Your Directors present the 91st Annual Report and the audited financialstatements for the financial year ended March 31 2020.
Financial performance and state of the Company's affairs
The standalone financial performance of the Company for the financial year ended March31 2020 is summarised below:
|Particulars || |
Financial year ended March 31 2020
*Financial year ended March 31 2019
| ||Rs. in crore ||** US $ ||Rs. in crore ||** US $ |
| || ||Million || ||Million |
|Total Income ||3339 ||443 ||3581 ||518 |
|Gross Profit before depreciation ||1061 ||141 ||1185 ||171 |
|Depreciation ||65 ||9 ||82 ||12 |
|Exceptional Items-(Expenses)/Income ||- ||- ||(6181) ||(894) |
|Profit/(Loss) before taxation ||996 ||132 ||(5078) ||(734) |
|Tax expenses (Net) (including deferred tax and tax for earlier years) ||(35) ||(5) ||(191) ||(28) |
|Net profit from discontinuing operation ||- ||- ||3974 ||575 |
|Profit/(Loss) after taxation ||1031 ||137 ||(913) ||(132) |
|Balance of profit brought forward from previous year ||(675) ||(92) ||626 ||96 |
|Other comprehensive income recognised directly in retained earnings ||3 ||1 ||6 ||1 |
|Profit available for appropriations ||359 ||46 ||(281) ||(35) |
|Dividend paid out on equity shares during the year (including tax on dividend) (Net) ||- ||- ||297 ||43 |
|Transfer to Debenture Redemption Reserve ||56 ||7 ||97 ||14 |
|Balance carried to Balance Sheet ||303 ||39 ||(675) ||(92) |
*Figures of previous year have been regrouped and reclassified wherever required.Figures for the previous year pertaining to Mumbai Power Business have been considered aspart of discontinued operation.
** @ Rs. 75.3245 = US $ 1 Exchange rate as on March 31 2020 (Rs. 69.1550 = US $ 1Exchange rate as on March 31 2019).
During the year under review your Company earned an income of Rs 3339 crore againstRs 3581 crore in the previous year. The Company earned a profit of Rs 1031 crore for theyear as compared to loss of Rs 913 crore in the previous year.
The performance and financial position of the subsidiary companies and associatecompanies are included in the consolidated financial statements of the Company andpresented in the Management Discussion and Analysis forming part of this Annual Report.
The outbreak of COVID-19 pandemic has significantly impacted businesses around theworld. The Government of India ordered a nationwide lockdown initially for 21 days whichwas extended twice and now valid till May 17 2020 to prevent community spread of COVID-19in India. This has resulted in significant reduction in economic activities. With respectto operations of the Company it has impacted its business by way of interruption inconstruction activities supply chain disruption unavailability of personnelclosure/lock down of various other facilities etc. Few of the construction activities arealready commenced albeit in a limited manner. The Company has considered various internaland external information including assumptions relating to economic forecasts up to thedate of approval of these financials for assessing the recoverability of variousreceivables which includes unbilled receivables investments goodwill contract assetsand contract costs. The assumptions used by the company have been tested throughsensitivity analysis and the company expects to recover the carrying amount of theseassets based on the current indicators of future economic conditions.
Further the Company has availed protections available to it as per various contractualprovisions to reduce the impact of COVID-19. The aforesaid evaluation is based onprojections and estimations which are dependent on future development including governmentpolicies. Any changes due to the changes in situations/circumstances will be taken intoconsideration if necessary as and when it crystallizes.
During the year under review the Board of Directors has not recommended dividend onthe equity shares of the Company.
The Company is amongst the leading player in the country in the Engineering andConstruction (E&C) segment for power roads metro and other infrastructure sectors.The Company is also engaged in implementation operation and maintenance of severalprojects in defence sector and infrastructural areas through its special purpose vehicles.
Management Discussion and Analysis
The Management Discussion and Analysis for the year under review as stipulated underRegulation 34(2) of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (the Listing Regulations) is presented in aseparate section forming part of this Annual Report.
Issue and redemption of Non-Convertible Debentures
The Company has not carried out any fresh issue of Non Convertible Debentures in thecurrent financial year.
During the year the Company has redeemed Non-Convertible Debentures aggregating to Rs30.80 Crore. There was delay/default by the Company in redemption of Non ConvertibleDebentures payment of interest and recall by the debenture holder to the extent of Rs906.58 Crore as on March 31 2020. The Company is engaged in various initiatives tomonetize its assets and to unlock the value of its businesses and to thereby significantlyreduce its overall leverage.
The Company has not accepted any deposits from the public falling within the ambit ofSection 73 of the Companies Act 2013 (the Act') and the Companies (Acceptance ofDeposits) Rules 2014. There are no unclaimed deposits unclaimed/unpaid interest refundsdue to the deposit holders or to be deposited with the Investor Education and ProtectionFund as on March 31 2020.
Particulars of Loans Guarantees or Investments
The Company has complied with provisions of Section 186 of the Act to the extentapplicable with respect to Loans Guarantees or Investments during the year.
Pursuant to Section 186 of the Act details of the Investments made by the Company areprovided in the standalone financial statement (Please refer to Note No. 7 to thestandalone financial statement).
Subsidiary Companies Associates and Joint venture
During the year under review Reliance Sealink One Private Limited ceased to be theSubsidiary of the Company and Gullfoss Enterprises Private Limited became an associate ofthe Company. Further Reliance Power Limited ceased to be an associate of the Company.
The summary of the performance and financial position of the each of the subsidiary andassociate company are presented in Form AOC-1 and in Management Discussion and Analysisreport forming part of this Annual Report. Also a report on the performance and financialposition of each of the subsidiaries associates and joint ventures as per the Act isprovided in the consolidated financial statement.
The Policy for determining material subsidiary company as approved by the Board maybe accessed on the Company's website at https://www.rinfra.com/documents/1142822/1189698/Policy_for_Determination_of_Material_Subsidiary_updated.pdf
Standalone and Consolidated Financial Statements
The audited financial statements of the Company are drawn up both on standalone andconsolidated basis for the financial year ended March 31 2020 in accordance with therequirements of the Companies (Indian Accounting Standards) Rules 2015 (Ind-AS) notifiedunder Section 133 of the Act read with relevant rules and other accounting principles.The Consolidated Financial Statements have been prepared in accordance with Ind-AS andrelevant provisions of the Act based on the financial statements received fromsubsidiaries associates and joint ventures as approved by their respective Board ofDirectors.
In terms of the provisions of the Act Shri S Seth Director of the Company retires byrotation and being eligible offers himself for re-appointment at the ensuing AnnualGeneral Meeting.
At the Annual General Meeting held on September 30 2019 the Members have approved theappointment of Shri Punit Garg as Whole-Time Director designated as Executive Director ofthe Company for a period of three years commencing from April 6 2019 and Ms. ManjariKacker was appointed as an Independent Director with effect from June 14 2019 for a termof five consecutive years. Further Ms. Ryna Karani Shri S S Kohli and Shri K Ravikumarwere re-appointed as Independent Directors for second term of five years to hold officefrom September 20 2019 to September 19 2024.
During the year Shri Jai Anmol Ambani and Shri Jai Anshul Ambani were appointed asAdditional Directors with effect from October 9 2019. They have resigned from the Boardeffective from January 31 2020.
Lt. Gen. Syed Ata Hasnain (Retd.) was appointed as Additional Director in the capacityof Independent Director with effect from October 9 2019. He resigned as an IndependentDirector with effect from March 18 2020 pursuant to his appointment as a Member of theNational Disaster Management Authority by the Government of India.
Shri B. C. Patnaik ceased to be Director on September 30 2019 in terms of Section161 of the Act.
The Board places on record its sincere appreciation for the valuable contribution madeby Shri B. C. Patnaik Shri Jai Anmol Ambani Shri Jai Anshul Ambani and Lt. Gen. Syed AtaHasnain (Retd.) during their tenure as Directors of the Company.
A brief profile of Shri S. Seth along with requisite details as stipulated underRegulation 36(3) of the Listing Regulations is provided in this Annual Report.
The Company has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under the Act and theListing Regulations. The details of programme for familiarisation of Independent Directorswith the Company nature of the industry in which the Company operates and related mattersare uploaded on the website of the Company at the link https://www.rinfra.com/documents/1142822/1182645/Familiarisation_ programme.pdf. In the opinion of theBoard the Independent Directors possess the requisite expertise and experience and arethe persons of high integrity and repute. They fulfill the conditions specified in the Actand the Rules made thereunder and are independent of the management.
Key Managerial Personnel
Shri Punit Garg was appointed as an Executive Director and Chief Executive Officer ofthe Company with effect from April 6 2019. Shri Paresh Rathod has been appointed asCompany Secretary and Compliance Officer of the Company with effect from August 16 2019.At the Board Meeting held on May 8 2020 Shri Pinkesh R Shah was appointed as ChiefFinancial Officer of the Company in the place of previous incumbent Shri SridharNarasimhan.
Evaluation of Directors Board and Committees
The Nomination and Remuneration Committee of the Board of the Company has devised apolicy for performance evaluation of the Directors Board and its Committees whichincludes criteria for performance evaluation.
Pursuant to the provisions of the Act and Regulation 17(10) of the Listing Regulationsthe Board has carried out an annual performance evaluation of its own performance thedirectors individually as well as the evaluation of the working of the committees of theBoard. The Board performance was evaluated based on inputs received from all the Directorsafter considering the criteria such as Board Composition and structure effectiveness ofBoard/Committee processes and information provided to the Board etc.
Policy on appointment and remuneration of Directors Key Managerial Personnel andSenior Management Employees
The Nomination and Remuneration Committee of the Board has devised a policy forselection appointment and remuneration of Directors Key Managerial Personnel and SeniorManagement Employees. The Committee has formulated the criteria for determiningqualifications positive attributes and independence of Directors which has been put upon the Company's website at https://www.rinfra.com/documents/1142822/1182645/Remuneration-Policy.pdf and also is attached as Annexure A.
Directors' Responsibility Statement
Pursuant to the requirements under Section 134(5) of the Act with respect to Directors'Responsibility Statement it is hereby confirmed that:
i. In the preparation of the annual financial statement for the financial year endedMarch 31 2020 the applicable accounting standards had been followed along with properexplanation relating to material departures if any;
ii. The Directors had 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 as at March 31 2020 and of the profit ofthe Company for the year ended on that date;
iii. The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
iv. The Directors had prepared the annual financial statement for the financial yearended March 31 2020 on a going concern basis;
v. The Directors had laid down proper internal financial controls to be followed by theCompany and such internal financial controls are adequate and are operating effectively;and
vi. The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
Contracts and Arrangements with Related Parties
All contracts arrangements and transactions entered into by the Company during thefinancial year under review with related parties were on an arm's length basis and in theordinary course of business.
There were no materially significant related party transactions made by the Companywith Promoters Directors Key Managerial Personnel or other designated persons whichcould have potential conflict with the interest of the Company at large.
During the year the Company has not entered into any contract/ arrangement/transactionwith related parties which could be considered material in accordance with the policy ofCompany on materiality of related party transactions.
All Related Party Transactions were placed before the Audit Committee for approval.Omnibus approval of the Audit Committee was obtained for the transactions which were of arepetitive nature. The transactions entered into pursuant to the omnibus approval sogranted were reviewed and statements giving details of all related party transactions wereplaced before the Audit Committee on a quarterly basis. The policy on Related PartyTransactions as approved by the Board is uploaded on the Company's website at the link:https://www.rinfra.com/ documents/1142822/1189698/Related_Party_Transactions_Policy_updated.pdf. Your Directors draw attention of the Members to note 34 to thestandalone financial statement which sets out related party disclosures pursuant to Ind-ASand Schedule V of Listing Regulations.
Material Changes and Commitments if any affecting the financial position of theCompany
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of thisreport.
Meetings of the Board
A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe financial year ended March 31 2020 six Board Meetings were held. Details of themeetings held and attended by each Director are given in the Corporate Governance Reportforming part of this Annual Report.
The Audit Committee of the Board of Directors comprises of majority of IndependentDirectors namely Ms. Manjari Kacker Shri S S Kohli Shri K Ravikumar Ms. Ryna Karaniand Shri Punit Garg Executive Director and Chief Executive Officer. Ms. Manjari KackerIndependent Director is the Chairperson of the Committee. During the year all therecommendations made by the Audit Committee were accepted by the Board.
Auditors and Auditor's Report
M/s. Pathak H.D. & Associates LLP Chartered Accountants who were appointed asstatutory auditors of the Company to hold office for a term of 4 (four) consecutive yearsat the 87th Annual General Meeting of the Company held on September 27 2016would be completing their second term of appointment upon conclusion of the 91stAnnual General Meeting of the Company and accordingly cannot be re-appointed.
The Board on recommendation of the Audit Committee has proposed the appointment ofM/s. Chaturvedi & Shah LLP Chartered Accountants as the Statutory auditors of theCompany for a term of 5 years until the conclusion of 96th Annual GeneralMeeting of the Company subject to approval of Members in ensuing Annual General Meeting.
The Company has received a consent letter from M/s. Chaturvedi & Shah LLP to theeffect that their appointment if made would be within the limits prescribed underSection 141(3)(g) of the Act and that they are not disqualified from appointment asstatutory auditors in terms of Section 141 of the Act read with Section 139 of the Act andthe Rules made there under. The Auditors in their report to the Members have given aDisclaimer of Opinion for the reasons set out in the para titled Basis of Disclaimer ofOpinion. The relevant facts and the factual position have been explained in the Note 40& 42 of the Notes on Accounts. It has been explained that:
(a) the Reliance Group of companies of which the Company is a part supported anindependent company in which the Company holds less than 2% of equity shares ("EPCCompany") to inter alia undertake contracts and assignments for the large number ofvaried projects in the fields of Power (Thermal Hydro and Nuclear) Roads CementTelecom Metro Rail etc. which were proposed and/or under development by the RelianceGroup. To this end along with other companies of the Reliance Group the Company funded EPCCompany by way of project advances subscription to debentures and inter corporatedeposits.
The activities of EPC Company have been impacted by the reduced project activities ofthe companies of the Reliance Group. While the Company is evaluating the nature ofrelationship; if any with the independent EPC Company based on the analysis carried outin earlier years the EPC Company has not been treated as related party.
Given the huge opportunity in the EPC field particularly considering the Government ofIndia's thrust on infrastructure sector coupled with increasing project and EPC activitiesof the Reliance Group the EPC Company with its experience will be able to achievesubstantial project activities in excess of its current levels thus enabling the EPCCompany to meet its obligations. The Company is reasonably confident that the provisionwill be adequate to deal with any contingency relating to recovery from the EPC Company.
(b) During the year the loss on invocation of pledge of shares of Reliance PowerLimited (RPower) held by the Company has been adjusted against the capital reserve sincethis is an extremely rare circumstance where even though the value of long term strategicinvestment is high the same is being disposed off at much lower value for the reasonsbeyond the control of the Company thereby causing the said loss to the Company. Hencebeing the capital loss the same has been adjusted against the capital reserve.
Further due to the aforesaid invocation investment in RPower has been reduced to12.77% of its paid-up share capital. Accordingly in terms of Ind AS 28 on Investments inAssociates and Joint Venture RPower ceases to be an associate of the Company. Althoughthis being strategic investment and Company continues to be promoter of RPower due to theinvocations of the shares by the lenders for the reasons beyond the control of the Companythe balance investments in RPower have been carried at fair value in accordance withInd-AS 109 on Financial Instruments and valued at current market price and loss on fairvaluation being the capital loss has been adjusted against the capital reserve.
The other observations and comments given by the Auditors in their report readtogether with notes on financial statements are self explanatory and hence do not call forany further comments under section 134 of the Act.
Pursuant to the provisions of the Act and the Companies (Audit and Auditors) Rules2014 the Board of Directors have appointed M/s. V J Talati & Co. Cost Accountants asthe Cost Auditors of the Company for conducting the cost audit of the EngineeringProcurement and Construction Division & Power Generation Division of the Company forthe financial year ending March 31 2021 and their remuneration is subject toratification by the Members at the ensuing Annual General Meeting of the Company.
The Provisions of Section 148(1) of the Act are applicable to the Company andaccordingly the Company has maintained cost accounts and records in respect of theapplicable products for the year ended March 31 2020.
During the year under review the Company has complied with the applicable SecretarialStandards issued by The Institute of Company Secretaries of India.
Secretarial Audit and Annual Secretarial Compliance Report
Pursuant to the provisions of Section 204 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorshas appointed M/s. Ashita Kaul & Associates Company Secretaries in Practice toundertake the Secretarial Audit of the Company. There is no qualification reservation oradverse remark made by the Secretarial Auditor in the Secretarial Audit Report except fordelay in filing of the financial results for the quarter and financial year ended March31 2019. The Board states that the delay in filing of financial results was due to thepostponement of meeting of the Board of Directors of Reliance Power Limited an AssociateCompany. The same has also been disclosed to the Stock Exchanges. The Audit Report of theSecretarial Auditors for the financial year ended March 31 2020 is attached hereto as
Pursuant to Circular No.CIR/ CFD/ CMD1/ 27/ 2019 dated February 08 2019 issued by theSEBI the Company has obtained Annual Secretarial Compliance Report from a PracticingCompany Secretary on compliance of all applicable SEBI Regulations and circulars/guidelines issued there under and the copy of the same shall be submitted with the StockExchanges within the prescribed due date.
As required under Section 134 (3)(a) of the Act the Annual Return for the year2018-2019 and 2019-20 is put up on the Company's website and can be accessed athttps://www.rinfra. com/web/rinfra/annual-return.
Particulars of Employees and related disclosures
In terms of the provisions of Section 197(12) of the Act read with rule 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended a statement showing the names and other particulars of the employees drawingremuneration in excess of the limits set out in the said Rules are provided in the AnnualReport. Disclosures relating to the remuneration and other details as required underSection 197(12) of the Act read with rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended also forms part of thisAnnual Report.
However having regard to the provisions of second proviso to Section 136(1) of theAct the Annual Report excluding the aforesaid information is being sent to all theMembers of the Company and others entitled thereto. Any member interested in obtaining thesame may write to the Company Secretary and the same will be furnished on request.
Conservation of energy technology absorption and foreign exchange earnings and outgo
The particulars as required to be disclosed in terms of Section 134(3) (m) of the Actread with Rule 8 of the Companies (Accounts) Rules 2014 are given in Annexure Cforming part of this Report.
The Company has adopted the "Reliance Group-Corporate Governance Policies and Codeof Conduct" which sets out the systems processes and policies confirming to theinternational standards. The report on Corporate Governance as stipulated under Regulation34(3) read with para C of Schedule V of the Listing Regulations is presented in a separatesection forming part of this Annual Report.
A certificate from M/s. Ashita Kaul & Associates Practising Company Secretaryconfirming compliance to the conditions of Corporate Governance as stipulated under Para Eof Schedule V of the Listing Regulations is enclosed to this Report.
Whistle Blower Policy (Vigil Mechanism)
In accordance with Section 177 of the Act and the Listing Regulations the Company hasformulated a Vigil Mechanism to address the genuine concerns if any of the directors andemployees. The details of the same have been stated in the Report on Corporate Governanceand the policy can also be accessed on the Company's website at the link: https://www.rinfra.com/documents/1142822/1189698/Whistle_Blower_ Policy_updated.pdf
The Board of the Company has constituted a Risk Management Committee which consists ofmajority of independent directors and also senior managerial personnel of the Company. Thedetails of the Committee and its terms of reference etc. are set out in the CorporateGovernance Report forming part of this Report. The Company has a robust Business RiskManagement framework to identify evaluate business risks and opportunities. Thisframework seeks to create transparency minimize adverse impact on the business objectivesand enhances Company's competitive advantage. The business risk framework defines the riskmanagement approach across the enterprise at various levels including documentation andreporting.
The framework has different risk models which help in identifying risk trend exposureand potential impact analysis at a Company level as also separately for business segment.The risks are assessed for each project and mitigation measures are initiated both at theproject as well as at the corporate level. More details on Risk Management indicatingdevelopment and implementation of Risk Management policy including identification ofelements of risk and their mitigation are covered in Management Discussion and Analysissection which forms part of this Report.
Compliance with the provisions of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
The Company is committed to upholding and maintaining the dignity of women employeesand it has in place a policy which provides for protection against sexual harassment ofwomen at work place and for prevention and redressal of such complaints. During the yearunder review no such complaints were received. The Company has also constituted anInternal Compliance Committee under the sexual harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
Corporate Social Responsibility
The Company has constituted Corporate Social Responsibility (CSR) Committee incompliance with the provisions of Section 135 of the Act read with the Companies(Corporate Social Responsibility Policy) Rules 2014. The CSR Committee has formulated aCSR Policy indicating the activities to be undertaken by the Company. The CSR policy maybe accessed on the Company's website at the link: https://www.rinfra.com/documents/1142822/1182645/RInfra-CSR-Policy.pdf. The CSR Committee of the Board consist ofMs. Ryna Karani as Chairperson Shri S S Kohli Shri K Ravikumar and Shri Punit Garg asthe Members.The disclosure with respect to CSR activities forming part of this Report isgiven as Annexure D.
Order if any passed by the regulator or courts or tribunals
No orders have been passed by the Regulators or Courts or Tribunals impacting the goingconcern status of the Company and its operations.
Internal Financial Controls and their adequacy
The Company has in place adequate internal financial controls with reference tofinancial statement across the organization. The same is subject to review periodicallyby the internal audit cell for its effectiveness. During the financial year such controlswere tested and no reportable material weakness in the design or operations were observed.
Business Responsibility Report
Business Responsibility Report for the year under review as stipulated under theListing Regulations is presented under separate section forming part of this AnnualReport.
Your Directors would like to express their sincere appreciation for the co-operationand assistance received from shareholders debenture holders debenture trustees bankersfinancial institutions government authorities regulatory bodies and other businessconstituents during the year under review. Your Directors also wish to place on recordtheir deep sense of appreciation for the commitment displayed by all executives officersand staff.
| ||For and on behalf of the Board of Directors |
| ||Anil Dhirubhai Ambani |
| ||Chairman |
|Place: Mumbai || |
|Date : May 08 2020 || |