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Patel Engineering Ltd.

BSE: 531120 Sector: Infrastructure
NSE: PATELENG ISIN Code: INE244B01030
BSE 00:00 | 02 Dec 19.20 -0.35
(-1.79%)
OPEN

19.50

HIGH

19.85

LOW

18.90

NSE 00:00 | 02 Dec 19.10 -0.40
(-2.05%)
OPEN

19.65

HIGH

19.85

LOW

18.90

OPEN 19.50
PREVIOUS CLOSE 19.55
VOLUME 3558400
52-Week high 34.95
52-Week low 18.90
P/E 8.17
Mkt Cap.(Rs cr) 990
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 19.50
CLOSE 19.55
VOLUME 3558400
52-Week high 34.95
52-Week low 18.90
P/E 8.17
Mkt Cap.(Rs cr) 990
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Patel Engineering Ltd. (PATELENG) - Director Report

Company director report

Board's Report

To the Members of Patel Engineering Limited

Your Directors hereby present the 73rd Board's Report on thebusiness operations and state of affairs of the Company together with the auditedfinancial statements for the year ended March 31 2022:

FINANCIAL PERFORMANCE

Standalone and Consolidated (Rs in million)
Particulars Consolidated Standalone
2021-22 2020-21 2021-22 2020-21
Total Revenue 34964.95 21039.28 31624.40 18624.32
Total Expenses 28525.73 17601.56 25697.90 15502.76
EBITDA 6439.22 3437.72 5926.50 3121.56
Depreciation 818.99 720.25 681.40 639.06
Finance Cost 4195.27 4013.92 3933.60 3693.83
Exceptional Item 304.94 2141.66 463.60 939.13
Profit / (Loss) before tax 1120.02 (3438.12) 847.90 (2150.46)
Tax expenses 433.77 (708.85) 322.92 (766.48)
Share in profit / (loss) in associates (net) 32.23 (178.21) - -
Net Profit / (Loss) after tax 718.49 (2907.47) 525.06 (1383.98)
Other Comprehensive Income (Net) (72.43) 45.28 8.49 (37.49)
Total comprehensive income for the year 646.06 (2862.19) 533.55 (1421.47)
Earnings per equity shares Rs (face value Rs 1 each)
- Basic 1.51 (6.78) 1.11 (3.23)
- Diluted 1.49 (6.78) 1.11 (3.23)

Consolidated:

The Consolidated total income for FY 2022 stood at Rs 34964.95 millionas against Rs 21039.28 million for the previous year. The Net profit forthe year ended March 31 2022 was at Rs 718.49 million as against Net Loss of Rs 2907.47million for the previous year.

Standalone:

On Standalone basis the total income for FY 2022 stood at Rs 31624.40million as against Rs 18624.32 million for the previous year. The Net Profit for the yearended March 31 2022 was at Rs 525.06 million as against Net Loss of Rs 1383.98 millionfor the previous year.

Dividend

To conserve funds the Directors have not recommended payment ofdividend for the financial year 2021-22.

Pursuant to Regulation 43A of the SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 ("the Listing Regulations") theDividend Distribution Policy is available on the website of the Company at the link:https://tinyurl.com/54cvkwz9.

Share Capital

During the year under review 13777470 Equity Shares of the facevalue of Rs 1 each were allotted on conversion of debt into equity at a conversion priceof Rs 14.78. No shares were allotted to the promoter group during the year under review.

Consequently as at March 31 2022 the total paid-up share capital ofthe Company stood at Rs 479230494 divided into 479230494 Equity Shares of Rs 1 each.

Information on state of affairs of the Company

Information on the operational and financial performance among othersis given in the Management Discussion and Analysis Report forming part of the AnnualReport and is in accordance with the Listing Regulations.

Merger of Subsidiaries

During 2020-21 Company filed merger applications with HonorableNational Company Law Tribunals (NCLT/Tribunal) Mumbai and Hyderabad for Merger byAbsorption of 14 wholly owned subsidiaries viz. Patel Energy Resources Ltd; PEL Power Ltd;PEL Port Pvt Ltd; Patel Energy Projects Pvt Ltd; Patel Energy Assignment Pvt Ltd; PatelEnergy Operations Pvt Ltd ; Jayshe Gas Power Pvt Ltd; Patel Thermal Energy Pvt Ltd; PatelHydro Power Pvt Ltd; Zeus Minerals Trading Pvt Ltd; Patel Concrete & Quarries Pvt Ltd; Patel Lands Ltd; Patel Engineers Pvt Ltd and Phedra Projects Pvt. Ltd with the Companyto combine business interest into one corporate entity resulting in operationalsynergies simpli_cation streamlining and optimization of the group structure andefficient administration.

Due to the Covid pandemic the process of merger got delayed. TheCompany is expecting completion of merger by July 2022.

Borrowing

The total long-term borrowings stood at Rs 19907.07 million as onMarch 31 2022 as against Rs 19187.38 million as on March 31 2021.

Subsidiaries & Associates

As on March 31 2021 the Company has 67 subsidiaries including stepdown subsidiaries.

During the year under review Apollo Buildwell Private Limited andNaulo Nepal Hydro Electric Private Limited ceased to be subsidiaries of the Company onaccount of sale/disinvestment.

Highlights of performance of key subsidiaries/Associates

Michigan Engineers Private Limited (Michigan)_having presence in urbaninfrastructure Projects mostly for Municipal Corporation of Greater Mumbai (MCGM) hassurpassed revenues of Rs 2900 million and profit of Rs 219.50 million in FY 2022. It hasan order book totaling to about Rs 10000 million. Michigan successfully completed itsfirst segment tunnel of 1857 meter in January 2022 under its TBM contract of Rs 1710million. The Company is looking to monetize and hive-off its stake in this company at aright valuation.

Raichur Sholapur Transmission Company Private Limited (RSTCPL)commissioned 765 kV single circuit transmission line between Raichur and Sholapur in July2014. The Project is promoted by the Company along with Simplex Infrastructure Ltd and BSLtd. The Project achieved transmission line availability of 99.48% in FY 2022 98.72% inFY 2021 98.46% in FY 2020. During the FY 2022 the Lenders refinanced the outstanding ECBinto Rupee Term Loan (RTL) as envisaged during implementation of the 5/25 scheme as perthe RBI guidelines in September 2017. The project is currently under operation and thedebt obligation is timely serviced by RSTCPL. The Company along with the other promotersis in final stages of discussion with the potential Buyer for 100% divestment from theproject.

Dirang Energy Private Limited (Dirang) a Special PurposeCompany for development of 144MW Gongri Hydroelectric Power Project in West Kamengdistrict in Arunachal Pradesh. Pursuant to the termination order for the said project byGovt. of Arunachal Pradesh in earlier years the Guwahati High Court had passed a stayorder dated 29.06.2018 on the said termination notice and also its consequential effects.Further the Guwahati High Court in its order dated 22.01.2021 has directed the parties tostart the Arbitration proceedings in the matter which has commenced subsequently.Meanwhile the parent company has settled the lenders dues of this entity.

The status of Patel KNR Infrastructure Ltd and Patel KNR HeavyInfrastructure Limited continue to remain the same. The Company holds substantial stake inthese road project companies. Both the NHAI annuity projects are under operation and therespective companies are receiving the annuity on semi-annual basis. The respectiveCompanies are maintaining the assets as per the contract conditions.

PBSR Developers Private Limited is developing the projectconsisting two residential towers (each tower having 20 floors) and one tower of servicedapartments (19 floors). The project offers residential units comprising of 2 BHK 2.5 BHKand 3 BHK. These residential towers have a total of 12 fiats per floor whereas the serviceapartment block comprises of 11 apartments per floor. The Company has completedsubstantial work in the towers except for some finishing works of podium externalpainting amenity block etc. The Company has applied for Occupation Certificate for thesaid project and the same is being made ready for final possession and some fiat ownershave also started fit-outs in their respective fiats.

The Company through a step down subsidiary of its wholly ownedsubsidiary_Patel Energy Resources Limitedintended to build a thermal coastal power plantproject of 1050 MW at Nagapattinam Tamil Nadu. The said project continues to be on hold.Meanwhile the Company is studying the technical feasibility and economic viability of anyother relavant project so that the land parcel available could be put to a gainful use.

The Company's Mauritius subsidiary Les Salines Development Ltd(LSDL) had lease Agreement for development of 24.6215 hectares of land for residentialcommercial leisure and shopping etc with Government of Mauritius (GOM) for a period of 99years. In February 2015 suddenly GOM had terminated the lease without assigning anyreason. After termination of the project the Company had issued a notice of arbitrationto GOM for expropriation of investment under bilateral treaty between India and Mauritiusfor promotion and protection of investment in both countries. Currently the arbitrationprocess is going on at permanent court of arbitration Hague. Final hearing was completedin May 2022. The Company is awaiting award from Tribunal.

The salient features of the financial statement of each of thesubsidiaries and the associates as required under the Companies Act 2013 is provided in AnnexureI of the Boards' Report. Pursuant to the provisions of Section 136 of the Actthe financial statements of the Company consolidated financial statements along withrelevant documents and separate audited financial statements in respect of thesubsidiaries are available on the website of the Company at www.pateleng.com.

In terms of the Listing Regulations the Company has formulated apolicy for determining ‘material' subsidiaries and the same has been disclosedon Company's website at the following link: https://tinyurl.com/235xsrxw.

Particulars of Loans given Investment made Guarantees given andSecurities provided

The Members may note that the Company is engaged in providinginfrastructural facilities and hence as per Section 186(11) of Companies Act 2013nothing in Section 186 shall apply to the Company except sub-section (1) of Section 186.Accordingly a separate disclosure has not been given in the financial statements asrequired under Section 186(4) with regard to particulars of loan given investment made orguarantee given or security provided and the purpose for which the loan or guarantee orsecurity is proposed to be utilized by the recipient of the loan or guarantee or security.

Related Party Transactions

Particulars of contract and arrangement with the Related Parties asreferred to in Sub-Section 1 of Section 188 of the Companies Act 2013 is forming part ofthis Report and is provided in Form AOC-2 as Annexure II. All the Related PartyTransactions as required under Ind AS-24 are reported in the Notes to the financialstatements.

In accordance with the provisions of the Listing Regulations theCompany has formulated the Related Party Transactions policy and the same is uploaded onCompany's website at the link: https://tinyurl.com/2p94jfyw.

Directors and Key Managerial Personnel i. Independent Directors

During the year under review Ms. Geetha Sitaraman ceased to be anIndependent Director of the Company effective March 25 2022 due to completion of hersecond term as an Independent Director. The Board acknowledged her contribution to theCompany arising out of her decades' long rich experience.

The Board appointed Ms. Sunanda Rajendran as an Independent Directoreffective from March 24 2022. Her appointment is subject to approval of members for whichPostal Ballot Notice date May 13 2022 was circulated to the members for approval.

The necessary declarations with respect to independence has beenreceived from all the Independent Directors of the Company and that the IndependentDirectors have complied with the Code for Independent Directors prescribed in Schedule IVto the Companies Act 2013. Further Board confirms compliance with the Code of Conductfor Directors and senior management personnel formulated by the Company.

ii. Other Directors / Key Managerial Personnel

Ms. Kavita Shirvaikar retires by rotation at the ensuing Annual GeneralMeeting and being eligible offer herself for reappointment.

The Members of the Company at the 72nd AGM held on September 15 2021approved the re-appointment of Ms. Kavita Shirvaikar and Mr. Sunil Sapre as whole timeDirectors of the Company for a further period of 5 years with effect from April 1 2022.

There is no change in the Key Managerial Personnel (KMPs). Some of theKMPs of the Company are also the Directors/KMPs of the subsidiaries.

Number of Board Meetings

During the year ended March 31 2022 the Board met 5 times. Themeeting of the Board of Directors of the Company were held on June 11 2021 August 62021 November 1 2021 December 20 2021 and February 9 2022.

Nomination and Remuneration Policy

The Company has formulated a Nomination and Remuneration Policypursuant Section 178 of the Companies Act 2013 and the Listing Regulations. The salientfeatures of the Policy is enclosed as Annexure III to the Boards' Report.

Evaluation of the performance of the Board

Based on Boards' Evaluation Policy the performance of the BoardDirectors its Committees Chairman Executive Directors

Independent Directors and Non–executive Directors were evaluatedpursuant to the Provisions of Companies Act 2013 and the Listing Regulations.

A separate meeting of Independent Directors was held during the yearunder review wherein the Independent Directors evaluated the performance of thenon-independent directors the Board as a whole and the Chairman of the Company.

Internal Financial Controls and Risk Management

The Company has in place adequate internal financial control withreference to financial statement. The Company ensures operational efficiency protectionand conservation of resources accuracy in financial reporting and compliance with lawsand regulations. The internal control system is supported by an internal audit process.

Pursuant to SEBI (Listing Obligation and Disclosure Requirements)(Second Amendment) Regulations 2021 the Risk Management Committee was reconstituted toframe implement and monitor the risk management policy for the Company. The Committeeshall be responsible for monitoring and reviewing the risk management plan and ensuringits effectiveness. The Audit Committee has additional oversight in the area of financialrisks and controls. The major risks identified by the businesses and functions shall besystematically addressed through mitigating actions on a continuing basis.

Audit Committee

The Audit Committee presently comprises of:

Mr. K. Ramasubramanian- Independent Director (Chairman of theCommittee) Mrs. Geetha Sitaraman- Independent Director (till March 25 2022) Mr. RupenPatel – Chairman & Managing Director Mr. Barendra Bhoi – IndependentDirector (from March 25 2022)

Whistle Blower Policy

The Company has adopted a Whistle Blower Policy to comply with theprinciples of Business Responsibility and Sustainability

Reporting (BRSR) as amended by SEBI. The Policy provides a formalmechanism for director(s) /stakeholder(s) to report concerns about unethical behavioractual or suspected fraud or violation of the Company's Ethics and Code of Conduct.The Policy is uploaded on the Company's website at the linkhttps://tinyurl.com/2sxkrt7t.

This Policy provides for adequate safeguards against victimization ofDirector(s) /stakeholder(s) and provides opportunity to director(s)/ stakeholder(s) toaccess in good faith to the ABMS (Anti Bribery Management System) Committee in case theyobserve Unethical and Improper Practices or any other wrongful conduct in the Company.

The vigil mechanism is overseen by the Audit Committee. There are nocomplaints / grievances received from any Directors/ stakeholders of the Company underthis policy.

Corporate Social Responsibility

In accordance with the provisions of Section 135 of the Companies Act2013 the Board of Directors of the Company has constituted the Corporate SocialResponsibility Committee (CSR Committee) comprising of the following Directors as itsmembers:

Mr. Rupen Patel Chairman & Managing Director
Ms. Kavita Shirvaikar Whole time Director & CFO
Mr. K. Ramasubramanian Independent Director

The Ministry of Corporate Affairs has notified the Companies(CSR_Policy) Amendment Rules 2021 vide a notification dated January 22 2021 which seeksto amend the Companies (Corporate Social Responsibility Policy) Rules 2014. Pursuant tothe notification the Company amended its CSR Policy as uploaded on the Company'swebsite at the link: https://tinyurl.com/ptvdfbs3.

Pursuant to Clause (o) of Sub-Section (3) of Section 134 of theCompanies Act 2013 and Rule 8 of Companies (Corporate Social Responsibility Rules 2014the CSR Report forms part of the Board Report as Annexure IV. The Company hasinitiated spending on CSR activities as detailed in the CSR Report.

Statutory Audit

M/s T.P. Ostwal Associates LLP (FRN: 124444W/W100150) the StatutoryAuditors of the Company hold office until the conclusion of the 73rd AGM to be held in theyear 2022.

The Notes on financial statement referred to in the Auditors'Report are self-explanatory and do not call for any further comments. The Auditors'Report does not contain any qualification reservation adverse remark or disclaimer.

Branch Audit

In accordance with the provisions of Section 139 and 143(8) of theCompanies Act 2013 M/s. N. H. Karnesh & Associates has been appointed as BranchAuditor for the Realty Division of the Company for a term of 5 years to hold office untilthe conclusion of the 77th AGM to be held in the year 2026.

The Company has appointed M/s. R K Agrawal & Associates as BranchAuditor of the Company for Arun 3 H.E. Project Nepal for 2021-22.

Secretarial Audit

The Board of Directors appointed M/s. MMJB & Associates LLPCompany Secretaries to conduct Secretarial Audit of the Company for the financial yearended March 31 2022. The Report of the Secretarial Auditor is provided as Annexure Vto this Report. The Secretarial Audit Report does not contain any qualificationreservation adverse remarks or disclaimer.

In terms of Regulation 24A of Listing Regulations the SecretarialAudit Report of Michigan Engineers Private Limited the Material Unlisted Subsidiary ofthe Company for the year ended March 31 2022 also forms part of this Report.

Cost Audit

As per Section 148 of the Act the Company is required to have theaudit of its cost records conducted by a Cost Accountant. The Board of Directors of theCompany has on the recommendation of the Audit Committee approved the appointment of M/s.Vaibhav M Gandhi & Associates. a firm of Cost Accountants in Practice (RegistrationNo.003399) as the Cost Auditors of the Company to conduct cost audits under the Companies(Cost Records and Audit) Rules 2014 for the year ending March 31 2022. The Board onrecommendations of the Audit Committee have approved the remuneration payable to the CostAuditor subject to rati_cation of their remuneration by the Members at the forthcomingAGM. M/s Vaibhav M Gandhi & Associates have under Section 139(1) of the Act and theRules framed thereunder furnished a certificate of their eligibility and consent forappointment.

The cost accounts and records of the Company are duly prepared andmaintained as required under Section 148(1) of Act.

Prevention of sexual harassment of Women at workplace

The Company has a Policy on Prevention of Sexual Harassment of Women atWorkplace. No cases were reported during the year under review. The Company has compliedwith the provisions relating to the constitution of Internal Complaints Committee underthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013.

Conservation of Energy Technology Absorption and Foreign ExchangeEarnings/ Outgo

The particulars prescribed under Section 134 of the Companies Act 2013read with Rule 8 (3) of the Companies (Accounts) Rules 2014 relating to Conservation ofEnergy Technology Absorption Foreign Exchange Earnings / Outgo is provided as AnnexureVI to this Report.

Annual Return

Pursuant to Section 92 and 134 of the Act the Annual Return as atMarch 31 2022 in Form MGT-7 is available on the website of the Company athttps://tinyurl.com/5aazu6md.

Disclosure under Section 197 of the Companies Act 2013

In accordance with the provisions of Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the particulars of theemployees are set out in the annexure to this Report. In terms of the provisions ofSection 136 of the Act the Report is being sent to the Members of the Company excludingthe annexure. Any member interested in obtaining a copy of the annexure may write to theCompany Secretary at the Registered Office of the Company.

Further disclosures on managerial remuneration as required underSection 197 read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are provided as Annexure VII to this Report.

Corporate Governance

Pursuant to the Listing Regulations the Report on Corporate Governancetogether with the certificate issued by M/s. T. P Ostwal Associates LLP the StatutoryAuditors of the Company on compliance in this regard forms part of the Annual Report.

Employee Stock Option / General Benefits Scheme

The Company currently has two Schemes for its employees viz. PatelEngineering Employee Stock Option Plan 2007 and Patel Engineering General EmployeeBenefits Scheme 2015.

The applicable disclosure under SEBI (Share Based Employee Benefits)Regulations 2014 ("the ESOP Regulations") as at March 31 2022 is uploaded onthe Company's website at the link https://tinyurl.com/y98ezsj5.

A Certificate from the Secretarial Auditors of the Company in terms ofRegulation 13 of ESOP Regulations would be available at the ensuing AGM.

Other Disclosures

i) There are no_material changes and commitments affecting thefinancial position of the Company which have occurred between the end of the financialyear of the Company to which the financial statements relate and the date of theBoards' report.

ii) No orders have been passed by any Regulator or Court or Tribunalwhich can have impact on the going concern status and the Company's operations infuture during the year under review.

iii) The Company has not accepted or renewed any amount falling withinthe purview of provisions of Section 73 of the Companies Act 2013 read with the Companies(Acceptance of Deposit) Rules 2014 during the year under review. Hence the requirementfor furnishing of details relating to deposits covered under Chapter V of the said Act orthe details of deposits which are not in compliance with the Chapter V of the said Act isnot applicable.

iv) The Company has complied with the Secretarial Standard issued bythe Institute of Company Secretaries of India. v) No fraud has been reported by theAuditors to the Audit Committee and the Board. vi) There is no Corporate InsolvencyResolution Process initiated under the Insolvency and Bankruptcy Code 2016.

Directors' Responsibility Statement

Pursuant to Section 134 of the Companies Act 2013 the Directorsconfirm that:

i. in preparation of the annual accounts the applicable accountingstandards have been followed;

ii. such accounting policies have been applied consistently andjudgments and estimates that are reasonable and prudent have been made so as to give atrue and fair view of the state of affairs of the Company and of the Profit and Loss ofthe Company for the year ended March 31 2022;

iii. proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

iv. the annual accounts have been prepared on a going concern basis; v.internal financial controls were followed by the Company and the same are adequate andwere operating effectively; and

vi. proper systems has been devised to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Acknowledgements

The Board of Directors wish to place on record their appreciation forcontinued support and co-operation by Shareholders Financial Institutions BanksGovernment Authorities and other Stakeholders. Your Directors would also like to take thisopportunity to express their appreciation for the dedicated efforts of the employees ofthe Company.

For and on behalf of the Board of Directors
Patel Engineering Limited
Sd/-
Rupen Patel
May 23 2022 Chairman & Managing Director
Mumbai DIN: 00029583

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