- 2019 20
Your Directors are pleased to present their report and financial statements for theyear ended 31st March 2020.
|Particulars ||2019-20 ||2018-19 |
|Operating Revenue ||12716.77 ||8244.88 |
|Add: Other Incomes ||148.16 ||88.79 |
|Total Income ||12864.93 ||8333.67 |
|Less Total Expenses ||11549.70 ||7326.04 |
|Profit Before Tax ||1315.23 ||1007.64 |
|Less Tax Expense ||342.44 ||303.27 |
|Profit After Tax ||972.79 ||704.37 |
|Opening Balance in ||3039.69 ||2335.31 |
|Retained Earnings || || |
|Amount available for appropriation ||3810.86 ||3039.69 |
|Key Ratios || || |
|Earnings per share ( ) ||5.82 ||4.21 |
|Dividend per share ( ) ||0.60 ||0.60 |
Total Operating Revenue for the year increased by 54.24%.
Your Company has been able to register CAGR of 36.63% in the Operating Revenue duringthe last three years. This has been made possible because of the extreme hard workdedication and sincerity of the Company's work force and efficient completion of RailwayElectrification Projects.
PAT for the year increased by 38.11%.
Your Company has been able to achieve extra- ordinary growth in all the earningparameters during the last three years such as EBIDTA (Earnings Before InterestDepreciation & Tax) (CAGR-26.43%) and PAT (CAGR 33.97%). This has been made possiblethrough the policy of complete focus on the Company's core competency.
The Board has recommended and paid interim dividend of 0.40 per share during the year2019-20. The outflow on account of interim dividend is 66.89 lacs and that on account ofDividend Distribution Tax would be 13.75 lacs thus aggregating to an amount of 80.64lacs. The Board has recommended a dividend of 0.20 per share subject to approval ofshareholders. The outflow on account of dividend if approved would be 33.45 lacs.
Contribution to Exchequer
Your Company over the years has been making significant contribution in the formvarious taxes. During the year 2019-20 the Company through its business enabled taxcollections at Central and State level close to 2047 Lacs in aggregate.
Management Discussion & Analysis
Review of Economic Scenario and outlook
With the insurgence of the spread of Novel Corona virus (COVID-19) during the lastquarter of the year 2019-20 and the lockdown measures adopted by the Government of Indiafrom March 25 2020 till 31st May 2020 the last quarter of the year 2019-20witnessed a temporary slowdown. In 2019-20 the Indian economy grew by 4.2% against 6.1%expansion in 2018-19. In the final quarter of the year that is January-March 2020 slowergrowth rate in the overall economy is reflected due to the impact of fear factor forCOVID-19 pandemic. Further slowdown in the last quarter of 2019-20 was due to thelockdown measures which began on March 25 2020.
Economic activity continued to recover after the unlock 1.0 directions of theGovernment of India with gradually increasing domestic demand and increase in consumptioncontributing to the overall growth.
In order to cater to the ever increasing consumption in the Indian Economy because ofthe inclusive nature of growth experienced in the last few years the leadership of theCountry has realised that the transportation sector has to be strengthened keeping in mindthe dependence of the country on imported fossil fuels. Moving towards theAtmanirbhar' stance taken by the Government Electrification of Indian Railways hasbeen able to attract top priority from the Government because of its direct and indirectbenefits for the country. As a result this sector has been able to achieve stupendousgrowth in getting new routes electrified. Further the Government has also set a target ofconverting the Indian Railways into a 100% electrified service. The results of theGovernment's plans have started getting noticed which can be easily understood from thefollowing data from the Central Organisation for Railway Electrification (CORE).
Growth in Electrification of routes in terms of Route Kilo meters (RKM) increased from1174 RKM in 2015-16 to 3613 RKM in FY 2018-19. In FY 2019-20 2606 RKM routes wereelectrified. The total tentative target for 2020-21 is set at 4000 RKM.
As of 1 April 2020 Indian Railways has electrified 39866 route kms which accounts for58.49% of total route kms and 62.65% of total broad-gauge route kms. It is planned toelectrify all routes of IR by 2024 of their existing non electrified routes.
The aim of the Government is to make Indian Railways the growth engine of the economy.The emphasis is on continued capacity enhancement through accelerated investments andexecution. Five measures relating to Railways have been highlighted in Budget speech onFeb 2020.
i. Setting up a large solar power capacity alongside the rail tracks on the land ownedby the railways. A proposal is under consideration.
ii. Four station re-development projects and operation of 150 passenger trains would bedone through PPP mode. The process of inviting private participation is underway.
iii. More Tejas type trains will connect iconic tourist destinations.
iv. High speed train between Mumbai to Ahmedabad would be actively pursued.
v. 148 km long Bengaluru Suburban transport project at a cost of Rs 18600 crore wouldhave fares on metro model. Central Government would provide 20% of equity and facilitateexternal assistance up to 60% of the project cost.
To this end Government has increased investment and introduced modern technology whilefocusing on safety speed and service to passengers. Capex of Indian Railways for 2020-21has been pegged at an all time high of Rs 161042 crore. Capex for the year 2019-20 is Rs156352 crore (RE) which is 17.2% higher than the previous year. Electrification of theentire Broad Gauge network is to be completed by 2023-24.
The Indian Railways Railways also plan to induct latest technology for Signalling &Telecommunication system. Under modernization plan of Railway signaling system it hasbeen decided to implement Centralized Traffic Control (CTC) system on Indian Railways.This will increase operational efficiency. Government has initiated the upgradation of thedecades old signalling system into an Automatic Train Protection System which will be amix of proven international technology as well as indigenously developed systems with animpetus to Make in India. Facilitating private participation in Railways to build aseamless national cold supply chain for perishables inclusive of milk meat and fish theIndian Railways will set up a Kisan Rail through PPP arrangements. There shallbe refrigerated coaches in Express and Freight trains as well. The Government has adopteda holistic approach for reaping the benefits from electrification. This step of theRailways will help the country in saving precious foreign exchange in two ways. Therequirement of fossil fuels for ignition of the Diesel Locos would come down and the costof manufacturing fully new electric locos can be effectively reduced because ofcomparatively lower investments in converting diesel to electric. Further since theprocess would be indigenous the country's Make in India' stance would also registersubstantial savings in foreign exchange.
Opportunities and Risks
Central Organisation for Railway Electrification (CORE) was set up in 1979 underMinistry of Railways with the prime objective of electrification of railway tracks underthe Indian Railways. Almost 40 years since its inception; the organization is marchingahead in the field of electrification by contributing to 58.49% of total route kms and62.65% of total broad-gauge route kms of total electrified sections of Indian Railway.
A lot of emphasis is given to Railway Electrification in recent years with a view toreduce the Nation's dependence on imported petroleum based energy and to enhance thecountry's energy security with a vision of providing eco-friendly faster and energyefficient mode of transportation. During the last five years total 204 electrificationprojects consisting of 30964 RKM have been sanctioned by Government of India and keepingin mind the huge cost savings and considerable reduction in carbon foot print IndianRailway has identified electrification of all BG routes as a mission area.
Total 38000 RKM has been identified for electrification of BG network by 2021.
As per a study total greenhouse gases emission from electric traction will become lessthan the diesel traction from 2020-21 onwards.
A blue print has been prepared by Indian Railways to electrify network with anestimated annual saving of the order of savings of Rs. 13500 crore post 100%electrification. As per the analysis approximately 5.5 lakh man years will be generatedduring execution period of Mission Electrification. It has been established that electrictrains have several advantages over diesel-powered ones. These advantages include
Reduced dependence on imported petroleum based fuels. It provides energy efficientfriendly mode of transports besides improving the system throughput. Faster andenvironment eco-friendly. Reduced line fuel cost. Increased sectional capacity by about18% due to higher average speeds. Reduced capital operating and maintenance costs. Offersregenerative breaking resulting in saving of energy by around 20% in locomotives andaround 30% in electric multiple units.
A Study by CORE has estimated that with 100% electrification of Indian Railways acumulative saving of 81000 crores would be realised by 2027.
Aided by the Government policy and initiatives your Company foresees a very brightfuture for organisations which are providing dedicated services for the RailwayElectrification Eco System.
BCPL because of its focus on Railway Electrification has been able to carve a niche foritself in the field whereby it has become a highly acceptable partner for the Railways.This has been possible because of the Company's focus on efficient execution managementsystem.
Your Company is endeavouring to export related products outside India. Your Company isexpected to cater to the needs of the importing countries by supplying them standardproducts with adequate quality checks.
Your Company is exploring new avenues of business opportunities by participating invarious tenders of State Electricity Board.
With the surge in spread of Novel Corona virus (COVID-19) demand for sanitizers andother health care products is increasing. Your Company is venturing into a partnershipbusiness to manufacture the sanitizers and other health care products to cater to suchdemands.
Your Company faces fluctuation in prices of raw materials unpredictable lead time inprocurement of such supplies and increasing rates of freight. During the recent Covid 19pandemic availability of labour and their movement from one site to another within Indiafollowing the health protocols is also a challenge for the Company. However your Companyis expected to mitigate such problems through efficient management and internal controlsystem.
Your Company is constantly directing its efforts towards efficiency enhancement in allfronts starting from administrative office to project locations.
Your Company has also started various programmes for training the work force inachieving improvements in micro level efficiency through training and workshops.
Your Company also encourages leadership skills amongst its employees which has helpedmaintaining a loyal and efficient work force.
The continuous lock down of more than 2 months would impact the revenue of the companyin the short term. But with the help of better use of technology and staff productivity wehope to come out of the universal pandemic without a drastic negative impact.
Your Company's capital and Banking facilities remain intact. There are no liquidityconcerns as your Company has sufficient unutilised Banking limits available. Even duringthe Lockdown period your Company has been able to manage its resources and ensurecollection of its receivables from the Indian Railways.
Further the Railways have taken the initiative of releasing the Bank Guarantees againstthe running projects in proportion to the works completed thereby providing furtherimpetus to your Company's finances.
Your Company has as a policy always strived to ensure safety and security of its workforce. With a view to achieve this your Company constantly organises training programmesfor educating about the ways and means of working under strict safe conditions. YourCompany procures the best safety gears comprising of helmets safety belts and undertakesregular safety checks to ensure that the rules are followed. The Company has a dedicatedsafety officer to ensure compliance of the rules.
Your Company is aware about its responsibility in terms of delivery of safe RailwayElectrification Eco System for the safety of lives and property that use the services ofthe Railways for meeting their transport requirements.
With a view to achieving the best standards in its construction efforts the Company hasin place a system of checks and balances whereby the work performed by its employees isthoroughly checked by trained engineers in terms of safety standards set by the RailwayAdministration.
Further your Company has a system of identifying its vendors based on their credibilityin terms of delivering quality products within committed time.
Your Company depends on vendors approved by RESEARCH DESIGNS & STANDARDSORGANISATION (RDSO) for procuring equipment required in execution of projects. Consideringthe ambitious plans of the Government towards Railway Electrification timely procurementmay play out as a considerable risk in future. In order to mitigate the risk your Companyis constantly developing new vendor base so that any challenge on this front can beeffectively dealt with in case an occasion for scarcity of supply of equipment arises.
The aim of your Company is to develop business while improving its environmentalperformance in order to create a more sustainable future. In order to achieve this yourCompany continues to focus on measures for the conservation and optimal utilization ofenergy in all the areas of its operations. Work Sites are encouraged to consistentlyimprove operational efficiencies minimize consumption of natural resources and reducewater energy consumption and carbon emissions while maximizing productivity. Followingthe Covid 19 protocol employees in work sites are encouraged to ensure that socialdistancing and health and hygiene protocols are maintained. Increasing the use of digitalmeans in our business operation is encouraged by arranging virtual meetings at all levelsbe it internal with the employees and work sites or Railway personnel client or otherstakeholders.
Health of Employees
Your Company recognises the importance of maintaining health of its employees who workaway from home for considerable period of time. With a view to providing the best medicalfacilities to its employees whenever required your Company has tied up with MedicalInsurance provider for its employees to avail the best medical attention without worryingabout the cost.
In compliance of Government's directions to prevent and contain the spread of NovelCorona virus (COVID-19) and to ensure the health and safety of employees associates andother stakeholders your Company has resumed operations at work sites maintaining allmeasures of social distancing health & hygiene protocols as per Governmentinstructions.
Your Company is taking utmost care of its staff and work force like sanitizationsocial distancing mandatory mask wearing thermal check before entering the gate andmaintaining proper hygiene.
Statements in this Report particularly those which relate to Management Discussion andAnalysis describing the Company's objectives projections estimates and expectations mayconstitute forward looking statements' within the meaning of applicable laws andregulations. Actual results might differ materially from those either expressed or impliedin the statement depending on the circumstances.
Directors' Responsibility Statement
The Directors state that:
i. in the preparation of the annual accounts the applicable accounting standards havebeen followed and no material departures were made from the same;
ii. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitsof the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the Annual Accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and
vi. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
In terms of Regulation 34 of the Securities Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (hereinafter ListingRegulations) a Report on Corporate Governance along with Compliance Certificateissued by Statutory Auditors of the Company is attached as Annexure - 5 and forms integralpart of this Report (hereinafter Corporate Governance Report).
Directors and Key Managerial Personnel Directors
Mr Aparesh Nandi retires by rotation and being eligible offers himself forre-appointment.
Mr Aparesh Nandi is a graduate from Calcutta University and a promoter and Chairman ofthe Company. He has considerable experience in Electrification and other allied works.
Structure of the Board of Directors
|Name of Director ||Executive/ Non-Executive ||Independent ||Lady |
|Aparesh Nandi ||Non-Executive ||No ||No |
|Jayanta Kumar ||Executive ||No ||No |
|Ghosh || || || |
|Uday Narayan ||Executive ||No ||No |
|Singh || || || |
|Vijay Mehta ||Non-Executive ||Yes ||No |
|Sanghamitra ||Non-Executive ||Yes ||Yes |
|Mukherjee || || || |
|Swapan Kumar ||Non-Executive ||Yes ||No |
|Chakraborty || || || |
The following are the independent directors of the Company:
1. Mr Vijay Mehta
2. Dr Sanghamitra Mukherjee
3. Mr Swapan Kumar Chakraborty
The Company has received declarations from all Independent Directors confirming thatthey meet the criteria for independence in the required format under the Companies Act2013.
The Company arranges detailed presentation on various business aspects to ensurefamiliarising the Independent directors about the different aspects of the prevailingbusiness environment economy performance of the Company and its strategies.
Creating shared value is your Company's fundamental way of working and contributing tosociety while ensuring long-term business success. Your Company has been conductingbusiness in a way that delivers long-term shareholder value and benefits to society.
M/s. Jain Seth & Co. Chartered Accountants was appointed as Statutory Auditors ofthe Company in the AGM held on 28th June 2019 for a period of 5 years till2023-24. Further the report of the Statutory Auditors M/s. Jain Seth & Co. alongwithnotes to Schedules is enclosed to this report. The observations made in the Auditors'Report are self-explanatory and therefore do not call for any further comments.
The Auditors have highlighted through reporting under Key Audit Matters the Company'sstanding with regard to Contracts under Joint Venture with EMC Ltd. because of slowmovement of the projects. In this regard the Board would like to assure that your Companyis in the final stages of completion of the venture with EMC Ltd. and the amountsrecoverable by your Company would not be jeopardised. The Board anticipates that theamount recoverable by your Company would be fully realized sooner than later.
With regard to the issue of non preparation of accounts of the Joint Ventures for theFY 2019-20 the Board has analysed the matter and does not foresee any material impact onthe finances of the Company once the accounts are available.
Cost Accounts and Cost Auditors
Cost audit applicability provisions are contained under rule 4 of the Companies (CostRecords and Audit) Rules 2014 are not applicable to the Company. Hence no cost accountsare required to be maintained nor Cost Auditors are required to be appointed by theCompany.
Secretarial Auditors and Secretarial Standards Mr Arvind Bajpai Practising CompanySecretaries have been re-appointed as the Secretarial Auditor of the Company with effectfrom 4th February 2020.
Further the report of the Secretarial Auditor is enclosed to this report and formspart of this report.
Meetings of the Board
During the year 2019-2020 the Board of Directors met 6 (Six) times. For details of themeetings of the Board of Directors please refer to the Corporate Governance Report.
Extract of Annual Return
The extract of annual return in Form MGT 9 as required under Section 92(3) of theCompanies Act 2013 and Rule 12 of the Companies (Management and Administration) Rules2014 is Annexed as Annexure 1.
Details of Loans and Investments Details of the loans given by your Company underSection 186 of the Act during the financial year ended 31st March 2020 are asfollows:
Doharia Ispat Pvt. Ltd. Non Related Party Loan Given 50 Lacs at 12% p.a. interest forgeneral business purpose. Loan outstanding as at 31st March 2020 54.50 Lacs
SMTC Steel & Power Pvt. Ltd. Non Related Party Loan Given 40 Lacs at 12% p.a.interest for general business purpose. Loan outstanding as at 31st March 202044.33 Lacs
Trident Texofab Ltd. Non Related Party Loan Given 100 Lacs at 12% p.a. interest forgeneral business purpose. Loan outstanding as at 31st March 2020 115.78 Lacs
Phoenix Overseas Limited Related Company with common promoters Guarantee Given againstloan from Bank of India amounting to 32.26 Crores.
Related Party Transactions
Members may refer to note no. 26 to the financial statement which sets out relatedparty disclosures.
The Management of the Company endeavours to identify elements of risk in differentareas of operations and to develop mechanism for initiating actions required to mitigatethe risks.
The Management on a timely basis informs the Board about risks that may threaten theexistence of the Company and also about measures that they propose to take in order tomitigate the risks.
Your Company has not accepted any Public Deposits under Chapter V of the Companies Act2013.
Significant and Material orders passed by the Regulators/Courts/ Tribunals
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impacts the going concern status and Company's operations in future.
Internal Financial Controls and their adequacy The Directors had laid down internalfinancial controls to be followed by your Company and such policies and procedures adoptedby your Company for ensuring the orderly and efficient conduct of its business includingadherence to your Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information. The Audit Committeeevaluates the internal financial control system periodically.
During the year under review the Audit Committee comprised Independent Directorsnamely Mr. Vijay Mehta (Chairman) Mr. Swapan Kumar Chakraborty (Member) and Mr. UdayNarayan Singh Executive Director cum CFO. Powers and role of the Audit Committee areincluded in Corporate Governance Report. All the recommendations made by the AuditCommittee were accepted by the Board of Directors.
The Vigil Mechanism of your Company is governed by the document Whistle BlowerPolicy & Vigil Mechanism. The said mechanism is available to the directors andemployees who can report to the Company Secretary on a confidential basis any practicesor actions believed to be inappropriate or illegal.
The Mechanism provides for adequate safeguards against victimization of director(s)/employee(s) who avail of the mechanism and also provides for direct access to the Chairmanof the Audit Committee in exceptional cases.
Information regarding Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo
The Company's activities during the year do not entail disclosure with respect toconservation of energy technology absorption etc. in accordance with the provisions ofSection 134(3)(m) of the Company Act 2013.
The Company does not have any foreign exchange earning and outgo. Information regardingEmployees and related disclosures
Your Company considers people as its biggest assets and Believing in People' isat the heart of its human resource strategy. Concerted efforts have been put in talentmanagement and strong performance management and learning and training initiatives toensure that your Company consistently develops inspiring strong and credible leadership.Your Company also organises employee felicitation events wherein well performing employeesare rewarded.
The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014(Rules) is appended as Annexure 6 to the Report. The information as per Rule5(2) of the Rules forms part of this Report.
Ratio of remuneration of Director/ KMP to the median of the employees:
|Name of Director /KMP ||Remunerat ion ||Ratio as to that of the median employee ||Percentage increase in remuneration |
|Mr Jayanta ||4521712 ||15.55:1 ||23.82 |
|Kumar Ghosh || || || |
|Mr Uday ||3751712 ||12.90:1 ||23.58 |
|Narayan || || || |
|Singh || || || |
|Mr Debasis ||1317612 ||4.53:1 ||-9.80 |
|Sircar || || || |
|Ms Devshree ||838586 ||2.88:1 ||19.09 |
|Sinha || || || |
Note: The median employee remuneration for 2019-20 is Rs 290760/-.
Your Company has been able to operate efficiently because of the culture ofprofessionalism creativity integrity and continuous improvement in all functions andareas as well as the efficient utilization of the Company's resources for sustainable andprofitable growth.
The Directors hereby wish to place on record their appreciation for the efficient andloyal services rendered by each and every employee without whose whole-hearted effortsthe overall satisfactory performance would not have been possible. Your Directors lookforward to the long term future with confidence.
Your Company continued to receive co-operation and unstinted support from the RailwaysSuppliers and others associated with the Company as its business partners. The Directorswish to place on record their appreciation for the same and your Company will continue inits endeavour to build and nurture strong links with concerned parties based onmutuality respect and co-operation with each other and consistent with National interest.
|On behalf of the Board of Directors |
|Jayanta Kumar Ghosh |
|Managing Director |
|Uday Narayan Singh |
|Executive Director & CFO |
|Date 30/06/2020 |
|Place Kolkata |