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RPP Infra Projects Ltd.

BSE: 533284 Sector: Infrastructure
NSE: RPPINFRA ISIN Code: INE324L01013
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VOLUME 1734
52-Week high 115.75
52-Week low 27.25
P/E 7.42
Mkt Cap.(Rs cr) 143
Buy Price 64.00
Buy Qty 12.00
Sell Price 64.80
Sell Qty 2600.00
OPEN 64.80
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VOLUME 1734
52-Week high 115.75
52-Week low 27.25
P/E 7.42
Mkt Cap.(Rs cr) 143
Buy Price 64.00
Buy Qty 12.00
Sell Price 64.80
Sell Qty 2600.00

RPP Infra Projects Ltd. (RPPINFRA) - Director Report

Company director report

Your Directors take pleasure in presenting their 24th Annual Report on thebusiness and operations of the Company together with the Audited Statement of Accountsfor the year ended 31st March 2019.

1. Financial Highlights (Standalone and Consolidated)

During the year under review performance of your Company's standalone and consolidatedresults are as under:

(Rs crore)

Year ended

Particulars 31-Mar-19 31-Mar-18 31-Mar-19 31-Mar-18

Standalone results

Consolidated results

Turnover 580.69 499.13 580.69 499.13
Profit/(Loss) before taxation 41.05 47.04 40.11 45.18
Less : Tax expense 16.70 33.56 16.70 33.56
Profit/(Loss) after tax 24.35 13.52 23.41 11.66
Add : Balance B/F from the previous year 122.48 110.22 137.22 126.92
Balance Profit/(Loss) C/F to the next year 144.52 122.48 158.99 137.22

Operations and Performance Review Standalone Results

During the year under review revenue from operations increased to Rs 580.69 crore fromRs 499.13 crore in the previous year registering an increase of 16.34%. Profit after taxstood at Rs 24.35 crore as against Rs 13.52 crore for the previous year. The Company'snet worth increased to Rs 209.16 crore as on 31st March 2019 as compared to Rs 164.51crore as on 31st March 2018.

Consolidated Results

Consolidated revenues for the year under review were Rs 580.69 crore as against Rs499.13 crore in the previous year recording an increase of 16.34% from the last year.Consolidated profit after tax was Rs 23.41 crore as against Rs 11.63 crore for theprevious year. The Company's consolidated net worth increased to Rs 241.23 crore as on31st March 2019 from Rs 219.85 crore as on 31st March 2018.

During the financial year the Company adopted changes in billing pattern to stage-wisecompletion as compared to earlier item-wise completion which resulted in cost booking tothe extent of Rs 14 crore without booking any consequential revenue.

In accordance with the Accounting Standard AS-21 on consolidated financial statementsthe audited consolidated financial statements are also provided along with standalonefinancial statement in the Annual report.

2. Company's Affairs and Future Outlook

The operations and revenues of the Company increased substantially in spite of themixed performance of the economy during the year. The Company kept its focus on theidentified areas and has been trying to venture into new geographical areas and ensurebetter margins. The Company has been trying to achieve optimum mix of projects thatprovide stability and growth in terms of revenues and margins.

During the financial year 2018-19 your Company's order inflows stood at around Rs1014 crore and orders of around Rs 481 crore are in various stages and quite a few ofthem may mature into contracts. The total order book size in hand as on 31st March 2019is Rs 1944.25 crore.

Your Company received the following major contracts during the financial year 2018-19and till the date of this report:

Order from Chennai Metropolitan Water Supply and Sewerage Board for plugging of sewageoutfalls and diversion works in Buckingham Canal Basin in Chennai city water ways worth Rs256 million.

Order from Ministry of Road Transport & Highways Government of India throughPublic Works Department for upgradation of Wardha-Arvi in the state of Maharashtra worthRs 2171 million.

Order from Central Public Works Department for construction of AMK 339 project for HAPPat Trichy worth Rs 679 million.

Order from Drinking Water & Sanitation Department under DW&S Div Medininagar onturnkey basis worth Rs 527 million.

Order from Tamil Nadu Water Supply & Drainage Board for CWSS to Perundurai and 7other Town Panchayats worth Rs 1559 million.

Order from Tiruppur Municipal Corporation for construction of 12 nos of elevatedservice reservoirs worth Rs 1947 million.

Order from Bharat Heavy Electricals Limited for levelling and grading of green beltarea and balance plant area in Kallamoli village Tiruchendur Taluk Tuticorin Districtworth Rs 1032 million.

Order from Gujarat Water Supply and Sewerage Board for working survey soilinvestigation design & construction of various sizes RCC HGLR/sumps of Astol Regionalwater supply Scheme Part-1 Tal: Kaprada & Dharmpur District Valsad Gujarat worth Rs733 million.

Order from Thoothukudi Smart City Limited for construction of storm water drain fromnew colony to sea (via George Road) Geetha Jeevan Nagar worth Rs 180 million.

Order from Tamil Nadu Slum Clearance Board for construction of 972 nos. of EWStenements scheme in Chennai Corporation Dn.46 under Housing For All (PMAY) worth Rs 1058million.

The details of affairs of the Company and future outlook have also been provided atother places including Management Discussion and Analysis Report forming a part of thisreport.

3. Change in Nature of the Business

There was no change in the nature of the business of the Company and its subsidiariesduring the year.

4. Dividend

Your Directors regret to inform that owing to reduced profit on account of the changein billing pattern to stage-wise completion from earlier item-wise completion and hencewith view to conserve resources the Board has decided to not recommend dividend for thefinancial year 2018-19.

5. Transfer to Reserves

Your directors have decided that no sum would be transferred to the reserve during theyear.

6. Share Capital

During the year under review no changes in share capital of the Company have takenplace and it has not issued any shares including shares with differential voting rightsor sweat equity.

7. Extract of Annual Return

The extract of Annual Return in form MGT - 9 for the financial year 2018-19 has beenenclosed forming part of the report as Annexure - 1. The extract in MGT - 9 is alsoavailable on the Company's website and web-link is: http://www.rppipl.com/

8. Board of Directors and Meetings of the Board

The Board is adequately constituted with an appropriate mix of executive non-executiveand independent directors to maintain the independence of the Board and to separate theBoard functions of governance and management.

The Board is constituted in compliance with Section 149 of the Companies Act 2013 andRegulation 17 of SEBI (LODR) Regulations. The total strength of the Board comprised ofseven directors at the beginning of the financial year 2018-19. The Board included twoexecutive promoter directors one non-executive director and four independent directors atthe beginning of the financial year 2018-19.

At the end of financial year the Board comprised of six directors comprising of twoexecutive promoter directors one non-executive director and three independent directorswith one woman director on the Board. More details about the Board including the profileof directors are provided in the Corporate Governance Report forming a part of the BoardReport.

During the financial year 2018-19 four Board meetings were held on 12th May 2018 14thAugust 2018 14th

November 2018 and 14th February 2019.

The attendance of Directors in the Board meeting is provided below:

Name of the Director Number of meetings held Number of meetings entitled to attend Number of meetings attended
Mr. P Arulsundaram 4 4 4
Mrs. A Nithya 4 4 4
Mr. P Muralidasan 4 4 4
Mr. K Rangasamy 4 4 4
Mr. P R Sundararajan 4 4 4
Mr. K Ravi* 4 3 3
Mr. Vijay Agarwal** 4 4 0

* Mr. KRavi Independent Director resigned w.e.f. 14th November 2018

** Mr Vijay Agarwal Independent Director was relieved from directorship w.e.f. 29thMay 2019

9. Loan Guarantees and Investments under Section 186

During the financial year 2018-19 the Company has not granted any loan or extended anyguarantee or provided any security in connection with the loans to other companies or madeany investments under Section 186 of the Companies Act 2013 and hence no disclosure isrequired to be made. Further Company has not made any loan or guarantee or security orinvestment in subsidiaries including wholly owned subsidiaries or joint venture during thefinancial year 2018-19.

Please refer to note no.5 of Notes to Accounts for details of all investments made bythe Company earlier.

10. Contracts or Arrangements with Related Parties

The particulars of contracts or arrangements with related parties referred to inSection 188(1) of the Companies Act 2013 for the financial year 2018-19 in theprescribed format AOC - 2 has been enclosed with this report as Annexure - 2.

11. Material Changes Affecting the Financial Position of the Company

There are no material changes affecting the financial position of the Company whichhave occurred between the end of the financial year of the Company i.e. 31st March 2019and till the date of the Directors' Report.

12. Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

Information as per Section 134 (3) (m) of the Companies Act 2013 read with Rule 8(3)of the Companies (Accounts) Rules 2014 relating to Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and Outgo has been enclosed with this report as Annexure- 3.

13. Subsidiaries Joint Venture and Associate

The Company has a total of seven subsidiaries out of which five are subsidiaries andtwo are step-down subsidiaries. The Company does not have any joint venture or associatecompany as on 31st March 2019 though it has entered into arrangements for quoting forprojects or undertaking projects as provided elsewhere in this report.

During the year no change has taken place as regards the position of the subsidiariesor investment in them. A brief of the subsidiaries is provided below for your information.

R.PP Infra Projects (Lanka) Limited Sri Lanka

R.PP Infra Projects (Lanka) Limited is a wholly-owned subsidiary of your Company basedin Sri Lanka. The Company during 2014-15 successfully completed a housing project forthe internally-displaced people of Sri Lanka's Northern Province for which HindustanPrefab Limited was the project consultant.

The Company has not taken up any new project during the year under review and has nooperating revenues during the financial year ended 31st March 2019. The Company recorded anet loss of Rs 0.85 crore for the year ended 31st March 2019.

R.PP Infra Overseas PLC Mauritius

R.PP Infra Overseas PLC is a wholly-owned subsidiary of your Company based inMauritius. The principal activity of the Company is to provide infrastructure project-related consultancy services.

The Company had no operating revenues during the financial year ended 31st March 2019.The company recorded a net loss of Rs 0.05 crore.

R.PP Infra Projects Gabon SA Gabon

R.P.P Infra Projects Gabon SA Gabon is a wholly- owned subsidiary of RPP InfraOverseas PLC Mauritius and a step-down subsidiary of the Company. It was incorporated toexecute a mass housing project awarded by the Republic of Gabon a West African countryin 2011. However due to change in political situation and increase in the workspecifications without an appropriate compensation for the change in work the Companywithdrew from the project and the contract has been terminated. The Company merged withthe holding company R.P.P Infra Overseas PLC Mauritius.

R.PP Energy Systems Private Limited India

R.P.P Energy Systems Private Limited a wholly-owned subsidiary of your Company wasincorporated mainly to venture into the power segment viz. to procure sell supplyelectricity from various sources including biofuels such as bio-mass bio-gas etc. andfrom coal and thermal energy. The other objectives of the Company are to generate and sellpower from all sources including non-conventional sources such as solar wind etc. Theoperation of this subsidiary has not yet commenced.

The Company had no revenues from operations during the year ended 31st March 2019 andhad an insignificant net loss for the year.

Sanskar Dealcom Private Limited India

Sanskar Dealcom Private Limited a wholly-owned subsidiary of your Company is aCompany engaged in activities that includes being distributors agents tradersmerchants contractors brokers and otherwise deal in merchandise and articles of allkinds including clearing agents freight contractors forwarding agents licensingagents general brokers and to carry any kind of commercial business.

The Company had no operational revenues during the year ended 31st March 2019 and hadan insignificant net loss for the year.

Greatful Mercantile Private Limited India

Greatful Mercantile Private Limited a wholly-owned subsidiary of your Company is aCompany engaged in activities that include being distributors agents traders merchantscontractors brokers and otherwise deal in merchandise and articles of all kindsincluding clearing agents freight contractors forwarding agents licensing agentsgeneral brokers and to carry any kind of commercial business.

The Company had no revenues from operations during the year ended 31st March 2019 andhad an insignificant net loss for the year.

Lunkar Finance Private Limited

Lunkar Finance Private Limited is a step-down subsidiary of your Company. SanskarDealcom Private Limited and Greatful Mercantile Private Limited holds the entire paid-upcapital of this company and hence step-down subsidiary of your Company. It is anon-deposit taking NBFC.

The Company had no operational revenues during the year ended 31st March 2019 and hadan insignificant net loss for the year.

The Company has kept the financial statements along with the audit reports of all thesesubsidiaries open for inspection at the registered office of the Company. Further theCompany will provide a copy of financial statements to any shareholder who asks for it.Further pursuant to Section 136 of the Act the financial statement of the Companyconsolidated financial statement along with the relevant documents and separate auditedfinancial statements in respect of subsidiaries are available on the website of theCompany.

As required under the Section 129(3) of Companies Act 2013 and Regulation 34(2) ofSEBI (LODR) Regulation 2015 consolidated financial statements along with Audit Reportthereon of the Auditors forms a part of the financial statements. Further statementspursuant to Section 129(3) of the Companies Act 2013 read with rule 5 of Companies(Accounts) Rules 2014 containing the brief financials of the subsidiaries in form AOC-1is attached with this report as Annexure-4.

At present none of the subsidiaries are material subsidiary. A copy of the policydetermining 'material' subsidiaries has been hosted on the website of the Company at theweblink: http://www.rppipl.com/

14. Consolidation of Accounts

Your Company has prepared consolidated financial statements as per Ind AS prescribedunder Section 129 read along with Section 133 and prescribed rules of Companies Act 2013.The Consolidated Financial Statements reflect the financial position of the Company andAssociates. As required by Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (hereinafter referred to as 'LODR Regulation) the AuditedConsolidated Financial Statements together with the Independent Auditor's Report thereonare annexed and form part of this Annual Report.

15. Risk Management Policy

Risk management is an integral part of the business. The risk management process interalia provides for a review of the risk assessment and mitigation procedures with timelyreporting to the management and review of the identified risks at periodic intervals toassess the progress of control measures.

The Audit committee of the Board also oversees and serves as Risk Management Committee.The Board has also constituted a Risk Management Team. The Committee had formulated a RiskManagement Policy that outlines the different kinds of risks and risk mitigating measures.The major risks are reviewed for the change in their nature and extent since the lastassessment. It also provides control measures for risks and future action plans. YourBoard is satisfied that there are adequate systems and procedures in place to identifyassess monitor and manage risks. The Company believes that the overall risk exposure ofpresent and future risks remains within risk capacity.

The details about risk and its management are provided appropriately in the report. TheRisk Management Team reports to the Audit Committee. The policy and terms of referencehave been provided in the Corporate Governance Report forming part of the Director'sReport.

16. Directors and Key Managerial Personnel

Your Board at the beginning of the financial year had seven directors whereas itcomprised of six directors at the end of the financial year. Details including profile ofdirectors are provided in the Corporate Governance Report which forms a part of theBoard Report.

Mr. K. Ravi Independent Director resigned from Directorship w.e.f. 14th November2018. Further Mr. Vijay Agarwal Independent Director was relieved from directorshipw.e.f. 29th May 2019.

I n terms of the provisions of Section 152(6)(d) of the Companies Act 2013 Mrs. ANithya Whole Time Director and Chief Financial Officer of the Company retires byrotation at this Annual General Meeting and being eligible offer herself forre-appointment.

17. Significant and Material Orders passed by the Regulators Courts or Tribunals

There are no significant material orders passed by the Regulators/Courts/Tribunalswhich impact the going concern status of the Company and its future operations.

18. Insurance

All insurable interest of the Company including buildings furniture and fixtures andother insurable interest are adequately insured.

19. Statement in respect of adequacy of Internal Financial Control with reference tothe Financial Statements Internal Controls

A robust system of internal control commensurate with the size and nature of itsbusiness forms an integral part of the Company's corporate governance policies. InternalAudit has been conducted by qualified externalinternal auditors. Findings of the internalauditor are reviewed by the management and the report of internal auditoris placed beforethe Audit Committee and proper followup action are ensured wherever required. TheStatutory Auditors have evaluated the system of internal controls of the Company and havereported that the same are adequate and commensurate with the size of the Company andnature of its business.

Internal Financial Controls

As per Section 134(5)(e) of the Companies Act 2013 the Directors have an overallresponsibility for ensuring that the Company has implemented robust systems and frameworksof internal financial controls.

These include those policies and procedures that:

i. Pertain to the maintenance of records which in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company

ii. Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of the financial statements in accordance with generally accepted accountingprinciples and that the receipts and expenditures are being made only in accordance withauthorizations of the management and the Directors of the Company and

iii. Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of assets that can have a material effect onthe financial statements.

This provides the Directors reasonable assurance regarding the adequacy and operatingeffectiveness of controls with regards to reporting operational and compliance risks toenable them to meet these responsibilities. The Company has devised appropriate systemsand frameworks including proper delegation of authority policies and procedureseffective IT systems aligned with business requirements internal audit framework riskmanagement frameworks and whistle blower mechanism.

The Audit committee regularly reviews the internal control system to ensure that itremains effective and aligned with business requirements. Where weaknesses are identifiedas a result of the reviews new procedures are put in place to strengthen controls and arein turn reviewed at regular intervals.

The Company has developed a framework for designing and assessing effectiveness ofinternal controls over financial reporting and has already laid down entity- levelpolicies and process-level standard operating procedures.

The entity-level policies comprise anti-fraud policies (code of conduct includingconflict of interest confidentiality and whistle blower policy) and other policies(organisation structure roles and responsibilities insider trading policy related partypolicy prevention of sexual harassment policy risk management policy policy formateriality of information or events and policy for preservation of documents). TheCompany has also prepared standard operating Practices for each of its processes ofrevenue to receive procure to pay hire to retire finance and accounts fixed assetstreasury inventory operations and administrative expenses.

The management assessed the effectiveness of the internal financial controls overfinancial reporting as of 31st March 2019 and the Board believes that the controls areadequate.

20. Deposits

The Company has not accepted any deposits from members or the public in terms ofSection 73 or Section 76 of the Companies Act 2013.

21. Declaration by Independent Directors

The Independent Directors have submitted the declaration of independence stating thatthey meet the criteria of independence as provided under Section 149(6) of the CompaniesAct 2013.

22. Receipt of any Commission by Managing Director/Whole Time Director from the Companyor Receipt of Commission/ Remuneration from Subsidiary

The Managing Director/Whole Time Director are not in receipt of any commission from theCompany or any commission/remuneration from subsidiary.

23. Independent Auditor

The shareholders of the Company at the Annual General Meeting held on 8th September2017 have appointed M/s Sundaram & Narayanan Chartered Accountants (ICAI Firm Regn.No.004204S) as Statutory Auditors of the Company for a period of five years and their termof office is till conclusion of the 26th AGM in 2022. As per the amendment effective 7thMay 2018 in Section 139 of Companies Act 2013 the appointment of Auditors is no morerequired to be ratified at each AGM and hence is no more being placed for approval ofmembers.

24. Cost Auditor

As per the requirement of Section 148 of the Companies Act 2013 the Board ofDirectors on the recommendation of Audit Committee has appointed Mr. R Gopal CostAccountant as Cost Auditor to audit the cost accounts of the Company for the financialyear 2018-19 at a remuneration of Rs 350000/- (Rupees Three Lakh and Fifty Thousand)only plus applicable taxes and reimbursement of out-of-pocket expenses. As required underthe Companies Act 2013 a resolution seeking member's approval for the remunerationpayable to the Cost Auditor forms a part of the Notice convening the Annual GeneralMeeting.

There were no qualifications reservations or adverse remarks made by the Cost Auditorin the Audit Report of the last financial year.

25. Secretarial Audit Report

As per the provisions of Section 204 of the Companies Act 2013 the Board of Directorshas appointed Mr. Gouri Shanker Mishra Practicing Company Secretary (C.P No.13581) asSecretarial Auditor to conduct the Secretarial Audit of the Company for the financial yearended on 31st March 2019.

The Secretarial Audit Report issued by Mr. Gouri Shanker Mishra Practicing CompanySecretary in form MR-3 pursuant to Section 204(1) of the Companies Act 2013 and Rule 9of the Companies (Appointment and Remuneration Personnel) Rules 2014 has been enclosedwith this report as Annexure-5.

No qualifications reservations or adverse remarks have been made by the SecretarialAuditor in his Secretarial Audit Report. As regards fact of compounding mentioned in thereport the violation happened due to oversight due to delay in filing of Cost AuditReport during 2014-15 which now stands compounded.

26. Auditors' Report

The Statutory Auditor's Report for both standalone and consolidated financialstatements of the Company is provided along with the financial statements.

There are qualifications or reservations or remarks made by the Statutory Auditors intheir Standalone Audit Report that the loan taken by the Company to the tune of Rs 1.00crore for which the provisions of sec. 73 to sec. 76 of the Companies Act 2013 and alongwith The Companies (Acceptance of Deposits) Rules 2014 were not complied with (Pleaserefer to note no.18 of the notes to accounts).

The mobilisation advance received by the Company from certain departments and theproportionate amount which has to be classified as GST liability has been shown asmobilisation advance liability to the extent of Rs 3.06 crore (Refer Note No. 24) .

Search operations were conducted by the Income Tax Department u/s 132 of the Income TaxAct during the financial year 2015-16. The Company had filed an application with thesettlement commission and remitted Rs 17.96 crore as tax. Final order from the Income TaxSettlement Commission is awaited.

Further there are qualifications or reservations or remarks made by the Auditors intheir Consolidated Audit report that the Company has taken loan to the tune of Rs 1.00crore for which the provisions of sec. 73 to sec. 76 of the Companies Act 2013 and alongwith The Companies (Acceptance of Deposits) Rules 2014 were not complied with (Pleaserefer to note no. 20 of the notes to accounts).

The company has received mobilisation advance from certain departments and theproportionate amount which has to be classified as GST liability has been shown asmobilisation advance liability to the extent of Rs 3.06 crore (Refer Note No. 23).

The Income Tax Department has conducted a search u/s 132 of the IT Act during thefinancial year 2015-16. The company had filed an application with settlement commissionand remitted Rs 17.96 crore as tax. Final order from the Income Tax Settlement commissionis awaited. However in Standalone Audit Report Auditors have made a disclaimer thatstandalone financial statements reflect total assets of Rs 23.05 crore as at 31st March2019 total revenue of Rs 30.44 crore as at 31st March 2019 whose unaudited financialstatements and other unaudited statements have been furnished to them. Further theiropinion is not modified in respect of the matter. Similarly in Consolidated Audit ReportAuditors have made a disclaimer that consolidated financial statements includes financialsof five subsidiaries and two branches and one Joint Venture which reflects total assets ofRs 39.22 crore as at 31st March 2019 total revenue of Rs 31.20 crore out of which threesubsidiaries have not been audited by them and financial statements of two subsidiariesbased at Sri Lanka and Mauritius and two branches in Sri Lanka and Bangladesh are based onunaudited financial statements. Further their opinion is not modified in respect of thematter.

The disclaimer made both in Standalone and Consolidated Financials areself-explanatory. Your Board would like to clarify that the accounts of both overseassubsidiaries Sri Lanka and Mauritius and branches in Sri Lanka and Bangladesh have beenaudited and auditors report does not contain any qualification/reservation. Due to somelogistics problem the same could not be provided to the Statutory Auditors at the time ofaudit and hence financials have been provided and audit has been done based on informationbut the auditors' report could not be provided to them at relevant time.

27. Audit Committee

The Company has Audit Committee in compliance to the Section 177 of Companies Act 2013and SEBI (LODR) Regulations 2013. The details about composition of the Audit Committeeits terms of reference meetings etc. have been provided in the Corporate GovernanceReport.

There were no such incidences where the Board has not accepted the recommendations ofthe Audit committee during the year.

28. Corporate Social Responsibility (CSR)

The Company has Corporate Social Responsibility Committee in compliance to theprovisions of the Companies Act 2013. The Committee has adopted policy for CorporateSocial Responsibility. The Committee defines the parameters and observes them for theeffective discharge of social responsibility of the Company.

A report on Corporate Social Responsibility including details as per Rule 8 ofCompanies (Corporate Social Responsibility Policy) Rules 2014 is enclosed with thisreport as Annexure - 6.

29. Nomination & Remuneration Committee

The Company has constituted Nomination and Remuneration Committee in compliance to theSection 177 of Companies Act 2013 and SEBI (LODR) Regulations 2013. The Company stronglybelieves that its human resource has infinite potential and therefore their developmentis the key to organizational effectiveness. We commit ourselves to integrate humanresources with organisational growth and development for mutual benefit. The Nominationand Remuneration policy has been formulated in compliance to the requirementof CompaniesAct 2013 and SEBI (LODR) Regulations 2013.

The details about composition of the Committee Nomination and RemunerationPolicy andother terms and condition including its terms of reference have been provided in theCorporate Governance Report forming part of the Directors'report.

30. Performance Evaluation

Pursuant to provisions of the Companies Act 2013 and SEBI (LODR) Regulation 2015the Board has carried out an annual performance evaluation of its own performance theDirectors individually including Independent Directors as well as the evaluation of theworking of its Committees i.e. Audit and Nomination & Remuneration committees.

A structured format was prepared to rate after taking into consideration inputsreceived from Directors covering various aspects of the Board's functioning such asadequacy of the composition of the Board and its Committees Board culture and executionand performance of specific duties obligations and governance.

A separate exercise was carried out to evaluate the performance of IndependentDirectors. The performance evaluation of Independent Directors was carried out by theentire Board. The performance evaluation of the Chairman and the Non Independent Directorswas carried out by the Independent Directors.

The mechanism for the evaluation of the Board is given in detail in the CorporateGovernance report.

31. Human Resources

Your Company takes pride in the commitment competence and dedication shown by itsemployees in all areas of its business. It considers people as its biggest assets. It hasput concerted efforts in talent management and succession planning practices strongperformance management and learning and training initiatives to ensure that your Companyconsistently develops inspiring strong and credible leadership. Your Company facilitatesproper induction and appropriate upgrade for the skills.

32. Disclosure on Establishment of a Vigil Mechanism

The Board of Directors has adopted a Whistle Blower Policy. The policy aims forconducting the affairs in a fair and transparent manner by adopting the highest standardsof professionalism honesty integrity and ethical behavior. Directors and all permanentemployees of the Company are covered under the Whistle Blower Policy. A mechanism has beenestablished for Directors/ Employees to report concerns about unethical behavior actualor suspected fraud or violation of code of conduct and ethics. It also provides foradequate safeguards against the victimization of Directors/Employees who avail of themechanism and allows direct access to the Chairperson of the Audit Committee inexceptional cases. A copy of the Whistle Blower Policy is also hosted on the website ofthe Company.

33. Secretarial Standard

The company has complied with the Secretarial Standards SS-1 and SS-2 issued by theInstitute of Company Secretaries of India on Board Meetings and General Meetings.

34. Corporate Governance

As per Schedule V of SEBI (LODR) Regulation 2015 a separate section on corporategovernance practices followed by the Company report on Corporate Governance together witha certificate confirming compliance and CEO/CFO Certificate by the Managing Director andChief Financial Officer forms an integral part of this Directors' Report.

35. Managerial Remuneration

Disclosures pursuant to Rule 5 of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 has been enclosed with this report as Annexure-7.

36. Disclosure as per Listing Regulations

Disclosures pursuant to Regulation 34 read with Schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulation 2015 has been provided in Annexure-8apart from those which are provided/covered in Corporate Governance.

37. Disclosures under Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013

The Company has adopted a policy on prevention of sexual harassment of women atworkplace in accordance with the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and has also created an Internal Complaints Committeeheaded by Mrs. A Nithya Whole-time Director and Chief Financial Officer of the Companywho directly reports to the Chairman & Managing Director. During the financial yearended 31st March 2019 the Company has not received any complaints pertaining to sexualharassment. A copy of the policy on sexual harassment is also hosted on the website of theCompany.

38. Management Discussion and Analysis report

As per Regulation 34(3) and Schedule V of SEBI (LODR) Regulation 2015 a separatesection on Management Discussion and Analysis report forms an internal part of Directors'Report.

39. Directors responsibility statement

I n accordance with the provisions of Section 134(5) of the Companies Act 2013 yourdirectors confirm that:

a) I n the preparation of the annual accounts for the financial year ended 31st March2019 the applicable accounting standards had been followed along with proper explanationrelating to material departures;

b) 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 31st March 2019 and of the profit/loss of the Company for that period;

c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d) The Directors had prepared the annual accounts on a going concern basis;

e) The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively; and

f) The Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

40. Transfer to Investor Education and Protection Fund

The Company transferred the dividend remaining unclaimed by the members of the companyto Investor Education and Protection Fund. The detail pertaining to transfer has beenprovided in notice to Annual General Meeting as well as corporate governance report.

41. Acknowledgment

Your Directors take this opportunity to offer their sincere thanks to all stakeholdersincluding the various departments of the central and state governments governmentagencies banks financial institutions shareholders customers and employees who throughtheir continued support and co-operation have helped in your Company's progress.

For and on behalf of the Board of Directors
P Arulsundaram
Place: Erode Chairman & Managing Director
Date: 29th May 2019 DIN 00125403