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 2017.
1. HIGHLIGHTS/ PERFORMANCE OF THE COMPANY
| ||As at 31 March 2017 ||As at 31 March 2016 |
|Particulars || || |
|1 Income from operation ||1050.12 ||1209.70 |
|Other income ||73.67 ||50.66 |
|Total Income ||1123.79 ||1260.36 |
|2 Profit before Interest Depreciation & Tax ||215.04 ||244.47 |
|Less: Interest/ Finance Charges ||280.68 ||251.58 |
|Depreciation ||24.72 ||30.60 |
|3 Profit / (Loss) before Exceptional Item and Tax ||(90.36) ||(37.72) |
|Exceptional Item ||128.27 ||41.01 |
|Less: Provision for Tax || || |
|Current Tax ||0 ||0 |
|Deferred Tax ||0 ||8.54 |
|Tax adjustment for earlier years ||(15.13) ||0 |
|4 Profit After Tax ||(203.50) ||(5.24) |
|Add: Profit at the beginning of the year ||821.44 ||825.38 |
|5 Profit available for appropriation ||618.18 ||821.44 |
|Appropriations ||NIL ||NIL |
|6 Balance carried to Balance Sheet (attributable to equity holders) ||618.18 ||821.44 |
OPERATION AND PERFORMANCE REVIEW
During the year under review the Company's income from operations and margins wereunder stress as compared to the previous year. Total Income during the year was 1050.12Crores as compared to Rs 1209.70 Crores in the previous year. The Net loss after Tax was203.50 Crores as compared to Rs 5.24 Crores in the previous year.
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 31st March 2017.
3. TRANSFER OF UNPAID / UNCLAIMED AMOUNTS TO INVESTOR EDUCATION PROECTION FUND(IEPF)
During the year under review the Company has credited 0.87 Lakhs 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 2017 is 4.17 Lakhs.
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 similar factorspeculiar to the infrastructure sector.
In accordance with the Reserve Bank of India's JLF Framework the JLF restructured andrescheduled the outstanding amount of their respective share of facilities. The Companyentered into Master Joint Lender Forum Agreement (JLF Agreement) with majority of thelenders of the Company in March 2015. Post implementation of restructuring scheme of March2015 the JLF reviewed the progress of the Company and was of the opinion that the Companywas not able to achieve the viability milestones/ projected financials as envisaged underthe restructuring scheme due to several factors. Therefore the JLF at their meeting heldon December 29 2016 discussed on various resolution options to address the liquiditystress on the Company and recommended the Scheme for Sustainable Structuring of StressedAssets ("S4A Scheme") in terms of the Reserve Bank of India ("RBI")circular dated June 13 2016 and further circulars issued from time to time in thisregard with reference date as December 29 2016. The S4A Scheme resolution plan' proposalwas submitted to Overseeing Committee ("OC") formed under the aegis of RBIguidelines. The S4A Scheme for Company was reviewed and recommended for implementation byOC. The broad highlights of the S4A Scheme are stated hereunder:
a. Out of the total debt of ~ Rs. 2359.04 cr. considered under the S4A Scheme thesustainable debt (Part A) is considered at ~ Rs. 1258.34 Cr. being ~ 53.34 % of the totaldebt. Balance debt of ~ Rs. 1100.70 Cr. being ~ 46.66% of the total debt is considered asunsustainable debt (Part B). b. Out of the present holding of the promoters ~ 4501513(Forty Five Lakhs One Thousand Five Hundred & Thirteen) Equity Shares constituting17.52% of the existing paid up equity share capital to be transferred to lenders byinvocation of existing pledged shares/ sale of promoter shares. c. The balance portion ofPrat B debt of Rs. 1096.20 Cr. would be converted into Optionally Convertible Debentures(OCDs) for the tenor of 14 years 6 Months. The lenders will have the right to convert OCDsinto equity shares of the Company in case of any event of default as specified in the S4AAgreements. d. Repayment of OCDs to be made in seven equal instalments commencing at theend of 9th financial year to 15th financial year i.e. FY 2026 onwards from the date ofissuance. e. Promoters of the Company to have a right of first refusal
(ROFR) to buy OCDs shares (including equity shares upfront allotted and equity sharesacquired pursuant to conversion of OCDs in case the lenders decide to sell the OCDS/equity shares). Further the same shall be as per the extant guidelines of SEBI. f.Company to raise funds up to Rs. 250 crores through issuance of securities by permittedmode including infusion of funds through equity issue by promoters to the extent of Rs.100 crores.
The above figures and percentage may undergo some change at the time of finalimplementation of the scheme.
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 nonfund based limits of the Company.
6. CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Companies Act 2013 and implementation requirements of IndianAccounting Standards (IND-AS') Rules on Accounting and disclosure requirementswhich is applicable from current year and as prescribed by Regulation 33 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referredto as "SEBI Listing Regulations") the audited Consolidated Financial Statementsare provided in this Annual Report.
Pursuant to Section 129(3) of the Companies Act 2013 a statement containing thesalient features of the financial statements of each of the subsidiary and joint venturein the prescribed form AOC-1 is annexed to this annual report.
Pursuant to Section 136 of the Companies Act 2013 the financial statements of thesubsidiaries are kept for inspection by the shareholders at the Registered Ofice of theCompany. The said financial statements of the subsidiaries are also available on thewebsite of the Company www.supremeinfra. com under the Investors Section.
7. DETAILS OF SUBSIDIARY COMPANIES JOINT VENTURES AND ASSOCIATES COMPANIES
As on 31st March 2017 the Company had Fourteen Subsidiaries (Direct & Indirect)of which thirteen are incorporated and based in India & one Overseas. The Company alsohad Two Associate Companies as on 31st March 2017. Some Joint Venture Projects havebecome non operative on account of the completion of the projects.
The Company 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.
The Company has been over the years slowly strengthening its BOT portfolio. TheCompany's two Subsidiary Companies viz. Supreme Infrastructure BOT Private Limited andSupreme Infrastructure BOT Holdings Private Limited undertake various BOT projects alongwith 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 2017 SIBPL registered a totalincome of Rs. 77.91 Lakhs as against 53.10 lakhs in the previous year. SIBPL has thefollowing operative subsidiary companies having the BOT projects:
i. Supreme Manor Wada Bhiwandi Infrastructure Private Limited (SMBIPL)
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 the State of Maharashtra and to convert it into a 4lane highway on BOT basis'. The total length of the project aggregates to 64.32 Kms. TheConcession period of the project is 28 years and 6 months from the date of work order. EPCwork is executed by the Supreme Infrastructure India Ltd. The Company commenced tollingoperations for this project on 4th March 2013. The Company is also in the process ofexecuting additional bypass road from SH-35 at Vishwabharati Phata-Bhinar-Vadpa Junction(KM
0/000 to 7/900 (Total Length - 7.90 km) Dist. Thane Maharashtra on BOT (Toll) basis.Once completed the by pass road would attract more road trafic for the main road project.Income from toll collection for the year ended 31st March 2017 was Rs. 4826.05 Lakhs ascompared to Rs. 3239.00 Lakhs in the previous year.
Subsequent to year ended 31 March 2017 the lenders of SMBIPL have invoked StrategicDebt Restructuring (SDR) with reference date of 24 November 2016. The joint lender's forum(JLF) of SMBIPL in its meeting held on 25 April 2017 agreed to proceed with theimplementation of SDR scheme by invoking pledged equity shares of the promoters in theirfavour. Pursuant to the invocation of SDR the lenders have invoked 5100 equity shares ofRs. 10 each held by its Promotors at par aggregating to Rs. 0.51 lakhs on 16 May 2017representing 51% of the paid up equity share capital of SMBIPL by conversion ofoutstanding borrowings of an equivalent amount.
ii. 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 Industrial DevelopmentBoard (PIDB) taken over from the earlier owner. The Company commenced tolling operationson 24th June 2012. The concession period is 13 years. The total length of the road isapproximately 56 kms. Income from toll collection for the year ended 31st March 2017 wasRs. 1047.57 Lakhs as compared to Rs. 1043.17 Lakhs in the previous year.
iii. Supreme Suyog Funicular Ropeways Private Limited
Incorporated as SPV Company for execution of the Project for construction of funicularrailway 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.
iv. 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 31st March 2017 wasRs. 3187.43 Lakhs as compared to Rs. 2571.96 Lakhs in the previous year.
v. 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).
vi. 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. 117 crores.
2. SUPREME INFRASTRUCTURE BOT HOLDINGS PRIVATE LIMITED (SIBHPL)
SIBHPL was incorporated in the F.Y. 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 2017 SIBHPL registered a total income of Rs. 68.78Lakhs as against 75.40 Lakhs in the previous year. SIBHPL has three road BOT portfoliohoused in the following three subsidiaries companies:
i. Supreme Kopargaon Ahmednagar Tollways Private Limited.
This partially completed project was awarded by Maharashtra 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 2019. 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 31st March2017 was Rs. 4619.78 Lakhs as compared to Rs. 3730.55 Lakhs in the previous year.
ii. 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 estimated costof project is Rs. 3840 Million. Total envisaged length for 4 laning is 25.66 Kms. & 2laning is 26.95 Kms. The concession period of the project is 22 years and 9 monthsincluding construction period.
iii. Supreme Ahmednagar Karmala Tembhurni Tollways Pvt. Ltd. (SAKTTPL)
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.
Subsequent to year ended 31 March 2017 the lenders of SAKTTPL have invoked SDR withreference date of 24 October 2016. The JLF of SAKTTPL in its meeting held on 11 May 2017agreed to proceed with the implementation of SDR scheme. Pursuant to the invocation of SDRscheme the lenders have been allotted 291429 equity shares of Rs. 10/- each at paraggregating Rs. 29.14 lakhs on 22 May 2017 representing 51% of the equity share capital ofSAKTTPL by conversion of outstanding borrowings of an equivalent amount.
3. SUPREME PANVEL INDAPUR TOLLWAYS PRIVATE LIMITED (SPITPL)
Incorporated as SPV Company for execution of the
Project of Panvel - Indapur section of NH-17 from Km.0.00 to Km.84.00' in theState of Maharashtra by widening the existing 2-lane dual carriageway to a 4-lane dualcarriageway on BOT basis at an estimated cost of project of Rs. 12060 Million. SupremeInfrastructure India Limited (SIIL) holds 26% and its subsidiary SIBPL holds 38% Equity inthe SPITPL. The Company has achieved the desired milestone of NHAI being completion offifty percent of the EPC work as per the independent engineer of NHAI. The balance EPCwork would be loan financed by NHAI for which all the required formalities in this regardis completed. The total concession period is 24 years including additional extension inthe concession period of three years. 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 scafiolding 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 2017 was Rs. 570.53 Lakhs as comparedto Rs. 697.23 Lakhs 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 A. ASSOCIATES
1. Rudranee Infrastructure Limited(RIL)
RIL is Aurangabad based Construction & Infrastructure
Company. RIL has wide experience in executing various infrastructure projects havingspecialization in pipeline and power transmission segment.
2. 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). Settlement Committee under chairmanship of a retired High Court Judge hasbeen formed by the Government of Rajasthan for arriving at the settlement. SSTDPL hasentered into an agreement with the Jaipur Development Authority for amicable settlement ofall pending disputes so as to foreclose the concession agreement. Subsequent to theamicable settlement & foreclosure of the concession agreement the project would betransferred to NHAI for further development on EPC mode.
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 CSR initiatives taken during the year pursuant toSections 134 & 135 of the Companies Act 2013 is given in the Annexure-I' as CSRReport.
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 so as toensure safety of all applicable compliances of environmental regulations and preservationof 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
In accordance with the provisions of the Companies Act 2013 and in terms of theArticles of Association of the Company Mr. Vikram Sharma (DIN 01249904) and Mr.Dakshendra Agrawal (DIN 01010363) retires by rotation at the forthcoming Annual GeneralMeeting and being eligible ofiers 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. Vikram Sharma Managing Director Mr. Vikas Sharma Whole-TimeDirector & CFO and Mr. Vijay Joshi Company Secretary as Key ManagerialPersonnel' of the Company in terms Section 203 of the Companies Act 2013 read withSection 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 Managerial Personnel and other employees pursuant to the provisions ofthe Act and Regulation of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The remuneration policy is annexed as Annexure II to this Report.
A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year Six Board Meetings and four 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 2017 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 afiairs of the Company as at31st March 2017 and of the loss of the Company for the year ended on that date;
c. taken proper and suficient 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 efiectively; and devised proper systemsto ensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating efiectively.
f. devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating efiectively.
14. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT2013
D etails of loans guarantees and investments covered the provisions of Sections 186 ofthe 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 year theCompany has not entered into any contract/ arrangement/ transaction with related partieswhich could be considered material in accordance with the policy of the Company onmaterially of related party transactions. Thus the disclosure in Form AOC-2' is notapplicable.
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 Transactions aregiven in the notes to the financial statements.
A. STATUTORY AUDITORS AND THEIR REPORT
M/s. Walker Chandiok & Co LLP Chartered Accountants and M/s. Shah & KathariyaChartered Accountants holds ofice upto the date of ensuing Annual General Meeting. M/s.Shah & Kathariya Chartered Accountants would be completing their maximum termpermitted and hence they would not be reappointed as Auditors at the ensuing AGM. M/s.Walker Chandiok & Co LLP Chartered Accountants would need to be reappointed at theensuing AGM of the company to hold ofice till the conclusion of the Annual General Meetingof the Company to be held in the year 2019 (subject to ratification of appointment atevery AGM). The Company has received letter from M/s. Walker Chandiok & Co. LLP to theefiect that their appointment if made would be within the prescribed limits underSection 141 of the Companies Act 2013. It is proposed to appoint M/s. Ramanand &Associate Chartered Accountants as Joint Auditors to hold ofice from the conclusion ofensuing AGM subject to approval by the shareholders. Members are requested to reappointAuditors and to authorize the Board of Directors to fix their remuneration.
B. EXPLANATION TO THE QUALIFICATION IN
The Directors submit their explanation to the qualifications made by the Auditors intheir report for the year 2016-17. The relevant Para nos. of the report and reply are asunder:
Qualification and Management's Reply for Standalone Audit Report:
a) As stated in Note 11 (b) to the standalone financial statements the Company's tradereceivables and unbilled work (other current financial assets) as at 31 March 2017 includeamounts aggregating Rs 6616.13 lakhs and Rs 3074.86 lakhs respectively in respect ofprojects which were closed / terminated by the clients and where the matters are currentlyunder negotiations / litigation being considered good and recoverable by the management.However in absence of suficient appropriate evidence to corroborate the management'sassessment of recoverability of these balances we are unable to comment upon therecoverability of the aforesaid amounts and the consequential impact if any on theaccompanying standalone financial statements that may arise on settlement of the aforesaidmatters. Our Opinion on the standalone financial statements for the year ended 31 March2016 was also qualified in respect of these matters.
b) As stated in Note 11 (c) to the standalone financial statements the Company's tradereceivables as at 31 March 2017 include amounts aggregating Rs 23507.17 lakhs in respectof projects which were closed and where the receivables remain outstanding for asubstantial period being considered good and recoverable by the management. However inabsence of suficient 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 accompanying standalonefinancial statements that may arise on settlement of the aforesaid matters. Our Opinion onthe standalone financial statements for the year ended 31 March 2016 was also qualified inrespect of these matters.
(a) Trade receivable and unbilled work (other current
financial assets) as at 31 March 2017 include Rs 6616.13 lakhs and Rs 3074.86 lakhsrespectively relating to three 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. Dispute Resolution Committee hasreferred the matter to Arbitrator and arbitration proceedings have been initiated inrespect of a party where net claims lodged by the Company by far exceed the amountsrecoverable.
(b) Trade receivables as at 31 March 2017 include Rs 23507.17 lakhs in respect ofprojects which were closed and which are overdue for a substantial period of time. TheCompany formed a senior management team comprising personnel from contract and legaldepartment to rigorously follow up including negotiate / initiate legal action wherenecessary. Based on the contract terms and these on-going recovery / arbitrationprocedures (which are at various stages) and an arbitration award received in favour ofthe Company during the year the management is reasonably confident of recovering theseamounts in full. Accordingly these amounts have been considered as good and recoverable.
Qualification and Management's Reply for Consolidated Audit Report: a) As stated inNote 13 (b) to the consolidated financial statements the Company's trade receivables andunbilled work (other current financial assets) as at 31 March 2017 include amountsaggregating Rs 6616.13 lakhs and Rs 3074.86 lakhs respectively in respect of projectswhich were closed / terminated by the clients and where the matters are currently undernegotiations / litigation being considered good and recoverable by the management.However in absence of suficient appropriate evidence to corroborate the management'sassessment of recoverability of these balances we are unable to comment upon therecoverability of the aforesaid amounts and the consequential impact if any on theaccompanying consolidated financial statements that may arise on settlement of theaforesaid matters. Our Opinion on the consolidated financial statements for the year ended31 March 2016 was also qualified in respect of these matters.
b) As stated in Note 13 (c) to the consolidated financial statements the Company'strade receivables as at 31 March 2017 include amounts aggregating Rs 23507.17 lakhs inrespect of projects which were closed and where the receivables remain outstanding for asubstantial period being considered good and recoverable by the management. However inabsence of suficient 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 accompanying consolidatedfinancial statements that may arise on settlement of the aforesaid matters. Our Opinion onthe consolidated financial statements for the year ended 31 March 2016 was also qualifiedin respect of these matters.
(a) Trade receivable and unbilled work (other current financial assets) as at 31 March2017 include Rs 6616.13 lakhs and Rs 3074.86 lakhs respectively relating to threecontracts which the clients have terminated and recovered the advances given against bankguarantees. The parties have not disputed payment of certified bills included under tradereceivables. Dispute Resolution Committee has referred the matter to Arbitrator andarbitration proceedings have been initiated in respect of a party where net claims lodgedby the Company by far exceed the amounts recoverable.
(b) Trade receivables as at 31 March 2017 include Rs 23507.17 lakhs in respect ofprojects which were closed and which are overdue for a substantial period of time. TheCompany formed a senior management team comprising personnel from contract and legaldepartment to rigorously follow up including negotiate / initiate legal action wherenecessary. Based on the contract terms and these on-going recovery / arbitrationprocedures (which are at various stages) and an arbitration award received in favour ofthe Company during the year the management is reasonably confident of recovering theseamounts in full. Accordingly these amounts have been considered as good and recoverab le.
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 2016-17 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 appointment andremuneration payable to M/s. Shashi Ranjan & Associates Cost Auditors is included atthe 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 year2016-17 is annexed herewith as Annexure III'. The Secretarial Audit Report does notcontain 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.
The CSR Committee comprises three directors viz. Mr. Vikram Sharma Chairman Mr.Dakshendra Agarwal and Mrs. Nilima Mamsukhani.
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.
Equity Shares of the Company are listed on the National Stock
Exchange of India Limited (NSE) and BSE Limited (BSE). The Company has paid listingfees for the year 2017-2018.
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 any utilities.However Power is required for (a) running the crushing unit (b) operating the ready mixconcrete plant (c) operating the asphalt plant and (d) at the various project sites foroperating the machinery/ equipment and lighting. The power requirement of manufacturingunits are met from local distribution sources and from generator sets. The power requiredat the project sites for operating the machinery/equipment and lighting are met from theregular distribution sources and are arranged by the clients who award the contracts. Atthe project sites where the power supply cannot be arranged diesel generator sets areused 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 be moreeficient and efiective 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 Technology Absorption 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. 0.45 Million.There were no foreign exchange earnings by the Company during the year under review.
23. PARTICULARS OF EMPLOYEES AND OTHER ADDITIONAL
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 Ofice 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 granted during theyear under review..
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 management were passed by theRegulators or Courts or Tribunals which impact the going concern status and Company'soperations in future.
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.
Date: August 26 2017
Supreme House Plot.No.94/C
Opp. I.I.T. Main Gate Pratap Gad Powai
Mumbai- 400 076