to the Financial Statements provided in this Annual Report.
Particulars of contracts or arrangements with related parties: The particulars ofcontracts or arrangements entered into by the Company with related parties referred to insub-section (1) of section 188 of the Companies Act 2013 is disclosed in the prescribedForm No. AOC-2 which forms part of the report as Annexure A.
Particulars of Subsidiary/Joint Venture/Associate Companies: The Company does nothave any subsidiary/associate companies for the financial year 2016-2017. However theCompany has set up a joint venture in the United States of America in the month of June2017 to supply their goods and services.
Material changes and commitments affecting the financial position between the end ofthe financial year and the date of the report: There are no material changes that haveoccurred subsequent to the end of the financial year and the date of the report.
Significant and material orders: There are no significant and material orderspassed by the regulators or courts or tribunals impacting the going concern status andCompany's operations in the future.
2. Human Resources Management
We have set up a strategic recruitment and human resources management process. Humanresources management at PEBS Pennar goes beyond the set boundaries of compensationperformance reviews and development. It aims to establish a more open flexible and caringmanagement style so that staff will be motivated developed and managed in a way that theycan give their best to support departments' missions. We look at the employee's entirelifecycle to ensure timely interventions that help build a long-lasting and fruitfulcareer. Employee value should appreciate with time. We invest in our employee trainingstrategically to reap the reward that pays off now and for years to come. The Companyadded 79 employees this year taking the total strength to 588 at the end of the financialyear.
Particulars of Employees and Directors: The employees' drawn salary above ` 60Lakhs in aggregate per annum and ` 5 Lakhs in aggregate per month and Median EmployeeComparison is enclosed as Annexure B.
Apart from the above no other director is receiving any elements of remunerationpackage such as salary benefits bonuses stock options pension etc. except sittingfees.
Sitting fees of ` 0.52 Lakhs have been paid to Mr. Kamalakar Rao Bandari Independent Director.
Statutory Auditors: The Company in its General Meeting held on August 6 2014appointed M/s Deloitte Haskins & Sells Chartered Accountants (ICAI RegistrationNumber N0008072S) as Statutory
Auditors of the Company from 2014-2015 to 2018-2019 subject to ratification of theappointment by shareholders at every Annual General Meeting. The Auditors' Report forfiscal 2017 does not contain any qualification reservation or adverse remarks. TheAuditors' Report is enclosed with the financial statements in this Annual Report. Howeverthe existing Statutory Auditors of the Company M/s Deloitte Haskins & Sells CharteredAccountants (ICAI Registration Number N0008072S) have tendered their resignation letterand expressed their unwillingness to act as Statutory Auditors for the Company.
Therefore the Board of Directors of the Company recommends the appointment of M/s. B SR & Associates LLP Chartered Accountants (Firm Registration No. 116231W/W-100024) asthe Statutory Auditors of the Company for a period of 1 year commencing from theconclusion of the 9 th Annual General Meeting till the conclusion of the 10 th AnnualGeneral Meeting to be held in the year 2018.
Secretarial Auditor and Secretarial Audit Report: In terms of Section 204 of theAct and Rules made thereunder Mr. Dwarka Prasad Asawa Company Secretary in Practice(Membership No. 20636) has been appointed Secretarial Auditor of the Company. Thesecretarial audit report for fiscal 2017 forms part of the Annual Report as Annexure C tothe Board's report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remarks.
Cost Auditors: The Board at their meeting held on August 10 2017 appointedKandikonda & Associates Cost Accountant (Membership No. 31775) as Cost Auditors ofthe Company for conducting cost audit of the Company for the financial year 2017-2018. Theremuneration proposed by the Board of Directors excluding taxes and out-of-pocketexpenses shall be paid on actuals and requires ratification of the shareholders of theCompany. The shareholders ratification for payment of remuneration to Cost Auditors isbeing sought at the ensuing AGM.
Auditors' Certificate on Corporate Governance: As required by SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the auditors' certificate oncorporate governance forms part of this report. The auditors' certificate for fiscal 2017does not contain any qualification reservation or adverse remarks.
Internal Financial Control and its adequacy: The Board has adopted policies andprocedures for ensuring the orderly and efficient conduct of its business includingadherence to the Company's policies the safeguarding of its assets the prevention anddetection of fraud and error the accuracy and completeness of the accounting records andthe timely preparation of reliable financial disclosure.
4. Corporate Governance and Corporate Social Responsibility
Company's Corporate Governance Philosophy
Corporate governance is about maximising shareholder value legally ethically andsustainably. At PEBS Pennar the goal of corporate governance is to ensure fairness forevery stakeholder. We believe sound corporate governance is critical to enhance and retaininvestor trust. We always seek to ensure that our performance is driven by integrity. OurBoard exercises its fiduciary responsibilities in the widest sense of the term. Ourdisclosures seek to attain the best practices in corporate governance. We also endeavor toenhance long-term shareholder value and respect minority rights in all our businessdecisions.
Corporate Governance Report for fiscal 2017 forms part of this Annual Report.
PEBS Pennar Code of Conduct for the Prevention of Insider Trading
The Board of Directors has adopted the Insider Trading Policy in accordance with therequirements of the SEBI (Prohibition of Insider Trading) Regulation 2015. The InsiderTrading Policy of the Company lays down guidelines and procedures to be followed anddisclosures to be made while dealing with shares of the Company as well as theconsequences of violation. The policy has been formulated to regulate monitor and ensurereporting of deals by employees and to maintain the highest ethical standards of dealingin Company securities.
The Insider Trading Policy of the Company covering code of practices and proceduresfor fair disclosure of unpublished price-sensitive information and Code of Conduct forthe prevention of insider trading is available on our website (www.pebspennar.com).
The Securities and Exchange Board of India (SEBI) on September 2 2015 issued SEBI(Listing Obligations and Disclosure Requirements) Regulations 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 effectiveDecember 1 2015. Accordingly all listed entities were required to enter into the ListingAgreement within six months from the effective date. The Company entered into ListingAgreement with BSE Limited and the National Stock Exchange of India Limited.
The Company recognises and embraces the importance of a diverse board in its success.We believe that a truly diverse board will leverage differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundage ethnicity race and gender which will help us retain our competitive advantage. TheBoard has adopted the Board Diversity Policy which sets out the approach to diversity ofthe Board of Directors. The Board Diversity Policy is available on our website(www.pebspennar.com).
The Board met five (5) times during the financial year the details of which are givenin the Corporate Governance Report. The maximum interval between any two meetings did notexceed 120 days as prescribed in the Companies Act 2013.
Woman Director on the Board
Dr. Sita Vanka is the woman director on the Board of the Company.
Declaration by Independent Directors: The Company has received necessarydeclarations from all the Independent Directors of the Company confirming that they meetthe criteria of independence as laid down in Section 149 of the Companies Act 2013 andRegulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and theprovisions of the Companies Act 2013 mandates that the Board shall monitor and review theBoard evaluation framework.
The framework includes the evaluation of directors on various parameters such as:
Board dynamics and relationships
Relationship with stakeholders
Company performance and strategy
Tracking Board and committee effectiveness
The Companies Act 2013 states that a formal annual evaluation needs to be made by theBoard of its own performance and that of its committees and individual directors. ScheduleIV of the Companies Act 2013 states that the performance evaluation of IndependentDirectors shall be done by the entire Board of Directors excluding the director beingevaluated.
The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board.
Policy on Directors' Appointment and Remuneration
The current policy is to have an appropriate mix of Executive and Independent Directorsto maintain the independence of the Board and separate its functions of governance andmanagement. As of March 31 2017 the Board consists of ten members one of whom isExecutive three are Non-Executive and six are Independent Directors. The policy of theCompany on directors' appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other matters asrequired under sub-section (3) of Section 178 of the Companies Act 2013 is available onour website (www.pebspennar.com). We affirm that the remuneration paid to the directors isas per the terms laid out in the nomination and remuneration policy of the Company.
Familiarisation Program for Independent Directors
All new Independent Directors inducted into the Board attend an orientation programinforming the business and background of the Company and Pennar Group as a whole.Furthermore at the time of the appointment of an Independent Director the Company issuesa formal letter of appointment outlining his/her role function duties andresponsibilities. The format of the letter of appointment is available on our website(www.pebspennar.com).
We seek to promote and follow the highest level of ethical standards in all ourbusiness transactions guided by our value system. The SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 mandated the formulation of certain policiesfor all listed companies. All our policies are available on our website(www.pebspennar.com). The policies are reviewed periodically by the Board and updatedbased on need and new compliance requirement. In the opinion of the Board there is noelement of risk which may threaten the existence of the Company.
Pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013 aVigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy is uploaded to the website of the Company(www.pebspennar.com).
Transfer of Amounts to Investor Education and Protection Fund
Your Company did not have any funds lying unpaid or unclaimed for a period of sevenyears. Therefore there were no funds which were required to be transferred to theInvestor Education and Protection Fund (IEPF).
Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013
The Company has adopted a policy for prevention of Sexual Harassment of Women in theworkplace. The policy is uploaded to the website of the Company (www.pebspennar.com).During the year. the Company has not received any complaint of sexual harassment of womenin the workplace.
Extract on Annual Return: An extract of annual return in MGT 9 is enclosed asAnnexure D.
Awards: The Company has received the following awards in the current year:
Pennar Engineered Building Systems Limited
|Award ||Category |
|1 Construction World Top Challenger Award 2015-2016 ||Top Challenger |
|2 Construction Week India Awards 2016 ||PEB Project of the Year Runner-up |
|3 D & B Infra Awards 2016 ||Industrial Building |
|4 IEI Industry Excellence Award 2016 ||Excellence |
|5 CIDC Vishwakarma Award 2017 ||Best Professionally Managed Company |
| ||(Revenue: ` 100 Crore to ` 500 Crore) |
Directors and Key Managerial Personnel
In accordance with the provisions of the Act and the Articles of Association of theCompany Mr. Mukul Gulati Director of the Company retired by rotation at the ensuingAnnual General Meeting and being eligible has offered himself for re-appointment.
As on the date of this report the Company has appointed the following persons as KeyManagerial Personnel of the Company pursuant to Sections 2(51) and 203 of the CompaniesAct 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014:
|1. Mr. P.V. Rao ||Managing Director |
|2. Mr. Shrikant Bhakkad ||Chief Financial Officer |
|3. Mr. Gopal Ladda ||Company Secretary and Compliance Officer w.e.f. November 30 2016 |
|4. Mr. Subhash Kishan K. ||Company Secretary and Compliance Officer (was associated with the Company until November 30 2016) |
Committees of the Board
Currently the Board has six committees: the Audit Committee the Nomination andRemuneration Committee the Corporate Social Responsibility Committee the StakeholdersRelationship Committee the Capex Committee and the Finance and Operational Committee.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The details of conservation of energy technology absorption foreign exchange earningsand outgo are enclosed as Annexure E.
Corporate Social Responsibility (CSR): Pennar Group and PEBS Pennar have been earlyadopters of corporate social responsibility (CSR) initiatives. The Pennar Group has formedits own CSR Trust Pennar Foundation in the last financial year towards supporting thePennar Group's CSR activities. As per the Companies Act 2013 all companies having a networth of ` 500 Crore or more or a turnover of ` 1000 Crore or more or a net profit of `5 Crore or more during any financial year are required to constitute a CSR Committee ofthe Board of Directors comprising three or more Directors at least one of whom should bean Independent Director. All such companies are required to spend at least 2% of theaverage net profits of their three immediately preceding financial years on CSR-relatedactivities. Accordingly the Company was required to spend ` 50.98 Lakhs towards CSRactivities out of which ` 9.05 Lakhs was utilised on activities specified in Schedule VIIof the Companies Act 2013. Amount unspent is ` 41.93 Lakhs.
Established in the last year as a not-for-profit trust for social welfare activitiesimplementing programs in the areas of healthcare education hunger eradication ruraldevelopment disaster relief arts and culture destitute care etc. across India. Thehighlights of the Foundation's work in fiscal 2017 included village developments schoolupgrading building of toilets in schools and spending on green initiatives.
We thank the trustees of the Foundation who continue to devote their time and effortin planning guiding and monitoring its activities.
The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy)Rules 2014 is enclosed as Annexure F. The prescribed CSR expenditure of the Company forthe financial year 2016-2017 was ` 50.98 Lakhs out of which ` 9.05 Lakhs was utilised onactivities specified in Schedule VII of the Companies Act 2013. Amount unspent is ` 41.93Lakhs.
The Policy is updated on the Company's website (www.pebspennar.com).
The Composition of CSR Committee is as follows:
|1. Mr. Kamalakar Rao ||Chairman |
|2. Mr. Nrupender Rao ||Member |
|3. Mr. P.V. Rao ||Member |
|4. Dr. Sita Vanka ||Member |
Directors' Responsibility Statement: The financial statements are prepared inaccordance with the Generally Accepted Accounting Principles (GAAP). GAAP comprisesmandatory accounting standards as prescribed under Section 133 of the Companies Act 2013(the Act') read with Rule 7 of the Companies (Accounts) Rules 2014 the provisionsof the Act (to the extent notified) and guidelines issued by the Securities and ExchangeBoard of India (SEBI). The Company has adopted IND AS with effect from April 1 2017.
The Directors confirm that:
a. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b. They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitand loss of the company for the financial year ended March 31 2017;
c. They 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. They have prepared the annual accounts on a going concern basis; and
e. They have laid down internal financial controls which are adequate and areoperating effectively
f. They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Statutory Disclosures and Green Initiatives
Any member interested in obtaining any particulars may write to the Company Secretaryof the Company. Electronic copies of the Annual Report 2016-17 and Notice of the 9thAnnual General Meeting are sent to all members whose email addresses are registered withthe Company/Depository Participant(s). For members who have not registered their emailaddresses physical copies are sent in the permitted mode. We hereby request shareholdersto register their email addresses with the Company/Depository Participant(s)/Registrar andShare Transfer Agents (RTA) of the Company for receiving the communication of the Companyin electronic mode.
Acknowledgements: We take this opportunity to express appreciation for theco-operation assistance and guidance provided by financial institutions your company'sbankers customers suppliers investors regulatory and government authorities businessassociates and stakeholders. We place on record our appreciation of the contribution madeby our employees at all levels. Our consistent growth was made possible by their hardwork solidarity cooperation and support. The Directors look forward to their continuedsupport in future. Your Directors value your involvement as shareholders and look forwardto your continued support.
For and on behalf of the Board of Directors:
|Place: Hyderabad ||Nrupender Rao |
|Date: August 10 2017 ||Chairman |