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Noida Toll Bridge Company Ltd.
|BSE: 532481||Sector: Infrastructure|
|NSE: NOIDATOLL||ISIN Code: INE781B01015|
|BSE 00:00 | 17 Sep||5.47||
|NSE 00:00 | 17 Sep||5.50||
|Mkt Cap.(Rs cr)||102|
|Mkt Cap.(Rs cr)||101.85|
Noida Toll Bridge Company Ltd. (NOIDATOLL) - Director Report
Company director report
Your Directors have pleasure in presenting the 22nd Annual Report along with theAudited Accounts for the financial year ended March 312018.
The Company adopted Indian Accounting Standard ("Ind AS") from April 1 2016and accordingly the financial results have been prepared in accordance with therecognition and measurement principles stated therein prescribed under Section 133 of theCompanies Act 2013 ("hereinafter referred to as "the Act") read with therelevant rules issued there under and the other accounting principles generally acceptedin India. Financial results for all the periods during FY 2017-18 have been prepared inaccordance with the recognition and measurement principles of Ind AS. The date oftransition to Ind AS is April 12015.
The Income from Operations for Financial Year (FY) 2018 has decreased over theprevious FY by Rs. 657.81 mn and the Company has incurred a loss of Rs. 577.61 mn for FY2018 as compared to profit after tax of Rs. 16.30 mn for the previous FY. The reduction isprimarily on account of noncollection of the user fee pursuant to the Hon'ble High Courtof Allahabad Judgement dated October 26 2016 on a Public Interest Litigation filed in2012 (challenging the validity of the Concession Agreement and seeking the ConcessionAgreement to be quashed) wherein the Hon'ble High Court of Allahabad held the two specificprovisions relating to levy and collection of fee to be inoperative but refused to quashthe Concession Agreement. Consequently collection of user fee from the users of the NoidaBridge has been suspended from October 26 2016. However the Company continues to fulfillits obligations as per the Concession Agreement including maintenance of Project Assets.
The non-toll revenue during FY 2017-18 is Rs. 162.77 mn as compared to Rs. 143.61 mnfor FY 2016 -17 which is an increase of 13.34%.
DIVIDEND AND RESERVES
Due to losses your Directors are not recommending any dividend for the FY 2017-18 tothe Shareholders.
During the year under review no amount was transferred to General Reserve.
The Company has repaid Secured Term Loan from the Bank amounting to Rs. 97.46 millionduring the FY 2017-18 in accordance with scheduled repayment terms. During the FY 2017-18the Company has drawn down an unsecured loan of Rs. 187.10 million from the body corporateand repaid the unsecured loan of Rs. 24.16 million to the body corporate.
The Automatic Vehicle Classification Systems installed at the toll plaza were madeinoperational post suspension of collection of user charges from the users of DND Flywayand hence traffic data on the DND Flyway for FY 2017-18 is not available. Howeverbetween January 2018 to March 2018 the Company had undertaken a traffic count on DNDFlyway and Mayur Vihar link using videography. The average daily traffic count on DNDFlyway and Mayur Vihar link was approximately 220000 which is 76.89% growth over theaverage total daily traffic preceding the suspension of toll in October 2016. The increasein traffic has led to congestion on DND Flyway as the ingress/egress roads at both theDelhi and Noida end are not able to cope with the continuous throughput. The Company hasdeployed adequate number of traffic marshals to manage and regulate the traffic duringpeak hours. Due to greater than normal growth in traffic there is accelerated wear andtear of the road surface and some sections of both DND Flyway and Mayur Vihar Link Roadwill require repairs post monsoon.
Presently your Company is generating revenue mainly from outdoor advertising on DNDFlyway and rent for use of the toll plaza for collection of Entry Tax and EnvironmentCompensation Charge by the Contractor appointed by South Delhi Municipal Corporation.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A Management Discussion and Analysis Report for the year under review as stipulatedunder Listing Regulations is attached and forms part of this Report.
The Issued and Subscribed Equity Share Capital of the Company on March 31 2017 was '1861950020/-. There were no allotments of shares during the year and hence the sharecapital on March 312018 remains the same.
The Company has one subsidiary ITNL Toll Management Services Limited. The auditedaccounts of the subsidiary as well as the Consolidated Financial Statements of theCompany along with its subsidiary form part of this Report. A statement containing salientfeatures of the financial statement of subsidiaries/associate companies in the prescribedForm AOC - 1 is annexed to this Report as Annexure 1.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr Pradeep Puri Executive Vice Chairman had resigned from the office of Executive ViceChairman of the Company effective from closing business hours on December 31 2017 and iscontinuing as a Non-Executive Director of the Company with effect from January 12018.
Mr Piyush Mankad - an Independent Director had resigned from the Directorship of theCompany with effect from March 25 2018. Your Directors place on records sincereappreciation of the contribution made by him to the growth of the Company.
The Board of Directors has re-designated and appointed Mrs Namita Pradhan (aNon-Executive Director) as an Independent Director of the Company with effect from May10 2018 subject to shareholders approval being obtained at this Annual General Meeting.
In accordance with the provisions of Section 152 of the Act Mr Pradeep Puri -Director retires by rotation at the forthcoming Annual General Meeting and beingeligible offers himself for re-appointment. The Board recommends his re-appointment forthe consideration of the Members of the Company at the ensuing Annual General Meeting.
None of the Directors of the Company are disqualified from being appointed as Directorsas specified under Section 164 of the Act.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149 (6) of the Act and Regulation 16 (b) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafterreferred to as "Listing Regulations"). During the year under review thenon-executive directors of the Company had no pecuniary relationship or transactions withthe Company other than sitting fees and reimbursement of expenses incurred by them forthe purpose of attending meetings of the Company.
Pursuant to the provisions of the Act and the Corporate
Governance requirements as prescribed by Listing Regulations the Company has devised aPolicy for performance evaluation of all the Independent Directors Board and Committeesof Directors both executive and non-executive. A structured questionnaire was preparedcovering various aspects of the Board's functioning execution and performance of dutiesobligations and governance. An evaluation of performance for FY 2017-18 has beenconducted. The Directors have expressed their satisfaction with the performance of each ofthe Directors Committees and the Board.
Ms Pooja Agarwal had resigned from the position of Company Secretary and ComplianceOfficer of the Company with effect from June 1 2017. The Board at its Meeting held on May16 2017 appointed Mr Dhiraj Gera as the Company Secretary and Compliance Officer of theCompany with effect from June 1 2017 in terms of the provisions of Section 203 of theAct read with Rules made there under and applicable Listing Regulations.
Pursuant to the provisions of Section 203 of the Act Mr Ajai Mathur ManagingDirector Mr Dhiraj Gera Company Secretary and Mr. Rajiv Jain Chief Financial Officerare Key Managerial Personnel of the Company.
The following policies of the Company are annexed to this Report:
1. Selection Criteria for Independent Directors of the Company along with the Criteriafor Independence (Annexure 2)
2. Remuneration policy for Directors Key Managerial Personnel and other employees(Annexure 3)
The above policies can also be accessed on the website of the Company in the investorinformation section on www.ntbcl . com
number of board meetings
The Board of Directors of the Company met six times during the year under review.Details on the Meetings form part of the Corporate Governance Report.
As per the provisions of the Act and the Listing Regulations the Audit Committee ofDirectors comprises 6 Directors out of which 4 are Independent. The Independent Directorson the Committee are; Mr. R.K. Bhargava (Chairman) Dr. Sanat Kaul Mr. Deepak Premnarayenand Mrs Namita Pradhan. The other Members are Mr. Pradeep Puri Non-Executive Director andMr. Ajai Mathur Managing Director. Mrs Namita Pradhan was inducted on the Committee witheffect from May 10 2018 in place of Mr Piyush Mankad.
All recommendations made by the Audit Committee were accepted by the Board.
Detailed composition of the Committee along with information on the meetings held andattended are given in the Corporate Governance Report.
WHISTLE BLOWER POLICY
The Company has adopted a Whistle Blower / Vigil Mechanism Policy to report genuineconcerns or grievances concerning instances of unethical behaviour actual or suspectedfraud or violation of the Company's Code of Conduct and Business Ethics Policy. The Policycan be accessed on the website of the Company in the investor information section onwww.ntbcl . com
The Company has not received any complaints under this policy during the year underreview.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an anti Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibitionand Redressal) Act 2013. An Internal Complaints Committee has been set up to redresscomplaints received regarding sexual harassment. All employees of the Company and itssubsidiary (permanent contractual temporary trainees) are covered under this Policy.During the year under review there were no cases filed pursuant to the Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
In terms of Section 135 of the Act the Company's Corporate Social ResponsibilityCommittee (CSR Committee) presently consists of three Directors out of which two areIndependent. The Independent Directors are Mr. R. K. Bhargava Chairman and Dr. SanatKaul Director. Other Member is Mr. K. Ramchand Non-Executive Director. Details of theCommittee along with information on the meetings held and attended are given in theCorporate Governance Report. The CSR Committee has formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR Policy) indicating the activities tobe undertaken by the Company which has been approved by the Board. The CSR Policy may beaccessed in the investor information section on the Company's website at www.ntbcl . com.An Annual Report on CSR Activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out as Annexure 4 to this Report.
The Company has not accepted any Fixed Deposits within the meaning of Section 73 of theAct read with the Companies (Acceptance of Deposits) Rules 2014 during the year underreview.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS uNDER SECTION 186Being anInfrastructure Company provisions of Section 186 of the Act are not applicable.
RELATED PARTY TRANSACTIONS
All transactions entered with Related Parties for the year under review were on anarm's length basis and in the ordinary course of business. The Company has not enteredinto any "material" Related Party Transactions during the year. Accordingly theprovisions of Section 188 of the Act are not attracted and disclosure in form AOC-2 is notrequired to be given. There are no materially significant Related Party Transactionsentered into by the Company with Promoters Directors or Key Managerial Personnel whichmay have a potential conflict with the interest of the Company at large.
The Company has a Related Party Transaction framework. The policy on Related PartyTransactions has been uploaded in the investor section of the Company's website at www.ntbcl.com. All Related Party Transactions regardless of their size are placed before the AuditCommittee and in case a Transaction needs approval as per the Policy it is recommendedto the Board by the Audit Committee. Omnibus approval was obtained on an Annual Basis fromthe Audit Committee for transactions which are repetitive in nature. A statement on allRelated Party Transactions is placed before the Audit Committee and Board for review on aquarterly basis. Other than remuneration none of the Directors have any pecuniaryrelationship or transactions vis-a-vis the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY Theregulators or courts
The Company had received aggregate demand of ' 1343.31 crores from the Income TaxDepartment for the Assessment Years 2007-08 to 2014-15. 95% of the total tax demand is onaccount of designated returns and revenue subsidy. The Company had deposited ' 23.55crores against the outstanding demand and also filed an appeal with the Commissioner ofIncome Tax (Appeals) Noida. Pursuant to the shifting of the Registered Office of theCompany from Noida to Delhi the jurisdiction of the Company had shifted from the State ofUttar Pradesh to the State of New Delhi. Accordingly the Company filed an application forextension on stay of demand with the Competent Authority in the Income Tax Departmentwhich were rejected by them. In this regard your Company has filed two separate writpetitions before the Hon'ble Delhi High Court on March 222018 seeking extension of stayof demand for AY 2007-082008-092012-13 and 2013-14 and for AY 2009102010-112011-12 and2014-15. On April 9 2018 the order was passed by the Hon'ble Delhi High Court whereinstay was granted against the order for Assessment Year 2007-08 200809 2012-13 and2013-14 till July 23 2018 and issued notice
to Income Tax Department to file counter affidavit. Further the Court directed theIncome Tax Department to dispose off the pending stay application for AYs 2009-102010-11 2011-12 and 2014-15. Additionally the Hon'ble Delhi High Court also asked theCommissioner of Income Tax (Appeals) to pass the orders in pending appeals at an earliest.
On April 25 2018 the Company received the combined order from Commissioner of IncomeTax (Appeals) Noida for all the pending appeals upholding the demand and with the penaltynotice under Income Tax Act 1961. The Company has sought adjournment of the same by threeweeks. Consequent upon the receipt of the order from Commissioner of Income Tax (Appeals)Noida the Company has sought legal advise and is in process of filing an appeal with thenext Appellate Authority within the permitted time allowed. Subsequently the stay ofdemand application along with the request for early hearing will also be filled beforenext Appellate Authority.
The local resident welfare associations (Federation of Noida Resident WelfareAssociations- FONRWA) had filed a Public Interest Litigation ("PIL") in 2012 inthe Allahabad High Court ("HC") challenging the validity of the ConcessionAgreement and seeking the Concession Agreement to be quashed. The Hon'ble HC of Allahabadin a judgement dated October 26 2016 held that the two specific provisions relating tolevy and collection of fee to be inoperative but refused to quash the ConcessionAgreement. Consequently collection of user fee from the users of the NOIDA Bridge wassuspended from October 26 2016. However the Company continues to fulfil its obligationsas per the Concession Agreement including maintenance of Project Assets.
The Company had challenged the High Court Judgment before the Hon'ble Supreme Court("SC") of India by way of Special Leave Petition (SLP No. 33403 of 2016). TheHon'ble SC had on November 11 2016 passed an order in the aforesaid matter requestingthe Comptroller and Auditor General of India ("CAG") to assist the court in thematter by verifying the claim of the Company that the Total Cost of the Project has notbeen recovered in accordance with the terms of the Concession Agreement dated 12.11.1997.The CAG filed an Affidavit along with sealed cover report to SC on March 22
2017. On August 112017 the Supreme Court instructed that copy of full CAG report beprovided to the Company. The CAG report clearly specified that Total Cost of Project hadnot been recovered by the Company. The CAG report also contained some other observationsby the CAG which were outside the scope of its remit. The matter was listed for hearingon April 32018 wherein the Legal Counsel of NTBCL raised the issue of whether theAllahabad HC had the jurisdiction to interfere and remove two provisions from a concludedand part performed commercial contract under a PIL. The SC bench directed that the matterbe listed in the month of July 2018 for hearing on merits and the CAG Report be kept in asealed cover andneed not be provided to the Respondents in the case. The Company throughits senior counsel will seek a date for hearing in early July 2018.
The Judgment of the Hon'ble HC of Allahabad had constituted a Change in Law as per theConcession Agreement which obligates New Okhla Industrial Development Authority("NOIDA") to modify or cause to modify the Concession Agreement so as to placethe Company in substantially the same legal commercial and economic position as it wasprior to such Change in Law. Accordingly the Company had sent a proposal dated November17 2016 under Section 6.3B(a) of the Concession Agreement notifying NOIDA of theresultant Change in Law and occurrence of Events of Default . However NOIDA failed totake any steps in pursuance of the said proposal. The Company then sent a Notice ofArbitration to NOIDA on February 14 2017 pursuant to Section 26.1 of the ConcessionAgreement. The Company had appointed Mr. Justice Vikramajit Sen (Retd) as its designatedArbitrator. However NOIDA had not nominated its arbitrator. In light of the foregoingthe Company had filed a petition on July 20 2017 under Section 11(4) of the Arbitrationand Conciliation Act 1996 ("A & C Act") in the Hon'ble HC of Delhi whichheard the said petition on October 24 2017 and appointed Mr. Justice S.B Sinha (Retd.) asthe arbitrator on NOIDA's behalf. The Arbitral Panel comprising of Mr Justice (Retd.)Satya Brata Sinha and Mr Justice (Retd) Vikramjit Sen and Hon'ble Justice (Retd) R.C.Lahoti as Presiding Arbitrator had been constituted on November 15 2017. At thepreliminary hearing of the Arbitral Tribunal on December 2 2017 schedule of steps to befollowed upon had been agreed upon.
In compliance with the schedule NTBCL had submitted their Statement of Claimaggregating to approximately ' 70000000000/- (Rupees Seven Thousand Crores) excludinginterest and costs. Separately Infrastructure Leasing & Financial Services Ltd("IL&FS") as the project sponsor and party to the Concession Agreement hadfiled an impleadment application with the Arbitral Tribunal along with a Statement ofClaim. NOIDA had also filed a counterclaim Statement of Defence and an Application underSection 16 of the A & C Act raising jurisdictional objections before the ArbitralTribunal. At the second hearing on March 27 2018 the Arbitral Tribunal directed the nexthearing on May 19 2018 if the Statement of Claims filed by the Company and IL&FS areto be treated as two Arbitrations and also asked the Company and IL&FS to file theirreply to NOIDA's application under Section 16 within 3 weeks. The Company and IL&FShave filed their reply to the application of NOIDA under Section 16 objecting to themaintainability of the claims within the stipulated time. NOIDA too has filed its writtensubmissions on May 18 2018 for arguments on application under Section 16 of the A & CAct. At the third hearing on May 19 2018 the Arbitral Tribunal heard the arguments ofthe legal counsel of NOIDA in respectof their application under Section 16. As thearguments could not be concluded the Arbitral Tribunal will decide on a date for the nexthearing to continue with the arguments.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY
There was no material change and commitment which materially affect the financialposition of the Company occurred between the financial year ended on March 31 2018 andthe date of this report.
EMPLOYEE STOCK OPTION PLANS
The Company has two employee stock option plans viz. ESOP 2004 and ESOP 2005.
During the year the Company has not granted any stock options. All stock optionsgranted in the past have been exercised allotted or have lapsed.
No options have been granted under ESOP 2005 so far and Options under ESOP 2004 weregranted as per the pricing formula approved by the shareholders.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN Exchange EARNINGS AND OuTGO
The Company has neither earned nor spent any foreign exchange during the year underreview. The Company is also in the process of setting up a solar power generation systemfor its captive use.
As per Regulation 34(3) read with Schedule V of the Listing Regulations a Report onCorporate Governance practices followed by the Company along with a certificate frompractising company secretaries on compliance with the provisions of Corporate Governanceis annexed to this Report.
The Company has carried out a detailed exercise at the operational as well as thecorporate/strategic level to identify and categorize risks with business and functionalheads. A Risk Management Policy was approved by the Board of Directors of the Company onApril 30 2015. Risk procedures are periodically reviewed to ensure control on risksthrough properly defined framework.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls. The Company's internalcontrol system is commensurate with its size scale and complexity of its operations. Theinternal audit is entrusted to M/s Patel & Deodhar Chartered Accountants. The mainthrust of the internal audit is to review controls and flag areas of concern and non-compliances if any. No fraud has been reported so far.
DIRECTORS' RESPONSIBILITY STATEMENT
The provisions of Section 134(5) of the Companies Act 2013 requires the Board ofDirectors to provide a statement to the members of the Company in connection withmaintenance of books records and preparation of Annual Accounts in conformity withaccepted accounting standards and past practices followed by the Company. Pursuant to theforgoing and on the basis of representations received from the operating management andafter due enquiry it is confirmed that:
(1) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(2) 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 of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;
(3) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
(4) the Directors have prepared the annual accounts on a going concern basis;
(5) the Directors have laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and are operating effectively.
(6) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems were adequate and operating effectively.
M/s N.M. Raiji & Co Chartered Accountants (Firm Registration No. 108296W) wereappointed as Statutory Auditors of the Company for a period of five years from theconclusion of 21st Annual General Meeting (AGM) held on September 25 2017 tillthe conclusion of the 26th AGM of the Company scheduled to be held in the year 2022subject to ratification of their appointment at every AGM at a remuneration to bedetermined by the Board of Directors of the Company. Pursuant to an amendment undersection 139 of the Act with effect from May 7 2018 the requirement of ratification ofappointment of Statutory Auditors at every AGM has been removed. Accordingly theratification of appointment of Statutory Auditors of the Company by the shareholders atevery AGM is not required.
There are no audit qualifications in the financials for the year under review.
Pursuant to Section 148 of the Companies Act 2013 and the Companies (Cost Records andAudit) Rules 2014 framed there under the Company is not required to appoint the CostAuditors for FY 2018-19.
Pursuant to the provisions of Section 204 of the Act and Rules framed there under theCompany has appointed GSK & Associates (Registration Number P2014UP036000) toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed asAnnexure 5 to the Directors' Report.
There are no qualifications in the secretarial audit for the year under review.
OTHER STATUTORY DISCLOSURES
The Company had 4 employees as on March 31 2018. The disclosures required undersection 197 (12) of the Act read with Rules 5(1) 5(2) and 5 (3) of the Companies(Appointment and remuneration of Managerial Personnel) Rules 2014 and forming part of theDirectors' Report for the year under review is given as Annexure 6 to the Report.
The Business Responsibility Reporting as required by Regulation 34(2) of the ListingRegulations is not applicable to the Company for the year under review.
EXTRACTS OF THE ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 as requiredunder Section 92 of the Act is annexed to this Report as Annexure 7.
The Board of Directors place on record their appreciation for the continued supportextended to them by various Government Authorities Banks Financial Institutions thePromoter and Shareholders of the Company.
The Directors would also like to place on record their appreciation for the hard workand dedication of the employees of the Company at all levels.
By order of the Board
For Noida Toll Bridge Company Limited
R. K. Bhargava
DIN : 00016949
Date: May 212018