To the Members
Your Directors hereby present their Eighteenth Annual Report on the business andoperations of your Company along with audited financial statements for the Financial Year2012-13.
The Company recorded a turnover of Rs 12.3 Crores in 2012-13. Despite weakening growthrate in the economy rising inflation costs tough competition and low margin in theindustry the Company has completed two projects of Rs 20 Crores secured from M/s CordonBleu Properties & Infrastructure (P) Ltd Coimbatore for construction of residentialblocks at Coimbatore and finishing works of ETA Star Techcity (P) Ltd.
Efforts are being made to restructure the capital of the Company including theborrowings of Rs. 60 Crores from State Bank of India. The Company is negotiating to raiselong term funds for repayment of loans and to augment its future growth. Immediateobjective of the Company is to stabilize infrastructure business and then plan for itsgrowth. However the present slowdown in the financial markets is not enabling the Companyto negotiate a restructuring plan.
In view of the loss during the year your Directors are not recommending any dividendfor the financial year 2012-13.
Management Discussion & Analysis
Financial crises of some kind or the other occur sporadically virtually every decadeand in various locations around the world. Financial meltdowns have occurred in countriesranging from Sweden to Argentina from Russia to Korea from the United Kingdom toIndonesia and from Japan to the United States. Each financial crisis is unique yet eachbears some resemblance to others. In general crises have been generated by factors suchas overheating of markets excessive leveraging of debt credit booms miscalculations ofrisk rapid outflows of capital from a country unsustainable macroeconomic policiesoff-balance sheet operations by banks and regulation without sufficient market monitoringand oversight.
Weak recovery will likely resume in the major advanced economies and it is expectedthat the activity will remain relatively solid in most emerging and developing economies.
Indian economy is expected to grow at a slow rate of 5.8% according to the AsianDevelopment Outlook Supplement. It further said the projected growth at 5.8 per cent in2013 will be higher than the 5.0 per cent posted in 2012 growth remains constrained bysupply-side bottlenecks as reflected in the continued slowdown in fixed capitalformation weakness in the industrial sector and sluggish progress in pushing throughbadly needed structural reforms. The growth rate it added is expected to accelerate in2014 as slower inflation provides some scope for monetary easing that could boostinvestment and consumption.
Company s Business Profile Future Outlook & New Business Opportunities:
At present the Company is looking to concentrate and focus on its core competence areainfrastructure. SAAG RR is engaged in execution of infrastructure projects in the area ofCivil Mechanical and Electrical works involved in construction of specialized buildings(Industrial Commercial and Residential) IT Parks Water and Sewer Oil and Gas pipelineconstruction. The Company specializes in executing Civil Mechanical and Electricalcontracts.
Infrastructure Sector Outlook & Opportunities
From the past scenario and recent global crisis the economy is recovering and it willyield good results in the future period and in the long run it will fetch good result forthe Engineering industry.The Company is looking forward to take advantage of theopportunities and efforts are being made is to stabilize infrastructure business and itsgrowth.
SWOT Analysis of SAAG RR
More than eighteen years experience in the execution of varied constructionprojects and Pre qualified to execute single projects worth Rs 60 crores in infrastructurebusiness.
Good engineering skills supported by functional group of planning budgetprocurement finance monitoring and CRM to complement the client and provide valueaddition to the end product.
Financial constraint in funding for growth
Organization constraint to handle multiple sites located in distant geographicallocations
Potential need for physical infrastructure in the country Government s plannedinvestment and public-private partnership model to develop infrastructure.
Construction and infrastructure sector is highly fragmented with high and majorplayers with their size and varied experience could give stiff competition.
Government and PSU award contracts to lowest bidding inviting unhealthycompetition and unremunerative pricing. This leads into difficulty of maintaining healthymargins while committing to its quality and safety standards.
At present the Company has two subsidiaries SAAG Energy Ltd engaged in manpowerconsultancy in the oil & gas sector and OGS Asiapac Ltd ( OGS )
Financial Results: (Amount in Rs.)
|Particulars ||Note ||31-3-2013 ||31-3-2012 |
|Revenue from operations || ||120743320 ||154054062 |
|Other income (net) ||2.18 ||6286772 ||13233017 |
|Total Revenue (I + II) || ||127030092 ||167287079 |
|Expenses: || || || |
|Cost of Revenue ||2.19 ||111897717 ||147447256 |
|Employee benefit expenses ||2.20 ||7271927 ||11493246 |
|Finance costs ||2.21 ||68134500 ||68431437 |
|Depreciation & Impairment ||2.10 ||36755393 ||9119489 |
|Other expenses ||2.22 ||181972055 ||183751880 |
|Total expenses || ||406031592 ||420243308 |
|Profit / (Loss) before Exceptional Items and tax (III- IV) || ||(279001500) ||(252956229) |
|Exceptional Items || ||- ||- |
|Profit / (Loss) before tax (V- VI) || ||(279001500) ||(252956229) |
|Tax expense: || || || |
|(1) Current tax ||2.23 ||- ||98442 |
|(2) Deferred tax ||2.23 ||- ||4151 |
|Profit / (Loss) for the year (VII - VIII) || ||(279001500) ||(253058822) |
|Less: Transfer to Minority Interest || ||(102039) ||(388) |
|Profit / (Loss) for the year after Minority Interest (IX - X) || ||(278899461) ||(253058434) |
Internal Control Systems and their Adequacy:
The Company is in the process of setting up an adequate system of internal control toendure that transactions are properly recorded. The Company aims constant improvement andstrives for better systems and controls The Board assures that it will effectivelyimplement the internal control system in the forthcoming year.
The Company continues with its effort in creating an environment of a high performancework culture. The Company has around 18 employees as on 31.03.13 working at corporateoffice and project sites.
Report on Corporate Governance:
As required by the existing clause 49 of the listing agreement entered into with thestock exchanges a separate report on corporate governance is given as part of the annualreport along with the auditors' statement on its compliance.
Directors Responsibility Statement under section 217(2AA) of the Companies Act 1956
As required under Section 217 of the Companies Act 1956 your Directors confirm that:
In preparation of the annual accounts the applicable accounting standards havebeen followed and that there were no material departures;
The Directors have selected appropriate accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profits of the Company for that period;
The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; and
The accounts for the financial year ended March 31 2013 have been made on agoing concern basis.
Auditors and their Report:
M/s. Sundar Srini& Sridhar Chartered Accountants retire as Statutory Auditors atthe ensuing Annual General Meeting and being eligible are recommended for re-appointment.A certificate in this regard has been received to the effect that the re-appointment ifmade would be in accordance with Section 224(1B) of the Companies Act 1956.
With regard to the observations made by the audit regarding (i) Fixed assets majorportion of reconciliation of fixed assets is being completed and description of assets andcurrent location will be incorporated in the asset records upon such reconciliation.(ii)Adequacy of the internal audit system commensurate with the size of the Company and natureof its business the Board is of the Opinion that the present system is adequate for thepresent level of business however steps will be taken to improve wherever required. (iii)Repayment of overdue amounts the Company is planning to raise long term funds forsettlement of loans and also augment working capital for future growth (iv) Erosion of networth and incurring of cash losses the Company is planning to raise long term funds forsettlement of loans and also augment working capital for future growth. (v) Outstandingstatutory dues the Company will be making the pending statutory dues on receipts of somepayments from clients in the near future or on receipt of Long Term Funds.
Information as per section 217(1) (e) of the Companies Act 1956:
Your Company has no activity with regard to conservation of energy Research &Development or technology absorption. There were no Foreign Currency earnings orexpenditure during this year.
The Company has recognized the need for an integrated risk management framework and hastaken appropriate measures to design comprehensive risk identification and mitigationframework .The internal control policy is reviewed periodically and realigned to meet therisk mitigation requirements.
Your Directors would like to place on record and acknowledge the commitment anddedication on the part of the employees of your Company at all levels in continuing tocontribute to your Company during these tough times. The Industrial Relations continues tobe cordial.
No employee of the Company was in receipt of remuneration over and above the sumspecified under section 217(2A) of the Companies Act 1956.
The Company has not accepted any public deposits and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of the BalanceSheet.
Particulars under section 212 of the Companies Act 1956:
As required under the provisions of Section 212 of the Companies Act 1956 a statementcontaining brief financial details of the Company's subsidiaries for the financial yearended March 31 2013 is included in the Annual Report.
Pursuant to the provision of Section 212(8) of the Act the Ministry of CorporateAffairs vide its circular dated 8th February 2011 has granted general exemption fromattaching the Balance Sheet Profit and Loss Account and other documents of the subsidiarycompanies with the Balance Sheet of the Company. The annual accounts of these subsidiariesand the related detailed information will be made available to any member of theCompany/its subsidiaries seeking such information at any point of time and are alsoavailable for inspection by any member of the Company/its subsidiaries at the registeredoffice of the Company. The annual accounts of the said subsidiaries will also be availablefor inspection as above at the head offices/registered offices of the respectivesubsidiary companies. The Company shall furnish a copy of details of annual accounts ofsubsidiaries to any member on demand.
Your Directors would like to place on record their sincere thanks to the Company ssuppliers contractors clients shareholders auditors and bankers and otheracquaintances for their continued support during the year and look forward to theircontinued support in the future.
| ||For and on Behalf of the Board |
|Place: Chennai || |
|Date: 31/05/2013 ||Mr. R. Sriram |
| ||Managing Director |