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Era Infra Engineering Ltd.
|BSE: 530323||Sector: Infrastructure|
|NSE: ERAINFRA||ISIN Code: INE039E01020|
|BSE 00:00 | 04 Mar||Era Infra Engineering Ltd|
|NSE 05:30 | 01 Jan||Era Infra Engineering Ltd|
Era Infra Engineering Ltd. (ERAINFRA) - Director Report
Company director report
Your Directors have pleasure in presenting the 27th Annual Report togetherwith Audited Statements of Accounts of the Company for the year ended 31stMarch 2017.
The Summarized financial results of the Company for the year under review are as below:
The turnover of the Company for the year ended 31st March 2017 was Rs. 122358.69lacs as compared to Rs. 122015.17 lacs in the previous year.
Loss before depreciation and taxation was Rs. 110060.19 lacs and after providing Rs.19443.09 lacs towards depreciation the net loss amounts to Rs. 129503.28 lacs.
Era Infra Engineering Limited (EIEL) being a major infrastructure development playergot directly impacted due to the stress in the construction and infrastructure sectorstarting from Financial Year 2011-12 onwards. The company strongly faced the stress in theinitial years wherein several key and most of small players shut down their operations.However company started facing crises due to continued slump in the construction andinfrastructure sector severely effecting the operations of the company compounded withfew of EIEL road projects getting considerably affected on account of delay inavailability of land and environmental clearance which resulted in significant costescalation thereby putting additional pressure on the financials of EIEL.
Besides company faced severe pressure on its operational cash flow and liquidityattributable to several external factors such as Slowdown in Infrastructure SectorDecline in turnover and operating margins Cash flow mismatch due to elongated WorkingCapital Cycle Lack of adequate Working Capital - shortfall arising out ofundisbursed/untied WC facilities.
We are working towards revival of the Company. We have invoked and filed severalarbitration claims for recovery of amount of loss which is being suffered by the Companydue to non-adherence of contractual obligations by various clients of company. FurtherDuring the year Company lose some projects due to non avaibality of banking facilities.
Your management has been striving hard and taking all efforts in ensuring repayment ofinterest due to lenders. During the period under review the Company focused on realizinglong pending receivables arbitration awards and retention moneys. Further also theCompany will have to continue focusing as before on sharply optimizing costs improvingproductivity and systematically monetizing its non-key assets for overcoming the liquiditycrisis. Our key priority is to deliver projects held up due to working capital shortageand sites that need to be expeditiously concluded. The Company is now concentrating onbidding projects relating to its core competency as also projects with high yieldingmargins.
With the Government's helping hand and positive attitude we look forward to a phasedeconomic revival and boosting of business confidence due to hard policy decisions. We arehoping the government will come up with a clear cut road-map for implementing thepolicies. The upturn in sentiment means roads ports and power projects will geton-stream. In addition to this there will also be expediting of stalled infrastructureprojects revival of investment climate and sorting of infrastructure clearances. Thegovernment is expected to provide an environment conducive for growth investments withmajor reforms in infrastructure sector enabling all-round growth.
All ongoing projects are monitored on a regular basis by the senior management. Thecompany has aggressively invested in an inhouse ERP system which encompasses differentareas of efficient construction management with greater efficiency accuracy andpredictability.
The Company is professionally managed with well-qualified and experienced personnel inall areas including engineering finance and administration combined with a full-fledgedEnterprise Resource Planning (ERP) and MIS system. As on 31st March 2017 the Company hason its roll approximately nine hundred eighty five.
All ongoing projects are monitored on a regular basis by the senior management. TheCompany is professionally managed with well-qualified and experienced personnel in allareas including engineering finance and administration combined with a full- fledgedEnterprise Resource Planning (ERP) and MIS system.
In view of the losses your Directors do not recommend any dividend for the year endedMarch 31st 2017.
There are no material changes and commitments affecting the financial position of thecompany between the end of financial year of your company and the date of this Report.
Your Company has not accepted any deposits from the public or its employees during theyear under review.
Since date of last report none of the Directors resigned from the Company nor anyDirector was appointed by the Company.
At present Mr. Hem Singh Bharana Mr. Mast Ram and Mr. Rattan Lal are the directors ofthe Company.
As per the provisions of the Companies Act 2013 Independent Director are eligible tohold office for a term upto five consecutive years and are eligible for re-appointment forthe second term on passing special resolution by the Company.
Brief resumes of these directors proposed to be appointed/ re-appointed and otherrelevant information have been furnished in the Notice convening the Annual GeneralMeeting. Appropriate resolutions for their appointment / re-appointment are being placedfor approval of the members at the Annual General Meeting.
AUDITORS & AUDIT REPORT:
In terms of the provisions of the Companies Act 2013 M/s. S S Kothari Mehta &Co. Chartered Accountants were appointed as Statutory Auditors of the Company at 27thannual general Meeting of the Company and their appointment was made for a term of fiveyears i.e. till 29th Annual General Meeting accordingly as per recommendation by the auditcommittee of the Company the Board has recommended the ratification of their appointmentas statutory auditors of the Company from the ensuing annual general meeting of theCompany till 28th annual general meeting of the Company.
The Company has obtained necessary certificate under section 141 of the Companies Act2013 from the auditor conveying their eligibility for the above appointment. The AuditCommittee and the Board reviewed their eligibility criteria as laid down under section141 of the Companies Act 2013 and recommended their appointment as auditors for the abovesaid period.
Company's explanation regarding adverse remark or qualification in the Auditors' Reportis as follows:
As per provisions of Section 204 of the Act the Board of Directors of the companyappointed M/s. SKP & Co. Practicing Company Secretaries (C.P. No.: 6575) asSecretarial Auditors for the purpose of auditing the Secretarial activities of the Companyfor the financial year 2016-17. The Secretarial audit report issued by the said auditorsin form MR-3 has been annexed to this report as 'Annexure 6'.
On the observations made in the Secretarial Audit Report the proper steps are beingtaken by the Management so as to comply with the provisions.
Point wise explanation by the Company on comments made by the secretarial auditor is asfollows:
In terms of the provisions of Section 148 and all other applicable provisions of theCompanies Act 2013 read with the Companies (Audit and Auditors) Rules 2014 M/s. MS& Co. Cost Accountants (FRN. 102592) have been appointed as Cost Auditors to conductthe audit of cost records of your company for the financial year 2017-18.
INTERNAL AUDITOR INTERNAL AUDIT & CONTROLS
The Company has well equipped internal audit mechanism. Their scope of work includesreview of processes for safeguarding the assets of the Company review of operationalefficiency effectiveness of systems and processes and assessing the internal controlstrengths in all areas. Internal Auditors findings are discussed with the process ownersand suitable corrective actions taken as per the directions of Audit Committee on anongoing basis to improve efficiency in operations.
WHISTLE BLOWER/VIGIL MECHANISM
As per the provisions of Companies Act 2013 every Listed Company shall establish avigil mechanism (similar to Whistle Blower mechanism as specified under the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015). In pursuance of theprovisions of section 177(9) & (10) of the Companies Act 2013 a vigil mechanism/whistle blower policy for directors and employees to report genuine concerns has beenestablished and approved by Board on 30th May 2014. The Vigil Mechanism is available onthe website of the Company at www.eragroup.co.in .
RISK MANAGEMENT POLICY
A statement indicating development and implementation of a risk management policy forthe Company including identification therein of elements of risk if any this in theopinion of the Board may threaten the existence of the company is stated in the CorporateGovernance Report.
The restructuring in the Directorship of the Company necessitated restructuring in theAudit Committee. The committee as on date of this report consists of three members namelyMr. Mast Ram Mr. Hem Singh Bharana and Mr. Rattan Lal out of which two are independentDirectors. Mr. Rattan Lal is the Chairman of Audit Committee. All members of the AuditCommittee possess sufficient knowledge and experience in the field of Finance andAccounts. The Committee composition is in accordance with the provisions of Companies Actand SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
STAKEHOLDER RELATIONSHIP COMMITTEE
The restructuring in the directorship of the company necessitated restructuring in thiscommittee. The committee as on date of this report consists of three members.
ii. Name and designation of Compliance Officer:
Mr. Gaurav Rajoriya Company Secretary.
A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year Five Board Meetings were held on 30.05.2016 30.08.2016 13.09.2016 4.11.201610.12.2016 and 9.02.2017. Further details of which are given in the Corporate GovernanceReport.
POLICY ON DIRECTORS' APPOINTMENT/REMUNERATION OF DIRECTORS/KEY MANAGERIAL PERSONNEL ANDOTHER EMPLOYEES:
The Nomination and Remuneration Committee constituted by the Company has formulatedcriteria for determining qualifications positive attributes and independence of theDirectors. The Committee has also recommended to the Board a Policy relating toremuneration ensuring:
(i) The level and composition of remuneration is reasonable and sufficient to attractretain and motivate key managerial personnel of the quality required to run the companysuccessfully;
(ii) Relation of remuneration to performance is clear and meets appropriate performancebenchmarks; and
(iii) Remuneration to key managerial personnel and senior management involves a balancebetween fixed and incentive pay reflecting short and long-term performance objectivesappropriate to the working of the Company and its goals.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of its Committees.
The Nomination and Remuneration Committee ("NRC") has framed the Directors'Performance Evaluation Policy ('Policy') and based on the recommendation of the NRC.Accordingly the evaluation of Board was carried out by each Director of each committeeby each of its member and of the individual Director by all other Directors on the Boardexcepting the concerned Director himself.
The Independent Directors of the Company positively reviewed the performance ofnon-independent directors and the Board as a whole; reviewed the performance of theChairperson of the company taking into account the views of the executive directors andnon-executive directors; and assessed the quality quantity and timeliness of flow ofinformation between the company management and the Board that is necessary for the Boardto effectively and reasonably perform their duties.
DECLARATION BY INDEPENDENT DIRECTOR(S)
The Independent Directors comply with the definition of Independent Director as givenunder Section 149(6) of the Companies Act 2013. While appointing / re-appointing anyIndependent Directors on the Board the Committee considers the criteria as laid down inthe Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. All the Independent Directors give a certificate confirming that theymeet the "independence criteria" as mentioned in Section 149(6) of the CompaniesAct 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
A declaration by an Independent Director(s) that he/they meet the criteria ofindependence as provided in sub-section (6) of Section 149 of the Companies Act 2013 hasbeen enclosed as Annexure 5.
An independent director shall hold office for a term up to five consecutive years onthe Board of a Company but shall be eligible for reappointment for next five years onpassing of a special resolution by the Company and disclosure of such appointment in theBoard's report.
APPOINTMENT & REMUNERATION POLICY
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Appointment & Remuneration Policy is stated in the CorporateGovernance Report.
INFORMATION & STATEMENT OF PARTICULARS OF EMPLOYEES
The Information & Statement of Particulars of employees pursuant to Section 197 ofthe Companies Act 2013 and Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed as Annexure 3.
EXTRACT OF ANNUAL RETURN
As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in formMGT 9 as a part of this Annual Report as Annexure 1.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
In accordance with Section 134(3)(g) of the Companies Act 2013 the particulars ofloans guarantees and investments under Section 186 of the Companies Act 2013 are providedin notes to financial statements read with respective heads to the Financial Statementswhich forms part of this Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in sub-section (1) of section 188 of the Companies Act 2013including certain arm's length transactions under third proviso thereto shall be disclosedin Form No. AOC-2 as Annexure 2.
SEXUAL HARASSMENT AT WORK PLACE
In order to prevent sexual harassment of women at work place company is fullydetermined and proper adjudication & Recourse mechanism is in place to avoid anysexual harassment at work place.
During the year Company has not received any complaint of harassment and no cases werefiled pursuant to the Sexual Harassment of Women at work Place (Prevention Prohibitionand Redressal) Act 2013 during the year under review.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per the provisions of Section 135 of the Act the Company has reconstituted the CSRcommittee in the meeting held on 30th May 2016 and has also adopted CSRPolicy. The following are its present members:
However as the Company does not have average net profits for the three immediatelypreceding financial years the Section 135(5) of the Act pertaining to spending of 2% ofaverage net profits of the company for immediately preceding three financial years anddisclosure required to be given under Section 135(5) of the Act and Rule 8 of Companies(Corporate Social Policy) Rules 2014 are not applicable to the Company for thefinancial year 2016-17.
Your Company treats its "human resources" as one of its most importantassets.
Your Company continuously invests in attraction retention and development of talent onan ongoing basis. A number of programs that provide focused people attention are currentlyunderway. Your Company thrust is on the promotion of talent internally through jobrotation and job enlargement.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with Section 129 of the Companies Act 2013 Consolidated FinancialStatements are attached and form part of the Annual Report and the same shall be laidbefore the ensuing AGM along with the Financial Statements of the Company.
SUBSIDIARY COMPANIES JOINT VENTURES & ASSOCIATE COMPANIES
As required under the first proviso to sub-section (3) of Section 129 of the CompaniesAct 2013 a separate statement containing the salient features of the financialstatements of the subsidiaries associates and joint venture companies in Form AOC-1 isannexed to the Financial Statements as Annexure - 4 and forms part of the Annual Reportwhich covers the performance and financial position of the subsidiaries associates andjoint venture companies.
The Company will make available the Annual Accounts of the subsidiary company and otherrelated information upon request by any member of the Company or its subsidiary company.The Annual Accounts of the subsidiary company will also be kept open for inspection at theregistered office of the Company and the subsidiary company during business hours.
The Equity shares continue to be listed on the BSE Ltd. (BSE) and the National StockExchange of India Ltd. (NSE). Both these Stock Exchanges have nationwide terminals.
CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS
A Company holds fiduciary relationship with its stakeholders and community here theBoard of Directors of the Company act as trustee to all the stakeholders of the Company toenhance the stakeholder'svalue and protect their interest. Your Company is committed tobenchmark itself with global standards in all areas including appropriate standards forGood Corporate Governance. Towards this end an effective Corporate Governance System hasbeen put in place in the Company which also ensures that the provisions of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 are duly complied with. Areport on Corporate Governance and Management Discussion and Analysis along withCertificate on its compliance as per regulation 40(9) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 from Ms. Pooja Anand Company Secretary inPractice is enclosed with this Annual Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGOCONSERVATION OF ENERGY:
The core activity of the company is civil construction which is not an energy intensiveactivity however all steps are taken to conserve energy at all levels of operationswherever possible. There are no particulars required to be disclosed as required under thenew provisions of Companies Act 2013 & rules made thereunder
During the year there was no Technology Absorption as your Company has not undertakenany research and development activity in any manufacturing activity nor any specifictechnology is obtained from any external sources which need to be absorbed or adapted.There are no particulars required to be disclosed as required under the new provisions ofCompanies Act 2013 & rules made thereunder
Innovation is a culture in the Company to achieve cost efficiency in the constructionactivity to be more and more competitive in the prevailing environment and the effect ofthe same cannot be quantified.
FOREIGN EXCHANGE EARNINGS AND OUTGO:
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(5) of the Act the Board of Directors herebystate that:
a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;
c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d) The directors had prepared the annual accounts on a going concern basis; and
e) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
f) The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
Your Directors take this opportunity to place on record their appreciation towardsbankers clients and all the business associates for their
continuous support to the Company and to the shareholders for the confidence reposed inthe Company management. The directors
also convey their appreciation to the employees at all levels for their enormouspersonal efforts as well as collective contribution.