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KNR Constructions Ltd.

BSE: 532942 Sector: Infrastructure
NSE: KNRCON ISIN Code: INE634I01029
BSE 00:00 | 18 Sep 269.25 4.65
(1.76%)
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266.25

HIGH

271.95

LOW

264.05

NSE 00:00 | 18 Sep 269.95 5.25
(1.98%)
OPEN

265.20

HIGH

271.80

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OPEN 266.25
PREVIOUS CLOSE 264.60
VOLUME 5532
52-Week high 311.05
52-Week low 171.65
P/E 16.92
Mkt Cap.(Rs cr) 3,786
Buy Price 268.00
Buy Qty 100.00
Sell Price 269.90
Sell Qty 99.00
OPEN 266.25
CLOSE 264.60
VOLUME 5532
52-Week high 311.05
52-Week low 171.65
P/E 16.92
Mkt Cap.(Rs cr) 3,786
Buy Price 268.00
Buy Qty 100.00
Sell Price 269.90
Sell Qty 99.00

KNR Constructions Ltd. (KNRCON) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Twenty Fourth Annual Report and the Company'saudited financial statement for the financial year ended March 31 2019.

FINANCIAL RESULTS

The Company's financial performance for the year ended March 31 2019 is summarisedbelow:

(Rs in Lakhs)
Particulars Year Ended March 31 2019 Year Ended March 31 2018
Total revenue (including other income) 220064.20 197096.70
Profit before interest depreciation and tax 48780.08 42544.07
Less: Interest and financial charges 2910.25 2314.42
Profit Before depreciation 45869.83 40229.65
Less: Depreciation and amortization 16810.65 13414.59
Profit before tax 29059.18 26815.06
Provision for tax (including Deferred Tax) 2732.68 (394.17)
Profit after tax 26326.50 27209.23
Profit brought forward from previous year 97612.78 71249.77
Profit available for appropriation 123939.28 98459.00
Appropriations:
Dividend (562.47) (703.09)
Dividend tax (115.62) (143.13)
Balance carried forward 123261.19 97612.78
Paid Up capital 2812.35 2812.35
Other Equity 138618.54 112970.90

RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS

The highlights ofthe Company's performance are as under: Revenue from operations Rs213725.62 Lakhs PBDIT(Excluding Other Income) increased by 10.55 % to '. 42441.50 LakhsProfit before Tax increased by 8.37% to Rs 29059.18 Lakhs Cash Profit increased by 5.19%to '. 43137.15 Lakhs Net Profit decreased by -3.24% to Rs 26326.50 Lakhs The order bookposition as on 31st March 2019 stands at Rs 401560 Lakhs.

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 statement of profit and loss andother comprehensive income) as on 31st March 2019 is Rs 138518.54 Lakhs as against thePaid-up capital ofRs 2812.35 Lakhs

Dividend

The Board of Directors has recommended final dividend ofRs 0.40 per Equity Share ofRs2.00 Each for the financial year ended 31st March 2019 amounting to 552.47 Lakhs subjectto approval ofthe shareholders. The dividend will be paid to the members whose namesappear in the Register of Members as on 23rd September 2019 in respect of shares held inthe dematerialized form it will be paid to members whose names are furnished by NationalSecurities Depository Limited and Central Depository Services (India) Limited asbeneficial owners as on that date. The dividend recommended by your Directors if approvedat the ensuring Annual General Meeting by the Shareholders would be paid within thestipulated time.

The dividend payout for the year under review has been formulated in accordance withthe Company's policy linked with long term performance keeping in view the company's needfor capital for its growth plans and the intent to finance such plans through internalaccruals to the maximum. The Dividend Distribution Policy ofthe Company is annexedherewith marked as Annexure IV to this Report. There has been no change in the policyduring the year.

Management Discussion and Analysis Statement

Management's Discussion and Analysis report for the year under review as stipulatedunder Regulation 34(2) (e) SEBI (LODR) Regulation 2015 of the LODR Regulations 2015 ispresented in a separate section forming part of the Annual report

Transferto the Investor Education and Protection Fund

In terms of Section 125 ofthe Companies Act 2013 an amount ofRs 57582/- beingunclaimed dividend for the Financial Year 2010-2011 was transferred to the InvestorEducation and Protection fund (IEPF) established by the Central Government during the yearunder review.

Company has transferred 8552 unclaimed equity shares to IEPF account.

Members are requested to note that dividends not encashed or remaining unclaimed for aperiod of 7 (seven) years from the date of transfer to the Company's Unpaid DividendAccount shall be transferred to the Investor Education and Protection Fund("IEPF") established by the Central Government. Further pursuant to theprovisions of Section 124 of the Act read with the Investor Education and Protection FundAuthority (Accounting Audit Transfer and Refund) Rules 2015 ('IEPF Rules') as amendedfrom time to time all shares on which dividend has not been paid or claimed for sevenconsecutive years or more shall be transferred to IEPF Authority as notified by theMinistry of Corporate Affairs.

The Members/Claimants whose shares unclaimed dividend have been transferred to IEPFmay claim the shares or apply for refund by making an application to IEPF Authority inForm IEPF 5 which is available on www.iepf.gov.in and on the website of the Companywww.cclproducts.com along with requisite fee as decided by it from time to time.

Members who have not yet encashed the dividend warrants from the financial year ended31st March 2010 onwards are requested to forward their claims to the Company's Registrarand Share Transfer Agents without any further delay. It is in Members' interest to claimany un-encashed dividends and for future opt for Electronic Clearing Service so thatdividends paid by the Company are credited to the Members' account on time. It may benoted that once the unclaimed dividend is transferred to IEPF as above no claim shallrest with the Company in respect of such amount. It may also be noted that the unclaimeddividend amount which were lying with the Company upto the year ended on 31st March 2011have already been transferred to IEPF. The details of the unclaimed dividends areavailable on the Company's website at www.cclproducts.com and on the website of Ministryof Corporate Affairs at www.mca.gov. in. Members are requested to contact the Company'sRegistrar and Share Transfer Agent or the Company to claim the unclaimed/unpaid dividends.

Subsidiaries Joint Ventures and Associate Companies

During the year under review 4 new wholly owned subsidiaries has been incorporated bythe Company for execution of HAM Projects and no company has ceased to be company'ssubsidiary and during the year the no new Joint Ventures were entered by the company asper the provisions of section 129 of the Companies Act 2013 read with Companies(Accounts) Rules 2014 a separate statement containing the salient features of thefinancial statements of the subsidiary Companies and Joint Ventures is prepared in FormAOC-1 and it forms part of the consolidated financial statements and hence not repeatedhere for the sake of brevity.

The Policy for determining material subsidiaries as approved by the Board may beaccessed on the Company's website: www. knrcl.com

Consolidated Financial Statements

The consolidated financial statements in terms of Section 129 of the Companies Act2013 and pursuant to Regulation 33 of SEBI(LODR) Regulations 2015 and prepared inaccordance with Accounting Standard 21 as specified in the Companies (AccountingStandards) Rules 2014 forms a part of this annual report.

As per the provisions of Section 135 of the Companies Act 2013 the Company has placedseparate audited accounts of its Subsidiaries on its website www.knrcl.com and copy ofseparate audited accounts of its Subsidiaries will be provided to the members at theirrequest.

Directors' Responsibility Statement

Pursuant to the requirements under Section 134 (3) (c ) of the Companies Act 2013with respect to Directors' Responsibility Statement Your Directors hereby confirmed that:

(a) in the preparation ofthe annual accounts for the year ended March 31 2019 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;

b) the Directors have 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 ofthe state of affairs ofthe Company as at March 31 2019 and ofthe profit oftheCompany for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions ofthe Act for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a ‘going concern' basis;

e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

Corporate Governance

The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. The report on CorporateGovernance as stipulated under the LODR Regulations forms an integral part of this Report.The requisite certificate from the Auditors of the Company confirming compliance with theconditions of corporate governance is attached to the report on Corporate Governance.Corporate Social Responsibility (CSR)

The Corporate Social Responsibility Committee (CSR Committee) has formulated andrecommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicatingthe activities to be undertaken by the Company which has been approved by the Board.

The CSR Policy may be accessed on the Company's website at the link:http://www.knrcl.com/images/knrcl_CSR.pdf

Name Designation Category
Shri L. B. Reddy Chairman Non-Executive and Independent Director
Shri B. V. Rama Rao Member Non-Executive and Independent Director
Shri K. Jalandhar Reddy Member Executive and Non- Independent Director

Composition ofthe CSR Committee

The Company has identified three focus areas of engagement which are as under:

1. Promoting education including special education and employment enhancing vocationskills especially among children women elderly and the differently abled and livelihoodenhancement projects

2. Rural development projects

3. Promoting gender equality empowering women setting up homes and hostels for womenand orphans; setting up old age homes day care centres and such other facilities forsenior citizens and measures for reducing inequalities faced by socially and economicallybackward groups;

The Company as part of its Corporate Social Responsibility (CSR) initiative undertookprojects like promotion of education in rural areas infrastructure and maintenance andrenovation ofold age homes.

The Annual Report on CSR activities is annexed herewith as "Annexure I" tothis report and CSR Policy is posted on the website of the Company and the web link ishttp://www.knrcl.com/images/ knrcl_CSR.pdf

Directors

In accordance with the requirements of the Companies Act 2013 Shri K Jalandhar ReddyDirector ofthe Company is liable to retire by rotation at the Annual General Meeting andbeing eligible offer themselves for reappointment at the ensuring Annual General Meeting.

Brief resume ofthe Director proposed to be reappointed nature of their expertise inspecific functional areas names of the companies in which they hold directorships andrelationships between directors inter-se as stipulated under LODR Regulations enteredwith the Stock Exchanges in India are provided in the Report on Corporate Governance.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed both under theAct and LODR Regulations entered with the Stock Exchanges.

The Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which include criteria for performanceevaluation of the non-executive directors and executive directors.

The Board of Directors has complete access to the information within the Company.Independent Directors have the freedom to interact with the Company's management.Interactions happen during Board / Committee meetings when MD / ED are asked to makepresentations about performance of the Company to the Board. Apart from this they alsohave independent interactions with the Statutory Auditors the Internal Auditors andexternal advisors appointed from time to time. Further they meet without the presence ofany management personnel and their meetings are conducted informally to enable theIndependent Directors to discuss matters pertaining to the Company's affairs and put forththeir combined views to the Board of Directors ofthe Company.

Statutory Auditors

M/s K P Rao & Co. Chartered Accountants were appointed as Statutory Auditors ofthe Company at the 22nd Annual General Meeting held on 28th September 2017 for a periodof 5 years ie. upto conclusion of 27th AGM to be held in the year 2022. Pursuant toNotification issued by the Ministry of Corporate Affairs on 7th 2018 amending section 139ofthe Companies Act 2013 and the Rules framed thereunder the mandatory requirement forratification of appointment of Auditors by the Members at every Annual General Meeting("AGM") has been omitted and hence the Company is not proposing an item onratification ofappointment ofAuditors at this AGM.

Internal Auditor & Controls

The Board of Directors based on the recommendation of the Audit Committee hasre-appointed M/s. K. P. Rao Associates Chartered Accountants Hyderabad as the InternalAuditors of your Company. The Internal Auditors are submitting their reports on quarterlybasis. Internal Auditors findings are discussed and suitable corrective actions are takenas per the directions of Audit Committee on an on-going basis to improve efficiency inoperations.

The Company's internal control systems are well established and commensurate with thenature of its business and the size and complexity of its operations. The Audit Committeereviews adequacy and effectiveness of the Company's internal control environment andmonitors the implementation of audit recommendations. The recommendations/suggestions ofthe internal auditors are discussed in the Audit Committee meetings periodically.

Cost Auditors

In accordance with Section 141 of the Companies Act 2013 (corresponding Section 233Bof the Companies Act 1956) and the MCA General Circular No. 15/2011 dated April 11 2011(as amended vide General Circular No. 36/2012 dated November 6 2012) the Audit Committeehas recommended and the Board of Directors had appointed K.K. Rao Cost AccountantsHyderabad being eligible and having sought re-appointment as Cost Auditors of theCompany to carry out the cost audit for the Company during the financial year 2019-20.

Secretarial Auditor

In accordance with Section 204 of the Companies Act 2013 the Board has appointed M/s.VCSR & Associates Company Secretaries to conduct Secretarial Audit for the FY2018-19. The Secretarial Audit Report for the financial year ended March 31 2019 isannexed herewith marked as Annexure II to this Report.

Contracts and arrangements with Related parties

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at thelink: http://www.knrcl.com/images/policy_on_materiality.pdf Your Directors draw attentionofthe members to Notes to the financial statement which sets out related partytransactions and disclosures.

Conservation of energy technology absorption and foreign exchange earnings and out go:

The particulars relating to Conservation of Energy Technology absorption ForeignExchange earnings and outgo as required under section 217 (1) (e) of the Companies Act1956 read with Companies (Disclosure of particulars in the Report of Board of Directors)Rules 1988 are as follows

a) Conservation of Energy

The Company has taken suitable measures for conservation of energy. The core activityof the company is civil construction that is not an energy intensive activity.

b) Technology absorption Adoption and Innovation There is no information to befurnished regarding Technology Absorption as your Company has not undertaken any researchand development activity in any manufacturing activity nor any specific technology isobtained from any external sources which needs to be absorbed or adopted.

I nnovation is a culture in the Company to achieve cost efficiency in the constructionactivity to be more and more competitive in the prevailing environment that cannot bequantified.

Foreign Exchange Earnings And Outgo Foreign Exchange Inwards - Nil Foreign Exchangeoutgo towards

a) Travel - ' Nil (PY Rs 130.30 lakhs)

b) Import of capital goods and Stores & Spares Rs 70.40 lakhs (PY Rs 1938.79 Lakhs)

c) Advance / Loan to Subsidiaries - Nil (PY Nil Lakhs)

d) Term Loan Repayment and interest - Nil (PY Nil Lakhs) Fixed Deposits

Your Company has not accepted any deposits covered by the provisions of Section 73 ofthe Companies Act 2013 and the Rules framed there under.

Industrial Relations

Your Directors are happy to report that the Industrial Relations have been extremelycordial at all levels throughout the year. Your Directors record their appreciation forsincere efforts support and co-operation of all employees being extended from time totime to accelerate the growth ofthe Company. Disclosures Audit Committee

The Audit Committee comprises majority Independent Directors namely Shri L. B Reddy(Chairman) Shri B V Rama Rao and Shri K Jalandhar Reddy as other members. All therecommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Company has a Vigil mechanism and Whistle blower policy in terms of the LODRRegulations under which the employees are free to report violations of applicable lawsand regulations and the Code of Conduct. Protected disclosures can be made by a whistleblower through a dedicated e-mail or a letter to the Chairman of the Audit Committee. ThePolicy on vigil mechanism and whistle blower policy may be accessed on the Company'swebsite at the link: http://www.knrcl.com/images/ knrcl_whistleblower.pdf Meetings of theBoard

Seven meetings ofthe Board of Directors were held during the year under review. Forfurther details please refer report on Corporate Governance of this Annual Report.

Code of Conduct

A declaration regarding compliance with the code of conduct signed by the Company'sManaging Director is published in the Corporate Governance Report which forms part oftheannual report.

Particulars of Loans given Investments made Guarantees given and Securities provided

Particulars of loans given investments made guarantees given and securities providedare provided in the standalone financial statement.

Extract of Annual Return

Extract of Annual Return ofthe Company is annexed herewith as Annexure III to thisReport and the same is available on the Company's website www.knrcl.com

Particulars of Employees

The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployeesofthe Company is as follows:

The percentage of increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year 2018-19 ratio ofthe remuneration of eachDirector to the median remuneration ofthe employees ofthe Company for the financial year2018-19 and the comparison of remuneration of each Key Managerial Personnel (KMP) againstthe performance of the Company are as under:

Sl. No. Name of Director/KMP and Designation Remuneration of Director/KMP for financial year 2018-19 (Rs in lakhs) % increase in Remuneration in the Financial Year 2018-19 Ratio of remuneration of each Director/ to median remuneration of employees Comparison ofthe Remuneration of the KMP against the performance of the Company
1 K Narsimha Reddy Managing Director 558.00 10.71% 308 Profit before Tax and exceptional item increased by 9.32% and Profit After Tax and comprehensive income decreased by 2.79% in financial Year 2018-19
2 K Jalandhar Reddy Executive Director and CFO 372.00 10.44% 205
3 M V Venkata Rao Company Secretary 13.20 0.00% 7
4 S.Vaikuntanathan V.P (F&A) 29.70 0.00% 16

* Remuneration is excluding Employer PF contribution and Gratuity.

During the period under review no employee ofthe Company is employed throughout thefinancial year and in receipt ofRs 102.00 lakhs or more or employed for part of the yearand in receipt ofRs 8.5 lakhs or more a month or was in receipt of remuneration in excessof that drawn by the managing director or whole time director or manager and holds byhimself or long with his spouse and dependent children not less than two percent oftheequity shares ofthe company under Rule 5(2) of Companies (Appointment and RemunerationofManagerial Personnel) Rules 2014.

Further details of top ten employees in terms of remuneration drawn during thefinancial year ended 31st March 2019 as required under Rule 5(2) ofthe Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014andas amended are :

Sl. No. Name of the Employee & Designation Age (years) Qualification *Gross Remuneration in ' Experience (years) Date of Commencement of Employment Previous Employment % of holding in the Company
1 Sri K. Narsimha Reddy Managing Director 71 B.A 55800000 50 Yrs 11.07.1995 - 32.53%
2 Sri K.Jalandhar Reddy Executive Director & CFO 48 B.E Computers 38640000 22 Yrs 11.07.1995 - 13.95%
3 Sri K.Shankar Reddy Vice President 48 B.Tech Civil 6000000 22 Yrs 01.10.1999 Rani Constructions
4 Sri Maj. T.L. Varma Sr.VicePresident - Technical 63 B.E. Civil 5448667 39 Yrs 12.07.2011 LANCO
5 Sri.V.Narasimha Ramana Sr.Vice President - Technical 56 M.Tech Civil 5408900 31 Yrs 09.06.2018 BSCPL
6 Sri V. Venugopal Reddy Director Projects 42 B.E 5034000 18 Yrs 21.08.2000 - 0.09%
7 Sri.E.Srinivasa Rao Vice President - Technical 55 B.E Civil 3800000 24 Yrs 02.12.2012 Navayuga --
8 Sri. T. Bhaskar Rao Sr.Vice President - Technical 52 M.Tech Civil 3645000 32 Yrs 06.08.2018 GVR Infra Projects
9 Sri. S. Vaikuntanathan Vice President (F&A) 64 FCA 2992688 38 Yrs 07.01.2016 Vaibhav Jyothi Power --
10 Sri.B.Phani Kumar Sr.Project Manager 53 B.Tech Civil 2864000 33 Yrs 14.10.2014 Balaji Rail Road Systems

• None of the above employees were relative of any Directors except Sri KJalandhar Reddy who is son of Shri K Narsimha Reddy.

• All appointments are / were contractual in accordance with terms and conditionsas per Company rules.

* Gross Remuneration includes perquisites and contribution to Provident fund by theemployer.

ii) The median remuneration of employees of the Company during the financial year wasRs 1.81 lakhs;

iii) In the financial year there was increase of 17.97% in the median remunerationofemployees;

iv) There were 1542 employees on the rolls of Company as on March 31 2019

v) Relationship between average increase in remuneration and company performance: - TheProfit before tax and exceptional items for the financial year ended March 31 2019increased by 9.32% whereas the increase in median remuneration was 17.97%

vi) Comparison of Remuneration of the Key Managerial Personnel(s) against theperformance ofthe Company: The total remuneration of Key Managerial Personnel was Rs973.59 lakhs whereas the Profit before tax and after exceptional item was Rs. 29059.18lakhs in FY 2018-19

vii) a) Variations in the market capitalisation of the Company: The marketcapitalisation as on March 31 2019 at NSE was Rs 364901.89 lakhs (Rs. 399353.13 lakhsas on March 31 2018)

b) Price Earnings ratio of the Company at NSE was 13.86 as at March 31 2019 and was14.67 as at March 312018;

viii) Average percentage increase made in the salaries of employees other than themanagerial personnel in the last financial year i.e. 2018-19 was 31.27% whereas theincrease in the managerial remuneration for the same financial year was 10.09%

ix) The key parameters for any variable component of remuneration availed by thedirectors: Not applicable

x) The ratio of the remuneration of the highest paid director to that ofthe employeeswho are not directors but received remuneration in excess ofthe highest paid directorduring the year - Not Applicable; and

xi) It is hereby affirmed that the remuneration paid is as per the Remuneration Policyfor Directors Key Managerial Personnel and other Employees.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of women at Workplacein accordance with The Sexual Harassment of women at Workplace (Prevention Prohibitionand Redressal) Act 2013.

During the year under review the Company has not received any complaints pertaining toSexual Harassment.

General

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOP referred to in this Report.

4. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

Appreciation and Acknowledgements Your Directors wish to place on record theirgratitude to the Company's shareholders customers vendors and bankers for theircontinued support to KNRCL's growth initiatives. Your Directors also wish to place onrecord their appreciation of the contribution made by employees at all levels whothrough their competence sincerity hard work solidarity and dedicated support haveenabled your Company to make rapid strides in its business initiatives. Your Directorsalso thank the Central and State Governments and their various agencies particularly theNational Highway Authority of India and other Governmental agencies for extending theirsupport during the year and look forward to their continued support.

On behalfofthe Board of Directors of KNR Constructions Limited
Place: Hyderabad K Narsimha Reddy K Jalandhar Reddy
Date: 14.08.2019 Managing Director Executive Director