Prajay Engineers Syndicate Limited (the Company or PESL)
Your Directors are pleased to submit the 24thAnnual Report of your Companytogether with the Audited Financial Statements (both Standalone and Consolidated) for theFinancial Year (FY) ended 31st March 2018 and report of the Statutory Auditorsthereon. Consolidated performance of the Company and its subsidiaries has been referred towherever required.
Certain key aspects of your Company's performance (on Standalone & Consolidatedbasis) during the financial year ended 31st March 2018 as compared to theprevious financial year are summarized below:
|Particulars || |
Year ended 31.03.2018
Year ended 31.03.2017
|Standalone ||Consolidated ||Standalone ||Consolidated |
|Total Income ||4114.44 ||4590.41 ||5674.03 ||7317.98 |
|Total Expenditure ||6163.38 ||6676.46 ||7593.81 ||9546.30 |
|Interest ||1855.86 ||1861.82 ||1591.7 ||1592.25 |
|Depreciation ||490.37 ||507.27 ||557.17 ||574.70 |
|Profit/(Loss) before Prior period Items ||(2048.94) ||*(2325.02) ||(1919.78) ||**(2193.30) |
|Prior period adjustments/ Exceptional items ||179.90 ||179.90 || || |
|Profit before Tax ||(1869.04) ||(2145.12) ||(1919.78) ||(2193.30) |
|Current Tax ||- ||0.14 ||- ||0.18 |
|Prior period tax ||(93.73) ||(93.73) ||- ||- |
|Deferred Tax Change ||172.27 ||169.79 ||208.01 ||203.98 |
|Total Tax expenses ||78.54 ||76.20 ||208.01 ||204.16 |
|Profit/(Loss) after Tax/Profit for the year ||(1947.58) ||(2221.32) ||(2127.79) ||(2397.46) |
|Other Comprehensive Income net of tax ||(0.70) ||(0.70) ||(22.57) ||(22.57) |
|Total comprehensive Income ||(1948.28) ||(2222.02) ||(2150.36) ||(2420.03) |
|EPS (Basic and as well as Diluted) ||(2.79) ||(3.18) ||(3.07) ||(3.47) |
*&** Profitbefore Non-Controlling Interests/Share Profit/(Loss) of associates.
REVIEW OF OPERATIONS:
During the FY 2017-18 your company reported a consolidated turnover of Rs.4121.37lakhs against Rs.6858.86 lakhs for the previous year and a loss of Rs.2222.02 lakhs asagainst Rs. 2420.03 lakhs for the previous year.
The standalone turnover of your company for the year 2017-18 stood at Rs.3662.16 lakhsas against Rs.5224.63 lakhs. Total loss for the FY 2017-18 is Rs.1948.28 lakhs as againstRs.2150.36 lakhs during 2016-17.
In view of the loss incurred by the Company for the year under review your Board ofDirectors donot recommend any dividend.
The Company has two subsidiaries viz; Prajay Holdings Private Limited (PHPL) and PrajayRetail Properties Private Limited (PRPPL) and one step down subsidiary viz; PrajayDevelopers Private Limited (PDPL) and two Associates viz: Prajay Properties PrivateLimited (PPPL) and Genesis Capital Private Limited as on 31st March 2018.There has been no material change in the nature ofthe business ofthe subsidiaries. Theconsolidated financial statements of the Company and its subsidiaries prepared inaccordance with applicable Indian Accounting Standards (Ind AS) as specified underSection 133 ofthe Companies Act 2013 (The Act) read with Rules made thereunder formspart of this Annual Report.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of the financial statements of the Company's subsidiaries inForm AOC-1 is attached to the standalone financial statements of the Company.
There is no change in the capital structure of the company during the year underreview.
TRANSFER TO GENERAL RESERVES
No amount has been transferred to General Reserves during the year under review.
DIRECTORS & KEY MANAGERIAL PERSONNEL:
During the year under review the following are the changes in office of Directors andKey Managerial Personnel of the company:
a) Mr. Raja Gopal Reddy Mekapati Non-Executive Director vacated the office w.e.f 14thSeptember 2017 pursuant to the applicable provisions of the Companies Act 2013However the Board of Directors took note of the same in their meeting held on 20thSeptember 2017.
b) Mr. Dantapalli Vijaysen Reddy resigned from the office ofthe Directorw.e.f 14thNovember 2017.
c) Mr. Raghavender Reddy Marpadaga was appointed as an Additional Director w.e.f. 14thNovember 2017. He was appointed as a Non-Executive Director under Independent Category.
d) Mr. Dantapalli Rohit Reddy was appointed as an Additional Director w.e.f. 26thOctober 2017. He was further appointed as Managing Director and CEO of the Company w.e.f.15th November 2017. He was appointed as Chairperson of the Company and alsodesignated as Key Managerial Personnel w.e.f. 14th February 2018.
Pursuant to the provisions Section 161(1) of the Companies Act 2013 Mr. DantapalliRohit Reddy and Mr. Raghavender Reddy Marpadaga will hold the office till the date ofthis AGM. As recommended by the Nomination and Remuneration Committee the Board proposedand recommend the regularization of Mr. Raghavender Reddy Marpadaga and Mr. DantapalliRohit Reddy as Directors. The Board further recommend the appointment of Mr. DantapalliRohit Reddy Managing Director for the approval of members in this AGM.
In accordance with Section 152 of Companies Act 2013 Mr. Ravi Kumar KutikalapudiDirector of the Company retires by rotation in this ensuing AGM to be held on 29thSeptember 2018 and being eligible offered himself for reappointment. The Boardrecommends his re-appointment.
Mr. Neelakantam Nagesshwara Rao Non-Executive Independent Directors resigned from theoffice of Director w.e.f 6th August 2018 and Mr. Vijay Kishore MishraNon-Executive Independent Director resigned from the office of Director w.e.f. 10thAugust 2018. Ms. Deevi Madhavi Latha Company Secretary and Compliance Officer resignedfrom the office w.e.f 3rd August 2018.
Designations of Mr. Sumit Sen and Mr. Ravi Kumar Kutikalapudi were changed fromWhole-time Director to Nonexecutive Director w.e.f 29th August 2018.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(5) of the Companies Act with respect toDirectors' Responsibility Statement it is hereby confirmed that:
a. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
b. Such accounting policies as mentioned in the notes to the financial statements havebeen selected and applied consistently and judgments and estimates that are reasonable andprudent made so as to give a true and fair view of the state of affairs of the Company atthe end of the financial year 2017-18 and of the profit or loss of the Company for thatperiod;
c. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d. The annual accounts for the year 2017-18 have been prepared on a going concernbasis.
e. Those proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
f. The systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and Individual Directors pursuant to the provisions of the Companies Act2013 and the corporate governance requirements as prescribed by Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015(SEBI Listing Regulations).
The manner in which the evaluation has been carried out has been explained in theCorporate Governance Report. BOARD DIVERSITY:
The Policy on Board Diversity of the Company devised by the Nomination and RemunerationCommittee and approved by the Board is disseminated under the weblink of the Company at www.praiavengineers.com/investors
CODE OF CONDUCT AND DECLARATION ON CODE OF CONDUCT BY MD & CEO:
Your Company has laid down a Code of Conduct for all Board members Senior Managementand Independent Directors of the company in line with the provisions of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 and Companies Act 2013. The said Code of Conduct has been posted on the website ofthe Company weblink www.praiayengineers.com/investors. Declaration of Code ofConduct is enclosed to this Board Report as an Annexure to Corporate Governance Report.
The Composition of the Audit Committee is provided in the Corporate Governance Reportforming part of this report. All the recommendations made by the Audit Committee wereaccepted by the Board.
ESTABLISHMENT OF VIGIL MECHANISM:
The Company has adopted a whistle blower policy establishing a vigil mechanism toprovide a formal mechanism to the directors and employees to report concern aboutunethical behavior actual or suspected fraud or violation of code of conduct and ethics.
It also provides for adequate safeguards against the victimization of employees whoavail of the mechanism and provides direct access to the chairperson of the auditcommittee in exceptional cases. The whistle blower policy aims for conducting the affairsin a fair and transparent manner by adopting higher standards of professionalism honestyintegrity and ethical behavior. All permanent employees of the company are covered underthe whistle blower policy.
It is affirmed that no personnel of the company has been denied access to the auditcommittee. The policy of vigil mechanism is available on the company's weblink www.praiayengineers.com/investors.
NOMINATION & REMUNERATION COMMITTEE:
Yours company has a Nomination and Remuneration Committee and further details as to itscomposition meetings and director's attendance thereat are set out in the corporategovernance report forming part of the Directors (Board) Report.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Salient Features of the Company's policy on directors' appointment and remunerationand other matters including performance evaluation are provided in the CorporateGovernance Report which forms part of this board report. Nomination and RemunerationPolicy available under weblink www.praiavengineers.com/investors
MEETINGS OF THE BOARD OF DIRECTORS DURING THE FINANCIAL YEAR
Eight (8) meetings of the board of directors were held during the year. For details ofthe meetings of the board please refer to the corporate governance report which formspart of the Directors (Board) Report.
MEETING OF INDEPENDENT DIRECTORS:
The details of the separate meeting of Independent Directors of the Company held duringthe year is reported in the Corporate Governance Report.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS:
All Independent Directors (IDs) inducted into the Board are provided with anorientation on company structure and board constitution and procedures matters reservedfor the Board and our major risks and risk management strategy. The company hasfamiliarized the independent directors with the company their roles rightsresponsibilities in the company nature of the industry in which the company operatesetc. through various Interactions and familiarization programmers. The saidfamiliarization programs are disclosed on the company's website www.praiayengineers.com/investors.
Details of the familiarization program of the independent directors are available onthe website of the Company www.praiayengineers.com/investors.
PERFORMANCE EVALUATION CRITERIA FOR INDEPENDENT DIRECTORS
The performance evaluation criteria for Independent Directors is determined by theNomination and Remuneration committee. An indicative list of factors that may be evaluatedinclude participation and contribution by a director commitment effective deployment ofknowledge and expertise effective management of relationship with stakeholders integrityand maintenance of confidentiality and independence of behavior and judgments etc.
DECLARATIONS BY INDEPENDENT DIRECTORS:
All Independent Directors have submitted declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Act and Securities and ExchangeBoard of India.
Pursuant to the provisions of Section 139(2) of the Companies Act 2013 and all otherapplicable provisions and rules made there under M/s. Karumanchi & AssociatesChartered Accounts Hyderabad has been appointed by the Shareholders of the Company inthe 23rd Annual General Meeting held on 27thSeptember 2017 for aperiod of 4 years i.e. from the conclusion of 23rd AGM to till the conclusionof 27th AGM subject to ratification at every subsequent Annual General Meeting.
Your board recommend for the ratification of Statutory Auditors from the conclusion ofensuing Annual General Meeting till the conclusion of 27th AGM for the approvalof shareholders.
REPLIES TO THE AUDITORS REMARKS/COMMENTS Point No.8 of Annexure A to the IndependentAuditor's Report.
Company is putting serious continuous efforts to re-pay the defaulted amounts to thebanks through One Time Settlements.
The company has appointed Mr. M. Shanker B.Com. and MBA-Finance Employee of thecompany has been appointed as Internal Auditor of the company.
Maintenance of cost records is not specified by the Central Government undersub-section (1) of section 148 of the Companies Act 2013 is in respect of the activitiescarried on by the company.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has adequate internal control systems and procedures designed toeffectively control its operations. The internal control systems are designed to ensurethat the financial and other records are reliable for the preparation of financialstatements and for maintaining assets. The Company has well designed Standard OperatingProcedures considering the essential components of internal control as stated in theGuidance Note on Audit of Internal Controls over Financial Reporting issued by theInstitute of Chartered Accountants of India. Internal Auditor conduct audit covering awide range of operational matters and ensure compliance with specified standards. Plannedperiodic reviews are carried out by Internal Audit. The findings of Internal Audit arereviewed by the top management and by the Audit Committee of the Board of Directors. Basedon the deliberations with Statutory Auditors to ascertain their views on the financialstatements including the Financial Reporting System and Compliance to Accounting Policiesand Procedures the Audit Committee was satisfied with the adequacy and effectiveness ofthe Internal Controls and Systems followed by the company.
Pursuant to the provisions of Section 204(1) of the Companies Act 2013 and TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 your Companyhas appointed Mr. M. Ramana Reddy Practicing Company Secretary as Secretarial Auditor toundertake the Secretarial Audit of the Company for the Financial Year 2017-18. TheSecretarial Audit Report for the year ended 31st March 2018 is annexedherewith to this Report as Annexure-VII.
POLICY ON PREVENTION PROHIBITION AND REDRESAL OF SEXUAL HARASSMENT AT WORK PLACE
Your Company has in place the Anti-Sexual Harassment Policy in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressed) Act 2013 Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. Your company has been complied with theprovisions relating to the constitution of ICC. All employees (permanent contractualtemporary trainees) are covered under this policy. During the financial year underreview the Company has not received any compliant on sexual harassment.
POLICY ON MATERIAL SUBSIDIARIES
Policy for determining material subsidiaries of the Company is available on the websiteof the Company www. praiavengineers.com/investors
MANAGEMNET DISCUSSION & ANALYSIS
The Management Discussion and Analysis Report as required under Regulation 34 &Schedule V of Securities and Exchange board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 and enclosed as Annexure- IV to this Directors(Board) Report.
Report on Corporate Governance enclosed as Annexure-V to this board report. Acertificate from the Practicing Company Secretary regarding compliance with the corporategovernance norms stipulated also annexed to the corporate governance report.
EXTRACT OF ANNUAL RETURN:
The extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of theCompanies Act 2013 is given as Annexure-VI to this Report and also available at www.priayengineers.comunder weblink www.praiayengineers. com/investors
During the Financial Year 2017-18 your Company has not accepted any deposit that fallswithin the meaning of Sections 73 and 74 of the Companies Act 2013 read together with theCompanies (Acceptance of Deposits) Rules 2014. However an amount of Rs. 138617/-(including interest) remains unclaimed by the previous depositors.
PARTICULARS OF LOANS GUARANTEES SECURITIES OR INVESTMENTS UNDER SECTION 186.
The details of loans given investments made guarantees given and securities providedduring the year under Sec.186 ofthe Act are available under Note 8&9 ofthe notes tothe standalone financial statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
Information on transactions with related parties pursuant to Section 134(3)(h) of theAct read with rule 8(2)of the Companies (Accounts) Rules 2014 and Pursuant to SEBI (LODR)215 are given in Form AOC-2 and forms part of this Directors (Board) Report as Annexure-Iand under Note 9&10to financial accounts.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
During the latter part of the year under review in the matter of in a petition filedby a shareholder against the company the National Company Law Tribunal (NCLT) imposedStatus Quo on impugned properties stating that not to alienate the properties. Howeverthe same has been vacated/relaxed subsequently National Company Law Appellate Tribunal(NCLAT). Except as stated above there are no significant material orders passed by theregulators/courts/tribunals which would impact the going concern status of your Companyand its future operations. The company has given necessary disclosures to the stockexchanges in this regard for the information of the shareholders.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
Due to the Status Quo imposed NCLT as stated above during the latter part of the yearyour company was not able to sell the properties developed by it and accordingly unableto realise the investments made on the same. Except this there are no material changes andcommitments in the business operations of the company for the financial yearended 31stMarch 2018 and to the date of signing of the Director's Report.
CHANGE IN THE NATURE OF BUSINESS
There is no change in the nature of business of the Company
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND
The particulars in respect of conservation of energy technology absorption and foreignexchange earnings and outgo as required under Section 134(3)(m) of the Companies Act2013 read with the Companies (Accounts) Rules 2014 is appended as Annexure-II tothis Directors (Board) Report.
The Company's principal financial liabilities comprise loans and borrowings trade andother payables. The main purpose of these financial liabilities is to finance and supportCompany's operations. The Company's principal financial assets include inventory tradeand other receivables cash and cash equivalents and land advances and refundable depositsthat derive directly from its operations.
The Company is mainly exposed to market risk credit risk and liquidity risk. Thecompany has a risk management policy and framework to identify evaluate business risksand opportunities. This framework seeks to create transparency minimize adverse impact onthe business objectives and enhance the Company's competitive advantage. This frameworkdefines the risk management approach across the enterprise at various levels includingdocumentation and reporting.
CORPORATE SOCIAL RESPONSIBILITY:
The company has constituted a Corporate Social Responsibility Committee and details ofthe Committee have been provided under Corporate Governance Report.
Yours directors are happy to report that the industrial relations have been cordial atall levels throughout the year. Your directors record their appreciation for all theefforts support and co-operation of all employees being extended from time to time.
LISTING AT STOCK EXCHANGES:
The equity shares of your Company are listed on NSE and BSE (the stock exchanges). Thelisting fee for the year 2017-18 has been paid to both the stock exchanges.
CEO AND CFO CERTIFICATION AS PER REG. 17(8) OF SEBI (LODR) REGULATIONS 2015:
As required by Reg. 17(8) of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 the CEO and CFO certificationon the Financial Statements and the Internal Control Systems for financial reporting hasbeen obtained from Mr. Dantapalli Rohit Reddy - Managing Director and Chief ExecutiveOfficer and Mr. Bhaskara Rao Patnana - Chief Financial Officer of the company and the samewas reviewed by the Board of Directors and is annexed to the Corporate Governance Report.
Your Company recognizes that Human Resource is its main asset. Your CompanyHR policy aims at enhancing individual capabilities for future readiness driving greateremployee engagement and strengthening employee relations further.
Considering the present market conditions your Company has down sized its humanresources and retaining only that are directly relevant to its growth at this stage. Toattract and retain people your Company provides a judicious combination of attractivecareer personal growth and a lucrative compensation structure. Your Company places greatimportance on nurturing and retaining the best skills in the industry.
INFORMATION TO BE FURNISHED UNDER COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014.
Not applicable as no employee of the Company is in receipt of such remunerationsspecified under above stated rule. However the other information as required to befurnished under Rule 5(1) and 5(2) of above stated rules is provided under Annexure-III
Your Directors thank the various Departments of Central/ State Government SEBI StockExchanges RBI MCA and other Regulatory Bodies for the continued help and co-operationextended by them. The Directors also gratefully acknowledge all stakeholders of theCompany viz. Shareholders Customers Bankers Suppliers Joint Venture Partners and otherbusiness associates for the excellent support received from them. The Directors place onrecord their sincere appreciation to all employees of the Company for their unstintedcommitment and continued contribution and confidence reposed in the management.
For and on behalf of the board Prajay Engineers Syndicate Limited
| ||Sd/- |
| ||Dantapalli Rohit Reddy |
|Place: Hyderabad ||Chairman |
|Date : 29.08.2018 ||DIN:07560450 |