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Simplex Infrastructures Ltd.

BSE: 523838 Sector: Infrastructure
NSE: SIMPLEXINF ISIN Code: INE059B01024
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OPEN 44.05
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VOLUME 2902
52-Week high 56.05
52-Week low 27.00
P/E
Mkt Cap.(Rs cr) 248
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Simplex Infrastructures Ltd. (SIMPLEXINF) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the One Hundredth and Second Annual Report alongwith Company's Audited Financial Statements for the financial year ended 31st March 2020.

Financial Results

The financial performance of the Company for the year ended 31st March 2020 issummarized below:

Particulars

Standalone

Consolidated

31st March 2020 31st March 2019 31st March 2020 31st March 2019
Revenue from Operations 39045 60415 40263 61172
Earning before finance costs tax depreciation and amortization (EBITDA) 1713 8222 1724 8212
Less: Finance Costs 5133 4708 5173 4707
Less: Depreciation and amortization 1371 1677 1377 1683
Share of net profit/ (loss) of Associates and Joint Ventures accounted for using equity method - - (1) 6
Profit/(loss) before tax (4791) 1837 (4827) 1828
Less: income tax expenses
Current Tax 40 247 40 247
Deferred Tax (1656) 503 (1658) 500
Excess Current tax provision for earlier years written back (net) * (139)

*

(139)
Profit/ (loss) for the year (3175) 1226 (3209) 1220
Attributable to:
Owners of the Company (3175) 1226 (3208) 1223
Non-Controlling Interest - - (1) (3)
Other Comprehensive Income for the year net of tax 433 363 445 374
Attributable to:
Owners of the Company 433 363 450 375
Non-Controlling Interest - - (5) (1)
Total Comprehensive Income for the year (2742) 1589 (2764) 1594
Attributable to:
Owners of the Company (2742) 1589 (2758) 1598
Non-Controlling Interest - - (6) (4)
Profit /(loss) for the period (3175) 1226 (3208) 1223
Balance at the beginning of the year 7452 8450 7419 8423
Profit / (loss) available to owners for appropriation 4277 9676 4211 9646
Impact of measurement of Contract Assets in accordance with Ind AS 115 and Ind AS 109 - (2095) - (2095)
Remeasurements of post-employment benefit obligations (37) 3 (37) 3
Transferred to retained earnings from FVOCI equity instruments on de-recognition (38) - (38)
Impact of measurement of Financial Assets at Fair Value of an associate - - - (3)
Transfer to Debenture Redemption Reserve - (98) - (98)
Dividend (including Dividend Tax) (34) (34) (34) (34)
Balance carried to Balance Sheet 4168 7452 4102 7419

*Amount is below the rounding off norm adopted by the Company/Group.

Review of Operations

During the year under review on standalone basis revenue from operations were Rs.39045 mns as against Rs.60415 mns in the previous year. The Company reported loss beforetax of Rs.4791 mns as against profit of Rs. 1837 mns in the previous financial year andnet loss for the year was Rs. 3175 mns as against profit of Rs.1226 mns in previousfinancial year. Other Comprehensive income for the year (net of tax) is Rs. 445 mns asagainst Rs. 363 mns in the previous year. After considering other comprehensive incometotal comprehensive loss stood at Rs. 2742 mns as against profit of Rs.1589 mns in theprevious year.

On a consolidated basis the revenue from operations was Rs. 40263 mns as against Rs.61172 mns in the previous year. Loss before tax was Rs. 4827 mns as compared to profit ofRs. 1828 mns in the previous year and loss for the year was Rs. 3209 mns as against profitof Rs.1220 mns in the previous year. Other Comprehensive income for the year (net of tax)is Rs. 445 mns as against Rs. 374 mns in the previous year. After considering othercomprehensive income total Comprehensive loss stood at Rs. 2764 mns as against profit ofRs.1594 mns in the previous year.

Business Review

During the year under review the Company bagged new orders amounting to Rs.26580 mnsin various vertical it operates - Civil Structural and interior finish work forResidential Project at Chennai Development of S&D network in Churial and DiamondPark Kolkata Medical College at Chaibasa Jharkhand Civil works for Blast Furnace atKarnataka Construction of Development Management Institute on EPC Basis at PatnaConstruction of Tower D5 & D6 - 47 Residential towers at Parkwoods Phase II at ThaneFlood Preparation measures and ancillary works of Embankment in different reaches at PurbaBurdawan and Hooghly (West Bengal) Construction of 7 stations and ancillary works on NewGaria - Airport Metro Project Kolkata making the order book over Rs. 100000 mns as onMarch 312020.

Transfer to General Reserves

The Company has not transferred any amount to the General Reserves during the currentfinancial year.

Dividend

In view of the loss during the year under review your Directors do not recommend anydividend for the Financial Year 2019-20.

Material changes and commitments

There are no material changes or commitments affecting the financial position of theCompany which have occurred after March 312020 till the date of this report.

Forfeiture of Convertible Warrants

The Company had allotted 3609261 Convertible Warrants to Promoters/Promoter Group onpreferential basis with an option to convert the same into equal number of equity sharesat a price of Rs.554.13/- each including premium of Rs. 552.13/- per share on face valueof Rs.2/- per share within a period of 18 months from the date of allotment of warrantsi.e.15th May 2018 as per terms and conditions approved in EGM held on 11th May 2018.One of the Promoter exercised its option for conversion of 602000 warrants into equityshares.

During the year under review 3007261 warrants (after conversion of 602000 warrantsinto equity shares) were lapsed due to non-exercise of option for conversion of the saidwarrants into equity shares as per terms of warrants issue and accordinglyRs.416603384/-upfront payment (after adjustment of Rs.83396565/- towards allotmentof 602000 equity shares were forfeited by the Company.)

Deposits

During the year under review the Company has not accepted deposits from the publicfalling within the ambit of Section 73 of the Companies Act 2013. Pursuant to theMinistry of Corporate Affairs (MCA) notification amending the Companies (Acceptance ofDeposits) Rules 2014 the Company files with the Registrar of Companies (ROC) therequisite returns for outstanding receipt of money/loan by the Company which is notconsidered as deposits.

Company response to Covid-19

In view of the outbreak of the Coronavirus (Covid-19) pandemic and in compliance withthe directives / orders issued by the State / Central Government authorities (from time totime) and keeping in mind the safety and well-being of all the employees and stakeholdersthe Company's offices including all branches offices and around 170 operating projectcontracts were shut down from last week of March 2020. With the gradual lifting oflockdown restrictions the operations at some of the working sites partially resumed fromthe first week of May 2020 and the offices of the Company have progressively started frommid-week of May 2020 with minimum staff strength based on the directions provided by theGovernment of India and the State Government notifications and approvals received fromappropriate local authorities. There is also a major labour shortage at the work sites dueto the movement of migrant labour and the Company is working to mitigate its impact. Thebusiness of the Company is significantly impacted due to the lockdown which affected theCompany sales revenue profitability working capital cash flows and other businessactivities of the Company.

The Company has established protocols including working from home wherever possiblewearing of face masks at workplace all the time maintaining social distancing andworkplace sanitization thermal screening before entering work space etc in accordancewith the post Covid-19 guidelines issued by relevant authorities in the places in which weoperate and we are making adherence to the same.

The prevailing uncertainties about the disease control migrant labour clientreadiness and local regulatory permissions make it extremely difficult to make futureestimates for the 170 project contracts spread across the nation.

Inter-Creditor Agreement for Resolution Plan

In terms of provisions of RBI Prudential Framework for Resolution of Stressed Assetsthe Inter Creditor Agreement (ICA) is being executed by the Lenders of the Company forResolution Plan to provide for repayment to financial creditors without affecting thebusiness of the Company.

Majority of the Consortium Members have approved and signed the same. This resolutionplan would address all categories of financial lenders and would encompass a repaymentschedule for all such lender dues including dues to NCD holders.

Extract of the Annual Return

An extract of the annual return in Form MGT-9 in accordance with section 92(3) of theCompanies Act 2013 ('the Act') and relevant Rules made there under is annexed herewith as"Annexure- 1"

Number of meetings of the Board

Seven meetings of the Board were held during the year. The details of the meetings ofthe Board are provided in the corporate governance report which forms part of thisReport.

Audit Committee

The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this report.

Directors' Responsibility Statement

The financial statements are prepared in accordance with Indian Accounting Standards(Ind AS) as prescribed under Section 133 of the Act read with Rule 3 of the Companies(Indian Accounting Standards) Amendment Rules 2016. Accounting policies have beenconsistently applied except where a newly issued accounting standard is initially adoptedor a revision to an existing accounting standard requires a change in the accountingpolicy.

Your Directors to the best of their knowledge and belief and according to theinformation and explanations obtained by them make the following statements in terms ofsection 134 (3)(c) & 134 (5) of the Companies Act 2013:

(a) In the preparation of the annual accounts for the financial year ended 31st March2020 the applicable accounting standards have been followed along with proper explanationrelating to material departures;

(b) t hat appropriate accounting policies were selected and consistently applied andjudgments and estimates were made that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe loss of the company for that period;

(c) That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) That the annual financial statements have been prepared on a going concern basis;

(e) That proper internal financial controls were followed by the company and suchinternal financial controls are reviewed by the Management and Independent InternalAuditors and any material weakness noticed during such review remedial action is taken bythe management so that internal control system as also its implementation is adequate andeffective; and

(f) That proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems were adequate and operating effectively.

Policy on Directors' Appointment and Remuneration and other details

The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Companies Act 2013 is hosted on the Company's websiteat www.simplexinfra.com. The details relating to Nomination and Remuneration Committee aregiven in the Corporate Governance Report which forms part of this Report.

Particulars of Employees and other additional information

The details of remuneration as required to be disclosed under the Companies Act 2013and the Rules made there under are given in Annexure '2' forming part of this BoardReport. Disclosures as contained in Rule 5 (1) of Companies (Appointment and Remunerationof

Managerial Personnel) Rules 2014 is provided at Table 1(a) of the Annexure-2.

The information in respect of employees of the Company required pursuant to Rule 5(2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 as amended from time to time is provided at Table 1 (b) of the Annexure-2 formingpart of this Report. In terms of Section 136(1) of the Act and the rules made there underthe Report and Accounts are being sent to the shareholders excluding the aforesaid Table 1(b). Any Shareholder interested in obtaining a copy of the same may write to the CompanySecretary. None of the employees listed in the said table is related to any Director ofthe Company.

Any Shareholder interested in obtaining the details of employees posted outside Indiaand in receipt of a remuneration of Rs. 60 Lakhs per financial year or Rs. 5 lakhs permonth or more may write to the Company Secretary of the Company.

Particulars of Loans Guarantees or Investments

The Company is engaged in the business of contract constructing infrastructuralfacilities as specified in Schedule VI of the Companies Act 2013. In accordance with theexemption provided by Section 186 (11) to the companies engaged in the business ofproviding infrastructural facilities the provisions of Section 186 (2 ) to (13) of theAct in respect of providing loan guarantee or security to any other body corporate/person do not apply to the Company.

Related Party Transactions

All the related party transactions were in the ordinary course of business or at arm'slength. The Company periodically review and monitors related party transactions. Astatement of all related party transactions is presented before the Audit Committee on aquarterly basis. There are no materially significant related party transactions made bythe Company with Promoters Directors or Key Managerial Personnel etc. which may havepotential conflict with the interest of the Company at large. Accordingly the disclosureof Related Party Transactions as required under Section 134(3) (h) of the Companies Act2013 in Form AOC 2 is not applicable.

However the details of the related party transactions are set out in Note 30 to thestandalone financial statements forming part of this Annual Report.

The Company has a Policy on materiality of and dealing with Related Party Transactionsas approved by the Board which is available at its website www.simplexinfra.com.

Risk Management

The Board of Directors of the Company has formed a Risk Management Committee to frameimplement and monitor the risk management plan for the Company. The Company also has inplace a Risk Management Policy to identify and assess the key risk areas. The Members ofthe Risk Management Committee monitors and reviews the implementation of various aspectsof the Risk Management Policy. Major risks identified by the Company are systematicallyaddressed through mitigating actions on a continuous basis. At present no particular riskwhose adverse impact may threaten the existence of the Company is visualized.

The details of risk management are covered in the management discussion and analysiswhich forms part of this report.

Corporate Social Responsibility (CSR)

The Company has constituted a Corporate Social Responsibility Committee comprising Mr.Rajiv Mundhra Executive Chairman as the Chairman of the Committee Mr.S. DuttaWhole-time Director and Mr. S.K. Damani Independent Director of the Company and hasframed a corporate social responsibility policy which is available at the website of theCompany at www.simplexinfra.com.

As part of CSR initiatives your Company focuses on promotion of education eradicationof hunger and malnutrition art and culture and livelihood enhancement projects. TheCompany will continue to support the social projects that are consistent with the policy.

Construction industry as a whole is going through a critical time and is facing strongchallenges in terms of liquidity. Since the Company is also a construction industrytherefore it is not an exception and is also facing the same critical situation as felt byothers in the sector. During the year the company contributed Rs.70.75 lakhs towards itsCSR obligations during the financial year as against the budgeted Rs.171.51 lakhs asrequired under the Companies Act 2013. The company is currently passing through a tightliquidity situation and has been able to meet its CSR obligations partially.

The annual report on CSR containing particulars specified in Companies (CorporateSocial Responsibility Policy) Rules 2014 is set out herewith as "Annexure-3".

Performance evaluation of the Board its Committees and Individual Directors

During the year formal annual evaluation of the Board its Committees and individualDirectors were carried out as per the framework laid down by the Board for formal annualevaluation of the performance of the Board Committees and individual Directors. Itincludes circulation of questionnaires to all Directors for evaluation of the Board andits Committees which entails a wide range of parameters facilitating proper evaluation ofthe Board its Committees and individual Directors. The response/ feedback/ commentreceived from each Director is carefully considered by the Board.

A separate meeting of Independent Directors was also held to review the performance ofWhole-time Directors performance of the Board as a whole and performance of the Chairmanof the Company taking into account the views of Executive Directors and Non-ExecutiveDirectors.

Performance evaluation of independent directors was done by the entire Board excludingthe independent director being evaluated.

The Board of Directors expressed their satisfaction with the evaluation process andalso the performance of Directors Independent Directors Chairman and performance of theBoard as a whole was found satisfactory.

Subsidiaries Associates & Joint Ventures

As on 31st March 2020 your Company has seven Subsidiaries namely

(i)Simplex (Middle East) Limited UAE

(ii)Simplex Infrastructures Libya Joint Venture Co. Libya

(iii) Simplex Infra Development Private Limited

(iv) Maa Durga Expressways Private Limited

(v) Jaintia Highway Private Limited

(vi) Simplex (Bangladesh)Private Limited and

(vii) PC Patel Mahalaxmi Simplex Consortium Private Limited three Associates namely

(i) Shree Jagannath Expressways Private Limited

(ii) Raichur Sholapur Transmission Company Private Limited and

(iii) Simplex Infrastructures LLC Oman and two Joint Venture Companies namely

(i) Arabian Construction Co-Simplex Infra Private Limited and

(ii) Simplex Almoayyed W.L.L

Pursuant to provisions of Section 129 (3) of the Act a statement containing thesalient features of the financial statement of the Company's subsidiary/ associate/ jointventure companies is provided in the Form AOC-1 is attached after the consolidatedfinancial statements of the Company.

In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and audited accounts of each of its subsidiaries are available on our websitewww. simplexinfra.com. These documents will also be available for inspectionelectronically up to the date of AGM. Members seeking to inspect such documents can sendan email to secretarial.legal@simplexinfra.com

Formation / Cessation of Company's Subsidiaries / Associate/ Joint Venture

During the year under review no company has become or has ceased to be subsidiaryjoint venture or associate company.

Directors

During the year under review Mr. A. N. Basu who was a Whole-time Director and KMPresigned from the Board of Directors with effect from 15th November 2019 owing to hisindifferent health conditions. The Board places on record its appreciation for thevaluable services rendered by Mr. A. N. Basu during his tenure.

In accordance with the provisions of the Act Mr. S. Dutta Whole-time Directorretires by rotation and being eligible has offered himself for reappointment at theensuing annual general meeting.

Pursuant to the provisions of Section 149 of the Act and Listing Regulations Mr.Asutosh Sen Mr. N.N. Bhattacharyya Mr. Sheo Kishan Damani and Ms. Leena GhoshIndependent Directors of the Company have submitted their declaration that they meet withthe criteria of independence as provided in Section 149 (6) of the Act and are notdisqualified from continuing as Independent Directors of the Company.

All the Directors have submitted the requisite disclosures/ declarations as requiredunder the relevant provisions of the Companies Act 2013.

Appropriate resolution seeking your approval and brief resume / details forre-appointment of Directors is furnished in the notice of the ensuing Annual GeneralMeeting.

Key Managerial Personnel

During the year under review Mr. Rajiv Mundhra (DIN: 00014237) Executive Chairman wasappointed as KMP for the purpose of Section 203 of the Act w.e.f 14.02.2020 in place ofMr. A. N. Basu who resigned w.e.f 15.11.2019.

Mr. S. Dutta Whole-time Director & CFO and Mr. B. L. Bajoria Sr. Vice President& Company Secretary continue to be the Key Managerial Personnel of the Company interms of the provisions of Section 203 of the Act.

Remuneration and other details of the said Key Managerial Personnel for the financialyear ended March 31 2020 are mentioned in the extract of the Annual Return (Annexure -1)which is attached to the Board's Report.

Significant and material orders passed by Regulators/Courts/Tribunals

During the year under review there were no significant or material orders passed bythe Regulators/ Courts/Tribunals impacting the going concern status of the Company and itsoperations in future.

Internal Control Systems and their adequacy

The details in respect of internal control systems and their adequacy are included inthe management discussion & analysis report which forms part of this report.

Vigil Mechanism (Whistle Blower Policy)

The Company has formulated a Whistle Blower Policy to provide a formal mechanism toDirectors and employees to report their concerns about unethical behaviour actual orsuspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policyprovides for adequate safeguards against victimization of employees who avail themechanism and also provides for direct access to the Chairman of the Audit Committee.Appropriate steps are taken for redressing the grievances as per the mechanism approved bythe Board as and when the complaints are received.

The Whistle Blower policy is available on the website of the Company www.simplexinfra.com.

Statutory Auditors

M/s. Chaturvedi & Co. Chartered Accountants (Firm Registration No: 302137E) wereappointed as Joint Statutory Auditors for a term of 5 (five ) consecutive years at theAnnual General Meeting of the Company held on the 30th day of September 2019 to holdoffice till the conclusion of the 106th Annual General Meeting to be held in 2024.

M/s. H. S. Bhattacharjee & Co. Chartered Accountants (Firm RegistrationNo.322303E) were appointed as Joint Statutory Auditors for a term of 2 (two) years at theAnnual General Meeting of the Company held on 30th day of September 2019 to hold officetill the conclusion of the 103rd Annual General Meeting to be held in 2021.

M/s. Chaturvedi & Co. Chartered Accountants and M/s. H.S.Bhattacharjee & Co.Chartered Accountants continue to be the Auditors of the Company.

During the year under review no frauds were reported by the Auditors under section143(12) of the Act.

Boards' Explanation on Auditors' Qualification on Financial Statements

The Board has duly examined the Statutory Auditors' Report to the accounts and theBoard's clarifications regarding the qualified opinions of the Statutory Auditors onFinancial Statements of the Company are given hereunder:

Standalone Financial Statements

I. 'Basis of Qualified Opinion' under Independent Auditors Report on the Audit of theStandalone

Financial Statements

(a) We refer to Clause (a) of Basis of qualified opinion of Independent AuditorsReport where the Auditors have qualified- 'Note 41(a) to the accompanying IND ASStandalone Financial Statements regarding pending certifications of unbilled revenuespertaining to earlier years prior to March 31 2016 aggregating Rs. 2858 Lakhs as per themanagement they are in regular discussion with the concerned customers for completion ofnecessary certification which often takes significant period of time and varies fromproject to project and also believes that above unbilled revenue will be billed andrealized in due course. We are unable to comment whether the aforesaid balances arerecoverable at this stage.

The Management is of the view that recognition of unbilled revenue is based on Cost toComplete (CTC) estimates as per Percentage of Completion Method (POCM) under Ind AS 115'Revenue from Contracts with Customers'. This CTC is regularly reviewed and necessarychanges are effected by the Management. Certification of unbilled revenue by customers andacceptance of final bills by customers often takes significant period of time and variesfrom project to project. At this stage based on discussions with concerned customers themanagement believes that unbilled revenue of Rs. 2858 lakhs (31st March 2019: Rs. 68924lakhs) as on 31st March 2020 will be billed and realised in due course. The aforesaidamounts have been considered as current based on management's expectation of realisationof these amounts in normal operating cycle. The matter has been explained in Note 41(a)forming part of the Standalone Financial Statements.

(b) We refer to Clause (b) of Basis of qualified opinion of Independent AuditorsReport where the Auditors have qualified- 'Note 38 to the accompanying IND AS StandaloneFinancial Statements

1. Regarding certain old balances of trade receivables of Rs. 9933 Lakhs due fromcustomer prior to March 312016 against various projects are outstanding for aconsiderable period of time but management is of view these are good at this stage andrecoverable. We are unable to comment whether the aforesaid balances are recoverable atthis stage.

2. Regarding inventories aggregating Rs. 2079 Lakhs pertaining prior to March 31 2016to certain completed projects are good and readily useable in the view of management. Weare unable to comment whether the aforesaid inventories are good and readily usable atthis stage.

3. Regarding retention monies amounting of Rs. 4502 Lakhs which is receivable onlyafter contract is completed and clearance of final bill by customer and after expiry ofdefect liability period was pending for settlement in certain completed contracts priorto March 31 2016. As stated by the management they regularly review the old outstandingreceivables and in their opinion the retention amount is good and recoverable. We areunable to comment whether the aforesaid balances are recoverable at this stage.'

The Management is of the view that the trade receivables aggregatingRs.9933 Lakhs(31st March 2019: Rs.15583 lakhs) as on 31st March 2020 from customers in respect ofvarious project sites are outstanding for a long period of time. At this stage based ondiscussions and correspondences with customers the management believes the above balancesare good and recoverable. Inventories aggregating Rs.2079 Lakhs (31st March 2019: Rs.2854 Lakhs) as on 31st March 2020 pertaining to certain completed project sites arereadily usable. Retention monies due from customers are receivable only after clearance offinal bill by customers and after expiry of defect liability period after execution ofcontracts. In the opinion of the management such retention amounts aggregating Rs.4502lakhs (31st March 2019: Rs.5354 lakhs) of certain completed contracts as on 31st March2020 are good and recoverable. The aforesaid amounts have been considered as current basedon management's expectation of realisation of these amounts in normal operating cycle. Thematter has been explained in Note 38 forming part of the Standalone Financial Statements.

(c) We refer to Clause (c) of Basis of qualified opinion of Independent AuditorsReport where the Auditors have qualified-'Note 39 to the accompanying IND AS StandaloneFinancial Statements regarding loans and advances made prior to March 31 2016 amountingto Rs. 13860 Lakhs on which as informed to us the company is in active pursuit andconfident of recovery/ settlement of these advances. We are unable to comment whether theaforesaid balances are recoverable at this stage. The Management is of the view that Loansand Advances amounting to Rs.13860 Lakhs (31st March 2019:Rs.18148 Lakhs) for which theCompany is in active pursuit and confident of recovery / settlement of such advanceswithin a reasonable period of time. The matter has been explained in Note 39 forming partof the Standalone Financial Statements.

(d) We refer to Clause (d) of Basis of qualified opinion of Independent AuditorsReport where the Auditors have qualified- 'Note 36 to the accompanying IND AS StandaloneFinancial Statements regarding company default in payment of principal and interest of Rs.75769 Lakhs due on revolving facilities like cash credit WCDL term loan etc. obtainedfrom Banks and also defaulted in repayment of interest and principal aggregating Rs.15073 Lakhs due and payable to Debenture holders on the non - convertible debenture.'

The Management is of the view that the Company has incurred net loss of Rs.31747 lakhsduring the year ended 31st March 2020 as also there was default in payment of financialdebts to its bankers and others amounting to Rs.90842 Lakhs. The Company is in theprocess of formulating a resolution plan with its lenders having underlying strength ofthe Company's healthy order book position and future growth outlook. The Company isconfident of improving the credit profile including time bound realization of its assetsarbitration claims etc. which would result in meeting its obligation in due course oftime. Accordingly the Management considers it appropriate to prepare these financialstatements on going concern basis. The matter has been explained in Note 36 forming partof the Standalone Financial Statements.

(e) We refer to Clause (e) of Basis of qualified opinion of Independent AuditorsReport where the Auditors have qualified- 'Note 41(b) to the accompanying IND ASStandalone Financial Statements regarding current assets which includes certain balancesof trade receivables retention monies unbilled revenue statutory advances pendingassessment by relevant authorities amounting to Rs. 13242 Lakhs 4502 Lakhs 22482Lakhs 23183 Lakhs respectively which in our opinion should have been classified asnon-current assets. We are further unable to comment on any consequential adjustment thatmay be required in this financial statement in this regard.

The Management is of the view that in respect of classification of certain currentassets into non-current assets the Company provides expected credit loss (ECL) on thesecurrent assets. The company considers an average normal operating cycle for its operationsthough the operating cycle for all the projects are not uniform the company hasclassified certain trade receivables retention monies unbilled revenue statutoryadvances pending assessment by relevant authorities amounting to Rs.13242 Lakhs (31stMarch 2019: Rs.11963 Lakhs) Rs.4502 lakhs (31st March 2019: Rs.3373 lakhs)Rs.22482 Lakhs (31st March 2019: Rs.29405 Lakhs) and Rs.23183 Lakhs (31st March 2019:Rs.24162 Lakhs) as current assets. The matter has been explained in Note 41(b) formingpart of the Standalone Financial Statements.

The Board is of the opinion that the matter being explained in detail above and also atNote no.36 38 39 and 41(a) and (b) of the Standalone Financial Statements areself-explanatory and do not call for further explanation.

II. 'Matter of Emphasis" under Independent Auditors Report on the Audit of theStandalone Financial Statements

a) We refer to Clause 1 (a) of Emphasis of Matter of Independent Auditors Report wherethe Auditors have emphasized 'Note 41(a) to the accompanying IND AS Standalone FinancialStatements regarding pending certification of unbilled revenues pertaining to earlieryears aggregating Rs. 19624 Lakhs. As per the management they are in regular discussionwith the concerned customers for completion of necessary certification which often takessignificant period of time and varies from project to project and also believes that aboveunbilled revenue will be billed and realized in due course.'

The Management is of the view that recognition of unbilled revenue is based on Cost toComplete (CTC) estimates as per Percentage of Completion Method (POCM) under Ind AS 115'Revenue from Contracts with Customers'. This CTC is regularly reviewed and necessarychanges are effected by the Management. Certification of unbilled revenue by customers andacceptance of final bills by customers often takes significant period of time and variesfrom project to project. At this stage based on discussions with concerned customers themanagement believes that unbilled revenue of Rs.19624 lakhs as on 31st March 2020 willbe billed and realised in due course. The aforesaid amounts have been considered ascurrent based on management's expectation of realisation of these amounts in normaloperating cycle. The matter has been explained in note 41(a) forming part of theStandalone Financial Statements.

b) We refer to Clause 1 (b) of Emphasis of Matter of Independent Auditors Report wherethe Auditors have emphasized 'Note 38 to the accompanying IND AS Standalone FinancialStatements regarding certain old balances of trade receivables of Rs.3309 Lakhs due fromcustomers against various projects are outstanding for a considerable period of time butmanagement is of view that these are good at this stage and recoverable.'

The Management is of the view that the trade receivables aggregating Rs.3309 Lakhs ason 31st March 2020 from customers in respect of various project sites are outstanding fora long period of time. At this stage based on discussions and correspondences withcustomers the management believes the above balances are good and recoverable. The matterhas been explained in Note 38 forming part of the Standalone Financial Statements.

c) We refer to Clause 1(c) of Emphasis of Matter of Independent Auditors Report wherethe Auditors have emphasized 'Note 41(c) of the standalone financial statements whichdescribe the uncertainties and the management's assessment of possible impact of COVID-19pandemic on its business operations financial assets contractual obligations and itsoverall liquidity position as at March 31 2020. Management will continue to monitor infuture any material changes arising on financial and operational performance of thecompany due to the impact of this pandemic and necessary measure to address thesituation.'

The Management is of the view that due to lockdown as declared by Central and StateGovernment on March 23 2020 on account of Covid-19 the Company temporarily suspendedoperations in all its working sites /offices which has an adverse impact on the normalbusiness operations of the Company. The operations at our working sites and offices havegradually resumed from May 2020 with a limited labour force. Based on internal assessmentof the Company's performance and on assessment of overall economic environment Managementis of the view that impact of Covid-19 will affect the Company's operations in the currentyear which has not yet been assessed completely at this stage. The matter has beenexplained in Note 41(c) forming part of the Standalone Financial Statements.

d) We refer to Clause 1(d) of Emphasis of Matter of Independent Auditors Report wherethe Auditors have emphasized 'as per Note 36 to the accompanying IND AS StandaloneFinancial Statements the Company has incurred net loss of Rs.31747 Lakhs during the yearended March 31 2020 as also there is delay in payment of financial debts to its bankersand others amounting to Rs. 90842 Lakhs. The Company is in the process of formulating aresolution plan with its lenders underlying strength of the Company's business planhaving a healthy order book position and future growth outlook. The Company is confidentof improving the credit profile including time bound realization of its assetsarbitration claims etc. which would result in meeting its obligation in due course oftime. Accordingly the Management considers it appropriate to prepare these financialstatements on going concern basis.'

The Management is of the view that the Company has incurred net loss of Rs.31747 lakhsduring the year ended 31st March 2020 as also there was default in payment of financialdebts to its bankers and others amounting to Rs.90842 Lakhs. The Company is in theprocess of formulating a resolution plan with its lenders having underlying strength ofthe Company's healthy order book position and future growth outlook. The Company isconfident of improving the credit profile including time bound realization of its assetsarbitration claims etc. which would result in meeting its obligation in due course oftime. Accordingly the Management considers it appropriate to prepare these financialstatements on going concern basis. The matter has been explained in Note 36 forming partof the Standalone Financial Statements.

The Board is of the opinion that the matter being explained in detail above and also atNote no.36 38 41 (a) and 41(c) of the Standalone Financial Statements areself-explanatory and do not call for further explanation.

III. Report on the Internal Financial Controls Over Financial Reporting under Clause(i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")(Annexure 'B' to the Independent Auditors Report)

We refer to Clause (1) of Report on the Internal Financial Controls over FinancialReporting of Independent Auditors Report where the Auditors have qualified

1. 'According to information and explanation given to us and based on the report issuedby other auditors on internal financial controls over financial reporting the followingmaterial weakness have been identified as at March 312020

a. The Company's internal financial controls for evaluation of recoverability ofcertain old balances of unbilled revenue loans/ advances trade receivables retentionmonies inventories at project sites and claims recoverable were not operating effectivelyas on March 31 2020 which could potentially result in the company not recognizingappropriate provision on the Standalone financial statement in respect of assets that aredoubtful of recovery/ credit impaired.

b. The Company's internal financial controls for assessing the period over whichcertain old balances of unbilled revenue loans / advances trade receivables retentionmonies and claim recoverable are expected to be recovered were not operating effectivelyas on March 31 2020 which could potentially result in the company not appropriatelymeasuring the fair values of those financial assets.

c. The Company's internal financial controls for classification of unbilled revenuesloan/advances trade receivables retention monies inventories at project sites claimsrecoverable statutory advances pending assessment by relevant authorities and otherbalances as current were not operating effectively as on March 31 2020 which couldpotentially result in the company not appropriately classifying the above asset asnon-current.'

All the qualifications mentioned above have been explained in detail under 'Basis ofQualified Opinion' under Independent Auditors Report on the Audit of the StandaloneFinancial Statements' in the earlier paragraphs.

The Board is of the opinion that the matter being explained in detail above and also atNote no. 383941(a) and 41(b) of the standalone financial statements are self-explanatoryand do not call for further explanation.

Consolidated Financial Statements

All the qualifications on Consolidated Financial Results appearing under clause (a)(b) (c) (d) and (e) under 'basis for qualified opinion' and also appearing under clause(a) (b) (c) and (d) of ' matter of emphasis' and also qualification appearing underclause (a) (b) and (c) under 'basis for qualified opinion' on Internal Financial ControlsOver Financial Reporting are similar to that of Standalone Financial statements and havebeen explained in detail in the earlier paragraphs details of which is appearing under'Standalone Financial Statements'

The Board is of the opinion that the matter being explained in detail above asappearing under 'Standalone Financial Statements ' and also at Note no. 35 3738 40 (a)40 (b) and 40(c) of the consolidated financial statements is self explanatory and do notcall for further explanation.

Secretarial Auditor and Secretarial Audit Report

Secretarial Audit for the FY 2019-20 was conducted by Mr. Atul Kumar Labh PractisingCompany Secretary (Membership No.FCS-4848 and C.P.No 3238) in accordance with theprovisions of Section 204 of the Act. The Secretarial Auditors' Report is annexed herewithas "Annexure -4".

The Board is of the opinion that the matter is selfexplanatory and do not call forfurther explanation.

Pursuant to the SEBI circular no. CIR/CFD/ CMD1/27/2019 dated 8th February 2019 theCompany has obtained an annual secretarial compliance report from Mr. Atul Kumar LabhPractising Company Secretary ( Membership No.FCS-4848 and C.P.No 3238).

Cost Audit

Pursuant to Section 148 of the Companies Act 2013 read with Companies (Cost Record& Audit) Amendment Rules 2014 as amended from time to time your Company hasappointed M/s Bandyopadhyaya Bhaumik & Co. Cost Accountants to conduct the audit ofcost records of the Company for the financial year 2019-20.

As required under the Act a resolution seeking members approval for ratification ofremuneration of the Cost Auditors forms part of the notice convening the Annual Generalmeeting.

Consolidated Financial Statement

Your Company has prepared Consolidated Financial Statements in accordance with Section129 (3) of the Act and applicable accounting principles generally accepted in Indiaincluding the Indian Accounting Standards specified in the Companies (Indian AccountingStandards) Rules 2015 (as amended) under Section 133 of the Act. The ConsolidatedStatements reflect the results of the Company and that of its Subsidiaries Joint Venturesand Associates. As required by Regulations 33 of the Listing Regulations with the StockExchanges the Audited Consolidated Financial Statements together with the Auditors Reportthereon are annexed and form part of this Annual Report.

The Consolidated Financial Statement comprises of the financial statements of theCompany and those of its subsidiaries Joint Ventures and its Associate Companies.Further pursuant to the provisions of Section 136 of the Act the financial statements ofthe Company including the consolidated financial statements and separate audited accountsin respect of its subsidiaries are available on the website of the Company www.simplexinfra.com.Thefinancial statements of the Subsidiary Companies are kept open for inspection by theShareholders at the Registered Office of the Company and a statement containing thesalient features of the Company's financial statement of the Company's subsidiary/associate/ joint ventures is attached as aforesaid.

Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 134(3)(m) of the Actread with Companies (Accounts) Rules 2014 are provided in the Annexure - 5 to thisReport.

Management Discussion and Analysis

Management Discussion and Analysis for the year under review as stipulated underRegulation 34 of the Listing Regulations with the Stock Exchange(s) in India is presentedin a separate section forming part of the Annual Report.

Corporate Governance Report

A separate report on 'Corporate Governance' including a certificate from M/s. H. S.Bhattacharjee & Co. Chartered Accountants Statutory Auditors of the Companyconfirming compliance of the Regulation 34 of the Listing Regulations is annexed heretoand forms a part of the report.

Capital Expenditure

During the year under review the Company has made additions of Rs.363.9 mns to itsFixed Assets consisting tangible assets of Rs 362.1 mns and intangible assets of Rs.1.8mns

Prevention of Sexual Harassment of Women

The Company has formulated 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 the Rules framed there under.

An Internal Complaints Committee (ICC) with requisite number of representatives hasbeen set up to redress complaints relating to sexual harassment if any received fromwomen employees.

During the financial year ended March 31 2020 the Committee has not received anycomplaints pertaining to sexual harassment.

Acknowledgment

Your Directors would like to express their sincere appreciation for the co-operationand support received from the Financial Institutions Banks Customers Vendors Centraland State Government Authorities Regulatory Authorities Stock Exchanges and theCompany's all valued stakeholders. Your Directors also take this opportunity to place onrecord their gratitude for the efforts and continuous hard work of all the employees.

By Order of the Board

For Simplex Infrastructures Limited

Rajiv Mundhra

Executive Chairman

DIN:00014237

Place: Kolkata

Date: 31st July 2020

.