Your Directors have pleasure in presenting the 17th Annual Report on the businessoperations and financial performance of H.G. Infra Engineering Ltd. (the Company) alongwith the Audited Financial Statements for the Financial Year ended March 31st 2019. Theconsolidated performance of the Company and its subsidiary has been referred to whereverrequired.
The Financial Performance of the Company for the financial year ended on 31st March2019 is as follows-:
(Amount in H Millions)
|Particulars ||Standalone ||Consolidated |
| ||31.03.2019 ||31.03.2018 ||31.03.2019 ||31.03.2018 |
|Gross Revenue ||20213.49 ||13973.91 ||20259.34 ||13973.91 |
|Total expenses ||18311.04 ||12786.31 ||18343.84 ||12786.31 |
|Profit / (loss) before tax ||1902.45 ||1187.60 ||1944.04 ||1187.60 |
|Tax expenses || || || || |
|Current tax ||689.26 ||383.74 ||693.06 ||383.74 |
|Deferred tax ||(22.49) ||(38.78) ||(22.45) ||(38.78) |
|Total Tax Expense ||666.77 ||344.96 ||670.61 ||344.96 |
|Profit After Tax ||1235.68 ||842.64 ||1273.43 ||842.64 |
|Other comprehensive income Items that will not be reclassified ||(12.96) ||(0.94) ||(12.96) ||(0.94) |
|to profit or loss (Net of Taxes) || || || || |
|Total Comprehensive Income for the year ||1222.72 ||841.70 ||1260.47 ||841.70 |
REVIEW OF OPERATIONS/STATE OF AFFAIRS OF THE COMPANY ITS SUBSIDIARIES
Review of Operations /State of Affairs of the Company
There has been no change in the nature of business of your Company during the FinancialYear 2018-2019.
During the year under review your Company reported a growth of 45% over the previousyear. At Standalone level the Revenue from Operations increased amounted to 20213.49Million as against 13973.91 Million in the previous year. The Net Profit before Taxamounted to 1902.45 Millions as against 1187.60 Million in the previous year. The NetProfit for the year amounted to 1235.68 Million against` 842.64 Million reported in theprevious year and total comprehensive income for the year amounted to ` 1222.72 Million asagainst ` 841.70 Million in the previous year.
At Consolidate level the Revenue from Operations increased amounted to 20259.34Million as against 13973.91 Million in the previous year. The Net Profit before Taxamounted to 1944.04 Millions as against 1187.60 Million in the previous year. The NetProfit for the year amounted to 1273.43 Million against ` 842.64 Million reported in theprevious year and total comprehensive income for the year amounted to1260.47 Million asagainst ` 841.70 Million in the previous year.
Review of Operations /State of Affairs of the Subsidiaries
During the Financial Year 2018-2019 Our Company has one Wholly Owned Subsidiary viz."Gurgaon Sohna Highway Private Limited" which is a unlisted subsidiary Mr. OnkarSingh an Independent Director of the Company has been appointed as a Director on the Boardof said subsidiary. The minutes of the subsidiary Company are periodically placed beforethe Board and reviewed by the Board of Directors. The Policy for determining subsidiarieshas been uploaded and can be accessed on the Companys website www.hginfra.com
The Audited Consolidated Financial Statements for the Financial Year ended 31st March2019 based on the financial statements received from Subsidiaries as approved by theirrespective Board of Directors have been prepared in accordance with relevant IndianAccounting Standards issued by the Institute of Chartered Accountants of India and formsan integral part of this Annual Report.
Order Inflow and Order Book
During the Financial Year Company won multiple big-ticket size orders.
? This includesH 1172 Cr project involving six laning of Hapur
Bypass to Moradabad from IRB
? We also won EPC order from NHAI in the state of Rajasthan valued at H 997cr.
? Another big-ticket project was H 952 cr Narnaul Bypass
2 HAM projects that we received during the year have a lot of synergy benefits. Sincethey are adjacent to each other these will help in efficient deployment of our machinesand manpower. The common base camp will lead to cost optimization. Both the projects areunder financial closure and we expect to achieve them soon.
Taking all these projects into countthe total order inflow for the year was H 3648 Cr.of the total order received this year three orders are EPC Contracts aggregating to H2359 Cr and the remaining contract to the tune of H 1289 Cr are HAM Projects.
Order book as on 31st March 2019 stood at H 6222 crore out of the total order book71% are government contracts and 29% are from private clients.
Major projects completed in FY19
Sitarganj:- NHAIs EPC project of Two-laning with paved shoulders ofSitarganj-Tanakpur section of NH-125 in Rajasthan Value H 2431 million.
Manoharpur:- NHAIs EPC project of Two-laning with paved shoulders of Manoharpurand Dausa on NH 11A in Rajasthan Value H 1982 million
UnchaNagla:- NHAIs EPC project of Widening strengthening and 2- laning ofUncha-Nagla- Khanuawa-Roppas- Dholpur section of NH-123 in Rajasthan Value H 2611million
Tonk-Madhopur:- NHAIs EPC project of Two-laning with paved shoulders of TonkSawaiMadhopur section of NH-116 in Rajasthan Value H 2161 million
Kaithal-IRBs BOQ project of four laning of Kaithal Rajasthan bordersection of NH-123/ 65 in Haryana Value H 4011 million
Company has shown sign of excellence in all financial and operational parameters whichhas been applauded by PWC our Statutory Auditors our investors and other Stakeholders.The Company has featured in many Business magazines like "Fortune 500""CEOmagazine"outlook magazine" and has been honoured by CNBC for "BestInfrastructure Company" in Rajasthan Ratan Award.
The Board of Directors of your Company recommend a Final Dividend for the FinancialYear 2018-19 at the rate of 5% ( Five per cent) i.e. 0.50 (Rupees Fifty Paisa Only) perEquity Share of Face Value of 10/- (Rupees Ten Only) each subject to approval of theMembers at the ensuing 17th (Seventeenth ) Annual General Meeting.
The Dividend will be paid to the Shareholders whose names appear in the Register ofMembers of the Company as on Friday August 2 2019 and in respect of shares held indematerialised form it will be paid to Shareholders whose names are furnished by NationalSecurities Depository Limited (NSDL) and Central Depository Services (India) Limited(CDSL) as the beneficial owners as on that date.
TRANSFER TO RESERVES
The Company is not proposing to transfer any amount to the General Reserves of theCompany out of the profits made during the Year. The Total other Equity (includingsecurities premium Reserves General Reserves Surplus in the statement of profit and Lossand and other Comprehensive income) as on March 31st 2019 is H 5978.10 (on ConsolidateBasis) million as against the Paid- up Capital of H 651.71 million.
During the year ended 31st March 2019 the Company has not accepted deposits from thepublic falling within the ambit of Section 73 of the Companies Act 2013 and the Rulesframed there under and hence no amount on account of principal or interest on publicdeposits was outstanding as on the date of the Balance Sheet.
DIRECTORS RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutorycostand secretarial auditors including audit of internal financial controls over financialreporting by the statutory auditors and the reviews performed by the management and therelevant Board committees including the audit committee the Board is of the opinion thatthe Companys internal financial controls were adequate and operating effectivelyduring theFY 2018-19.
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of its knowledge and ability confirm that:
i. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures.
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 profitand loss of 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 this 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 andsuch internal financial controls are adequate and operating effectively.
vi. The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
CAPITAL STRUCTURE OF THE COMPANY
The Current Capital Structure of the Company is given below:-
During the Financial Year 2018-19 the Authorised Capital of the Company is H800000000/- (Rupees Eighty Crore Only) divided into 80000000 (Eight Crore EquityShare) Equity Shares of H 10/- (Rupees Ten Each).
During the Financial Year 2018-19 the Issued Capital of the Company is H 651711110/-(Rupees Sixty Five Crore Seventeen Lakh Eleven Thousand One Hundred Ten Only) divided into65171111 (Six Crore Fifty One lakh Seventy One thousand one hundred Eleven Equity Shares)Equity Shares of H 10/- (Rupees Ten Each).
Subscribed & Paid up Capital:-
During the Financial Year 2018-19 the Subscribed & paid up Capital of the Companyis H 651711110/- (Rupees Sixty Five Crore Seventeen Lakh Eleven Thousand One HundredTen Only) divided into 65171111 (Six Crore Fifty One lakh Seventy One thousand one hundredEleven Equity Shares) Equity Shares of H 10/- (Rupees Ten Each).
Utilization of the IPO Proceeds (2018-19)
The status of the utilisation of the Proceeds of the IPO and division thereon are asunder:-
|Particulars ||Amount in |
| ||Crores |
|Gross Proceeds of the Issue ||300.00 |
|Less-Issue related expenses ||22.25 |
|Net Proceeds of the Issue ||277.75 |
|(Less) Utilization of IPO Proceeds up-to ||251.17 |
|March 312019 || |
|Funds to be utilized (remain invested in ||26.58 |
|Bank Fixed Deposits ) and current account) || |
EXTRACT OF ANNUAL RETURN
As provided under Section 92 of the Act and rules framed thereunder the extract ofannual return in Form MGT-9 is given in Annexure-I which forms part of this report.
INFORMATION ABOUT SUBSIDIARY/ JOINT VENTURE/ ASSOCIATE COMPANY:
The Company has 1(one) wholly owned subsidiary as on March 31 2019. (GURGAON SOHNAHIGHWAY PRIVATE LIMITED incorporated on 06.04.2018). There are 4 (four) Joint Venture and1 (one) Associate within the meaning of Section 2(6) of the Companies Act 2013("Act").
Pursuant to Section 129 (3) of the Companies Act 2013 read with Rule 5 of theCompanies (Accounts) Rules 2014 a Statement containing salient features of the financialstatements of Subsidiaries/Associate Companies/Joint Ventures is given in Form AOC-1 asAnnexure-II and forms an integral part of this Annual Report.
Further pursuant to the provisions of Section 136 of the Act the financial statementsof the Company consolidated financial statements along with relevant documents andseparate audited financial statements in respect of subsidiaries are available on thewebsite of the Company.
BOARD OF DIRECTORS AND MEETINGS
The members of the Companys Board of Directors are eminent persons of provencompetence and integrity. Besides experience strong financial acumen strategicastuteness and leadership qualities they have a significant degree of commitment towardsthe Company and devote adequate time to the meetings and preparation.
The Board meets at regular intervals to discuss and decide on Company / Business policyand strategy apart from other Board business. The Board exhibits strong operationaloversight with regular presentations in every quarterly meeting. The Board /Committeemeetings are pre-scheduled and a tentative annual calendar of the Board and Committeemeetings is circulated to the Directors well in advance to help them plan their scheduleand ensure meaningful participation in the meetings. Only incase of special and urgentbusiness if the need arises the Boards/Committees approval is taken bypassing resolutions through circulation or by calling Board/ Committee meetings at shortnotice as permitted by law.
The Agenda for the Board and Committee meetings includes detailed notes on the items tobe discussed to enable the Directors to take an informed decision.
The Board of Directors had held four meetings during FY 2018-19. For further detailsplease refer to the Corporate Governance Report which forms part of this Annual Report.The intervening gap between the meetings was within the period prescribed under the Actand the Listing Regulations.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS
The Company has designed and implemented a process driven framework for InternalFinancial Controls ("IFC") within the meaning of the explanation to Section134(5) (e) of the Companies Act 2013 read with Rule 8(5)(viii) of the Companies(Accounts)Rules 2014 The Company has appropriate internal control systems for business processeswith regard to its operations financial reporting and compliance with applicable laws andregulations. It has documented policies and procedures covering financial and operatingfunctions and processes. These policies and procedures are updated from time to time andcompliance is monitored by the internal audit function as per the audit plan. The Companycontinues its efforts to align all its processes and controls with best practices.
The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of the internal control system and suggests improvements to strengthen thesame. The Company has robust management information system which is an integral part ofthe control mechanism.
These are detailed in the Management Discussion and Analysis Report.
DECLARATION BY INDEPENDENT DIRECTORS UNDER SUB SECTION (6) OF SECTION 149
Company having three (3) Independent Directors which are in accordance with therequirement of Listing Regulation as well as under the Companies Act 2013.
The Company has received necessary declaration from all the three Independent Directorsto the effect that they meet the criteria of independence as provided under Section 149(6)of the Companies Act 2013 and Regulation 16(b) of SEBI (LODR) Regulations 2015. In theopinion of the Board they fulfil the conditions specified in the Act and the Rules madethere under for the appointment as Independent Directors and are Independent of theManagement
In terms of the provisions of Section 149 of the Companies Act 2013 and Regulation 17of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and pursuantto the Amendments in Listing Regulations based on the recommendations of the KotakCommittee. Company has complied with the requirement of having at least one WomanIndependent Director on the Board of the Company Ms. Pooja Hemant Goyal IndependentDirector is the Women Director of the Company.
The details of meeting of Independent Director and Criteria for Evaluation ofIndependent Director and the Board are explained in the Corporate Governance Report.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTOR
As trustees of shareholders Independent Directors play a pivotal role in upholdingCorporate Governance norms and ensuring fairness in decision making. Being expertsinvarious fields they also bring Independent Judgement on matters of strategy riskmanagement controls and business performance.
At the time of appointing a new Independent Director a formal letter of appointment isgiven to the Director inter alia; explaining the role duties and responsibilities of theDirector. The Director is also explained in detail the Compliances required from him / herunder the Act SEBI Regulations and other relevant regulations.
By way of an introduction to the Company presentations are also made to the newlyappointed Independent Director onrelevantinformationlikeoverviewoftheCompanysbusinesses market and businessenvironment growth and performance organisational set up of the Company governance andinternal control processes.
On-going familiarisation program aims to provide insights into the Company and thebusiness environment to enable all the Independent Directors to be updated of newerchallenges risks and opportunities relevant in the Companys context and to lendperspective to the strategic direction of the Company.
The details for familiarisation program for the Independent Directors are put up on thewebsite of the Company. As required under Regulation 46(2)(i) of the ListingRegulationsthe details of familiarisation programmes conducted during FY2018-19 is alsoput on the Companys website and the same can be accessed at the link :https://www.hginfra.com/ pdf/Details%20of%20Familiarization%20programme%20 Imparted.pdf
CRITERIA FOR DETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES AND INDEPENDENCE OF ADIRECTOR
In terms of the provisions of Section 178(3) of the Actand Regulation 19 of theListing Regulations the NRC has formulated the criteria for determining qualificationspositive attributes and independence of Directors the key features of which are asfollows:? Qualifications The Board nomination process encourages diversityof thought experience knowledge age and gender. It also ensures that the Board has anappropriate blend of functional and industry expertise.? Positive Attributes -Apart from the duties of Directors as prescribed in the Act the Directors are expected todemonstrate high standards of ethical behaviour communication skills and independentjudgment. The Directors are also expected to abide by the respective Code of Conduct asapplicable to them.
? Independence - A Director will be considered independent if he / she meets thecriteria laid down in Section 149(6) of the Act the Rules framed thereunder andRegulation 16(1) (b) of the Listing Regulations.
For more details please refer to the Corporate Governance Report which is a part ofthis report
ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND OFDIRECTORS:
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors pursuant to the provisions of the Act and theListing Regulations.
The Board evaluated its performance after seeking inputs from all the Directors on thebasis of criteria such as the Board composition and structure effectiveness of Boardprocesses information and functioning etc. The performance of the Committees wasevaluated by the Board after seeking inputs from the committee members on the basis ofcriteria such as the composition of committees effectiveness of committee meetings etc.The above criteria are as provided by the Guidance Note on Board Evaluation issued by theSecurities and Exchange Board of India.
The Chairman of the Board had one-on-one meetings with the Independent Directors andthe Chairman of NRC had one-on-one meetings with the Executive andNon-ExecutiveNon-Independent Directors. These meetings were intended to obtainDirectors inputs on effectiveness of the Board/ Committee processes.
The Board and the NRC reviewed the performance of individual directors on the basis ofcriteria such as the contribution of the individual director to the board and committeemeetings like preparedness on the issues to be discussed meaningful and constructivecontribution and inputs in meetings etc.
In a separate meeting of Independent directors performance of non-independentdirectors and the board as a whole was evaluated. The Independent Directors in the saidmeeting also evaluated the quality quantity and timeliness of flow of information betweenthe company management and the Board that is necessary for the Board to effectively andreasonably perform their duties. Additionally the Chairman of the Board was alsoevaluated on key aspects of his role taking into account the views of executive directorsand non-executive directors in the aforesaid meeting. The above evaluations were thendiscussed in the board meeting that followed the meeting of the Independent directors andNRC at which the performance of the board its committees and individual directors wasalso discussed. Performance evaluation of Independent directors was done by the entireboard excluding the independent director being evaluated.
For details of previous year Annual Evaluation please refer to the Annual Report forthe Financial Year 2017-18 which is accessed throughhttps://www.hginfra.com/pdf/annual-report-2017-18-latest.pdf
Details of Criteria for Evaluation of Independent Director and the Board please referto the Corporate Governance Report which is a part of this report
HGIEL financial discipline and prudence is reflected in the strong credit ratingascribed by rating agencies. The Table below depicts the Credit Rating profile:
|Instrument ||Rating Agencies ||Previous Rating ||Current Rating |
|Long Term Credit ||ICRA ||ICRA A- ||ICRA A |
|Short Term Credit ||ICRA ||ICRA A2 + ||ICRA A1 |
For details of credit rating please refer to the Corporate Governance Report which isa part of this report
COMMITTEES OF THE BOARD
Details of all the Committees along with their terms of reference composition andmeetings held during the year is provided in the Corporate Governance Report which is apart of this report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Board of Directors has formulated a Whistle Blower Policy/ Vigil Mechanism which isin Compliance with the provisions of Section 177 (10) of the Companies Act 2013. Duringthe Financial Year 2018-2019 the Policy was modified in the Board Meeting held on 01st Dayof February 2019.
The Companys Whistle Blower Policy/Vigil Mechanism encourages Directors andemployees to bring to the Companys attention instances of unethical behaviour andactual or suspected incidents of fraud or violation of the Code of Conduct that couldadversely impact the Companys operations business performance and / or reputation.
Company investigates such incidents when reported in an impartial manner and takesappropriate action to ensure that requisite standards of professional and ethical conductare always upheld. It is the Companys Policy to ensure that no employee isvictimised or harassed for bringing such incidents to the attention of the Company. Thepractice of the Whistle Blower Policy/Vigil Mechanism is overseen by the Audit Committeeand no employee has been denied access to the Committee. The Whistle-blower Policy isavailable on the Companys corporate website www.hginfra.com
NOMINATION & REMUNERATION POLICY
As per sub-Section (1) of Section 178 of the Companies Act 2013 as well as the Listingregulations the Nomination & Remuneration Policy of the Company has revised on 23rdMay 2018 and 1st February 2019 as recommend by the Nomination & RemunerationCommittee of the Company.
The details of the policy are explained in the Corporate Governance Report and same isalso available on the Company Website www.hginfra.com.
SELECTION AND PROCEDURE FOR NOMINATION AND APPOINTMENT OF DIRECTORS
The Company has a Nomination and Remuneration Committee ("NRC") which isresponsible for developing competency requirements for the Board based on the industryand strategy of the Company. The Board composition analysis reflects an in-depthunderstanding of the Company including its strategies environment operations financialcondition and compliance requirements.
The NRC makes recommendations to the Board in regard to appointment of new Directorsand Key Managerial Personnel ("KMP") and senior management. The role of the NRCencompasses conducting a gap analysis to refresh the Board on a periodic basis includingeach time a Directors appointment or re-appointment is required. The NRC is alsoresponsible for reviewing the profiles of potential candidates vis--vis the requiredcompetencies undertake a reference and due diligence and meeting of potential candidatesprior to making recommendations of their nomination to the Board. The appointee is alsobriefed about the specific requirements for the position including expert knowledgeexpected at the time of appointment.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
All transactions entered with Related Parties for the year under review were entered onarms length basis and in the ordinary course of business and that the provisions ofSection 188(1) ofthe Companies Act 2013 and the Rules made there under were notattracted.
The particulars of contracts or arrangements with related parties referred to inSection 188(1) is prepared in Form AOC-2 pursuant to Section 134(3)(h) of the Act and Rule8(2) of the Companies(Accounts) Rules 2014 and the same is annexed to the BoardsReport as Annexure-III.
All Related Party Transactions are placed before the Audit Committee and the Board forapproval. The Company has a process in place to periodically review and monitor RelatedParty Transactions. Omnibus approval was obtained on a yearly basis for transactions whichare of repetitive nature. All the related party transactions were in the ordinary courseof business and at arms length. The Audit Committee and the
Board have approved the Related Party Transactions Policy and the same has beenuploaded on the Companys website www.hginfra.com.
CORPORATE SOCIAL RESPONSIBILITY
As a part of its initiatives under "Corporate Social Responsibility" theCompany has framed Corporate Social Responsibility Policy (CSR Policy) in terms of whichthe Company has undertaken projects in the areas of environment animal education healthcare etc. These projects are largely in accordance with Schedule VII of the Companies Act2013. As required under Section 134 (3)(o) and Policy Rule 9 of the Companies (CorporateSocial Responsibility Policy) Rules 2014 the Annual Report on CSR activities formingpart of the Directors Report is annexed as Annexure-IV.
Risk management comprises all the organizational rules and actions for earlyidentification of risks in the course of doing business and the management of suchrisks.In terms of regulation 17(9)(b) of the Listing Regulations the Board of Directorsadopted a Risk Management Policy of the Company. On the recommendation of Audit CommitteeBoard has revised Risk Management Policy Twice a year i.e (Board Meeting held on30.07.2018 & 01.02.2019).
The objective of Risk Management Policy at H.G. Infra is to preserve shareholder valueto the extent practically feasible and to ensure sustainable business growth withstability by identifying and mitigating major operating and external business risk. Inorder to achieve the key business objectives the policy establishes a structured anddisciplined approach to Risk Management including the development of the Risk Registerin order to guide decisions on risk related issues. The specific objectives of the RiskManagement Policy are:-
1) To ensure that all the current and future material risk exposures of the Company areidentified assessed mitigated monitored and reported.
2) To establish a frame work for the Companys risk management process and toensure Company wide implementation.
3) To ensure systematic and uniform assessment of risks related with constructionprojects.
4) To enable compliance with appropriate regulations wherever applicable through theadoption of best practices.
5) To assure business growth with financial stability.
The effectiveness of Risk Mitigation plans shall be ensured through proper monitoringevaluation of outcomes of mitigation plans and to look for the scope of its applicabilityin other areas in order to achieve overall objective of this policy.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO
The information required to be disclosed pursuant to Section 134(3)(m) of the Companiesact 2013 read with Rule 8 of companies (Accounts) Rules2014 the particulars oftechnology absorption and foreign exchange earnings and outgo is provided as under.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
The Company has complied with the Corporate Governance requirements under the Act andListing Regulations. A separate section on Corporate Governance along with a certificatefrom the practicing Company Secretary confirming compliance is annexed as Annexure-V andforms part of this report.
A detailed report on Management Discussion and Analysis forms an integral part of thisreport and also covers the consolidated operations reflecting the global nature of ourbusiness.
AUDITORS OF THE COMPANY
At the 15th Annual General Meeting held on Friday September 08 2017 the Shareholdershad approved the appointment of M/s. Price Waterhouse & Co Chartered Accountants LLP(FRN 304026E/E300009) as the Statutory Auditors for a period of 5 years commencing fromthe conclusion of the 15th Annual General Meeting until the conclusion of the 20thAnnual General Meeting to be held in the year 2022 subject to ratification by theShareholders every year if so required under law. Pursuant to the recent amendment toSection 139 of the Act effective May 7 2018 ratification by Shareholders every year forthe appointment of the Statutory Auditors is no longer required and accordingly the Noticeof ensuing Annual General Meeting does not include the proposal for seeking Shareholdersapproval for ratification of Statutory Auditors appointment.
M/s. Price Waterhouse & Co Chartered Accountants LLP (FRN 304026E/E300009) hasfurnished a certificate of their eligibility and consent under Section 139 and 141 of theAct and the Companies (Audit and Auditors) Rules 2014 for their continuance as theAuditors of the Company for the FY 2019-20. In terms of the Listing Regulations theAuditors have confirmed that they hold a valid certificate issued by the Peer Review Boardof the ICAI.
The Statutory Auditors of the Company have submitted Auditors Report on theFinancial Statements (standalone and consolidated) of the Company for the Financial Yearended 31st March 2019. The Company is generally regular in depositing undisputedstatutory dues in respect of provident fund employees state insurance income tax andgoods and service tax though there has been slight delay in few cases and is regular indepositing undisputed statutory dues in respect of professional tax as applicable withthe appropriate authorities.
Further the Company is taking necessary steps to ensure the compliance/timely paymentof statutory dues.
Except above all Information referred in the Auditors Report are self-explanatoryand do not call for any further comments.
Secretarial Auditor & Secretarial Audit Report
In terms of Section 204 of the Act read with the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Audit Committee recommended and theBoard of Directors has re-appointed M/s. ATCS & Associates Company Secretaries as theSecretarial Auditors of the Company to conduct Secretarial Audit for the Financial Year2019-20.
The Secretarial Audit was carried out by M/s. ATCS & Associates a firm of CompanySecretaries in Practice for the Financial Year 2018-2019.
The Report given by the Secretarial Auditors is annexed as Annexure-VI and forms anintegral part of this Boards Report. There has been no qualification reservation oradverse remark or disclaimer in their Report except the following:
i. The Company has submitted the Monitoring Agency Report to stock exchange(s) on whichits equity shares are listed after the expiry of 45 days from the end of March 2018quarter as prescribed in Regulation 16(4) Securities and Exchange Board of India (Issue ofCapital and Disclosure Requirements) Regulations 2009.
Reply by Board:
The Company is taking necessary step to ensure timely compliance of monitoring agencyreport in future and submit to stock exchange within time.
The Company has re-appointed M/s. Rajendra Singh Bhati
& Co Cost Accountants (FRN101983) Jodhpur(Raj.) as Cost Auditors of the Companyfor the Financial year 2019-2020. They have furnished a Certificate to the effect thattheir appointment if made would be in accordance with the provisions of Section 148 ofthe Companies Act 2013 read with Companies (Audit and Auditors) Rules 2014.
As required under the Companies Act 2013 a resolution seeking members approvalfor the remuneration payable to the Cost Auditor forms part of the Notice convening theAnnual General for their ratification.
M/s. Tibrewal Chand & Co. Chartered Accountants have been re-appointed asInternal Auditors of the Company for the Financial Year 2019-2020 and the reports of theInternal Auditors are reviewed by the Audit Committee from time to time. The observationsand suggestions of the Internal Auditors are reviewed and necessary corrective/preventiveactions are taken in consultation with the Audit Committee.
Reporting Of Fraud by Auditors
During the Financial year 2018-2019 the Auditors has not reported any instances offrauds committed in the Company by its Officers or Employees to the Audit Committee undersection 143(12) of the Companies Act2013.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED
Since the Company is a Construction Company pursuant to the provisions of Section186(11) of the Companies Act 2013 except Section 186(1) nothing contained in section186 of the Companies Act 2013 shall apply to a loan made guarantee given and securityprovided by a Company engaged in the business of providing infrastructure facilities.However the details of loans guarantees and investments as required by the provisionsof Section 186 of the Companies Act 2013 and the rules made there under are set out inthe Notes to the Standalone Financial Statements of the Company.
INVESTOR GRIEVANCE REDRESSAL
As per regulation 13 of SEBI (Listing Obligation & disclosure Requirements)Regulations 2015 the number of complaints received and resolved to the satisfaction ofinvestors during the year under review. There were no pending complaint or share transfercases as on 31st March 2019 as per the certificate given by RTA.
RECONCILIATION OF SHARE CAPITAL AUDIT REPORT
Audit to reconcile the total admitted capital with National Securities DepositoryLimited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issuedand listed capital. This audit is carried out every quarter and the report thereon issubmitted to the Stock Exchanges where the Companys shares are listed. The auditconfirms that the total Listed and Paid-up Capital is in agreement with the aggregate ofthe total number of shares in dematerialised form (held with NSDL and CDSL) and totalnumber of shares in physical form.
CODE OF CONDUCT
Your Company is committed to conducting its business in accordance with the applicablelaws rules and regulations and highest standards of business ethics. In recognitionthereof the Board of Directors has implemented a Code of Conduct for adherence by theDirectors Senior Management Personnel and Employees of the Company. The Code of Conductis dealing with ethical issues and also foster a culture of accountability and integrity.The Code in accordance with the requirements of SEBI (LODR) Regulations 2015 has beenposted on the Companys website www.hginfra.com. All the Board Members and SeniorManagement Personnel have confirmed compliance with the Code.
CONFLICT OF INTERESTS:
Each Director informs the Company on an annual basis about the Board and the Committeepositions he occupies in other companies including Chairmanships and notifies changesduring the year. The Members of the Board while discharging their duties avoid conflictof interest in the decision making process. The Members of Board restrict themselves fromany discussions and voting in transactions in which they have concern or interest.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS:
During the Financial Year 2018-2019 penalty imposed on the Company of H 30000/- in aCompounding order Dated-23.10.2018(NWR)/441/Section 148 (6) /404/2018/3732 passed byRegional Director Ahmedabad Gujarat against an application filled by the Company U/S 441of the Companies Act 2013 for Compounding of offence under Section 148 of the CompaniesAct 2013.
DISCLOSURE IN REFERENCE OF SUB RULE 1 CLAUSE (C) SUB CLAUSE (VIII) OF RULE 2 OFCOMPANIES (ACCEPTANCE OF DEPOSITS) RULES2014
During the period under review the Company has accepted loan/borrowing from itsDirector and they have given declaration that the amount given from their owned funds onlyand does not falls under the definition of deposits.
The details of monies accepted are as under:-
|Name of Director ||Amount Taken (H In Million) |
|Mr. Harendra Singh ||523.13 |
|Mr. Vijendra Singh ||160.00 |
INTERNAL COMPLAINT COMMITTEE (ICC) AND OTHER DISCLOSURES UNDER THE SEXUAL HARASSMENT OFWOMEN AT WORK PLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The Company has adopted zero tolerance for sexual harassment at workplace and hasformulated a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the rules framed thereunder forprevention and redressal of complaints of sexual harassment at workplace. Awarenessprograms were conducted at various locations of the Company.
The Company has complied with provisions relating to the constitution of InternalCommittee under the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
During the Financial Year ended 31st March 2019 the Company has not received anyComplaints pertaining to Sexual Harassment.
DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL ANDPARTICULARS OF EMPLOYEES
In accordance with Section 178 and other applicable provisions of the Act read with theRule 6 of the Companies (Meeting of Boards and its Powers) Rules 2014 issued there underand Regulation 19 of the LODR 2015 the Board of Director formulated the Nomination andRemuneration Policy of your Company on the recommendations of the Nomination andRemuneration Committee.
The salient aspects covered in the Nomination and Remuneration Policy covering thepolicy on appointment and remuneration of Directors and other matters have been outlinedin the Corporate Governance Report which forms part of this Report.
The Managing Director and Whole-time Directors of your Company do not receiveremuneration from any of the subsidiaries of your Company. The information required underSection 197 of the Act read with the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of Directors/employees of your Company is set out in
CHANGE IN DIRECTOR AND KEY MANAGERIAL PERSONNEL
During the Financial Year 2018-19 the Mr. Girish Pal Singh has resigned from the postof Directorship & Mr. Dinesh Kumar has appointed as an Executive Director of theCompany in the Board Meeting held on 23rd May 2018.
Further Mr. Dinesh Kumar Goyal has resigned from the post of a Executive Director inthe Board Meeting held on 01st February 2019 and continuing as a Non- Executive Directorof the Company. Company received a letter dated 24.01.2019 from Mr. Goyal and the same hasintimated to the Bombay Stock Exchange and National Stock Exchange of India and alsoavailable on the Company website www.hginfra.com
Details of Change in Directors and Key Managerial Personnel
|Name of Director ||Designation ||Date of Change ||Nature of Change |
|Mr.Harendra Singh ||Managing Director ||NA ||NA |
|Mr.Vijendra Singh ||Whole Time Director ||NA ||NA |
|Mr. Girish Pal Singh ||Non-Executive Director ||23.05.2018 ||Resignation |
|Mr. Ashok Kumar Thakur ||Independent Director ||NA ||NA |
|Mr.PoojaHemant Goyal ||Independent Director ||NA ||NA |
|Mr. Onkar Singh ||Independent Director ||NA ||NA |
|Mr. Dinesh Kumar Goyal ||Non Executive Director ||23.05.2018 & ||Appointment as a Executive Director Change in |
| || ||01.02.2019 ||Designation from Executive to Non Executive Director |
Retirement by Rotation-
Mr. Harendra Singh (DIN-00402458)Managing Director of the Company whose period ofoffice is liable to retire by rotation pursuant to provisions of Companies Act2013 and asper the Article of Association of the Company retires by rotation at the ensuing AGM andbeing eligible offers himself for reappointment.
The Notice Convening the Annual General Meeting includes the proposal for the aboveappointments/re-appointment.
Details of Composition of the Board Category Attendance of Directors at BoardMeetings and last Annual General Meeting number of other directorships and othercommittee memberships are given in the Corporate Governance Report as Annexure and formspart of this report.
All the properties including buildings plant and machinery and stocks have beenadequately insured.
HEALTH SAFETY AND ENVIRONMENT PROTECTION
Companys Health and Safety Policy commits to comply with applicable legal andother requirements connected with occupational Health Safety and Environment matters andprovide a healthy and safe work environment to all employees of the Company.
HUMAN RESOURCE DEVELOPMENT
A major part of the Company strategy is satiated towards our employees whose relentlesssupport and devotion took our Company to great heights. With construction that binds thenation our employees have been our core strength to deepen the roots. Therefore asrecognition of their perseverance and endeavour HGIEL bears the responsibility of theirwelfare providing them with many social amenities including Medical Expense ProvidentFund Gratuity and Leave Travel Allowance. A dedicated and competitive talent is bracedin the mould of the vision and mission of the Company. The potential of each employee isadvanced and skills are honed due to the provision of right opportunities to grow. Thisincludes regular in-house and external training along for knowledge and skill development.A value-driven work environment with satisfaction and appreciation as well asprofessionalism has led us build an excellent team. This year saw a lot of reforms andchanges in the approach and execution of different activities relating to welfare andmaintenance of our workforce with added focus on KRAs of all employees as well asimplementation of SAP Success Factor for the daily activities in Human Resources. We arehaving 3500+employees including employees of subsidiary companies as on 31st March 2019.
The Company has complied with Secretarial Standards issued by the Institute of CompanySecretaries of India on Board and General Meetings.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
During the Financial Year 2018-19 Company was awarded by new Hybrid Annuity Projects("HAM").For domiciling of the said Projects Company required to incorporate SPVand After the Closure of Financial Year 2018-2019 Company have Incorporated two new"SPV" Special Purpose Vehicle.
1. H.G. Ateli Narnaul Private Limited-Company has incorporated this "SPV"Special Purpose Vehicle for domiciling a project allotted by National Highway Authority ofIndia for Construction of proposed Narnaul Bypass (design length 24.0 km)-Ateli Mandi toNarnaul Section of NH-11 from km 43.445 to km 56.900 (design length 14.0 km) as anEconomic Corridor-Feeder route Pkg-II in the State of Haryana on Hybrid Annuity Mode. TheCompany Incorporated in the State of Rajasthan India as Wholly Owned Subsidiary of theCompany.
2. H.G. Rewari Ateli Highway Private Limited-Company has incorporated this"SPV" Special Purpose Vehicle for domiciling a project allotted by NationalHighway Authority of India for "Upgradation of Four Lane of Rewari- Ateli MandiSection of NH-11 from km 11.780 at Rewari to Ex. Km 43.445 near AteliMandi (designedlength 30.45 km) as Feeder Route Pkg-III in the State of Haryana on Hybrid Annuity Mode.The Company Incorporated in the State of Rajasthan India as Wholly Owned Subsidiary ofthe Company.
INSIDER TRADING CODE
As per the provisions of Securities and Exchange Board of India ("SEBI" or"the Board") vide Notification No.LADNRO/ GN/2014-15/21/85 has issued SEBI(Prohibition of Insider Trading) Regulations 2015 the Company have revised the Code ofPractices and Procedures for Fair Disclosure of Unpublished Price Sensitive Informationand the same is also available at Company Website www.hginfra.com. The code is applicableto all who covered under "Legitimate purposes" and Legitimate purpose shallinclude sharing of unpublished price sensitive information in the ordinary course ofbusiness by an insider with partners collaborators lenders customers suppliersmerchant bankers legal advisors auditors insolvency professionals or other advisors orconsultants provided that such sharing has not been carried out to evade or circumventthe prohibitions of the Regulations.
TRANSFER OF UNCLAIMED DIVIDEND AND EQUITY SHARES TO IEPF
Pursuant to applicable provisions of the Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 all unpaid or unclaimed dividendsare required to be transferred by the Company to the Investors Education & ProtectionFund (IEPF) established by the Central Government after completion of 7 (seven) years.Further according to the aforesaid Rules shares in respect of which dividend has notbeen paid or claimed by the shareholders for 7 (seven) consecutive years or more shallalso be transferred to the demat account created by the IEPF Authority. This Provision isnot applicable to your Company.
Our business is dependent on highway construction projects undertaken by large Indianand on infrastructure projects undertaken by government authorities funded by governmentsor by international and multilateral development finance institutions. We therefore mustdevelop and maintain strategic alliances with other construction developers that undertakecontracts for such infrastructure development projects and we intend to continue toexplore entering into Joint ventures consortia or sub-contract relationships for specificprojects with certain of these EPC contractors. In addition we develop and maintainrelationships and pre-qualified status with certain major clients and obtaining a share ofcontracts from such clients.
The Board of Directors state that no disclosure or reporting is required in respect ofthe following items as there were no transactions on these items during the year underreview:
1. As per rule 4(4) the Companies (Share Capital and Debentures) Rules 2014 theCompany has not issued equity shares with differential rights as to dividend voting orotherwise.
2. As per rule 8(13) the Companies (Share Capital and Debentures) Rules 2014 theCompany has not issued shares (including sweat equity shares) to employees of the Companyunder any scheme.
3. As per rule 12(9) the Companies (Share Capital and Debentures) Rules 2014 theCompany has not issued equity shares under the scheme of employee stock option.
Your Directors thank the various Central and State Government DepartmentsOrganizations and Agencies for the continued help and co-operation extended by them. TheDirectors also gratefully acknowledge all stakeholders of the Company viz. customersmembers dealers vendors banks and other business partners for the excellent supportreceived from them during the year and look forward to their continued support in future.The Directors place on record their sincere appreciation to all employees of the Companyfor their unstinted commitment and continued contribution to the Company.
| ||For and on behalf of Board |
| ||H.G. Infra Engineering Limited |
| ||Harendra Singh |
|Place-Jaipur ||Chairman & Managing Director |
|Date-24.05.2019 ||DIN-00402458 |