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Petron Engineering Construction Ltd.

BSE: 530381 Sector: Engineering
NSE: PETRONENGG ISIN Code: INE742A01019
BSE 00:00 | 18 Feb Petron Engineering Construction Ltd
NSE 05:30 | 01 Jan Petron Engineering Construction Ltd
OPEN 4.56
PREVIOUS CLOSE 4.49
VOLUME 5336
52-Week high 9.19
52-Week low 4.49
P/E
Mkt Cap.(Rs cr) 3
Buy Price 4.50
Buy Qty 200.00
Sell Price 4.49
Sell Qty 2236.00
OPEN 4.56
CLOSE 4.49
VOLUME 5336
52-Week high 9.19
52-Week low 4.49
P/E
Mkt Cap.(Rs cr) 3
Buy Price 4.50
Buy Qty 200.00
Sell Price 4.49
Sell Qty 2236.00

Petron Engineering Construction Ltd. (PETRONENGG) - Director Report

Company director report

To

The Members

Petron Engineering Construction Limited

1. INITIATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS (CIRP)

The Hon'ble National Company Law Tribunal (‘NCLT') Mumbai Bench on 23rd March2018 admitted the application made by M/s. Kohinoor Crane Service and M/s. Industrial GasDistributors the Operational Creditors under Section 9 of the Insolvency and BankruptcyCode 2016 ("Code") and pronounced the commencement of the Corporate InsolvencyResolution Process (‘CIRP') of PETRON ENGINEERING CONSTRUCTION LIMITED andappointment of Mr. Rajeev Mannadiar as the Interim Resolution Professional (‘IRP')vide its order dated 23rd March2018 in CP No. 1374/IBC/NCLT/MB/MAH/2017 & CP No.1526/IBC/NCLT/ MB/MAH/2017.

On admission the provisions of Moratorium as prescribed under Section 14 of the Codebecame operative with effect from the date of the Order. Section 14 of the Code prohibitsinstitution of any suits before a Court of encumbering any of the assets of the Debtoretc. However the supply of essential goods or services to the "CorporateDebtor" shall not be terminated during Moratorium period. The Moratorium period willbe effective till the completion the Insolvency Resolution Process or until the approvalof the Resolution Plan prescribed under section 31 of the Code. At the first meeting ofCommittee of Creditors (‘CoC') of Petron the members resolved to appoint Mr. UdayrajPatwardhan as the Resolution Professional (‘RP'). Subsequently he was appointed asthe RP pursuant to the Order of the Hon'ble NCLT Mumbai dated 6th August 2018.

As per Section 17 read with Section 23 of the Code from the date of appointment of theInterim Resolution Professional/ Resolution Professional-

(a) The management of the affairs of the company shall vest in the Interim ResolutionProfessional.

(b) The powers of the Board of Directors of the Company shall stand suspended and beexercised by the Interim Resolution Professional / Resolution Professional.

(c) The officers and managers of the Company shall report to the ResolutionProfessional and provide access to such documents and records of the Company as may berequired by the Interim Resolution Professional / Resolution

Professional.

(d) The financial institutions maintaining accounts of the Corporate Debtor shall acton the instructions of the Interim Resolution Professional in relation to such accountsand furnish all information relating to the Corporate Debtor available with them to theInterim Resolution Professional / Resolution Professional.

The Committee of Creditors (CoC) at its meeting February 2019 have heldon14 resolvedthat the Company may be liquidated under liquidation as a "Going Concern". Inthis regard the Resolution Professional has filed necessary application with the Hon'bleNCLT Mumbai Bench. The matter is pending before the Hon'ble NCLT Mumbai Bench.

1. FINANCIAL HIGHLIGHTS

For the year ended March 31 2019
(Rupees in Lacs)
Particulars 2018-19 2017-18
Income from Operations 13363 23586
Other Income 148 726
Total Income 13511 24312
Profit/(Loss) before Interest Depreciation and Taxes 517 (21283)
Finance Cost 1308 2304
Profit/(Loss) before Depreciation and Taxes (791) (23587)
Depreciation 724 777
Profit/(Loss) before Tax (1515) (24364)
Tax Expenses (Including Taxes of Earlier Years) 73 (7050)
Profit /(Loss) for the year (1588) (17314)

2. DIVIDEND

Your Company has been incurring losses due to which the Company expresses its inabilityto recommend any dividend for the F Y 2018-19.

However the register of members and share transfer books shall remain closed fromSaturday 21st September 2019 to Friday 27th September 2019 (both days inclusive).

3. OVERVIEW OF COMPANY'S PERFORMANCE

During the financial year the Company earned revenue from operations of Rs. 13363Lacs as against Rs. 23586 Lacs in the previous year. Other income stood at Rs. 148 Lacsas against Rs. 726 Lacs in the previous year. The loss before tax stood at Rs. 1515 Lacsas compared to Rs. 24364 Lacs in the previous year. The Company has suffered a net lossof Rs. 1588 Lacs during the financial year 2018-19 primarily due to lower execution ofprojects and due to external constraints.

4. PUBLIC DEPOSITS

During the year under review your Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (including any statutory modification(s) orre-enactment(s) for the time being in force).

5. CHANGE IN NATURE OF BUSINESS

During the financial year 2018-19 Company has not changed its nature of business andhas been continuingwith the same line of business.

6. SHARE CAPITAL

The Paid-up Share Capital as on March 31 2019 was Rs. 753.84 Lacs. During the yearunder review the Company has not issued any shares. The Company has not issued shareswith differential voting rights. It has neither issued employee stock options nor sweatequity shares and does not have any scheme to fund its employees to purchase the shares ofthe Company.

7. RESERVES

In view of the losses Company has not transferred any amount to the reserves.

8. HOLDING COMPANY/ SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

There are no Subsidiary & Associate Companies within the meaning of Companies Act2013. The Company has not entered into any Joint Ventures during the year under review.

As at the end of financial year March 31 2019 the Company has below mentioned Holdingcompanies:

Holding Company KSS Petron Pvt. Ltd.
Ultimate Holding Company KazStroyService Global BV

9. DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors:

During the year under review there were no Directors on the Board of the Company as on31st March 2019.

Key Managerial Personnel :

During the year under review there were no Key Managerial Personnel in the Companyw.e.f. June 2 2019.

10. MEETINGS

Five meetings duly conducted by the Resolution Professional. The meetings were held onMay 30 2018 August 14 2018 November 13 2018 December 01 2018 and February 14 2019during the year under review.

11. BOARD COMMITTEES

All the Directors of the Company resigned from the Board in the month of February2018. Post resignation of all the Directors the Corporate Insolvency Resolution Processcommenced vide Order dated23 rd March 2018 received from the Hon'ble NCLT Mumbai Benchand thereafter no meeting of the Board Committees were held.

12. BOARD EVALUATION

As there were no Directors on the Board of the Company and in view of the CIRP noevaluation of the Board were carried out during the FY 2018-19.

13. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act2013 the Companyhereby state that :

a) In preparation of annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures;

b) such accounting policies as mentioned in Notes to Financial Statements have beenselected and applied consistently and judgments and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of thecompany as at March 31 2019 and of the profit/loss of the company for the year ended onthat date;

c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in the provisions of the Companies Act 2013 for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

d) the Annual Financial Statements have been prepared on a "going concern"basis;

e) proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively;

f) systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.

14. CORPORTE GOVERNANCE

Detailed report on Corporate Governance as stipulatedunder Clause E of Schedule V ofthe SEBI (LODR) Regulations 2015 is provided under separate Section and forms part ofthis Report.

The requisite certificate from Practicing Company Secretaries confirming under SEBI(LODR) Regulations 2015 is attached to the Report on Corporate Governance.

The details of remuneration paid to Key Managerial Personnel as per criterias mentionedherein below are given under Annexure I (‘Particulars of Employees') :

i. all elements of remuneration payable such as salary perquisites employer'scontribution to P.F. pension scheme bonus stock options etc.;

ii. details of fixed component and performance linked incentives.

The detailed policy of the Company on Director's appointment and remuneration includingcriteria for determining qualifications positive attributes independence of Directorsand other matters is annexedas‘Annexure II'.

15. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As stipulated under SEBI (Listing Obligations and Disclosures Requirements) Regulations2015 the Discussion and Analysis is annexed to the Annual Report.

16. PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedfrom time to time disclosures pertaining to remuneration and other details are providedin MGT-9 annexed to this report.

The Information required as per Rule 5(2) and 5(3) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in the Annexure-I formingpart of the Report. In terms of the first proviso to Section 136 of the Act the Reportand Accounts are being sent to the Shareholders. Any Shareholder interested in obtainingthe same may write to the Resolution Professional at the Registered Office of the Company.None of the employees listed in the said Annexure is related to any Director of theCompany.

There are no employees drawing remuneration exceeding Rupees One Crore and Two Lakhsper annum if employed or rupees Eight Lakhs and Fifty through out the financial Thousandper month if employed for part of the financial year or draws remuneration in excess ofManaging Director or Whole time Director or Manager and holds by himself or along with hisspouse and dependent children not less than two percent of the equity shares of theCompany

17. NOMINATION AND REMUNERATION POLICY

In terms of section 178(3) of the Companies Act 2013 and Part D of Schedule IISecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 your Company has framed Nomination and Remuneration Policy. The saidpolicy of the Company on Director's appointment and remuneration including criteria fordetermining qualifications positive attributes independence of Directors and othermatters is annexedas ‘Annexure II'.

18. AUDITORS AND AUDITORS' REPORT STATUTORY AUDITORS

M/s. Lodha & Co. Chartered Accountants (Registration No. 301051E) New Delhi wereappointed as Independent (Statutory) Auditors of the Company at the 39th Annual GeneralMeeting for a period of five years. They have been appointed as Independent Auditors fromthe conclusion of the 39th Annual General Meeting till the conclusion of the 44 th AnnualGeneral Meeting.

In accordance with the Companies Amendment Act 2017 enforced on 7th May 2018 byMinistry of Corporate Affairs the appointment of Statutory Auditors is not required to beratified at every Annual General Meeting. The appointment of M/s. Lodha & Co. as theStatutory Auditor of the Company shall continue for the Financial . Year 2019-20

SECRETARIAL AUDITOR

Pursuant to Section 204 of the Companies Act 2013 and Rules thereunder theSecretarial Audit for the financial year 2018-19 was conducted by M/s. RJM &Associates Company Secretaries and the Secretarial Audit Report for the Financial Yearended March 31 2019 is annexed herewith marked as "Annexure III" to thisReport.

19. AUDITORS' REPORT

The Auditors M/s. Lodha & Co. Chartered Accountants New Delhi in their Reporthave drawn attention to Note No. 33 34(b) 34(d)35 36 37 39 40 41 42 43 4446(a) and 48 on the following matter:

Auditors' Qualification No. 1

Quote:

a) In respect of certain suspended / delayed contracts as of 31st March 2019 tradereceivable of Rs. 246 lakhs (net of mobilization advance and provisions of Rs. 11 lakhs)(trade receivable of Rs. 246 lakhs as of 31st December 2018 and Rs. 331 lakhs as of 31stMarch 2018 respectively net of mobilization advance and provisions of Rs. 11 lakhs andRs. 3 lakhs respectively as at 31st December 2018 and 31st March 2018) are doubtful ofrecovery and pending for confirmation/ negotiation. We are unable to comment about thestatus of amount receivables / payables on the reported profit for the quarter and lossfor the year ended 31st March 2019 and its corresponding impact on assets / liabilitiesas at that date.

Unquote

The Company's response with regard to above qualifications is as under:

Quote:

The Company is making various efforts to recover the outstanding Trade receivable andis hopeful of recovery. The reconciliation of accounts and negotiations are in progress.

Unquote

Auditors' Qualification No. 2

Quote: b) Various claims submitted by the financial creditors {including claimsfiled by ArcelorMittal India Private Limited (AMIPL) as stated in note no. 6(b)}operational creditors other creditors and employees of the Company to the ResolutionProfessional(RP) pursuant to the Insolvency and Bankruptcy Code 2016 are currently underreconciliation. Pending reconciliation by the Company we are unable to comment on theconsequential impact if any on the reported profit for the quarter and loss for the yearended 31stMarch 2019 and its corresponding impact over state of affairs as on that date.

Unquote

The Company's response with regard to above qualification is as under:

Quote:

The Company is in the process of reconciling the accounts with the parties concerned.Accounting effect if any to the same would be made after completing the finalreconciliation with the said creditors. The claims accepted by Resolution Professional maynot directly have an effect on the balances reflected in the books of accounts.

Unquote

Auditors' Qualification No. 3

Quote: c) Balances of certain trade receivable (including from related parties)unbilled revenue trade payables (including MSME and interest payable thereon) securedloans (including Banks and NBFC) bank guarantees and unsecured loans (including fromrelated parties) bank balances current liabilities other liabilities (includingstatutory dues and returns thereof) and loan & advances (read with para (b) above) aresubject to confirmation/reconciliation where we are unable to comment on the same and itscorresponding impact over reported profit for the for the year ended 31st March 2019 andrelated components of financial statements as on date

Unquote

The Company's response with regard to above qualification is as under:

Quote:

Because of the CIRP many of the creditors have referred their claims as on theInsolvency commencement date i.e.23rd March 2018 which can be construed as balanceconfirmations. Wherever there is a difference between the books and the creditors claimreconciliation work is under way. As far as the receivable is concerned the balancesconcerned . reflects mostly the certified invoices by the client concerned.

Unquote

Auditors' Qualification No. 4

Quote:

d) No provision against overdue Trade Receivables outstanding for more than six monthsamounting to Rs. 9606 lakhs (net of mobilisation advances of Rs. 301 lakhs and excludingof unbilled revenue of Rs. 1486 lakhs and excluding performance guarantee encashed bycertain parties) (Rs. 8995 lakhs as of 31st December 2018) (net of mobilisation advancesof Rs. 232 lakhs and excluding of unbilled revenue of Rs. 1864 lakhs and excludingperformance guarantee encashed by certain parties) have been made which are doubtful forrecovery considering non confirmation of outstanding balances short closure of runningprojects encashment of performance bank guarantee and demand raised for counter claim/liquidated damages by the parties (customers).

Unquote

The Company's response with regard to above qualification is as under:

Quote: of We are following up with all the parties balances.

Unquote

Auditors' Qualification No. 5

Quote:

e) Liability /provision against performance guarantee encashed by certain partiesamounting to during the quarter Rs. Nil (Rs. 3635 lakhs till nine months period ended31st December 2018) has not been provided for in the books where the management isconfident about settlement in its favour.

Unquote

The Company's response with regard to above qualification is as under:

Quote:

We are in process of initiating arbitration procedure / process in the matter of Bankguarantees hopeful of positive outcome in favour of the Company.

Unquote

Auditors' Qualification No. 6

Quote:

f) Certain expenses {including finance costs (refer note no.10 of financial results)}/liabilities/employee benefit expenses have been accounted for as approved by themanagement based on vouchers and for which contracts supporting records and agreementscould not be made available to the auditors for verification as the same are under processof compilation/updation. As per the management expenses were incurred for businesspurposes only. Further in respect of certain contract sites the Company is in process ofcompiling / updating the records with respect to employees/labour where we are unable tocomment on the same and its corresponding impact over reported profit for the quarter andloss for the year ended 31st March 2019 and related components of financial statements ason date.

Unquote

The Company's response with regard to above qualification is as under:

Quote: and Head Offices have left their services of Inview of the liquidityconstraints many of the staffs at sites Offices company. This has resulted indelay in compiling information. However the Company is in the process of taking steps forcompleting the reconciliation and compiling the records.

Unquote

Auditors' Qualification No. 7

Quote:

g) Regarding non provision against carry over Deferred tax assets as on 31st March 2019of Rs. 5991 lacs for the reasons stated in the said note that sufficient future taxableincome will be available deferred tax asset (net) can be realized and our inability tocomment thereon.

Unquote

The Company's response with regard to above qualification is as under:

Quote:

The CoC has recommended liquidation as a going concern. In case of any applicant beingsuccessful the Company will change hands accordingly. Thus it is expected that theCompany would be in a position to avail set-off of tax losses against expected taxableprofit in the future years as per the provisions of Income Tax Act 1961.

Unquote

Auditors' Qualification No.8

Quote:

h) Regarding delays in payment of certain statutory dues and non- submission /delay infiling of certain statutory returns (including PF ESIC TDS GST etc.) statutory dueswritten off and pending reconciliation between books and returns filed where we areunable to comment on the impact of the same on profit for the quarter and loss for theyear ended 31st March 2019 and state of affairs.

Unquote

The Company's response with regard to above qualification is as under:

Quote:

There may be slight delay due to cash flow problem.

Unquote

Auditors' Qualification No. 9

Quote:

i) Regarding all the directors (including Woman Director) and Company Secretaryresigned by 31st March 2018. Further CFO also resigned during the year. Consequently allcommittees of Directors (including Nomination and Remuneration Committee Audit Committeeetc.) were not present during the year in compliance to the provisions of the CompaniesAct 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (asamended). Regarding non-availability of secretarial forms (including application forextension of Annual General Meeting) and compliances thereof and our inability to commenton related party transactions compliances related to appointment /resignationofDirectorscompliances w.r.t. SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (as amended) Corporate Governance submission of annual return with the appropriateauthorities and other related regulations and our inability to comment thereon.

Unquote

The Company's response with regard to above qualification is as under:

Quote:

As all the directors have resigned and new directors can be appointed only by theshareholders at an AGM/EGM. At present there is no Company Secretary hence requireddocuments could not be prepared and submitted. As all the directors have resigned hencethe Company couldn't file the e-forms with the Registrar of Companies w.r.t. resignationof Directors Company Secretary Chief Executive Officer and CFO. However we are inprocess of updating required registers /forms which shall be submitted in due course.Subsequently the RP has informed the Holding Company M/s KSS Petron Private Limited forcompliance of provisions of Section 168(3) of the Companies Act 2013.

Unquote

Auditors' Qualification No. 10

Quote:

j) Regarding pending adjustment of impact of physical verification of property plantand equipment (PPE) in the financial books and reconciliation of the same with thebooks& records with respect to certain sites where we are unable to comment on thesame. In view of the management impact of final adjustment shall not be material overresult for the quarter and year ended 31st March 2019.

Unquote

The Company's response with regard to above qualification is as under:

Quote:

The PMD team at respective sites have carried out the verification process. Nodiscrepancy has been found by the said team. Physical verification w.r.t. closed sites isin process.

Unquote

Auditors' Qualification No. 11

Quote: k) Certain pending/ delayed projects estimated costs to completion arebased upon management estimates and where the management is confident that there will notbe any material impact on completion of work in future.

Unquote

The Company's response with regard to above qualification is as under:

Quote:

Most of the project are on the verge of completion and adequate margins are availableto absorb any contingency. In view of this management do not expect any materialvariation cost of completion.

Unquote

Auditors' Qualification No. 12

Quote: l) Regarding the matter stated in para (a) to (k) above and otherwiseinternal controls needs to be further strengthened to be commensurate with the size of thecompany and nature of its business.

Unquote

The Company's response with regard to above qualification is as under:

Quote:

The Company has an internal control system in existence and is in the process offurther strengthening the same.

Unquote

Auditors' Qualification No. 13

Quote:

m) Regarding preparation of the financial statements on ‘going concern' basisnotwithstanding Company is having negative net worth continuous losses lower level ofoperations effecting concern short closure in certain projects current liabilities arein excess of current assets and default in repayment of loan installments and payment ofdue interest both on term loans and working capital. These conditions indicate theexistence of material uncertainty that may cast significant doubt about the Company'sability to continue as a going concern. As company is under corporate insolvencyresolution process (CIR process) (as stated in Note no. 1 of the accompanying statement ofaudited financial results). The Committee of Creditors (CoC) at its meeting have resolvedthat the Company may be liquidated under liquidation as a "Going Concern". Inthis regard the Resolution Professional has filed necessary application with the NCLTCourt Mumbai and final decision is pending before the NCLT. The management and the RPhave continued its practice to prepare financial statements on going concern basis.

Unquote

The Company's response with regard to above qualification is as under:

Quote:

Net worth is not a singular measure of deciding as a ‘going concern'. The Companyhas a good brand name in the industry and during its last 40 years has already establishedits position as a reliable EPC contractor. Considering the same it is expected that itwill in due course of time be in a position to receive a viable Resolution Plan for theapproval of CoC and NCLT. Currently the Company is executing few contracts which are ableto run on its own by using the cash inflows from these projects. In view of the above theCompany has prepared its accounts on a going concern basis. The CoC has recommendedliquidation as going concern. In appropriate treatment will be given in the books ofaccount.

Unquote

20. RISKS & CHALLENGES

Construction Companies are facing challenges due to adverse market conditionsincreased inflation increase fluctuating supply of feed-stocks cost overruns due to thedelay in Government approvals land acquisition etc. Clients and consultants are alsoadopting the ‘Wait and Watch' situation and have become averse to take riskydecisions due to the dynamic environment.

The Company manages / monitors the principal risks and uncertainties that can impactits ability to achieve its objectives. The Company's management systems organizationalstructures code of conduct governs the business of the Company and takes view of risksand put efforts to achieve risk mitigation through Internal Control Systems.

Further the Company was under CIRP and the CoC at its meeting held on 14th February2019 resolved to liquidate the Company as a "Going Concern" and hence theCompany has to face various risks and challenges with regard to availing of workingcapital facilities (NFB) and also bagging new projects.

21. INTERNAL FINANCIAL CONTROL

As per explanation to Section 134 of the Companies Act 2013 the Internal FinancialControls (IFC) are reviewed by your management and key areas are subject to statutoryaudits. The review of the IFC inter alia consists of the optimum utilization andsafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and adherence to applicable accountingstandards and the timely preparation with applicable of reliable financial lawsregulations and management policies; and an effective management information system.

22. INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company has appropriate internal control system for business processes with regardsto its operations financial reporting and compliance with applicable laws andregulations. There are defined and documented procedures policies and authorityguidelines for each function in the Company.

23. PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIESPROVIDED

Details of loan investments and guarantees given are provided in the notesaccompanying the financial statements.

24. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO INSECTION 188(1) OF COMPANIES ACT 2013

During the year under review there were related party transactions however the Companyhas adopted a Policy to approve the Related Party Transactions and dealings with theRelated Parties.

None of the transactions with Related Parties fall under the scope of 188(1) of theAct. The information on transactions with related parties pursuant to Section 134(3)(h) ofthe Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 are given in Form AOC2 appended as "Annexure IV".

25. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OFFINANCIAL YEAR AND DATE OF REPORT

During the period from the end of the Financial Year till date of the report followingmaterial changes took place:

Mr. Himanshu Mohapatra has resigned from the post of Chief Financial Officer w.e.f June02 2018;

Initiation of Corporate Insolvency Resolution Process of the Company vide Order of theHon'ble National Company Law Tribunal (NCLT) Mumbai Bench dated 23rd March 2018 ;

26. EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theannual return in Form MGT-9 is appended as "Annexure V" to the Director'sreport.

27. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO

(A) Conservation of Energy

i) Steps taken for energy conservation inter alia include the following:

• Office Air conditioning comfort temperature optimization

• Electricity Consumption reduction by daily monitoring and control

• Operational control of HVAC system (air conditioning) in winding premises

• Compressed air pressure reduction in non-use time

• Closing of unwanted opening from air conditioned premises reducing cooling loss

Access control on air conditioning. Installation of remote control switch in officeoptimizing operating temperature

Put in system to switch off the HVAC AC Lights Fans when not required

ii) Steps taken by the Company for utilizing alternate sources of energy:

Open the blinds/curtains in offices to use natural lights

iii) Capital investment on energy conservation equipments: NIL

(B) Technology Absorption: Not Applicable

Expenditure incurred on Research and Development: NIL

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with regard to foreign exchange earnings and outgo are given below:

Total Foreign Exchange used and earned:

i) Value of Imports on CIF basis : Nil
ii) Expenditure in Foreign Currency : Nil
iii) Foreign Exchange earned : Nil

28. MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT INCLUDINGNUMBER OF PERSONS EMPLOYED

Though the Company is passing through a challenging period due to financial constraintsincluding cash-flow problems your Company's relation with its staff / workers year . hasremained cordial during the The Company is having 172 employees as on 31st March 2019.

29. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

The Company has formulated CSR Policy. The same may be accessed on the Company'swebsite. The contents of the policy along with the annexure specified in Rule 8 of theCompanies (Corporate Social Responsibility) Rules 2014 is annexed herewith as ‘AnnexureVI'.

30. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy to provide a formal Vigil Mechanism tothe Directors and employees to report their concerns about unethical behavior actual orsuspected fraud or violation of the Company's Code of Conduct or ethics policy. The policyprovides for adequate safeguards against victimization of employees who avail of themechanism. The Whistle Blower Policy may be accessed on the Company's websitewww.petronengineering.com.

31. POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORK PLACE

The Company has zero tolerance for Sexual Harassment at workplace and has adopted apolicy on Prevention Prohibition and Redressal of Sexual Harassment at work place inline with the provisions of Sexual Harassment of Women at work place (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The Policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment and or matters connected or incidental thereto with the objective of providinga safe working environment where women employees can feel secure. The Company hasconstituted a Committee which has got the powers to enquire into the complaints of sexualharassment and recommend appropriate action.

The Company has not received any complaint of sexual harassment during the FinancialYear 2018-19.

32. GENERAL INFORMATION

Your Company is continuing to execute the contracts related to fabricationinstallation of Plant Machinery and Equipments for cement refinery petrochemicalspower fertilizer plants etc. It is also continuing to execute Turnkey / CompositeConstruction Projects.

Over a period of time your Company has developed the capabilities of executingvertical construction contracts across all sectors which will be preferred mode ofexecution of future contracts and multiple project execution simultaneously.

33. TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of the provisions of Section 124 of the Companies Act 2013 dividendsremaining unpaid/ unclaimed for a period of seven years have to be statutorily transferredto the Investor Education and Protection Fund (IEPF) Central Government. To ensure maximumdisbursement of unclaimed dividend the Company regularly sends reminder to the relevantinvestors.

Unclaimed Dividend in respect of the financial year 2011-12 will be due for transfer toIEPF on September 7 2019 in terms of Section 124 of the Companies Act 2013. Members whohave not encashed their Dividends for the Financial Year ended 31st March 2012 or anysubsequent year(s) are requested to lodge their claims with the Company immediately.

34. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

The Company has received order vide C.P. No. 1374/IBC/NCLT/MB/MAH/2017 dated March 232018 with respect to commencement of Corporate Insolvency Resolution Process and CA RajeevMannadiar having Registration No. IBBI/IPA- 001/IP-P00212/2018-19/10412 was appointed asInterim Resolution Professional to conduct the Corporate Insolvency Resolution Process.meeting of Committee of Creditors (‘CoC') of the Company the members of the CoCresolved to appoint Mr.At the first Udayraj Patwardhan as the Resolution Professional(‘RP'). Order of the Hon'ble NCLT Mumbai dated 6th August 2018 in M.A. No. 500 of2018.

Process of the Company for a further period of 90 days was An order forextension of the Corporate In solvency Resolution passed on 3rd October 2018 in MA1030/2018 in C.P.(IB)-1732/9/(MB)/2017.

Further at the meeting held on 14th February 2019 the CoC has resolved to liquidatethe Company as a "Going Concern" and accordingly the Resolution Professional hasfiled necessary application with the Hon'ble NCLT Mumbai Bench. The said application ispending for hearing.

35. ACKNOWLEDGEMENTS

Your Company would like to express its sincere appreciation for the assistance andco-operation received from the bankers clients dealers vendors Committee of Creditorsand members for their support and confidence placed in the Company. The Company alsowishes to place on record its deep sense of appreciation for committed services by thecompany's executives staff and workers at all levels for their unstinted efforts as wellas their collective contribution to the Company's performance.

The Company would also like to offer its sincere thanks to the shareholders bankerscustomers dealers suppliers and all other business associates for their unstintedsupport during this Corporate Insolvency Resolution Process period and continuedconfidence in the Company.

For Petron Engineering Construction Limited

Resolution Professional

Date : August 13 2019

Place: Mumbai

Form No. MR-3

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