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Punj Lloyd Ltd.

BSE: 532693 Sector: Infrastructure
NSE: PUNJLLOYD ISIN Code: INE701B01021
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VOLUME 131000
52-Week high 25.85
52-Week low 17.70
P/E
Mkt Cap.(Rs cr) 700
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 20.85
CLOSE 20.75
VOLUME 131000
52-Week high 25.85
52-Week low 17.70
P/E
Mkt Cap.(Rs cr) 700
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Punj Lloyd Ltd. (PUNJLLOYD) - Director Report

Company director report

Directors' Report

Your Directors are pleased to present the Twenty Ninth Annual Report and the auditedaccounts of Punj Lloyd Limited ("the Company") for the financial year endedMarch 31 2017.

Financial Highlights

The financial performance of the Company for the year ended March 31 2017 issummarized below:

Particulars 2016-17 2015-16
Total revenue 4059.75 3527.71
Earnings Before Interest (Finance Costs) Tax Depreciation and Amortisation (EBITDA) 107.63 (369.66)
Less: Finance costs 881.66 897.73
Profit/ (Loss) before tax depreciation and amortisation (774.03) (1267.39)
Less: Depreciation and amortisation expenses 125.13 227.90
Profit/ (Loss) before tax (PBT) (899.16) (1495.29)
Less: Tax expenses [net of deferred tax effect and minimum alternate tax credit entitlement/ written off (net)] (48.58) 18.42
Profit/ (Loss) after taxation (PAT) (850.58) (1513.71)
Other Comprehensive Income (936.91) (214.35)
Total Comprehensive Income (1787.49) (1728.06)

Dividend

To conserve the cash resources your Directors have not recommended any dividend on theequity shares for the financial year ended March 31 2017.

Operations Review

Your Company is focussed on improving operational efficiencies and these efforts havestarted to reap in the benefits. During the current year the Company clocked anoperational profit of ' 108 crore compared to loss of ' 370 crore reported in previousyear and the revenues also grew by 12% to ' 3761 crore and this trend is expected tocontinue and gradually accelerate in years to come.

Given the backdrops in the construction and infrastructure industry per se globallyand in India the Company is working on adapting to the changing market dynamics. While itis focusing on taking up projects across a wider spectrum of sectors; developing itscapabilities and creating a richer portfolio of projects; it is also focusing onleveraging the growing market opportunities in India while preserving its strong globalclient relationships.

Further to realign its strategic path with the financial imperatives of increasingcash flows and reducing its debt exposure it is cohesively working with the lenders tocarve out another round of financial restructuring that will provide the necessarybreathing space to the Company to chart out its business turnaround.

On business development given the Company's liquidity position your Companyapproached in a calibrated manner. Activities were more geared towards exploring newmarket opportunities rather than aggressively participating in tenders and getting orders.The Company has an order book of '18561 crore as of May 2017. This includes orders of'6845 crore in Libya which unfortunately are not seeing any traction. The order bookposition is not comparable to FY2016 as its Singapore subsidiaries are not included inFY2017.

Lastly though the company saw some developments on claim realisation but the recoveryprocess thereof continues to be mired in litigation and it is still awaiting large moniesfrom India and abroad.

Business Review

The Management Discussion and Analysis Section of the Annual Report presents a detailedbusiness review of the Company.

Health Safety and Environment (HSE)

Early in its working your Company realised that to be a preferred EPC contractorstandards of health safety and environment had to be high and non-negotiable. This laterbecame one of the differentiators between the Company and its competition. A detailed noteon the HSE practices and initiatives by the Company is included in Management Discussionand Analysis Section of the Annual Report.

Directors and Key Managerial Personnel

Mr. Atul Kumar Jain and Ms. Jyoti Punj were appointed as Additional Directors by theBoard of Directors of the Company with effect from August 10 2016 and August 18 2016respectively to hold office up to the ensuing Annual General Meeting ("theAGM"). Appropriate resolution seeking your approval for appointment of Mr. Atul KumarJain and Ms. Jyoti Punj as Directors of the Company liable to retire by rotation formspart of the notice convening the ensuing AGM of the Company.

Mr. Atul Kumar Jain was also appointed as Whole Time Director by the Board of Directorsof the Company for a period of five years with effect from August 10 2016. Appropriateresolution seeking your approval for the appointment and payment of remuneration to himforms part of the notice convening the AGM.

In terms of Section 149(7) of the Companies Act 2013 ("the Act") Mr. PhirozA. Vandrevala Mr. Uday Walia Mr. Rajat Khare and Mr. Shravan Sampath IndependentDirectors of the Company have given declarations to the Company to the effect that theymeet the criteria of independence as provided in Section 149(6) of the Act.

Mr. Shiv Punj retires by rotation and being eligible has offered himself forre-appointment at the AGM. The Board of Directors recommend his re-appointment.

Brief resume of the Directors seeking appointment/re-appointment at the AGM asrequired under SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015("SEBI Regulations") and the Act forms part of the notice convening the AGM.

Meetings of the Board

During the year the Board of Directors of the Company met 4 times on May 27 2016;August 10 2016; November 30 2016 and February 11 2017.

Policy on Appointment and Remuneration of Directors Key Managerial Personnel and OtherEmployees

The Nomination and Remuneration Committee in its meeting held on May 20 2014 hadrecommended to the Board of Directors a Policy on Directors' Appointment and Remunerationincluding criteria for determining qualifications positive attributes independence of adirector and relating to remuneration for the Directors Key Managerial Personnel andOther Employees in terms of sub-section (3) of section 178 of the Act. The Board ofDirectors in its meeting held on May 20 2014 have approved and adopted the same. The saidpolicy is enclosed as Annexure - I to this Report.

Formal Annual Performance Evaluation of the Board and that of its Committees andIndividual Directors

Pursuant to the Guidance Note on Board Evaluation issued by SEBI vide Circular datedJanuary 5 2017 the Remuneration Committee has reviewed and revised the Criteria forPerformance Evaluation of the Board Individual Directors (including IndependentDirectors) and Committees of the Board.

In line with the above revised criteria the Independent Directors at their separatemeeting held on May 27 2017 without participation of the Non-Independent Directors andManagement have considered and evaluated the Board's performance and the performance ofthe Chairman and Managing Director and Non-Independent Directors. The IndependentDirectors in the said meeting have also assessed the quality quantity and timeliness offlow of information between the Company Management and the Board.

The Board of Directors in their meeting held on May 27 2017 have evaluated theperformance of each of the Independent Directors (without the participation of theDirector being evaluated) and also of the Committees of the Board.

The revised criteria for performance evaluation have been detailed in the CorporateGovernance Report which is attached as Annexure -II to this Report.

Directors' Responsibility Statement

Pursuant to the requirements of Sub-Sections (3)(c) and (5) of Section 134 of the Actit is hereby confirmed:

1. that in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;

2. that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for the year under review;

3. that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

4. that the Directors have prepared the annual accounts of the Company on a ‘goingconcern' basis.

5. that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

6. that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Audit Committee

The Audit Committee comprises of Mr. Phiroz Vandrevala Independent Director asChairman Mr. Rajat Khare Mr. Shravan Sampath and Mr. Atul Punj as Members.

The Board of Directors have accepted all the recommendations of the Audit Committee.

Vigil Mechanism

The Company has in place a vigil mechanism in the form of Whistle Blower Policy. Itaims at providing avenues for employees to raise complaints and to receive feedback on anyaction taken and seeks to reassure the employees that they will be protected againstvictimization and for any whistle blowing conducted by them in good faith. The policy isintended to encourage and enable the employees of the Company to raise serious concernswithin the organization rather than overlooking a problem or handling it externally. TheCompany is committed to the highest possible standard of openness probity andaccountability. It contains safeguards to protect any person who uses the Vigil Mechanism(whistle blower) by raising any concern in good faith. The Company does not tolerate anyform of victimization and takes appropriate steps to protect a whistleblower that raises aconcern in good faith and treats any retaliation as a serious disciplinary offence thatmerits disciplinary action. The Company protects the identity of the whistle blower if thewhistle blower so desires however the whistle blower needs to attend any disciplinaryhearing or proceedings as may be required

for investigation of the complaint. The mechanism provides for a detailed complaint andinvestigation process. If circumstances so require the employee can make a complaintdirectly to the Chairman of the Audit Committee. The Company also provides a platform toits employees for having direct access to the Chairman and Managing Director of theCompany for raising any concerns. It is through ATP Connect (atpconnect@punjlloyd.com ).

Mr. Dinesh Thairani Company Secretary is the Compliance Officer. The confidentialityof those reporting violations is maintained and they are not subjected to anydiscriminatory practice.

Share Capital

During the financial year 2016-17 the Company issued and allotted 2130000 EquityShares of '2/- each fully paid up for cash at par on the exercise of vested stock optionsunder Employee Stock Option Plan 2005 (ESOP 2005) and Employee Stock Option Plan 2006(ESOP 2006). Consequently the issued subscribed and paid-up Equity Share Capital of theCompany has increased from ' 664191490/- divided into 332095745 equity shares of'2/- each as at March 31 2016 to '668451490/- divided into 334225745 equity sharesof ' 2/- each as at March 312017. Further 1020000 Equity Shares of '2/- each fully paidup for cash at par were issued and allotted on April 26 2017 on the exercise of vestedstock options under ESOP 2005 and ESOP 2006 and consequently the issued subscribed andpaid-up Equity Share Capital of the Company has increased to '670491490/- divided into335245745 Equity Shares of '2/- each fully paid up.

Employee Stock Option Scheme

The Company has 2 (two) Employee Stock Option Scheme at present:

• Employee Stock Option Plan 2005 (ESOP 2005); and

• Employee Stock Option Plan 2006 (ESOP 2006)

ESOP 2005 and ESOP 2006 are in compliance with the Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 (the Regulation).

The details as required to be disclosed under the Regulation with regard to the ESOP2005 and ESOP 2006 of the Company as at March 312017 are disclosed on the website of theCompany at the web link: http://punjlloydgroup.com/investors .

The Company has never provided any loan to its employees to purchase the shares of theCompany.

The Company has not issued any shares with differential voting rights.

The Company has not issued any sweat equity shares.

Corporate Governance

As stipulated under SEBI Regulations the Report on Corporate Governance and therequisite Certificate from the Auditors of the

Company confirming compliance with the conditions of Corporate Governance as stipulatedunder the aforesaid regulation is attached as Annexure - II to this Report and forms partof the Annual Report.

Corporate Social Responsibility (CSR) initiatives

The Company has formed a CSR Committee comprising of Mr. Atul Punj as Chairman Mr.Shiv Punj and Mr. Uday Walia as members.

The said Committee has developed a Policy on CSR which has been approved by the Boardof Directors in its meeting held on May 20 2014.

In terms of the provisions of Section 135 of the Act read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 the Company was not required to make anyexpenditure on CSR activities during the Financial Year 2016-17. The CSR Report isattached as Annexure - III.

Management Discussion and Analysis

As stipulated under SEBI Regulations Management Discussion and Analysis Report forthe year under review is presented in a separate section forming part of the AnnualReport.

Auditors and Auditors' Report

M/s BGJC & Associates LLP (formerly BGJC & Associates) Chartered AccountantsNew Delhi (Registration No. 003304N / AAI -1738) had been appointed as Statutory Auditorsof the Company from the conclusion of the 28th AGM of the Company held onAugust 10 2016 untill the conclusion of the sixth consecutive AGM of the Company subjectto ratification of their appointment at each AGM.

The Company has received a letter from the Statutory Auditors to the effects that theirappointment if ratified would be within the limit prescribed under Section 139 of theAct and that they are not disqualified for appointment.

The observations of the Auditors have been fully explained in Note 32 to the FinancialStatements.

Secretarial Auditors and Secretarial Audit Report

M/s. Suresh Gupta & Associates Company Secretaries Delhi have been appointed asSecretarial Auditors of the Company to conduct the Secretarial Audit of the Company forthe financial year 2016-17 and their Secretarial Audit Report is annexed as Annexure - IVto this Report.

Cost Auditors

The Board has appointed M/s. Amit Singhal & Associates Cost Accountants Delhi(Firm Regn. No. 101073) as Cost Auditors of the Company to conduct the audit of costrecords of the Company for the Financial Year 2016-17.

Fixed Deposits

The Company has not accepted any fixed deposits from public

shareholders or employees during the year under review.

Particulars of Employees

The details as required in terms of the provisions of Section 197 of the Act read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are attached as Annexure - V to this Report.

The details of employees as required in terms of the provisions of Section 197 of theAct read with Rule 5 (2) & (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are attached as Annexure - VI to this Report.

The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaints Committee has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary andtrainees) are covered under this policy. During the year 2016-17 no complaints werereceived.

Consumption of Energy and Foreign Exchange Earnings and Outgo

The details as required under Section 134(3)(m) of the Act read with Rule 8(3) ofCompanies (Accounts) Rules 2014 regarding conservation of energy technology absorptionand foreign exchange earnings and outgo are attached as Annexure - VII to this Report.

Loans Guarantees and Investment

In accordance with Section 134(3)(g) of the Act the particulars of loans guaranteesand investments under Section 186 of the Act are given in the Note 38(a) of standaloneFinancial Statements read with respective heads to the Financial Statements.

Related Party Transactions

In accordance with Section 134(3)(h) of the Act read with Rule 8(2) of Companies(Accounts) Rules 2014 the particulars of contracts or arrangements with related partiesreferred to in Section 188(1) of the Act in the prescribed Form AOC 2 are attached asAnnexure -VIII to this Report.

Risk Management Policy

The company has formulated and implemented a Risk Management policy. The details ofelements of risk are provided in the Management Discussion and Analysis section of theAnnual Report.

Internal Financial Controls

The Company has designed and implemented a process driven framework for InternalFinancial Controls as detailed in the Act. These controls have been established at theentity and process levels to comply with internal control requirements.

A detailed note on internal controls is included in the Management

Discussion and Analysis Section of the Annual Report.

Extracts of Annual Return

In terms of Section 134(3)(a) of the Act read with Rule 12(1) of Companies (Management& Administration) Rules 2014 the extracts of Annual Return of the Company in FormMGT 9 is attached as Annexure - IX to this Report.

Significant and Material Orders

No significant and material orders have been passed by any regulators or courts ortribunals impacting the going concern status and company's operations in future.

Consolidated Financial Statements

In accordance with Section 129 of the Act Consolidated Financial Statements areattached and form part of the Annual Report and the same shall be laid before the ensuingAGM along with the Financial Statements of the Company.

Subsidiaries Joint Ventures & Associate Companies

As required under the first proviso to sub-section (3) of Section 129 of the Act aseparate statement containing the salient features of the financial statements of thesubsidiaries associates and joint venture companies in Form AOC 1 is annexed to theFinancial Statements and forms part of the Annual Report which covers the performance andfinancial position of the subsidiaries associates and joint venture companies.

The annual accounts of the subsidiary companies are available on the Company's websiteviz. www.punjlloyd.com and will also be available for inspection by any member or trusteeof the holder of any debentures of the Company at the Registered Office and the CorporateOffice. A copy of the above accounts shall be made available to any member on request.

Acknowledgement

Your Directors would like to place on record their appreciation for the committedservices put in by the employees of the Company. Your Directors would also like to conveytheir sincere gratitude to the shareholders debenture holders bankers financialinstitutions regulatory bodies clients and other business constituents for theircontinued co-operation and support.

For and on behalf of the Board of Directors

Atul Punj

Chairman and Managing Director DIN:00005612

Place: Gurugram Date: May 27 2017