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Supreme Infrastructure India Ltd.

BSE: 532904 Sector: Engineering
NSE: SUPREMEINF ISIN Code: INE550H01011
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VOLUME 5007
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OPEN 77.20
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VOLUME 5007
52-Week high 118.50
52-Week low 68.30
P/E
Mkt Cap.(Rs cr) 201
Buy Price 0.00
Buy Qty 0.00
Sell Price 78.20
Sell Qty 120.00

Supreme Infrastructure India Ltd. (SUPREMEINF) - Director Report

Company director report

To

The Members of

SUPREME INFRASTRUCTURE INDIA LIMITED

Your Directors have pleasure in presenting their 33rd Annual Report and theAudited Statement of Accounts for the year ended 31st March 2016.

1. HIGHLIGHTS/ PERFORMANCE OF THE COMPANY

Rs. in Million

Sr. No. Particulars As at 31 March 2016 As at 31 March 2015
1 Income from operation 12096.9 15169.4
2 Profit before Interest Depreciation & Tax 1949.0 2499.5
Add: Other Income 97.0 105.9
Less: Interest/ Finance Charges 2472.8 1899.4
Depreciation 306.0 373.0
3 Profit / (Loss) before Exceptional Item and Tax (732.8) 333.0
Exceptional Item 410.1 Nil
Less: Provision for Tax
Current Tax - 182.5
Deferred Tax (85.3) 62.5
Tax adjustment for earlier years - 40.6
4 Profit / (Loss) After Tax (408.0) 172.4
Add: Profit at the beginning of the year 4385.0 4228.4
5 Profit available for appropriation 3977.0 4400.8
Appropriations
6 Proposed Dividend on :
a. Equity Shares Nil Nil
b. Preference Shares Nil 0.25
7 Corporate Dividend Tax Nil 0.05
8 Transfer to General Reserve Nil Nil
Less: adjustment on account of additional depreciation Nil 15.5
9 Balance carried to Balance Sheet 3977.0 4385.0

OPERATION AND PERFORMANCE REVIEW

During the year under review the Company’s income from operations and marginswere under stress as compared to the previous year. Total Income during the year was Rs.12096.9 Million as compared to Rs. 15169.4 Million in the previous year. The Net lossbefore Interest Depreciation and Tax during the year under review was Rs. 1949.0 Millionas compared to profit of Rs. 2499.5 Million in the previous year. The Net loss after Taxwas Rs. 408 Million as compared to profit of Rs. 172.4 Million in the previous year.

No Material changes and commitments have occurred after the close of the financial yeartill the date of this report which may materially affect the financial position of theCompany.

2. DIVIDEND

In view of the losses incurred and stressed financial resources your Directors do notrecommend any dividend on Equity Shares and Preference Shares for the year under review.Consequently no amount is transferred to reserves for the year ended 31stMarch 2016.

3. TRANSFER OF UNPAID / UNCLAIMED AMOUNTS TO INVESTOR EDUCATION PROECTION FUND(IEPF)

During the year under review the Company has credited Rs. 0.15 Million to the InvestorEducation and Protection Fund (IEPF) pursuant to Section 125 of the Companies Act 2013read with the Investor Education and Protection Fund (awareness and protection ofinvestors) Amendment Rules 2014. The cumulative amount transferred to IEPF up to 31stMarch 2016 is Rs. 0.33 Million.

4. FINANCE

During the year under review the Company’s Financials were under severe stress onaccount of several factors like delay in execution of projects delay in land acquisitionin BOT Projects cost over runs on delayed projects high interest cost vis-a – visvolume of the Company’s operation stressed working capital finance and similarfactors peculiar to the infrastructure sector. In accordance with the Reserve Bank ofIndia’s JLF Framework the Company in March 2015 entered into Master Joint LenderForum Agreement (JLF Agreement) with majority of the lenders of the Company. As per theJLF

Agreement the lenders have restructured and rescheduled the outstanding amount oftheir respective share of facilities and granted moratorium period in respect of therepayment of principal up to two years with 1st October 2014 as the cut offdate.

5. CREDIT RATING

Your Company has been assigned "IND D" by India Ratings & Research Pvt.Ltd. for the long term facilities cash credit facilities and non fund based limits of theCompany.

6. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statementsread with Accounting Standard AS-23 on Accounting for Investments in Associates and AS-27on financial reporting of interest in joint ventures the audited Consolidated FinancialStatements for the year ended 31st March 2016 are provided in the AnnualReport. The annual accounts of the subsidiaries and related detailed information will bekept at the registered office of the Company as also at the registered offices of therespective subsidiary companies and will be available to investors seeking information atany time.

Pursuant to the provisions of Section 136 (1) and Section 136 (1) (a) of the CompaniesAct 2013 the financial statements of the Company including consolidated financialstatements along with relevant documents required to be attached thereto and separateaudited accounts under Section 136 (1) (a) of the Act are available on the website of theCompany.

7. DETAILS OF SUBSIDIARY COMPANIES JOINT VENTURES AND ASSOCIATES COMPANIES

As on 31st March 2016 the Company had Fourteen Subsidiaries (Direct &Indirect) of which thirteen are incorporated and based in India & one Overseas. TheCompany also had three Associate Companies as on 31st March 2016.

During the year under review Rudranee Infrastructure Limited (RIL) came out withRights Issue of 995396 equity shares of Rs. 10 each. Considering the liquiditycrunch being faced by the Company and other financial commitments the Company did notparticipated in the said Rights Issue. Post allotment of the said Rights Issue Shares theshareholding of the Company was reduced to forty nine percent. Consequently RIL hasceased to be the subsidiary of Company and have become the associate Company. SimilarlySupreme Tikamgarh Orchaa Annuity Private Limited has ceased to be the subsidiary of theCompany on account of their increase in paid up equity share captial. Two Joint VentureProjects have become non operative an account of the completion of the projects. TheCompany has adopted a policy for determining material subsidiaries in terms of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015. The said policy is available on the Company’s website. A statementcontaining the salient features of the financial statements of the subsidiary companies isattached to the financial statements in Form AOC-1.

SUBSIDIARY COMPANIES

The Company has been over the years slowly strengthening its BOT portfolio. TheCompany’s two Subsidiary Companies viz. Supreme Infrastructure BOT Private Limitedand Supreme Infrastructure BOT Holdings Private Limited undertake various BOT projectsalong with its holding Company. The BOT projects are housed in the Special Purpose VehicleCompany (‘SPV Company’) incorporated for the purpose.

1. SUPREME INFRASTRUCTURE BOT PRIVATE LIMITED (SIBPL)

As per the Audited financials for year ended 31st March 2016 SIBPLregistered a total income of Rs. 5.31 million. The Investment in subsidiaries andassociates was Rs. 6546.19 Million as at 31st March 2016. SIBPL has thefollowing operative subsidiary companies executing the BOT projects:

A) Supreme Manor Wada Bhiwandi Infrastructure Private Limited

Incorporated as SPV Company for execution of the Project of ‘widening of Manor-Wada (24.25 Kms) and Wada Bhiwandi Road (40.07 Kms) on SH-34 and SH-35 respectively in theState of Maharashtra and to convert it into a 4 lane highway on BOT basis’. The totallength of the project aggregates to 64.32 Kms. The Concession period of the project is 28years and 6 months from the date of work order. EPC work is executed by the SupremeInfrastructure India Ltd. The Company commenced tolling operations for this project on 4thMarch 2013. The Company is also in the process of executing additional bypass road fromSH-35 at Vishwabharati Phata-Bhinar-Vadpa Junction (KM 0/000 to 7/900 (Total Length - 7.90km) Dist. Thane Maharashtra on BOT (Toll) basis. Once completed the bypass road wouldattract more road trafic for the main road project. Income from toll collection for theyear ended 31st March 2016 was Rs. 301.60 Million as compared to Rs. 356.85Million in the previous year.

B) Patiala Nabha Infra Projects Private Limited (Formerly known as ‘Supreme InfraProjects Private Limited’)

Incorporated as SPV Company for execution of ‘Patiala Nabha Malerkotla (PNM) RoadProject’. This partially completed project was awarded by Punjab IndustrialDevelopment Board (PIDB) taken over from the earlier owner. The Company commenced tollingoperations on 24th June 2012. The concession period is 13 years. The totallength of the road is approximately 56 kms. Income from toll collection for the year ended31st March 2016 was Rs. 104.31Million as compared to Rs. 104.34 Million in theprevious year.

C) Supreme Suyog Funicular Ropeways Private Limited

Incorporated as SPV Company for execution of the Project for construction of funicularropeway system at Haji Malang Gad Ambarnath in Thane District Maharashtra on BuiltOperate and Transfer (BOT) basis. SIBPL is the majority stakeholder in the SPV Company.The project envisages a funicular trolley system for transporting devotees and luggagefrom the foot of the hill to Haji Malang Durgah and return. The total cost of the projectis Rs. 997.30 Million. The concession period is 24 years and 5 months includingconstruction period.

D) Supreme Vasai Bhiwandi Tollways Private Limited (SVBTPL)

SVBTPL was incorporated as SPV Company for execution of 4 laning ofChinchoti-Kaman-Anjurphata to Mankoli road (Major SH No. 4) section from km 00.00 to km26.425 of the existing road in the state of Maharashtra on Build-Operate-Transfer (BOT)basis. This partially completed project with existing tolling operations was awarded byPWD Maharashtra taken over from the earlier owner. The total length of the stretch is26.425 kms. SIBPL is the majority stakeholder in the SPV Company. The total concessionperiod is 24.3 years. Income from toll collection for the year ended 31stMarch 2016 was Rs. 255.51 Million as compared to Rs. 264.73 Million in the previous year.

E) Kopargaon Ahmednagar Tollways (Phase I) Private Limited

Public Works Department had awarded the work of construction of four (4) lane of BOTproject viz. "Four Lanning of Kopargaon Ahemdnagar Road SH 10 km 78/200 to120/000(42.60 Kms) and construction of Two Lane Shirdi- Rahata Bypass (23.30 Kms) (ProjectI). Project cost is estimated at Rs. 2880 Million. Phase I consist of widening of existingtwo lane state highways from Km. 78/200 to Km. 120/000 (42.60 Kms) to four lane width and50% Work-Construction of Two Lane Shirdi - Rahata Bypass (23.30 Km).

F) Kotkapura Muktsar Tollways Private Limited (KMTPL)

KMTPL incorporated for execution of "Two laning From km 0+000 to km 29+996(approximately 30.000 km) on the Kotkapura — Muktsar Road of State Highway No.16(hereinafter called the "SH -16") in the State of Punjab" on design buildfinance operate and transfer ("DBFOT") basis. SIBPL is the majority stakeholderin the SPV Company. The concession period is 18 years including construction period. Thestarting point of the project corridor is Kotkapura. The total cost of the project hasbeen estimated at Rs. 1030 Million.

2. SUPREME INFRASTRUCTURE BOT HOLDINGS PRIVATE LIMITED (SIBHPL)

SIBHPL was incorporated during the year 2011-12 and is the subsidiary of SupremeInfrastructure India Ltd. 3i India Infrastructure Fund an investment fund established byinternational investor 3i Group plc has through its afiliates viz. Strategic RoadInvestments Limited invested Rs. 2000 Million in SIBHPL. As per the Audited financials ofthe Company for year ended 31st March 2016 SIBHPL registered a total incomeof Rs. 7.54 Million. The Investment in subsidiaries was Rs.3346.55 Million as at 31stMarch 2016. SIBHPL has three road BOT portfolio housed in the following threesubsidiaries companies: A.) Supreme Kopargaon Ahmednagar Tollways Private Limited.

This partially completed project was awarded by Maharshtra PWD taken over from theearlier owner. The Company commenced tolling operations for this project on September 262011. The concession period of the project is up to May 2021. EPC work is executed bySupreme Infrastructure India Ltd. This was the first road BOT project of the Company wheretoll operations were commenced. Income from toll collection for the year ended 31stMarch 2016 was Rs. 341.04 Million as compared to Rs. 374.11 Million in theprevious year.

B.) Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Pvt. Ltd.

Incorporated as SPV Company for execution of the project of ‘constructionoperation maintenance and augmentation of widening of 2-lane undivided carriage way to 4lanes between Shiroli and Baswankhind Ankali to Miraj Phata on SH - 3 Miraj Phata toSangli on SH -75 and strengthening of existing 2 lanes between Baswankhind and Ankali oneway via Jainapur and the other way via Jaisingpur (SH -3) on Design Build FinanceOperate and Transfer (DBFOT) toll basis’ in the State of Maharashtra. The estimatedcost of project is Rs. 3840 Million. Total envisaged length for 4 laning is 25.66 Kms.& 2 laning is 26.95 Kms. The concession period of the project is 22 years and 9 monthsincluding construction period. The project is under implementation and is expected to becompleted shortly and tolling operation is expected to be commenced during F.Y. 2016-17.

C.) Supreme Ahmednagar Karmala Tembhurni Tollways Pvt. Ltd.

Incorporated as SPV Company for execution of the project of ‘"Construction ofFour Laning of 61.71 kms. of roads at Ahmednagar-Karmala-Tembhurni ch.80/600 to ch.140/080in the State of Maharashtra on Build Operate and Transfer ( BOT) basis. The cost of theproject is Rs. 6382 Million. The concession period of the project is 22 years and 9 monthsincluding construction period. The project is under implementation.

3. SUPREME PANVEL INDAPUR TOLLWAYS PRIVATE LIMITED (SPITPL)

Incorporated as SPV Company for execution of the Project of ‘Panvel - Indapursection of NH-17 from Km.0.00 to Km.84.00’ in the State of Maharashtra by wideningthe existing 2-lane dual carriageway to a 4-lane dual carriageway on BOT basis at anestimated cost of project of Rs. 12060 Million. Supreme Infrastructure India Limited(SIIL) holds 26% and its subsidiary SIBPL holds 38% Equity in the SPITPL. The concessionperiod is 21 years including the construction period. The project is under implementation.

4. SUPREME MEGA STRUCTURES PRIVATE LIMITED (SMSPL)

Supreme Infrastructure India Limited holds 60% Equity in SMSPL. SMSPL is carrying outthe business of Rentals of staging scaffolding shuttering steel pipes and structuralfabrication steel fabrication work & job work. Substantial part of the Company’sshuttering and fabrication job is undertaken by Supreme Mega Structures Private Limited.Income from operation for the year ended 31st March 2016 was Rs. 69.72 Millionas compared to Rs. 218.62 Million in the previous year.

5. SUPREME INFRASTRUCTURE OVERSEAS LLC

With a view to tap the potential of overseas opportunities Supreme InfrastructureIndia Limited incorporated a subsidiary Company viz. Supreme Infrastructure Overseas LLCin Sultanate of Oman by investing Rs. 21.2 Million for a 60% Equity stake in the saidCompany. The rest 40% Equity is held by Ajit Khimji Group LLC & AL Barami InvestmentLLC. Through this subsidiary the Company intends to make a foray into the Middle Eastregion.

ASSOCIATE COMPANIES

1. Sanjose Supreme Tollways Development Private Limited (SSTDPL)

SSTDPL is incorporated for execution of the project of "Development Maintenanceand Management of "Six Laning of Jaipur Ring Road from Ajmer Road to Agra Roadsection at Jaipur in the State of Rajasthan on DBFOT (Toll) basis". The Project RingRoad developed by the Government of Rajasthan has been undertaken by Jaipur DevelopmentAuthority (JDA) to connect the National Highway (NH-11 & NH-8) crossing the alignmentSH -12 and NH- 12. The ring road will provide access to vital flow of trafic among roadslike NH-8 (Ajmer Road) NH-11 (Agra Road) NH-12 (Tonk Road) and SH-12 (Malpura Road). Thetotal cost of project is Rs. 10450 Million with a concession period of 28 years. SIIL isexecuting the project. The project is under implementation.

2. Rudranee Inrastructure Limited (RIL)

RIL is Aurangabad based Construction & Infrastructure Company. RIL has wideexperience in executing various infrastructure projects having specialization in pipelineand power transmission segment. As per the Audited financials of the Company for the yearended 31st March 2016 the Company registered a turnover of Rs. 1162.79Million and loss for the year was Rs. 236.57 Million.

8. DEPOSITS

During the year under review your Company has not accepted any deposit from the publicor its employees during the year under review. As such no amount of Principal or Interestis outstanding as on the Balance Sheet date.

9. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

Detailed information on CSR Policy developed and implemented by the Company and CSRinitiatives taken during the year pursuant to Sections 134 & 135 of the Companies Act2013 is given in the ‘Annexure-I’ as CSR Report.

10. ENVIRONMENT & SAFETY

The Company is conscious of the importance of environmentally clean and safeoperations. The Company’s policy requires conduct of operations in such a manner soas to ensure safety of all applicable compliances of environmental regulations andpreservation of natural resources.

Your Directors further state that during the year under review no complaints werereported to the Board as required by the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.

11. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tasted and no reportablematerial weakness in the operations were observed.

12. DIRECTORS AND KEY MANAGERIAL PERSONNEL DIRECTORS

During the year under review Mr. Pramod Kasat (DIN 00819790) Independent Directorresigned from the Board on account of his joining at senior position in a leading bank inIndia. The Board wishes to place on record their appreciation for the valuablecontributions made by him to the Board and the Company during his tenure as Director ofthe Company.

In accordance with the provisions of the Companies Act 2013 and in terms of theArticles of Association of the Company Mr. Bhawanishankar Sharma (DIN 01249834) and Mr.Vikas Sharma ( DIN 01344759) retires by rotation at the forthcoming Annual GeneralMeeting and being eligible offers themselves for reappointment.

The Company has received declarations from the Independent Directors confirming thatthey meet the criteria of independence as prescribed both under Section 149 (6) of theCompanies Act 2013 and Regulation 16(b) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and that there is no change in their status ofIndependence.

KEY MANAGERIAL PERSONNEL

The Company has designated Mr. Bhawanishankar Sharma Executive Chairman Mr. VikramSharma Managing Director Mr. Vikas Sharma Whole-Time Director & CFO and Mr. VijayJoshi Company Secretary as Key ‘Managerial Personnel’ of the Company in termsSection 203 of the Companies Act 2013 read with Section 2(51) of the said Act.

A. BOARD EVALUATION

Pursuant to the provisions of Section 134(3)(p) 149(8) and Schedule IV of theCompanies Act 2013 and Regulation of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 annual performance evaluation of the Directors as well asthat of the Audit Committee Nomination and Remuneration Committee and Stakeholders’Relationship Committee has been carried out. The performance evaluation of the IndependentDirectors was carried out by the entire Board and the performance evaluation of theChairman and Non-Independent Directors was carried out by the Independent Directors.

B. REMUNERATION POLICY

The Company has adopted a remuneration policy for the Directors Key ManagerialPersonnel and other employees pursuant to the provisions of the Act and Regulation of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The remunerationpolicy is annexed as Annexure II to this Report.

C. MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year five Board Meetings and five Audit Committee Meetings were convened and held thedetails of which are given in the Corporate Governance Report. The intervening gap betweenthe meetings was within the period prescribed under the Companies Act 2013.

13. DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013 that the Board of Directors have:

a. in the preparations of the annual accounts for the year ended March 31 2016 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any;

b. selected such accounting policies as mentioned in the annual accounts and appliedthem consistently and judgement and estimates have been made that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as at 31stMarch 2016 and of the loss of the Company for the year ended on that date;

c. taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Companies Act 2013 for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities;

d. prepared the annual accounts on a going concern basis;

e. laid down internal financial controls to be followed by the Company and that suchfinancial controls are adequate and were operating effectively; and

f. devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.

14. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT2013

Details of loans guarantees and investments covered under the provisions of Sections186 of the Companies Act 2013 are given in notes to the financial statements.

15. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were onan arm’s length basis and were in the ordinary course of business. During the yearthe Company has not entered into any contract/ arrangement/ transaction with relatedparties which could be considered material in accordance with the policy of the Company onmaterially of related party transactions. Thus the disclosure in ‘FormAOC-2’ is not applicable.

All Related Party Transactions are placed before the Audit Committee as also the Boardof Directors for approval. Prior omnibus approval of Audit Committee and the Board ofDirectors is obtained on an annual basis for the transactions which are foreseen and ofrepetitive nature. The transactions entered into pursuant to the omnibus approval sogranted are audited and a statement giving details of all related party transactions isplaced before the Audit Committee and the Board of Directors for their approval on aquarterly basis.

The Company has a Related Party Transactions Policy duly approved by the Board and thesame is uploaded on the Company’s website. The details of Related Party Transactionsare given in the notes to the financial statements.

16. AUDITORS

A. STATUTORY AUDITORS AND THEIR REPORT

M/s Walker Chandiok & Co LLP Chartered Accountants and M/s. Shah & KathariyaChartered Accountants the Statutory Auditors of the Company will retire at the ensuingAnnual General Meeting of the Company. The Company has received letters from both theAuditors to the effect that their appointment if made would be within the prescribedlimits under Section 141 of the Companies Act 2013. Members are requested to reappointJoint Auditors and to authorize the Board of Directors to fix their remuneration.

B. EXPLANATION TO THE QUALIFICATION IN AUDITORS' REPORT

The Directors submit their explanation to the qualifications made by the Auditors intheir report for the year 2015-16. The relevant Para nos. of the report and reply are asunder:

Qualification and Management’s Reply for Standalone Audit Report:

8. As stated in Note 39(a) to the standalone financial statements the Company’strade receivables and unbilled work as at 31 March 2016 include amounts aggregating Rs.313940395(31March2015Rs.313940395)andRs.100335880 (31 March 2015 Rs. 100335880) respectively in respectof projects which were closed/ terminated by the clients and where the matters arecurrently under negotiations/ litigation being considered good and recoverable by themanagement. However in view of the ongoing negotiations/litigations and in absence ofsufficient appropriate evidence to corroborate the management’s assessment ofrecoverability of these balances we are unable to comment upon the recoverability of theaforesaid amounts and the consequential impact if any on the standalone financialstatements that may arise on settlement of the aforesaid matters. Our opinion on thestandalone financial statements for the year ended 31 March 2015 was also qualified inrespect of these matters.

9. As stated in Note 39(b) to the standalone financial statements the Company’strade receivables as at 31 March 2016 include amounts aggregating Rs. 924696662 (31March 2015 Rs. 975191826) in respect of projects which were closed and where thereceivables remain outstanding for substantial period being considered good andrecoverable by the management. However in absence of sufficient appropriate evidence tocorroborate the management’s assessment of recoverability of these balances we areunable to comment upon the recoverability of the aforesaid amounts and the consequentialimpact if any on the standalone financial statements that may arise on settlement of theaforesaid matters. Our opinion on the standalone financial statements for the year ended31 March 2015 was also qualified in respect of these matters.

Management Reply

8. Trade receivable and unbilled work as at 31 March 2016 include Rs. 3139.40 Lacs (31March 2015 Rs. 3139.40 Lacs) and Rs. 1003.36 Lacs (31 March 2015 Rs. 1003.36 Lacs)respectively in respect of two contracts which the clients have terminated and recoveredthe advances given against bank guarantees. The parties have not disputed payment ofcertified bills included under trade receivables. The Company is under negotiations withthe parties and has also preferred an appeal in the Honourable High Court for initiatingarbitration proceedings and providing stay on bank guarantee invoked in respect of oneparty where counter-claims lodged by the Company exceed the amounts recoverable. Based onthe on-going progress of these matters the management is confident of recovering theseamounts in full.

9. Trade receivables as at 31 March 2016 include Rs. 9246.97 Lacs (31 March 2015 Rs.9751.92 Lacs) in respect of projects which were closed and which are overdue for asubstantial period of time. The Company has formed a senior management team led by theManaging Director to rigorously follow up including negotiate/ initiate legal actionwhere necessary. Based on the contract terms and these ongoing recovery procedures adoptedby the Company the management is reasonably confident of recovery of old outstandingtrade receivables.

Qualification and Management’s Reply for Consolidated Audit Report:

8. As stated in Note 34(a) to the consolidated financial statements the Company’strade receivables and unbilled work as at 31 March 2016 include amounts aggregating Rs.313940395 (31 March 2015 Rs. 313940395) and Rs. 100335880 (31 March 2015 Rs.100335880) respectively in respect of projects which were closed/ terminated by theclients and where the matters are currently under negotiations/ litigation beingconsidered good and recoverable by the management. However in view of the ongoingnegotiations/litigations and in absence of sufficient appropriate evidence to corroboratethe management’s assessment of recoverability of these balances we are unable tocomment upon the recoverability of the aforesaid amounts and the consequential impact ifany on the consolidated financial statements that may arise on settlement of theaforesaid matters. Our opinion on the consolidated financial statements for the year ended31 March 2015 was also qualified in respect of these matters.

9. As stated in Note 34(b) to the consolidated financial statements the Company’strade receivables as at 31 March 2016 include amounts aggregating Rs. 924696662 (31March 2015 Rs. 975191826) in respect of projects which were closed and where thereceivables remain outstanding for substantial period being considered good andrecoverable by the management. However in absence of sufficient appropriate evidence tocorroborate the management’s assessment of recoverability of these balances we areunable to comment upon the recoverability of the aforesaid amounts and the consequentialimpact if any on the consolidated financial statements that may arise on settlement ofthe aforesaid matters. Our opinion on the consolidated financial statements for the yearended 31 March 2015 was also qualified in respect of these matters.

Management Reply

8. Trade receivable and unbilled work as at 31 March 2016 include Rs. 3139.40 Lacs (31March 2015 Rs. 3139.40 Lacs) and Rs. 1003.36 Lacs (31 March 2015 Rs. 1003.36 Lacs)respectively in respect of two contracts which the clients have terminated and recoveredthe advances given against bank guarantees. The parties have not disputed payment ofcertified bills included under trade receivables. The Company is under negotiations withthe parties and has also preferred an appeal in the Honourable High Court for initiatingarbitration proceedings and providing stay on bank guarantee invoked in respect of oneparty where counter-claims lodged by the Company exceed the amounts recoverable. Based onthe on-going progress of these matters the management is confident of recovering theseamounts in full.

9. Trade receivables as at 31 March 2016 includeRs. 9246.97 Lacs (31 March 2015 Rs.9751.92 Lacs) in respect of projects which were closed and which are overdue for asubstantial period of time. The Company has formed a senior management team led by theManaging Director to rigorously follow up including negotiate/ initiate legal actionwhere necessary. Based on the contract terms and these ongoing recovery procedures adoptedby the Company the management is reasonably confident of recovery of old outstandingtrade receivables.

Further the observations made by the Auditors in their report are self-explanatory anddo not call for any further comment. The Notes on financial statement referred to in theAuditors’ Report are self-explanatory and do not call for any further comments.

C. COST AUDITORS

Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintained by the Companyin respect of its Infrastructure activity is required to be audited. Your Directors hadon the recommendation of the Audit Committee appointed M/s. Shashi Ranjan &Associates to audit the cost accounts of the Company for the financial year 2015-16 on aremuneration of Rs. 60000/- plus service tax subject to ratification by the members atthe AGM. Accordingly a Resolution seeking Member’s ratification for the appointmentand remuneration payable to M/s. Shashi Ranjan & Associates Cost Auditors is includedat the Notice convening the Annual General Meeting.

D. SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Pritika Surana & Associates Company Secretary in Practice to undertakethe Secretarial Audit of the Company. The Secretarial Audit Report for the financial year2015-16 is annexed herewith as ‘Annexure III’. The Secretarial Audit Report doesnot contain any qualification reservation or adverse remark.

17. BOARD COMMITTEES

The Board of Directors of your Company had already constituted various Committees incompliance with the provisions of the Companies Act 2013 / SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 viz. Audit Committee Nomination andRemuneration Committee Stakeholders Relationship Committee and CSR Committee.

CSR Committee

The CSR Committee comprises three directors viz. Mr. Vikram Sharma Chairman Mr.Dakshendra Agarwal and Mrs. Nilima Mamsukhani.

Audit Committee

All the recommendations made by the Audit Committee were accepted by the Board.

Details of the role and composition of these Committees including the number ofmeetings held during the financial year and attendance at meetings are provided in theCorporate Governance Section of the Annual Report.

18. VIGIL MECHANISM

The Vigil Mechanism of the Company also incorporates a whistle blower policy in termsof the Listing Regulations. Protected disclosures can be made by a whistle blower throughan e-mail or a letter to the Ombudsperson Task Force or to the Chairman of the AuditCommittee.

19. CORPORATE GOVERNANCE

As per Regulation of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 with the Stock Exchanges a separate section on corporate governancepractices followed by the Company together with a certificate from the Practicing CompanySecretary confirming compliance forms an integral part of this Report.

20. MANAGEMENT DISCUSSION AND ANALYSYS

A detailed review of the operations performance and future outlook of the Company andits business is given in the Management Discussion and Analysis appearing as Annexure tothis Report.

21. LISTING

Equity Shares of the Company are listed on the National Stock Exchange of India Limited(NSE) and BSE Limited (BSE). The Company has paid listing fees for the year 2016-2017.

22. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules 2014 is given hereunder:

A. CONSERVATION OF ENERGY

The Company’s main activity is of construction which does not require anyutilities. However Power is required for (a) running the crushing unit (b) operating theready mix concrete plant (c) operating the asphalt plant and (d) at the various projectsites for operating the machinery/equipment and lighting. The power requirement ofmanufacturing units are met from local distribution sources and from generator sets. Thepower required at the project sites for operating the machinery/equipment and lighting aremet from the regular distribution sources and are arranged by the clients who award thecontracts. At the project sites where the power supply cannot be arranged dieselgenerator sets are used to meet the requirement of power.

The conservation of energy in all possible areas is undertaken as an important means ofachieving cost reduction. Savings in electricity fuel and power consumption receive dueattention of the management on a continuous basis.

B. TECHNOLOGY ABSORPTION ADAPTATION RESEARCH & DEVELOPMENT AND INNOVATION

The Company has not acquired any technology for its manufacturing division. Howeverthe technology adopted and applied is the latest technology available in the Industry andmain thrust has always been put to adapt the latest technology.

In terms of Research and Development it is the Company’s constant endeavor to bemore efficient and effective in planning of construction activities for achieving andmaintaining the highest standard of quality.

In view of the above the rules regarding conservation of Energy and TechnologyAbsorption are not applicable to the Company.

C. FOREIGN EXCHANGE EARNINGS AND OUT GO

During the year under review there was foreign exchange outgo of Rs. 6.86 Million.There were no foreign exchange earnings by the Company during the year under review.

23. PARTICULARS OF EMPLOYEES AND OTHER ADDITIONAL INFORMATION

The information required under Rule 5 (1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is attached herewith as ‘AnnexureIV’. The Information as required under Rule 5 (2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 will be provided upon request by anymember of the Company. In terms of Section 136 (1) of the Companies Act 2013 the Reportand the Accounts are being sent to the members excluding the aforesaid Annexure. Anymember interested in obtaining copy of the same may write to the Company Secretary at theRegistered Office of the Company.

24. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as ‘Annexure V'.

25. EMPLOYEE STOCK OPTION SCHEME

With an objective of participation by the employees in the ownership of the Companythrough share based compensation scheme/ plan your company has implemented ESOS Schemeafter having obtained the approval of the shareholders at the Annual General Meeting ofthe Company held on 30th September 2015. However no ESOS have been grantedduring the year under review.

26. GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

a. Details relating to deposits covered under chapter V of the Act.

b. Neither the Managing Director nor the Whole-time Director of the Company receivesany remuneration or commission from any of its subsidiaries.

c. No significant or material orders in view of the mangement were passed by theRegulators or Courts or Tribunals which impact the going concern status and Company’soperations in future.

27. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation for their continued supportand co-operation by financial institutions banks government authorities and otherstakeholders. Your Directors place on record their sincere appreciation to all employeesof the Company for their unstinted commitment and continued contribution to the Company.

ON BEHALF OF THE BOARD OF DIRECTORS

Sd/-

(B.H.SHARMA)

EXECUTIVE CHAIRMAN

Place: Mumbai

Date: May 30 2016

Registered Office:

Supreme House Plot.No.94/C

Opp. I.I.T. Main Gate Pratap Gad Powai

Mumbai- 400 076