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MBL Infrastructures Ltd.

BSE: 533152 Sector: Infrastructure
NSE: MBLINFRA ISIN Code: INE912H01013
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VOLUME 2500
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OPEN 13.86
CLOSE 13.95
VOLUME 2500
52-Week high 31.00
52-Week low 12.70
P/E
Mkt Cap.(Rs cr) 146
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

MBL Infrastructures Ltd. (MBLINFRA) - Director Report

Company director report

Dear Members

The Board of Directors is pleased to present the Twenty Third Annual Report of theCompany together with the Audited Financial Statements for the financial year ended 31stMarch 2018.

Financial Highlights

Standalone

Consolidated

Year ended

Year ended

2017-18 2016-17 2017-18 2016-17
Gross Revenue 54535.03 230767.22 57669.57 232046.91
Earnings Before Interest Taxes and Depreciation 9081.33 3711.45 12075.8 4882.21
Less : Interest & Finance Charges 24596.62 14509.64 24985.77 14711.22
Less : Depreciation 1460.74 1777.22 2265.71 2721.76
Profit Before Tax and Exceptional Item (16976.03) (12575.39) (15175.68) (12550.77)
Exceptional item (Net) (Transferred to capital Reserve) 40212.56 - 16384.15 -
Profit before Tax* 23236.53 (12575.39) 1208.47 (12550.77)
Less: Provision for Tax (Current & Deferred) (666) (6061.24) (700.9) (6131.49)
Profit After Tax* 23902.53 (6514.15) 1909.37 (6419.28)
Balance Brought Forward From Last Year 6013.20 (13275.76) 7641.01 (14363.84)
Transfer to Capital Reserve 40212.56 - 40212.56 -
Balance carried to Balance Sheet (10296.82) 6013.20 (30573.73) 7641.01

* Including exceptional items (Refer Note No. 39 to the Financial Statements)

Affairs of the Company

The Resolution plan dated 22nd November 2017 submitted by Mr. Anjanee Kumar LakhotiaPromoter Director after being voted in favour by Committee of Creditors (CoC) wasapproved by Hon'ble National Company Law Tribunal ("NCLT") Kolkata Bench by itsorder dated 18th April 2018. With approval of the Resolution Plan the powers of the Boardwhich were suspended from 30th March 2017 to 18th April 2018 were reinstated w.e.f. 19thApril 2018.

The performance of the Company during the Corporate Insolvency Resolution process(""ClRP") period was adversely affected. The turnover of the Company onstandalone basis decreased from Rs 227123.53 lakhs to Rs 48674.13 lakhs and onconsolidation basis decreased from Rs 228132.34 lakhs to Rs 51069.70 lakhs. The Companyhad loss of Rs 169.77 crores on standalone basis and Rs 151.76 crores on consolidationbasis. However after considering the Exceptional Item (transferred to Capital Reserve)the profit on standalone basis was Rs 23902.53 lakhs and Rs 1909.37 lakhs on consolidationbasis.

Adequate means have been provided in the Resolution Plan for supervising theimplementation and safeguards in the Resolution Plan. Post approval of the ResolutionPlan the Board has taken various steps for the implementation of the Plan. Consortium ofassenting working capital lenders have been formed. Four of the dissenting financialcreditors have filed appeals with Hon'ble National Company Law Appellate Tribunal (Hon'bleNCLAT) against the order of Hon'ble NCLT Kolkata Bench. The Provision has been made forpayment of liquidation value to the dissenting financial creditors and such payment willbe made to them before any recoveries are made by the financial creditors who voted infavour of the Resolution Plan. Over and above the working capital facilities of Rs. 388.79crores from the existing consortium of Banks the Company can also raise upto Rs 100crores by way of fund based facilities and Rs 250 crores by way of non-fund basedfacilities for new contracts against specific charge on receivables/stock of suchcontracts.

In accordance with Resolution Plan the Promoters and entities forming part of PromoterGroup have already contributed Rs 63.30 crores against the envisaged total contribution ofRs 128.19 crores by way of issue of warrants/preferential issue of equity shares and/orwarrants at Par/face value. The Company has made necessary application to both BSE &NSE for grant of "In-principle approval" for issuance and allotment of theequity shares aggregating to 128190000 equity shares at face value of Rs 10 each in oneor more tranches.

The Company has enormous amount of long term receivables. Necessary legal andarbitration proceedings has been initiated in respect of most of the long term receivablesand the Company expects to receive favorable awards in future.

The Company has inducted many professionals in various departments to strengthen themanagement of the Company and Board is in process of inducting more professionals. For thebusiness advantage and to reduce the administrative & establishment cost necessarysteps have been taken for shifting of the Registered Office of the Company from the Stateof West Bengal to New Delhi and the Board expects that the approval from the concernedauthorities will be received in due course.

With immense opportunities available in the core competency area of the Company theBoard is optimistic that going forward the performance of the Company will improve and itwill sustain it's formidable position in infrastructure sector of the country.

Dividend

In view of the profits being capital in nature resulting from approved ResolutionPlan your Directors do not recommend any dividend for the year.

Transfer to Reserves

The exceptional item of Rs. 402.13 crores due to impact of the approved Resolution Planwhich being capital in nature has been transferred to Capital Reserve.

Changes in the Nature of Business if any

There has been no change in the nature of business of the Company during the financialyear 2017-18.

Changes in Share Capital

The paid-up Equity Share Capital of the Company as at 31st March 2018 stood at Rs.414.54 lakhs. During the year under review there has been no changes in the share capitalof the Company.

However pursuant to the Resolution Plan as on date the authorized capital of theCompany stands increased from Rs 50 crores to Rs 105 crores divided into 105000000equity shares of Rs 10 each. The increase in authorized capital is in commensurate to thepaid up capital to be increased to the extent of Rs 63.30 crores of the contributionreceived from the Promoters and entities forming part of Promoter Group after "Inprinciple approval " of both the stock exchanges i.e. BSE & NSE.

Management Discussion and Analysis Report

Management Discussion and Analysis Report is enclosed as Annexure -A and forms integralpart of this Annual Report.

Material Changes and Commitments if any Affecting The Financial Position of theCompany which have occurred between the end of the Financial Year of the Company to whichthe Financial Statements relate and the date of the Report

The Resolution Plan submitted by Mr. Anjanee Kumar Lakhotia Promoter Director wasapproved by Hon'ble NCLT Kolkata Bench by order dated 18th April 2018. The powers of theBoard of Directors have been reinstated and the management of the affairs of the Companyis with the Board of Directors w.e.f 19th April 2018.

The effect of the Resolution Plan on the financial statements post the closure of thefinancial year ended 31st March 2018 was material and to give complete/ true and fair viewof the affairs of the Company the impact of the Resolution Plan on the financialstatements and notes thereto for both Standalone and Consolidation have been considered atthe time of adoption of the financial statements for the year ended 31st March 2018. Theimpact of the Resolution plan on the financial statement has been provided in note 39 tothe enclosed financial statements and its impact of Rs. 402.13 crores being capital innature and exceptional item has been transferred to Capital Reserve.

Extract of Annual Return

The details forming part of the extracts of the Annual Return in form MGT-9 as providedunder section 92 of the Act is enclosed as Annexure-B and forms integral part of thisreport.

Corporate Governance

The Company has complied with the requirement of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("LODR")relating to Corporate Governance Report ("CGR"). A separate section titled"Report on Corporate Governance" along with the Practicing Company SecretaryCertificate on Corporate Governance pursuant to requirement of Regulation 34 read withPara C of Schedule V of the Listing Regulations confirming compliance with the conditionsof the Corporate Governance is annexed as Annexure- C and forms integral part of thisReport.

Board Meetings

During the year 4 (Four) Board Meetings were convened and held details of which areprovided in enclosed Corporate Governance Report. The intervening gap between the meetingswas within the period prescribed under the Act and LODR.

Independent Directors

Mr. Ashwini Kumar Singh Mr. Bhagwan Singh Duggal and Ms. Sunita Palita were appointedas Independent Directors of the Company to hold office for five consecutive years for aterm upto 31st March 2019. The

Board on the recommendation of the Nomination and Remuneration Committee recommendapproval of the members the re-appointment of Mr. Ashwini Kumar Singh Mr. Bhagwan SinghDuggal and Ms. Sunita Palita as Independent director for a period of 5 years. Requisitenotice under Section 160 of the Act have been received for Mr. Ashwini Kumar Singh Mr.Bhagwan Singh Duggal and Ms. Sunita Palita who have filed their consent to act asDirectors of the Company if appointed.

Independent Directors Declaration

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as laid down under Section 149(6)of the Act and Regulation 16 of the Listing Regulations.

Performance Evaluation

The Company has in place formal process for evaluation of performance of the Board itsCommittee and individual directors. The evaluation process was done through a‘structured questionaries' in terms of the Company policy which inter- aliaconsider composition and attendance of Directors at Board and Committees acquaintancewith business effective participation regulatory compliance corporate governance etc.

The Independent Directors in their meeting held without the presence of the ManagingDirector have evaluated the performance of Executive Director and Board as a whole. TheBoard of Directors expressed their satisfaction on the evaluation process and theperformance of all the Directors the Committees and the Board as a whole. The evaluationof Independent Director was done by the entire Board excluding the director beingevaluated. On the basis of the performance evaluation report the Board has determined tocontinue the term of the Independent Directors.

Key Managerial Personnel

Pursuant to Section 203 of the Companies Act 2013 the Key Managerial Personnal of theCompany are Mr. Anjanee Kumar Lakhotia Chairman and Managing Director Mr. Darshan SinghNegi Chief Financial Officer and Mr. Anubhav Maheshwari Company Secretary and ComplianceOfficer.

Mr. Anjanee Kumar Lakhotia Chairman and Managing Director of the Company retire byrotation at the ensuing Annual General Meeting ("AGM") and being eligible offershimself for re-appointment. The Board recommends his re-appointment for the considerationof Members of the Company at the ensuing Annual General Meeting. The brief resume/profileof Mr. Anjanee Kumar Lakhotia is attached with Notice for the ensuing Annual GeneralMeeting.

Mr. Anubhav Maheshwari was appointed as Company Secretary and Compliance Officer of theCompany w.e.f. 01st April 2017.

Directors' Responsibility Statement

Your Directors here by confirm that:

a) in the preparation of the annual accounts for the year ended 31st March 2018 theapplicable accounting standards had been followed along with proper explanations whereverrequired;

b) 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 profit ofthe Company for that period;

c) they have proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down Internal Financial Controls to be followed by the Company andthat such Internal Financial Controls were adequate and operating effectively; and

f) they have proper systems to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.

Corporate Social Responsibility (CSR)

The CSR policy of the Company is in accordance with the requirement of the Companies(CSR policy) rules 2014 and is available on company website. www.mblinfra.com .Theexpenditure on activities undertaken are in accordance to schedule VII of the Act.

The focus areas of the CSR engagements amongst others are promoting healthcareincluding preventive healthcare and sanitation ensuring Environmental sustainability andmeasures for reducing inequalities faced by the socially and economically backward groups.

The report on the CSR activities as required under Companies (CSR) Rules 2014 isenclosed as Annexure-D and forms integral part of this Report.

Performance of Susidiary Companies

The contribution of the Subsidiary Companies to the overall performance of the Companyis given as note 47 of the consolidated Financial Statement. Pursuant to Section 129(3) ofthe Act and Ind AS -110 issued by the ICAI consolidated financial statements includesfinancial statement of subsidiary companies. The statement containing salient features ofthe financial statement of the subsidiary companies is enclosed as Annexure - E and formsintegral part of the Report.

The Audited accounts of each subsidiary is placed on the website of the Companywww.mblinfra.com and copy of separate financial statement in respect of each subsidiaryshall be provided to any shareholder of the Company. These documents are also availablefor inspection at the registered office of the Company for the period of 21days before thedate of AGM.

During the year the Board of Directors reviewed the affairs of the subsidiaries.Summary of the BOT projects undertaken by the company through its subsidiaries is asunder:

Project SPV/Subsidiary companies Type Current Status
Strengthening Widening Maintaining and Operating of 18.303 kms Waraseoni- Lalbarra Road in the state of Madhya Pradesh MBL (MP) Toll Road Company Limited Toll + Annuity Operational
Developing and Operation of Bikaner - Suratgarh Section of NH - 15 in the State of Rajasthan Suratgarh Bikaner Toll Road Company Private Limited Toll Work is in Progress

Auditors

STATUTORY AUDITORS

M/s SARC & Associates Chartered Accountants (Firm Registration No. 006085N) wereappointed as Statutory Auditors of the Company in the Annual General Meeting held on 11thNovember 2017 for period of 5 (Five) consecutive years. The Auditor have confirmed thatthey are not disqualified from continuing as Statutory Auditor of the Company.

The Auditors report does not contain any qualifications reservation and adverse remarkor disclaimer. The note on financial statement referred to Auditors Report areself-explanatory and do not call for further comments. There has been no fraud report toaccount or Board of Directors during the period.

SECRETARIAL AUDITORS

The Secretarial Audit was conducted by M/s Mehak Gupta & Associates PracticingCompany Secretaries for the FY 2017-18. The Secretarial Audit Report is enclosed asAnnexure - F and forms integral part of the Directors Report.

The Secretarial Audit report does not contain any qualification or reservation oradverse remark or disclaimer.

The Board of Directors of the Company has appointed M/s Mehak Gupta & AssociatesPracticing Company Secretaries to conduct Secretarial Audit of the Company for theFinancial Year 2018-19.

The Company has obtained written consent from them that their appointment is inaccordance with applicable provisions of the Act and rules made therein.

COST AUDITORS

The Board of Directors on the recommendation of Audit Committee has appointed M/s DipakLal & Associates Cost Accountant as Cost Auditors of the Company for the FinancialYear ended 2018-19 at a remuneration of Rs. 30000/- (Rupees Thirty Thousand only) plusapplicable taxes and reimbursement of out of pocket expenses subject to ratification bymembers in the ensuing AGM.

The Cost Audit report for FY 2017-18 does not contain any qualification or reservationor adverse remark or disclaimer.

Particulars of Loans Guarantees or Investments

Details of loans guarantees or investments made under Section 186 of the Act are givenin the note to the financial statements.

Particulars of Contract or Arrangements with Related Parties

The Company related party transactions ("RPT") are with its SubsidiaryCompanies Special Purpose Vehicle Associate Companies JointVentures/Enterprise-Participation which are entered for synergy of operation long-termsector environment strategy legal requirements liquidity and capital requirement ofSubsidiary Companies Associate Companies Joint Venture/ Enterprise Participation. TheBoard has sought shareholders approval in the ensuing AGM for the Related PartyTransactions proposed to be executed with Subsidiary Companies Special Purpose VehicleAssociate Companies Joint Venture/ Enterprise Participation.

All contracts/arrangements/transactions entered by the Company with related parties forthe year under review were on arm's length basis and in the ordinary course of business.Hence disclosure in form AOC- 2 under the Act read with the rules made therein is notrequired. The Company has not entered into any contract/ arrangement/ transaction whichwould be considered as material in accordance with the policy of the Company on themateriality of the related party transaction. The details of RPT transactions forms partof the notes to audited financial statement.

None of the transaction with any related parties were in conflict with the Companyinterest.

The policy on Related Party Transactions as approved by the Board of Directors of theCompany may be accessed on the weblink https:// www.mblinfra.com/corporategovernance.php.

Significant and Material Orders

The Resolution Plan submitted by Mr. Anjanee Kumar Lakhotia Promoter Director hasbeen approved by Hon'ble NCLT by its order dated 18th April 2018. With the approval of theResolution Plan the moratorium period under IBC 2016 ceases and the powers of the Boardof Directors have been reinstated. The copy of the order dated 18th April 2018 isavailable on the website of the Company.

Details of Conservation of Energy Technology Absorption and Foreign Exchange Earningsand outgo

i) Conservation of energy is an ongoing process in the Company's activities. As thecore activities of the Company are not energy intensive activity no information is to befurnished regarding conservation of energy.

ii) The Company had not undertaken any research and development activity for anymanufacturing activity nor was any specific technology obtained from any external sourceswhich needs to be absorbed or adapted.

iii) The particulars of expenditure and earnings in foreign currency are furnished inthe notes forming part of the financial statements.

Risk Management

The Company has in place the Risk Management Policy. The details of the identificationof the various risk associated with the business of the Company which in the opinion ofthe Board may threaten existence of the Company is detailed in the enclosed ManagementDiscussion & Analysis Report ("MDA").

Audit Committee

The Composition terms of reference and number of meetings of the Audit committeeduring the period under review is covered in the enclosed CGR.

Particulars of the Employees

The information required pursuant to Section 197 of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respectof employees of the Company is given in a separate annexure to this Report. The Reportsand Accounts are being sent to Members and other entitled thereto excluding theinformation on employee's particulars which is available for inspection by the Members atthe Registered Office of the Company during business hours on any working day. If anymember is interested in obtaining a copy thereof such member may write to CompanySecretary in this regard.

During the period under review no employee of the Company drew remuneration in excessof the limits specified under the provisions of the Act read with rules made therein andhence no disclosure is required to be made in the Annual Report.

Remuneration Policy

The Company has in place Remuneration Policy for Directors Key Managerial Personneland Senior Management Personnel to align with the requirement of the Act and LODR. Theparticulars of the remuneration policy are stated in the enclosed CGR.

Statement in Respect of Adequacy of Internal Financial Controls with Reference to theFinancial Statements

The purpose of the internal control is to prevent risk arising in course of operationsby adopting appropriate controls and process especially with regard to conformity withthe laws compliance with the strategy the quality of accounting and reporting and thequality of process and protection of assets amongst others.

Your Company has an effective internal control system commensurate to its size scaleand complexities of its operations. Internal Auditors of the Company have conducted theInternal Audit in line with the scope formulated functioning periodicity and methodologyagreed with the Audit Committee. The Internal Auditors monitors and evaluate the efficacyand adequacy of the internal control system in the Company its compliance with operatingsystems and accounting procedures and policies adopted by it. Based on the reports of theinternal audit process owners undertake corrective action in their respective areas andthereby strengthening the controls. To maintain its objectivity and independence theInternal Auditors reports to the Chairman of the Audit Committee. The Company hasappointed consultants/professionals to conduct Cost Audit and Secretarial Audit andobservations made if any are reviewed by the Management periodically and correctiveactions if required are taken.

Whistle Blower Policy/ Vigil Mechanism

The Company has in place Vigil Mechanism/ Whistle Blower Policy for director andemployees to report genuine concerns. The policy is available on the website of theCompany www.mblinfra.com and the brief particulars of the establishment of Vigil Mechanismis provided in the enclosed CGR.

Deposits

During the period under review no deposits were accepted by the Company.

Disclosures under Sexual Harassment of Women at Workplace (Prevention Prohibiton &Redressal) Act 2013

Your Company has in place a policy on Prevention of Sexual Harassment at workplace.This policy is in line with the requirements of The Sexual Harassment of Women at theWorkplace (Prevention Prohibition & Redressal) Act 2013. All employees whetherpermanent contractual temporary and trainees are covered under this Policy. As per thesaid Policy an Internal Complaints Committee is also in place to redress complaintsreceived regarding sexual harassment. No case or complaint was filed pertaining to SexualHarassments policy.

Acknowledgements

We convey our grateful appreciation for the valuable patronage and co-operationreceived and goodwill enjoyed by the Company from all the Stakeholders its esteemedcustomers shareholders business associates banks financial institutions governmentAuthorities and other stakeholders.

We place on record our appreciation to the contribution made by the employees at alllevels.

By Order of the Board
For MBL Infrastructures Ltd.
Anjanee Kumar Lakhotia
Place: New Delhi Chairman & Managing Director
Dated: 30th June 2018 (DIN-00357695)