The Directors have pleasure in presenting the Ninth Annual Report along with theaudited accounts of the Company for the year ended March 31 2014.
1. Financial Results
| || || || ||Rs in crore |
|Particulars ||Consolidated ||Standalone |
| ||FY14 ||FY13 ||FY14 ||FY13 |
|Net Revenue from Operations ||7901.83 ||6979.49 ||6558.77 ||5592.08 |
|EBITDA ||493.27 ||381.40 ||372.89 ||231.09 |
|Finance Cost ||263.27 ||194.40 ||231.42 ||164.81 |
|Depreciation & Amortisation ||70.52 ||56.08 ||55.42 ||43.05 |
|Profit Before Tax ||155.10 ||146.83 ||150.86 ||43.74 |
|Tax Expenses ||88.34 ||81.79 ||65.27 ||39.18 |
|Profit After Tax ||66.75 ||65.04 ||85.59 ||4.56 |
|Proposed Dividend on equity shares ||18.05 ||15.22 ||18.05 ||15.03 |
|(including tax on dividend) || || || || |
|Transfer to General Reserve ||8.56 ||0.45 ||8.56 ||0.45 |
The Board of Directors has recommended a dividend of Rs 0.60 per equity share of Rs 2each for the year ended March 31 2014 on the equity share capital of the Companyaggregating to Rs 154253022 (Rupees Fifteen Crore Forty Two Lacs Fifty Three ThousandTwenty Two only). The dividend on equity shares is subject to the approval of the membersat the ensuing Annual General Meeting. Further the Board of Directors proposes to transferan amount of Rs 8.56 crore to the General Reserve.
On a consolidated basis the net revenue from operations increased by 13.21% to
Rs 7901.83 crore. The net Profit increased by 2.6% to Rs 66.75 crore. On a standalonebasis the net revenue from operations increased by 17.29% to Rs 6558.77 crore while thenet Profit was Rs 85.59 crore in FY14 as compared to Rs 4.56 crore in FY13.
During the year under review several measures have been taken for improving theperformance of the Company and to secure new orders across various businesses andgeographies. The order intake for the year increased by 13.34% to Rs 8482 crore. Theclosing order book has increased by 7.7% to Rs 10200 crore by FY14 end.
While the transmission business continued to perform well both in terms of revenue andProfitability the overall Profitability of the Company on consolidated basis was impacteddue to revenue de-growth in the wholly owned subsidiary
SAE Towers. It was also impacted due to time and cost overruns in Railways PowerSystems and Water businesses. In the Cables business Profitability was impacted due topricing pressure as also higher costs at the new manufacturing facility established atVadodara.
The key highlights for the Companys various businesses are as follows:
Power Transmission & Distribution: This is the Companys largest businessvertical which provides end-to-end solutions for power evacuation from generating stationsto consumer distribution points.
The order intake for the business increased by 12.1% to Rs 6951 crore. The orders camefrom across all the regions. These also include large value orders from Tanzania Rs(772 crore) Saudi Arabia (Rs 708 crore) and Afghanistan (Rs 590 crore).
The Company is also leveraging its strong global EPC expertise along with a localfoothold in American market through SAE Towers. During FY14 SAE towers entered in EPCbusiness and secured two transmission line EPC orders in Brazil. These orders were ofapprox. Rs 94 crore.
The Company also expanded its international presence in Substation space by securingorders in Laos Philippines Malaysia Saudi Arabia and Afghanistan during the year.Further the Company has increased its presence in Gas Insulated Substations (GIS) bysecuring a
Rs 102 crore order in Bihar.
SAE Towers completed expansion of its pole production capacity at its existing facilityin Mexico from 5000 MTs to 12000 MTs per annum. In addition to this the Company hasalso completed expansion of its tower manufacturing capacity at its existing facilities inJaipur Jabalpur and Nagpur from 174000 MTs to 211200 MTs per annum.
Cables: Consequent upon the commencement of the new plant at Vadodara themanufacturing facility at Thane has been closed down and the Company has entered into anagreement for sale of this land. The complete range of products manufactured at Thaneplant are now being manufactured at the Vadodara plant. The annual order intake for thebusiness increased by 26.5% to Rs 855 crore in FY14.
Railways: The Company has secured a large composite order from the Rail Vikas NigamLimited India. The order includes electrification civil works signalling andtelecommunication works in the state of Uttar Pradesh and the order value is Rs 228 crore.The Company also intends to target projects related to Metro and dedicated freightcorridors in partnerships with other Indian and foreign players.
Water: The Company secured two Sewage Treatment orders in Bengaluru and Uttarakhand oftotal Rs 205 crore. In addition to this it secured its first ever Dam construction orderin Madhya Pradesh of Rs 99 crore. Further it also secured Canal construction orders inMadhya Pradesh of
Rs 75 crore. Based on orders in hand and execution in FY14 the Company is alsobuilding its pre-qualification base in this business.
The Equity Shares of the Company continue to remain listed on BSE Limited and NationalStock Exchange of India Limited. Further during the year the Company has listed its equityshares on MCX Stock Exchange Limited. The stipulated listing fees for FY15 have been paidto all the above Stock Exchanges.
5. Fixed Deposits
The Company has not accepted any deposits within the meaning of Sections 58A and 58AAof the Companies Act 1956 and the Rules framed thereunder and any re-enactmentsthereof.
6. Conservation of Energy Technology Absorption Foreign Exchange Earnings andOutgo
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 217(1) (e) of theCompanies Act 1956 read with the Companies (Disclosure of Particulars in the Report ofBoard of Directors) Rules 1988 are provided in the prescribed format as an annexure tothis Report.
7. Management Discussion and Analysis and Corporate Governance Report
In compliance with Clause 49 of the Listing Agreement entered into with the StockExchanges a separate section on Management Discussion and Analysis as approved by theBoard of Directors which includes details on the state of affairs of the Company asrequired to be disclosed in the Directors Report forms a part of this Annual Report.Further the Corporate Governance Report duly approved by the Board of Directorstogether with a certificate from the Statutory Auditors confirming the compliance with therequirements of Clause 49 also forms a part of this Annual Report.
8. Subsidiary Companies
At the beginning of FY14 the Company had twenty two direct and step down subsidiarycompanies. One step down subsidiary company has been incorporated in Mexico to explore thebusiness opportunities in EPC business. Accordingly the number of direct and step downsubsidiaries of the Company stands increased to twenty three as on the date of thisReport. The details pertaining to subsidiaries are mentioned under the statement madepursuant to Section 212 of the Companies Act 1956 which forms a part of this AnnualReport.
Ministry of Corporate Affairs vide Circular No: 02 / 2011 dated February 08 2011 hassubject to compliance with certain conditions granted general exemption to the companiesfrom applicability of Section 212 of the Companies Act 1956. As per the generalexemption a statement containing brief financial details of the Companyssubsidiaries for the year ended March 31 2014 is included in this Annual Report. TheAnnual Accounts of these subsidiaries and the related detailed information will be madeavailable to any Member of the Company / its subsidiaries seeking such information at anypoint of time and are also available for inspection by any Member of the Company / itssubsidiary(ies) at the Registered Office of the Company / its subsidiary(ies).
9. Consolidated Financial Statements
In accordance with Clause 32 of the Listing Agreement entered into with the StockExchanges the Consolidated Financial Statements of the Company including the financialdetails of all the subsidiary companies of the Company forms part of this Annual Report.The consolidated Financial Statements have been prepared in accordance with the AccountingStandards issued by the Institute of Chartered Accountants of India.
In accordance with the provisions of the Companies Act2013Mr.H.V.GoenkaandMr.A.T.Vaswaniareliabletoretire by rotation and eligible forre-appointment at the ensuing Annual General Meeting. Further the Board of Directors hasappointed Mr. Vinayak Chatterjee as an Additional Director w.e.f. April 30 2014. Pursuantto Section 161 of the Companies Act 2013 and Article 124 of the Articles of Associationof the Company Mr. Vinayak Chatterjee holds Office upto the date of the ensuing AnnualGeneral Meeting of the Company and is eligible for appointment as Director. Further as perthe provisions of the Companies Act 2013 the independent directors of the Company willhave to be appointed by the members for a term upto five years and no independentdirector shall be liable to retire by rotation. Further Mr. S. S. Thakur Mr. G. L.Mirchandani Mr. D. G. Piramal Mr. S. M. Kulkarni Mr. S. M. Trehan and Mr.Vinayak Chatterjee have given declaration to the Company under Section 149(6) of theCompanies Act 2013 that they qualify the criteria of independence mentioned under thatsub-section. Accordingly it is proposed to appoint them as independent directors notliable to retire by rotation for a term of five years from the ensuing Annual GeneralMeeting.
In view of the provisions of Section 165 of the Companies Act 2013 which restrictsthe directorship of a director in ten public limited companies and the proposed amendmentto the Listing Agreement entered into with the Stock Exchanges which restricts thedirectorships of independent directors to seven listed companies only Mr. M. K. Sharmawho was a director of the Company resigned from his Office w.e.f. March 31 2014. TheBoard places on record its sincere appreciation for the valuable services rendered by Mr.M. K. Sharma during his tenure as the Member of the Board.
In compliance with Clause 49 IV (G) of the Listing Agreement brief resume expertiseand other details of all the directors proposed to be appointed / re-appointed areattached to the Notice of the ensuing Annual General Meeting.
The Board of Directors recommends to the members the appointment of the above referredindependent directors and the re-appointment of Mr. H. V. Goenka and Mr. A. T. Vaswani asthe directors of the Company.
In view of the provisions of Section 139 of the Companies Act 2013 and the Rules madethereunder a listed company cannot appoint an audit firm as the Auditors of the Companyfor more than two terms of five consecutive years and which shall be subject toratification by the members at every Annual General Meeting. For reckoning this term theperiod already served by the firm as auditors shall be counted. According to theIllustration 2 appended to sub-rule 3 of Rule 6 of the Companies (Audit and Auditors)Rules 2014 every firm of the Auditors who has completed 7 or more years as an Auditor ofthe prescribed classes of companies (including listed companies) can be appointed as anAuditor for a further period upto three years only. Accordingly Delloitte Haskins &Sells (DHS) is entitled to be appointed as Statutory Auditors of the Company for a furtherperiod upto three years. In view of the same it is proposed to appoint DHS as theStatutory Auditors of the Company to hold Office from the conclusion of the ensuing AnnualGeneral Meeting until the conclusion of the Twelfth Annual General Meeting and toauthorise the Board of Directors to fix their remuneration. The Company has received aletter from DHS to the effect that their appointment if made would be within the limitsprescribed under the provisions of the Companies Act 2013 and that they are notdisqualified for such appointment within the meaning of the said Act. The Board ofDirectors recommends the appointment of DHS as the Statutory Auditors of the Company for aperiod of three years.
In terms of Section 143(8) of the Companies Act 2013 the audit of the accounts of thebranch Offices of the Company located outside India is required to be conducted by theperson(s) or firm(s) qualified to act as Branch Auditors. The Board of Directorsrecommends to the members to pass the resolution as stated in Item No.6 of the Noticeconvening the ensuing Annual General Meeting.
The Central Government has approved the appointment of M/s. Kirit Mehta & Co. CostAccountants Mumbai as Cost Auditors for conducting Cost Audit in relation to ElectricalCables and Conductors and Steel Towers manufactured by the Company for FY14 under TheCompanies (Cost Accounting Records) Rules 2011. The Cost Audit Report and the ComplianceReport for FY13 was filed by the Cost Auditors with the Ministry of Corporate Affairs onSeptember 30 2013.
12. Policy on Code of Conduct and Ethics
The RPG Group has laid down a Code of Conduct and Ethics (Code) applicable to all theemployees in RPG Group companies. The Code provides for the matters related to governancecompliance ethics and other matters within the RPG Group companies. The Code alsoincludes the policy on Prevention Prohibition and Redressal of Sexual Harassment of Womenat Workplace in accordance with the provisions of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
13. Awards Received During the Year
For FY 14 the Company was conferred with the Utkrishta Puraskar i.e. BestTransmission Line Company Award and Sahbhagita Puraskar i.e. Support OutsideLine of Duty Award from Power Grid Corporation of India Limited. Further the Company alsowon the prestigious "Best Employer Award 2013" by Aon Hewitt and the"Indo-American Corporate Excellence Award" by the Indo-American Chambers ofCommerce for best Indian company operating in US. The details of these Awards &Recognition are mentioned on page 18 & 19 of this Annual Report
14. Directors Responsibility Statement
The Board of Directors would like to affirm that the financial statements for the yearunder review conform in their entirety to the requirements of the Companies Act 1956. Asstipulated in Section 217(2AA) of the Companies Act 1956 the Board of Directors of theCompany hereby state and confirm that:
(i) in the preparation of the annual accounts for the year ended March 31 2014 theapplicable Accounting Standards have been followed; (ii) such accounting policies havebeen selected and applied consistently and judgments and estimates made that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the Profit of the Company for the yearunder review; (iii) proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; (iv) the annual accounts for the financial year ended March 312014 have been prepared on a going concern basis.
15. Particulars of Employees
In terms of provisions of Section 217(2A) of the Companies Act 1956 read with theCompanies (Particulars of Employees) Rules 1975 as amended the names and otherparticulars of the employees are required to be set out in the Annexure to theDirectors Report. However as per the provisions of Section 219(1)(b)(iv) of thesaid Act the Annual Report excluding the aforesaid information is being sent to all themembers of the Company and others entitled thereto. Members who are desirous of obtainingsuch particulars are requested to write to the Company Secretary of the Company.
Your Directors take this opportunity to thank the Customers Vendors FinancialInstitutions Banks and all other stakeholders for their continued co-operation andsupport to the Company. Further the Directors would also like to thank the Central andState Government authorities and Regulatory authorities for their support.
Your Directors appreciate and value the trust reposed and faith shown by everyshareholder of the Company.
Last but not least the Board wishes to place on record its deep gratitude to all itsemployees whose enthusiasm team efforts devotion and sense of belongingness has madethis Company proud.
| ||For and on behalf of the Board of Directors |
| ||H. V. Goenka |
| ||Chairman |
|Place: Mumbai || |
|Date: April 30 2014 || |