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Mold-Tek Technologies Ltd.

BSE: 526263 Sector: Engineering
NSE: MOLDTECH ISIN Code: INE835B01035
BSE 12:56 | 30 Nov 102.50 -0.95
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NSE 12:44 | 30 Nov 103.05 -0.25
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OPEN 103.10
PREVIOUS CLOSE 103.45
VOLUME 1782
52-Week high 122.00
52-Week low 64.20
P/E 17.89
Mkt Cap.(Rs cr) 290
Buy Price 102.80
Buy Qty 8.00
Sell Price 103.20
Sell Qty 10.00
OPEN 103.10
CLOSE 103.45
VOLUME 1782
52-Week high 122.00
52-Week low 64.20
P/E 17.89
Mkt Cap.(Rs cr) 290
Buy Price 102.80
Buy Qty 8.00
Sell Price 103.20
Sell Qty 10.00

Mold-Tek Technologies Ltd. (MOLDTECH) - Director Report

Company director report

DEAR MEMBERS:

Your Directors have pleasure in presenting the 37th AnnualReport and the Audited Statement of Accounts for the year ended 31st March2021.

FINANCIAL RESULTS:

The Company's operating performance during the year ended 31stMarch 2021 is summarized below.

Rs. in Lakhs

Particulars Standalone Consolidated
Year ended 31st March Year ended 31st March
2021 2020 2021 2020
Sales 7601.90 9085.01 8292.05 10098.24
Other Income 511.73 52.17 511.82 52.19
Total Income 8113.63 9137.18 8803.87 10150.43
Profit before Interest Depreciation & Tax 1918.38 1968.28 1940.03 2009.18
Interest 48.75 73.03 48.75 73.03
Depreciation & Preliminary 472.18 544.84 477.83 554.51
Profit/(Loss) before Tax 1397.45 1350.41 1413.45 1381.64
Provision for tax 411.87 305.89 413.05 306.89
Profit/(Loss) after Tax 985.58 1044.52 1000.40 1074.75
Profit/(Loss) brought forward from previous year 2048.24 2061.96 2178.73 2145.48
Add: Other Comprehensive Income 114.91 (82.75) 110.30 (66.01)
Profit available for appropriation appropriations 3148.73 3023.73 3289.43 3154.22
Dividends (including corporate dividend tax) (168.25) (975.49) (168.25) (975.49)
Transferred to General Reserve - - - -
Others - - - -
Balance Carried forward 2980.48 2048.24 3121.18 2178.73

OPERATIONS:

Inspite of being impacted by COVID during the first three quarters thecompany recovered well to achieve a revenue of $11.174 million in 12M 2020-21 compared to$13.238 million in 12M 2019-20 i.e. there is a drop of 15%.

However with cost controls and forward gains company posted a healthybottom line of ' 10.00 crores as against ' 10.75 crores of last year i.e. there is adrop of 7%.

On a Consolidated basis the Company achieved a revenue of '8292.05Lakhs as against ' 9533.37 Lakhs during the previous year i.e. there is a drop of 13.02%in FY 2020-21.

On a Standalone basis the Company achieved a revenue of '7601.90 Lakhsas against ' 8520.14 Lakhs during the previous year i.e. there is a drop of 10.78% in FY2020-21.

For FY 2020-21 Civil Engineering Services (CES) generated a revenue of$ 9.81 million compared to $ 10.72 million for FY 2019-20 i.e. there is a drop of 8.49%and the Mechanical Engineering Services (MES) generated a revenue of $ 1.36 million in FY2020-21 compared to $ 2.45 million in FY 201920 i.e. there is a drop of 44.49%.

Service Export from India Scheme (SEIS):

As per the DGFT Notification No. 57/2015-20 dated 31st March2020 for the services rendered w.e.f. 1st April 2020 the decision oncontinuation of the Service Export from India Scheme (SEIS) will be taken subsequently andnotified accordingly. However even today there is no clarity from the Government aboutcontinuation or removal of the said incentive of 7% of revenue. The Company has notaccounted any export incentives estimated at ' 5.03 crores during the 12M 2020-21 due tothe said notification. This incentive was ' 5.65 crores in 12M 2019-20.

Hence in FY 2020-21 company has achieved almost same PAT as FY2019-20 inspite of not accounting for ' 5.03 crores incentive. This shows the improvedoperational efficiency and cost control achieved during the FY 2020-21.

FUTURE OUTLOOK:

Company has registered a decent performance in US and Europe markets inthe current quarter despite of Pandemic Situation. US markets are looking very strong dueto $ 2.3 trillion infrastructure plans by Mr. Joe Biden for USA which includesinvestments in Rail Road Home Infrastructure as well as Manufacturing & Research. Thereduced Interest rates in US Banking have resulted in a surge for residential &commercial construction of Private sector apart from Public Spending projects as announcedby Mr. Joe Biden. This is helping our company with more RFQs as well as sizable ordersCivil & Structural Engineering services continue to grow beyond FY 2020-21'sperformance. Company has took major steps for improved productivity enhanced qualitysystems which resulted in more long term satisfied customer base who are giving repetitiveorders. Company is also venturing in to High end Structural Engineering as well as PlansProcessing services which are going to be sizable new verticals for the near future.

Mechanical Engineering Services (MES) continue to focus on Automotiveand Hi-Tech Engineering Services in both Europe & American regions with a greaterfocus on US Market. Automotive industry is in a transition phase from Power train to moreElectrical Vehicles which throws huge opportunity for us with highway modernisation thereis a high demand for our engineering services in Poles & Towers segment. Company hasmade long-term contracts for two major Power distribution manufacturing Giants and couldable to improve the overall revenues for MES divisions.

The second wave of COVID-19 has thrown a lot of challenges in the wayhow we run our operations.

Now WFH has been streamlined and the Company's Employees are able towork from home.

Moreover any lockdowns now or in future won't have any impact on theoperations as well as our performance.

We are looking forward to a considerable growth in future quarters witha strong finish for FY 2021-22.

CHANGE IN THE NATURE OF BUSINESS:

There is No change in the nature of Business.

The Company is into Structural Engineering and Design services of Civiland Mechanical to clients majorly located in United States of America and Europeancountries.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIALPOSITION OF THE COMPANY:

No material changes and commitments affecting the financial position ofthe Company have occurred between the end of the financial year to which the financialstatements relate and the date of this Directors' Report.

COVID-19- BRIEF IMPACT ANALYSIS:

The Company has considered the possible effects that may result fromthe pandemic relating to Covid-19 in the preparation of these financial results includingthe recoverability of carrying amounts of financial and non-financial assets.

In developing the assumptions relating to the possible futureuncertainties in the global economic conditions because of the ongoing pandemic theCompany has at the date of approval of these financial results used internal andexternal sources of information including credit reports and related information andeconomic forecasts and expects that the carrying amount of these assets will be recovered.

The impact of Covid-19 on the Company's financial results may differfrom that estimated as at the date of approval of these financial results.

The pandemic has triggered a significant downturn throughout the worldand has impacted the normal business operations of the company by way of interruption indifferent functions of the company. However under the operational guidelines as issued byMinistry of Home Affairs the company has commenced its operations in a phased manner andhas adopted proactive measures to comply with various guidelines.

The management has conducted a detailed assessment and evaluation ofits liquidity position recoverability of assets loans and receivables etc. inaccordance of IND AS and based on current estimates has concluded that the impact is notmaterial.

However due to the uncertainties involved with its nature and durationand the resultant operational guidelines the actuals may differ from the estimatesconsidered in the financials. The impact assessment of COVID-19 is a continuing processand the company will continue to monitor any material economic changes.

SUBSIDIARY:

As on 31st March 2021 the company has "Mold-TekTechnologies Inc." as its Subsidiary. The financial position of the said company isgiven in the notes to Consolidated Financial Statements.

The Highlights of the performance of subsidiary is as follows:

Particulars Mold-Tek Technologies Inc (Amount in Rs.)
Total Income 706237438/-
Total Sub Contract Expenses 633890959/-
Gross profit 72346479/-
Total Expenses 70810366/-
Net ordinary Income 1536113/-
Current Tax 117639/-
Deferred Tax Liability NIL
Profit after Tax 1418474/-

The audited accounts of the subsidiary company are placed on theCompany's website and it is available for inspection at the registered office of theCompany during working hours. The Company will make available a copy thereof to any memberof the Company who may be interested in obtaining the same.

Pursuant to the provisions of Section 129 (3) of the Companies Act2013 a statement containing salient features of financial statements of subsidiary inForm AOC 1 is attached in Annexure-A

CONSOLIDATED FINANCIAL STATEMENTS (CFS):

The Consolidated Financial Statements of your Company for the financialyear 2020-21 are prepared in compliance with applicable provisions of the Companies Act2013 read with the Rules issued thereunder applicable Accounting Standards and theprovisions of SEBI (LODR) Regulations 2015 (hereinafter referred to as the "ListingRegulations"). The Consolidated Financial Statements have been prepared on the basisof audited financial statements of your Company its subsidiary as approved by therespective Board of Directors.

The Consolidated Financial Statements should therefore be read inconjunction with the Directors' Report Financial Notes Cash Flow Statements and theIndividual Auditor's Reports of the Subsidiary.

TRANSFER TO RESERVES:

The Board of Directors of the Company has not recommended for transferof any amount to the General Reserve for the financial year ended on 31stMarch 2021.

DIVIDEND:

The Board has decided to recommend a final dividend amidst COVID-19Pandemic in the Board Meeting held on 7th June 2021 of ' 0.80/- (40%) perequity share and will put forward in Annual General Meeting (as against the final dividendof ' NIL in previous year).

The Board had recommended an interim dividend on 8th March2021 of ' 0.60/- (30%) per equity share (as against previous year interim dividend of '1.50/- (75%) of paid up equity share of Rs. 2/- each) for the financial year ended 31stMarch 2021. This will entail an outflow of ' 168.25 Lakhs.

The dividend payout for the years under review has been formulatedkeeping in view your Company's need for capital for its growth plans and the intent tofinance such plans through internal accruals to the optimum.

Equity shares that may be allotted on or before the Book Closure willrank pari passu with the existing shares and will be entitled to receive the dividend.

SHARE CAPITAL AND CONSEQUENT CHANGES AUTHORISED SHARE CAPITAL:

The Authorised Share Capital of the Company as on 31st March2021 stands at ' 130000000/- (Rupees Thirteen Crores only) divided into 65000000(Six Crores Fifty Lakhs) Equity Shares of Rs. 2/- (Rupees Two Only) each. During the yearthere has been no change in the Authorised Share Capital of the Company.

PAID UP SHARE CAPITAL:

The paid up equity share capital of the company is ' 55908556/-divided into 27954278 equity share of face value of Rs. 2/- each as on 31stMarch 2020.

The Board of Directors in the meeting held on 23rd October2020 allotted 37200 equity shares and allotted 49680 equity shares in meeting held on 12thFebruary 2021 during the year of face value of Rs. 2/- each at a price of '35/-[comprising nominal value of Rs. 2/- and premium of '33/- each] to its employees who haveexercised the option vested on them under the Mold-Tek Technologies Employees Stock OptionScheme 2016.

Post allotment the paid up share capital of the company has increasedto ' 56082316/- divided into 28041158 equity shares of face value of Rs. 2/- each ason 31st March 2021.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Loans guarantees and investments covered under Section 186 of theCompanies Act 2013 form part of the notes to the financial statements provided in thisAnnual Report.

DEPOSITS:

The company has neither accepted nor renewed any deposits from publicwithin the meaning of section 73 of the Companies Act 2013 read with Companies(acceptance of Deposits) Rules 2014 during the year under review.

AUDIT COMMITTEE:

The Audit Committee consists of Dr. Vasant Kumar Roy Chintamaneni(Independent Director) Mr. Togaru Dhanrajtirumala Narasimha(Independent Director) Mr.Venkata Appa Rao Kotagiri(Independent Director) and Mr. Sobhana ChalamKesaboina(Independent Director) as members. The Committee inter alia reviews theInternal Control System Reports of Internal Auditors and Compliance of variousregulations. The Committee also reviews the financial statements before they are placedbefore the Board.

INTERNAL CONTROLS SYSTEMS AND ADEQUACY:

The Company's internal audit systems are geared towards ensuringadequate internal controls commensurate with the size and needs of the business with theobjective of efficient conduct of operations through adherence to the Company's policiesidentifying areas of improvement evaluating the reliability of Financial Statementsensuring compliances with applicable laws and regulations and safeguarding of assets fromunauthorized use.

Details of the internal controls system are given in the ManagementDiscussion and Analysis Report which forms part of the Directors' Report.

DETAILS OF DIRECTORS/KEY MANAGERIAL PERSONNEL:

All the Independent Directors have given declarations that they meetthe criteria of independence as laid down under Section 149 (6) of the Companies Act 2013and Regulation 16 of SEBI (LODR Regulations) 2015. In the opinion of the Board theyfulfil the conditions of independence as specified in the Companies Act 2013 and theRules made there under and are independent of the management.

Based on the confirmations received none of the Directors aredisqualified for being appointed/re-appointed as directors in terms of Section 164 of theCompanies Act 2013.

In accordance with the provisions of Section 152 of the Companies Act2013 Mr. P Venkateswara Rao Non-executive Promoter Director & Mr. Bhujanga RaoJanumahanti Nonexecutive Promoter Director of the Company are liable to retire byrotation and being eligible offered themselves for re-appointment.

Pursuant to the provisions of Regulation 36 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and Secretarial Standard -2 onGeneral Meetings issued by ICSI brief particulars of the directors proposed to beappointed/ reappointed are provided as an annexure to the notice convening the AGM.

There has been no change in Directors and Key Managerial Personnel.

EMPLOYEE STOCK OPTION SCHEME:

The Company has in operation Mold-Tek Technologies Employees StockOption Scheme 2016 for granting stock options to the employees of its company inaccordance with Securities and Exchange Board of India (Share Based employee benefits)Regulations 2014.

There have been no Changes in the Scheme. Disclosures pursuant toRegulation 14 of the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 are enclosed as Annexure - B to this report.

The Annexure - B is also available on website of the company atwww.moldtekgroup.com.

GOVERNANCE GUIDELINES:

The Company has adopted Governance Guidelines or Code of Conduct onBoard for Independent Directors Key Managerial Personnel and Senior ManagerialPersonnel. The Governance Guidelines or Code of Conduct cover aspects related to role ofthe Board diversity definition of independence and duties of independent DirectorsMoral ethics and principles to be followed.

STATEMENT ON COMPLIANCE WITH APPLICABLE SECRETARIAL STANDARDS:

It is hereby stated that the Company has duly complied with applicableSecretarial Standards during the financial year 2020-21.

NOMINATION REMUNERATION AND PERFORMANCE EVALUATION POLICY:

The requisite details as required by Section 134(3) Section 178(3)& (4) of Companies Act 2013 and Regulation 34 of SEBI (LODR) Regulations 2015 isprovided in the Corporate Governance Report.

During the year under review pursuant to the provisions of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the evaluation of performance of all Directors has been undertakenannually. The Company has implemented a system of evaluating performance of the Board ofDirectors and of its Committees and individual Directors on the basis of a structuredquestionnaire which comprise evaluation criteria taking into consideration variousperformance related aspects.

The Board of Directors has expressed their satisfaction with thevaluation process.

TRANSACTION WITH RELATED PARTIES:

The requisite details as required by Section 134 & 188 of CompaniesAct 2013 and Regulation 23 34(3) of SEBI (LODR) Regulations 2015 is provided in theCorporate Governance Report.

The details as per form AOC-2 are enclosed as Annexure C to thisreport.

BOARD AND COMMITTEE MEETINGS:

Details of the composition of the Board and its Committees and of theMeetings held and attendance of the Directors at such Meetings are provided in theCorporate Governance Report. The intervening gap between the Meetings was within theperiod prescribed under the Section 173(1) of Companies Act 2013 and Regulation 17(2)SEBI (LODR) Regulations 2015.

DIRECTORS' RESPONSIBILITY STATEMENT:

Based on the framework of internal financial controls and compliancesystems established and maintained by the Company work performed by the InternalStatutory Cost and Secretarial Auditors and the reviews performed by Management and therelevant Board Committees including the Audit Committee the Board is of the opinion thatthe Company's Internal Financial Controls were adequate and effective during the FinancialYear 2020-21.

Accordingly pursuant to Section 134 (3) (c) and 134 (5) of theCompanies Act 2013 the Board of Directors to the best of their knowledge and abilityconfirm that:

i. in the preparation of the Annual Accounts the applicable AccountingStandards have been followed and that there are no material departures;

ii. they 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 at the end of thefinancial year and of the profit of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the Annual Accounts on a going concern basis;

v. they have laid down internal financial controls to be followed bythe Company and that such Internal Financial Controls are adequate and are operatingeffectively;

vi. they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS:

The Independent Directors have submitted the declaration ofindependence as required under sub-section (7) of section 149 of the Companies Act 2013and Regulation 25(8) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 stating that they meet the criteria of independence as provided insub-section (6) of Section 149 and Regulation 16(1) (b) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

Pursuant to the provisions of Section 135 of the Companies Act 2013read with the Companies (Corporate Social Responsibility Policy) Rules 2021 the Companyhas constituted a CSR Committee. The Corporate Social Responsibility Committee comprisesof 3 Executive Directors and one independent Director chaired by J. Lakshmana Rao. Thecomposition of the Corporate Social Responsibility Committee meets the requirements ofSection 135 of the Act. The Board of Directors based on the recommendations of theCommittee formulated a CSR Policy and updated as per the requirements of Companies(Corporate Social Responsibility Policy) Rules 2021. The requisite details on CSRactivities pursuant to Section 135 of the Act and as per Annexure attached to theCompanies (Corporate Social Responsibility Policy) Rules 2021 are annexed as Annexure-Dto this Report.

POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT ATWORKPLACE:

The Company has zero tolerance for sexual harassment at workplace andhas adopted a Policy on Prevention Prohibition and Redressal of Sexual Harassment at theWorkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules there under. The policyaims to provide protection to employees at the workplace and prevent and redresscomplaints of sexual harassment and for matters connected or incidental thereto with theobjective of providing a safe working environment where employees feel secure. TheCompany has also constituted an Internal Complaints Committee known as the Prevention ofSexual Harassment (POSH) Committee to inquire into complaints of sexual harassment andrecommend appropriate action. During the Financial year 2020-21 the Company has notreceived any complaints which fall within the scope of this policy. The policy isavailable on website of the company at http://moldtekengineering.com/investor.html

VIGIL MECHANISM/WHISTLE BLOWER POLICY:

The Company has adopted a Whistle Blower Policy establishing vigilmechanism to provide a formal mechanism to the Directors and employees to report concernsabout unethical behaviour actual or suspected fraud or violation of Code of Conduct andEthics. It also provides for adequate safeguards against the victimization of employeeswho avail of the mechanism and provides direct access to the Chairperson of the AuditCommittee in exceptional cases. It is affirmed that no personnel of the Company has beendenied access to the Audit Committee. The policy of vigil mechanism is available on theCompany's website. The Whistle Blower Policy aims for conducting the affairs in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behaviour.

The requisite details as required by Section 177 of Companies Act 2013and Regulation 22 &34 (3) of SEBI (LODR) Regulations 2015 is provided in theCorporate Governance Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS:

No significant material order has been passed by any Regulators orCourts or Tribunal which would impact the going concern status of the Company and itsfuture operations.

AUDITORS-

(1) STATUTORY AUDITORS:

M/s. Anandam & Co. Chartered Accountants (Firm Registration Number000125S) were appointed as the Statutory Auditors by the Members of the Company at the 33rdAnnual General Meeting (AGM) to hold office from the conclusion of the 33rd AGMuntil the conclusion of the 38th AGM for audit up to the financial year endingon 31st March 2022

The requirement to place the matter relating to appointment of Auditorsfor ratification by members at every Annual General Meeting is done away with videnotification S.O. 1833(E) dated 7th May 2018 issued by the Ministry of Corporate AffairsNew Delhi.

The notes to the accounts referred to in Auditors' Report areself-explanatory and do not call for any further comments. The Audit Report does notcontain any qualification reservation or adverse remark.

(2) Internal AUDITORS:

The Board of Directors of the Company have appointed M/s Praturi &Sriram. Chartered Accountants as Internal Auditors to conduct Internal Audit for theFinancial Year ended 31st March 2021.

(3) SECRETARIAL AUDITOR:

Pursuant to the provisions of Section 204 of the Act and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsof the Company had appointed Mr. Ashish Kumar Gaggar Practicing Company Secretary toundertake the Secretarial Audit of the Company for the year ended 31st March2021. The Secretarial Audit Report is annexed as Annexure-E. The Auditors' Report and theSecretarial Audit Report for the financial year ended 31st March 2021 do notcontain any qualification reservation adverse remark or disclaimer except theobservations provided thereunder.

Pursuant to the provisions of Regulation 24A of the SEBI (LODR)Regulations 2015 the Board of Directors of the Company had appointed Mr. Ashish KumarGaggar Practicing Company Secretary to undertake the Annual Secretarial Compliance Auditof the Company for the year ended 31st March 2021. The Annual SecretarialCompliance Report is annexed as Annexure-E1. The

Annual Secretarial Compliance Report for the financial year ended 31stMarch 2021 do not contain any qualification reservation adverse remark or disclaimerexcept the observations provided thereunder.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO:

The information on conservation of energy technology absorption andforeign exchange earnings and outgo stipulated under Section 134 (3) (m) of the CompaniesAct 2013 read with Rule 8 of The Companies (Accounts) Rules 2014 is annexed as AnnexureF

PARTICULARS OF EMPLOYEES:

The Company has not employed any individual whose remuneration fallswithin the purview of the limits prescribed under the provisions of Section 197 of theCompanies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014

PARTICULARS OF REMUNERATION:

The information required under Section 197 (12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed as Annexure G.

The information required under Rule 5 (2) and (3) of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided in saidAnnexure forming part of the Report.

extract OF ANNUAL RETURN:

Pursuant to Section 92 of the Companies Act 2013 and Rule 12 (1) ofthe Companies (Management and Administration) Rules 2014 the extract of Annual Return inform MGT-9 is annexed as Annexure H.

MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE:

The Management Discussion and Analysis Report and the Report onCorporate Governance as required under Regulation 34 (2) of SEBI (LODR) Regulations2015 forms part of the Annual Report.

Your Company is committed to the tenets of good Corporate Governanceand has taken adequate steps to ensure that the requirements of Corporate Governance aslaid down under SEBI (LODR) Regulations 2015 are complied with.

A separate report on Corporate Governance and a Management Discussionand Analysis Report is being presented as part of the Annual Report.

A declaration of Code of Conduct from Mr. J. Lakshmana Rao Chairmanand Managing Director forms as part of the Corporate Governance Report.

CREDIT RATING:

The Company has received credit rating from D&B Rating agency in31st July 2017.

D&B Rating

The credit rating is 4A3 and condition is stated as Fair.

D&B Indicative Risk Rating of 4A3 implies that the Company has atangible networth between INR 129190000 and 645949999 as per latest available auditedfinancial statements. Composite appraisal 3 indicates that the overall status of theCompany is fair as on 31st July 2017.

CEO/CFO CERTIFICATION:

Mr. J. Lakshmana Rao Chairman and Managing Director and Mr. SatyaKishore Nadikatla Chief Financial Officer of the Company have given a certificate to theBoard as contemplated in Regulation 17(8) of SEBI (LODR) Regulations 2015.

RISK MANAGEMENT:

All assets of the Company and other potential risks have beenadequately insured.

RISK MANAGEMENT POLICY:

In terms of the requirement Section 134(3)(n) of the Companies Act2013 and Regulation 21 of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has developed and implemented theRisk Management Policy. The Audit Committee has additional oversight in the area offinancial risks and controls. Major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuing basis. The developmentand implementation of risk management policy has been covered in the management discussionand analysis which forms part of this report. At present the Company has not identifiedany element of risk which may threaten the existence of the company.

EMPLOYEE RELATIONS:

The relationship with the workmen and staff remained cordial andharmonious during the year and the management received full co-operation from theemployees.

BOARD'S OPINION OF INDEPENDENT DIRECTOR APPOINTED DURING THE YEAR:

As per Rule 8 (5) (iii)(a) of Companies (Accounts) Rules 2014 it isin the opinion of the Board that integrity expertise and experience (proficiency yet tobe ascertained from the online proficiency self-assessment test conducted by the IICA) ofthe independent directors appointed during the year has been fulfilled.

fraud REPORTING:

In the terms of provision of Section 134(3) (ca) of the Companies Act2013 during the year under review there was no case of offense of fraud detected by theAuditors under sub section (12) of section 143.

MAINTENANCE OF COST RECORDS:

The Central Government has not prescribed the maintenance of costrecords under sub section (1) of section 148 of the Companies Act 2013 for theproducts/services of the company.

ACKNOWLEDGEMENTS:

Your Directors wish to place on record their appreciation and gratitudefor all the assistance and support received from Citibank and ICICI Bank Limited andofficials of concerned government departments for their co-operation and continued supportextended to the Company. They also thank the Members for the confidence they have reposedin the Company and its management.

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