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KNR Constructions Ltd.

BSE: 532942 Sector: Infrastructure
NSE: KNRCON ISIN Code: INE634I01029
BSE 11:59 | 13 Dec 188.95 -2.75
(-1.43%)
OPEN

190.90

HIGH

195.10

LOW

186.35

NSE 11:49 | 13 Dec 189.00 -2.75
(-1.43%)
OPEN

193.45

HIGH

193.80

LOW

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OPEN 190.90
PREVIOUS CLOSE 191.70
VOLUME 4061
52-Week high 348.80
52-Week low 163.30
P/E 10.05
Mkt Cap.(Rs cr) 2,657
Buy Price 188.90
Buy Qty 50.00
Sell Price 189.45
Sell Qty 112.00
OPEN 190.90
CLOSE 191.70
VOLUME 4061
52-Week high 348.80
52-Week low 163.30
P/E 10.05
Mkt Cap.(Rs cr) 2,657
Buy Price 188.90
Buy Qty 50.00
Sell Price 189.45
Sell Qty 112.00

KNR Constructions Ltd. (KNRCON) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Twenty Third Annual Reportand the Company's audited financial statement for the financial year ended March 31 2018.

FINANCIAL RESULTS

The Company's financial performance for the year ended March 31 2018is summarised below:

(different in Lakhs)

Year ended

Year ended

Particulars

March 31 2018

March 31 2017

Total revenue (including other income)

197096.70

157132.83

Profit before interest depreciation and tax

42544.07

24898.89

Less: Interest and financial charges

2314.42

2189.88

Profit Before depreciation

40229.65

22709.01

Less: Depreciation and amortization

13414.59

6387.32

Profit before tax

26815.06

16321.69

Provision for tax (including Deferred Tax )

(394.17)

596.59

Profit after tax

27209.23

15725.10

Profit brought forward from previous year

71249.77

55524.67

Profit available for appropriation

98459.00

71249.77

Appropriations:
Dividend

(703.09)

-

Dividend tax

(143.13)

-

Balance carried forward

97612.78

71249.77

Paid Up capital

2812.35

2812.35

Other Equity

112970.90

86735.09

RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS

The highlights of the Company's performance are as under:

Revenue from operations different 187563.54 Lakhs

PBDIT(Excluding Other Income) increased by 68.19 % to different38612.82 Lakhs Profit before Tax increased by 54.04% to different 26815.06 Lakhs CashProfit increased by 83.71% to different 40623.82 Lakhs Net Profit increased by 71.66% todifferent 27082.03 Lakhs The order book position as on 31st March 2018 stands atdifferent 232656.51 Lakhs.

Reserves

The Company is not proposing to transfer any amount to the GeneralReserves of the Company out of the profits made during the year. The total Other Equity(including securities premium Reserves General Reserves Surplus in statement of profitand loss and other comprehensive income) as on 31st March 2018 is different 112970.90Lakhs as against the Paid-up capital of different 2812.35 Lakhs

Dividend

The Board of Directors has recommended final dividend of different 0.40per Equity Share of different 2.00 Each for the financial year ended 31st March 2018amounting to different 562.47 Lakhs subject to approval of the shareholders. The dividendwill be paid to the members whose names appear in the Register of Members as on 22ndSeptember 2018 in respect of shares held in the dematerialized form it will be paid tomembers whose names are furnished by National Securities Depository Limited and CentralDepository Services (India) Limited as beneficial owners as on that date. Thedividend recommended by your Directors if approved at the ensuring Annual General Meetingby the Shareholders would be paid within the stipulated time. The dividend payout for theyear under review has been formulated in accordance with the Company's policy linked withlong term performance keeping in view the company's need for capital for its growth plansand the intent to finance such plans through internal accruals to the maximum.

Management Discussion and Analysis Statement

Management's Discussion and Analysis report for the year under reviewas stipulated under Regulation 34(2) (e) SEBI (LODR) Regulation 2015 of the LODRRegulations 2015 is presented in a separate section forming part of the Annual report

Transfer to the Investor Education and Protection Fund

In terms of Section 125 of the Companies Act 2013 an amount ofdifferent 57016/- being unclaimed dividend for the Financial Year 2009 - 10 wastransferred to the Investor Education and Protection fund (IEPF) established by theCentral Government during the year under review.

Subsidiaries Joint Ventures and Associate Companies

During the year under review no companies have become or ceased to becompany's subsidiaries and during the year the no new Joint Ventures were entered by thecompany as per the provisions of section 129 of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 a separate statement containing the salient features ofthe financial statements of the subsidiary Companies and Joint Ventures is prepared inForm AOC-1 and it forms part of the consolidated financial statements and hence notrepeated here for the sake of brevity. The Policy for determining material subsidiaries asapproved by the Board may be accessed on the Company's website: www. knrcl.com

Consolidated Financial Statements

The consolidated financial statements in terms of Section 129 of theCompanies Act 2013 and pursuant to Regulation 33 of SEBI(LODR) Regulations 2015 andprepared in accordance with Accounting Standard 21 as specified in the Companies(Accounting Standards) Rules 2014 forms a part of this annual report. As per theprovisions of Section 136 of the Companies Act 2013 the Company has placed separateaudited accounts of its Subsidiaries on its website www.knrcl.com and copy of separateaudited accounts of its Subsidiaries will be provided to the members at their request.

Directors' Responsibility Statement

Pursuant to the requirements under Section 134 (3) (c ) of theCompanies Act 2013 with respect to Directors' Responsibility Statement Your Directorshereby confirmed that: a. in the preparation of the annual accounts for the year endedMarch 31 2018 the applicable accounting standards read with requirements set out underSchedule III to the Act have been followed and there are no material departures from thesame; b. the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2018 andof the profit of the Company for the year ended on that date; c. the Directors have takenproper and su3 cient care for the maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; d. the Directors have preparedthe annual accounts on a ‘going concern' basis; e. the Directors have laid downinternal financial controls to be followed by the Company and that such internal financialcontrols are adequate and are operating effectively; and f. the Directors have devisedproper systems to ensure compliance with the provisions of all applicable laws and thatsuch systems are adequate and operating effectively.

Corporate Governance

The Company is commi3 ed to maintain the highest standards of corporategovernance and adhere to the corporate governance requirements set out by SEBI. The reporton Corporate Governance as stipulated under the LODR Regulations forms an integral part ofthis Report. The requisite certificate from the Auditors of the Company confirmingcompliance with the conditions of corporate governance is a3 ached to the report onCorporate Governance.

Corporate Social Responsibility (CSR)

The Corporate Social Responsibility Committee (CSR committee) hasformulated and recommended to the Board a Corporate Social Responsibility Policy (CSRPolicy) indicating the activities to be undertaken by the Company which has been approvedby the Board.

The CSR Policy may be accessed on the Company's website at the link: h3p://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 of the CSR Committee

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

1. Promoting education including special education and employmentenhancing vocation skills especially among children women elderly and the differentlyabled and livelihood enhancement projects

2. Rural development projects

3. Promoting gender equality empowering women setting up homes andhostels for women and orphans; setting up old age homes day care centres and such otherfacilities for senior citizens and measures for reducing inequalities faced by sociallyand economically backward groups; The Company as part of its Corporate SocialResponsibility (CSR) initiative undertook projects like promotion of education in ruralareas infrastructure and maintenance and renovation of old age homes.

The Annual Report on CSR activities is annexed herewith as"Annexure I" to this report and CSR Policy is posted on the website of theCompany and the web link is h3 p://www.knrcl.com/ images/knrcl_CSR.pdf

Directors

In accordance with the requirements of the Companies Act 2013 Smt. K .Yashoda Director of the Company is liable to retire by rotation at the Annual GeneralMeeting and being eligible offer themselves for reappointment at the ensuring AnnualGeneral Meeting. Brief resume of the Director proposed to be reappointed nature of theirexpertise in specific functional areas names of the companies in which they holddirectorships and relationships between directors inter-se as stipulated under LODRRegulations entered with the Stock Exchanges in India are provided in the Report onCorporate Governance.

The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet with the criteria of independence asprescribed both under the Act and LODR Regulations entered with the Stock Exchanges.

The Company has devised a Policy for performance evaluation ofIndependent Directors Board and other individual Directors which include criteria forperformance evaluation of the non-executive directors and executive directors.

The Board of Directors has complete access to the information withinthe Company. Independent Directors have the freedom to interact with the Company'smanagement. Interactions happen during Board / Committee meetings when MD / ED are askedto make presentations about performance of the Company to the Board. Apart from this theyalso have 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 of the Company.

Statutory Auditors

M/s K P Rao & Co. Chartered Accountants were appointed asStatutory Auditors of the Company at the 22nd Annual General

Meeting held on September 28 2017 for a period of 5 years ie. uptoconclusion of 27th AGM to be held in the year 2022. Pursuant to Notification issued by theMinistry of Corporate A3 airs on 7th May 2018 amending section 139 of the Companies Act2013 and the Rules framed thereunder the mandatory requirement for ratification ofappointment of Auditors by the Members at every Annual General Meeting ("AGM")has been omi3 ed and hence the Company is not proposing an item on ratification ofappointment of Auditors at this AGM.

Internal Auditor & Controls

The Board of Directors based on the recommendation of the AuditCommittee has re-appointed M/s. K. P. Rao Associates Chartered Accountants Hyderabad asthe Internal Auditors of your Company. The Internal Auditors are submi3 ing their reportson quarterly basis. Internal Auditors findings are discussed and suitable correctiveactions are taken as per the directions of Audit Committee on an on-going basis to improvee3 ciency in operations.

The Company's internal control systems are well established andcommensurate with the nature of its business and the size and complexity of itsoperations. The Audit Committee reviews adequacy and effectiveness of the Company'sinternal control environment and monitors the implementation of audit recommendations. Therecommendations/suggestions of the internal auditors are discussed in the Audit Committeemeetings periodically.

Cost Auditors

In accordance with Section 148 of the Companies Act 2013(corresponding Section 233B of 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 November6 2012) the Audit Committee has recommended and the Board of Directors had re-appointedM/s. K.K. Rao & Associates Cost Accountants Hyderabad being eligible and havingsought reappointment as Cost Auditors of the Company to carry out the cost audit for theCompany during the financial year 2018-19.

Secretarial Auditor

In accordance with Section 204 of the Companies Act 2013 the Board hasappointed M/s. VCSR & Associates Company Secretaries to conduct Secretarial Auditfor the FY 2017-18. The Secretarial Audit Report for the financial year ended March 312018 is annexed herewith marked as Annexure II to this Report.

Contracts and arrangements with Related parties

All contracts / arrangements / transactions entered by the Companyduring the financial year with related parties were in the ordinary course of business andon an arm's length basis. During the year the Company had not entered into any contract /arrangement / transaction with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealingwith related party transactions as approved by the Board may be accessed on the Company'swebsite at the link: h3 p://www. knrcl.com/images/policy_on_materiality.pdf Your Directorsdraw a3 ention of the members to Notes to the financial statement which sets out relatedparty transactions and disclosures.

Conservation of energy technology absorption and foreign exchangeearnings and out go:

The particulars relating to Conservation of Energy Technologyabsorption Foreign Exchange earnings and outgo as required under section 217 (1) (e) ofthe Companies Act 1956 read with Companies (Disclosure of particulars in the Report ofBoard of Directors) Rules 1988 are as follows

a) Conservation of Energy

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

b) Technology absorption Adoption and Innovation

There is no information to be furnished regarding Technology Absorptionas your Company has not undertaken any research and development activity in anymanufacturing activity nor any specific technology is obtained from any external sourceswhich needs to be absorbed or adopted. Innovation is a culture in the Company to achievecost e3 ciency in the construction activity to be more and more competitive in theprevailing environment that cannot be quantified.

Foreign Exchange Earnings And Outgo Foreign Exchange Inwards - NilForeign Exchange outgo towards a) Travel – different 13.30 Lakhs (P.Y different 15.67Lakhs) b) Import of capital goods and Stores & Spares different 1938.79 Lakhs (P.Ydifferent 300.71 Lakhs) c) Advance / Loan to Subsidiaries – Nil (P.Y Nil Lakhs) d)Term Loan Repayment and interest – Nil (P.Y Nil Lakhs)

Fixed Deposits

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

Industrial Relations

Your Directors are happy to report that the Industrial Relations havebeen extremely cordial at all levels throughout the year. Your Directors record theirappreciation for sincere e3 orts support and co-operation of all employees being extendedfrom time to time to accelerate the growth of the Company.

Disclosures Audit committee

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

Vigil Mechanism

The Company has a Vigil mechanism and Whistle blower policy in terms ofthe LODR Regulations under which the employees are free to report violations ofapplicable laws and regulations and the Code of Conduct. Protected disclosures can be madeby a whistle blower through a dedicated e-mail or a le3 er to the Chairman of the Auditcommittee. The Policy on vigil mechanism and whistle blower policy may be accessed on theCompany's website at the link: h3 p://www.knrcl.com/images/knrcl_whistleblower.pdf

Meetings of the Board

Seven meetings of the Board of Directors were held during the yearunder review. For further details please refer report on Corporate Governance of thisAnnual Report.

Code of Conduct

A declaration regarding compliance with the code of conduct signed bythe Company's Managing Director is published in the Corporate Governance Report whichforms part of the annual report.

Particulars of Loans given Investments made Guarantees given andSecurities provided Particulars of loans given investments made guarantees given andsecurities provided are provided in the standalone financial statement.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as AnnexureIII to this Report.

Particulars of Employees

The information required pursuant to Section 197 read with Rule 5 ofThe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of employees of the Company is as follows:

The percentage of increase in remuneration of each Director ChiefFinancial Officer and Company Secretary during the financial year 2017-18 ratio of theremuneration of each Director to the median remuneration of the employees of the Companyfor the financial year 2017-18 and the comparison of remuneration of each Key ManagerialPersonnel (KMP) against the performance of the Company are as under:

Name of Director/KMP and Designation

Remuneration of Director/KMP for financial year 2017- 18 (different in lakhs)

% increase in Remuneration in the Financial Year 2017-18

Ratio of remuneration of each Director/ to median remuneration of employees

Comparison of the Remuneration of the KMP against the performance of the Company
1 K Narasimha Reddy Managing Director

504.00

40.00%

328

Profit before Tax and exceptional item increased by 54.04% and Profit A3 er Tax and comprehensive income increased by 71.66% in financial Year 2017-18
2 K Jalandhar Reddy Executive Director and CFO

336.82

39.86%

219

3 M V Venkata Rao Company Secretary

14.31

9.99%

9

4 S.Vaikuntanathan V.P (F&A)

29.70

10.00%

19

During the period under review no employee of the Company is employedthroughout the financial year and in receipt of different 102.00 lakhs or more oremployed for part of the year and in receipt of different 8.5 lakhs or more a month or wasin receipt of remuneration in excess of that drawn by the managing director or whole timedirector or manager and holds by himself or long with his spouse and dependent childrennot less than two percent of the equity shares of the company under Rule 5(2) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014.

Further details of top ten employees in terms of remuneration drawnduring the financial year ended 31st March 2018 as required under Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and asamended are :

Name of the Employee & Designation

Age (years)

Qualification

*Gross Remu- neration in different

Experience (years)

Date of Com- mencement of Employ- ment

Previous Em- ployment

% of holding in the Company

1 Sri K. Narasimha Reddy Managing Director

68

B.A

50400000

49 Yrs

11.07.1995

-

32.53%

2 Sri K.Jalandhar Reddy Executive Director & CFO

46

B.E Computers

35121918

21 Yrs

11.07.1995

-

13.96%

3 Sri Maj. T.L. Varma Vice President

62

B.E. Civil

5280000

38 Yrs

12.07.2011

LANCO

--

4 Sri K.Shankar Reddy Vice President

47

B.Tech Civil

5160000

21 Yrs

01.10.1999

Rani Constructions

--

5 Sri V. Venugopal Reddy Director Projects

41

B.E

4398000

17 Yrs

21.08.2000

-

0.09%

6 Shri.E.Srinivasa Rao Chief Project Manager

54

B.E Civil

3775000

23 Yrs

02.12.2012

Navayuga

--

7 Sri. S. Vaikuntanathan Vice President (F&A)

63

FCA

2970000

37 Yrs

07.01.2016

Vaibhav Jyothi Power

--

8 Sri. K. Venkata Ram Rao General Manager (F&A)

43

ACA ACS

2736000

14 Yrs

28.09.2015

RAMKY

--

9 Sri.B.Phani Kumar Sr.Project Manager

52

B.Tech Civil

2580000

32 Yrs

14.10.2014

Balaji Rail Road Systems

--

10 Sri. K. Venkateshwarlu Sr. Project Manager

44

M.Tech Civil

2506080

23 Yrs

01.02.1999

KMC

--

• None of the above employees were relative of any Directorsexcept Shri K Jalandhar Reddy who is son of Shri K Narasimha Reddy.

• All appointments are / were contractual in accordance with termsand conditions as per Company rules.

* Gross Remuneration includes perquisites and contribution to Providentfund by the employer.

ii) The median remuneration of employees of the Company during thefinancial year was different 1.54 Lakhs;

iii) In the financial year there was increase of 2.40% in the medianremuneration of employees;

iv) There were 1020 employees on the rolls of Company as on March 312018

v) Relationship between average increase in remuneration and companyperformance: - The Profit before tax and exceptional items for the financial year endedMarch 31 2018 increased by 54.04% whereas the increase in median remuneration was 2.40%

vi) Comparison of Remuneration of the Key Managerial Personnel(s)against the performance of the Company: The total remuneration of Key Managerial Personnelwas different 840.82 lakhs whereas the Profit before tax was different 26815.06 Lakhs in2017-18

vii) a) Variations in the market capitalisation of the Company: Themarket capitalisation as on March 31 2018 at NSE was different 399353.13 Lakhs(different 271039.85 Lakhs as on March 31 2017)

b) Price Earnings ratio of the Company at NSE was 14.67 as at March 312018 and was 17.24 as at March 31 2017;

viii) Average percentage increase made in the salaries of employeesother than the managerial personnel in the last financial year i.e. 2017-18 was 30.16%whereas the increase in the managerial remuneration for the same financial year was 38.07%

ix) The key parameters for any variable component of remunerationavailed by the directors: Not applicable

x) The ratio of the remuneration of the highest paid director to thatof the employees who are not directors but received remuneration in excess of the highestpaid director during the year – Not Applicable;

XI) It is hereby a3 rmed that the remuneration paid is as per theRemuneration Policy for Directors Key Managerial Personnel and other employees.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment ofwomen at Workplace in accordance with The Sexual Harassment of women at Workplace(Prevention Prohibition and Redressal) Act 2013. During the year under review theCompany has not received any complaints pertaining to Sexual Harassment.

General

Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear under review:

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

2. Issue of equity shares with di3 erential rights as to dividendvoting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of theCompany under any scheme save and except ESOP referred to in this Report.

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

5. No significant or material orders were passed by the Regulators orCourts or Tribunals which impact the going concern status and Company's operations infuture.

Appreciation and Acknowledgements

Your Directors wish to place on record their gratitude to the Company'sshareholders customers vendors and bankers for their continued support to KNRCL's growthinitiatives. Your Directors also wish to place on record their appreciation of thecontribution made by employees at all levels who through their competence sincerityhard work solidarity and dedicated support have enabled your Company to make rapidstrides in its business initiatives. Your Directors also thank the Central and StateGovernments and their various agencies particularly the National Highway Authority ofIndia and other Governmental agencies for extending their support during the year andlook forward to their continued support.

On behalf of the Board of Directors of KNR Constructions Limited

K Jalandhar Reddy

Executive Director & CFO

K Narasimha Reddy

Managing Director

Place : Hyderabad Date : August 10 2018