The Members of
SUPREME INFRASTRUCTURE INDIA LIMITED
Your Directors have pleasure in presenting their 36th Annual Report and the AuditedStatement of Accounts for the year ended 31st March 2019.
|1. HIGHLIGHTS/ PERFORMANCE OF THE COMPANY || ||Rs. in Crores |
| ||As at 31 March 2019 ||As at 31 March 2018 |
|Sr' Particulars No. || || |
|1 Income from operation ||555.63 ||904.04 |
|Other income ||24.09 ||76.25 |
|Total Income ||579.72 ||980.29 |
|2 Profit before Interest Depreciation & Tax ||49.92 ||188.93 |
|Less: Interest/ Finance Charges ||438.15 ||361.35 |
|Depreciation ||21.03 ||21.90 |
|3 Profit / (Loss) before Exceptional Item and Tax ||(409.26) ||(194.32) |
|Exceptional Item ||696.48 ||259.49 |
|Less: Provision for Tax/ (Credit) || || |
|Current Tax ||2.79 ||46.31 |
|Deferred Tax ||0 ||0 |
|Tax adjustment for earlier years ||0 ||0 |
|4 Profit / (Loss) After Tax ||(1108.54) ||(500.12) |
OPERATION AND PERFORMANCE REVIEW
During the year under review the Company's income from operations and margins wereunder stress as compared to the previous year. Total Income during the year was Rs. 579.72Crores as compared to Rs. 980.29 Crores. in the previous year. The Net loss after Tax wasRs. 1108.54 Crores as compared to 500.12 Crores loss in the previous year.
No Material changes and commitments have occurred after the close of the financial yeartill the date of this report which may materially affect the financial position of theCompany.
In view of the losses incurred and stressed financial resources your Directors do notrecommend any dividend on Equity Shares and Preference Shares for the year under review.Consequently no amount is transferred to reserves for the year ended 31st March 2019.
3. TRANSFER OF UNPAID / UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROECTION FUND(IEPF)
During the year under review the Company has credited Rs. 33795 to the InvestorEducation and Protection Fund (IEPF) pursuant to Section 125 of the Companies Act 2013read with the Investor Education and Protection Fund (awareness and protection ofinvestors) Amendment Rules 2014.
During the year under review the Company's Financials were under severe stress onaccount of several factors like delay in execution of projects delay in execution of BOTProjects cost over runs on delayed projects high interest cost vis-a-vis volume of theCompany's operation stressed working capital finance and similar factors peculiar to theinfrastructure sector.
During the under review the proposed S4A Scheme in respect of restructuring of debtsof the Company had to be abandoned in view of the RBI Circular dated 12th February 2018regarding "Resolution of Stressed Assets- Revised Framework". Hence it wasdecided to work in terms of the above referred new RBI circular. A revised Resolution Planwas prepared which was sanctioned and signed by the majority of the lenders on 29th March2019. However in the matter of Dharani Sugars and Chemicals Ltd. Vs. Union of India &Others it was held by the Hon. Supreme Court that the RBI circular dated February 122018 on Resolution of Stressed Assets as 'ultra vires and has no effect in law! Hence allactions taken under the RBI circular dated February 12 2018 on Resolution of StressedAssets were made redundant. Consequently the proposed Resolution Plan made in terms ofRBI circular dated February 12 2018 fell off.
After the Supreme Court Judgement referred above the Reserve Bank of India issued afresh circular dated 7th June 2019 on 'Prudential Framework for Resolution of StressedAssets. The Company is in the process of working on the resolution plan in accordance withthe new RBI circular dated 7th June 2019.
5. CREDIT RATING
Your Company had been assigned "IND D" by India Ratings & Research Pvt.Ltd. for the long term facilities cash credit facilities and non fund based limits of theCompany.
6. CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Companies Act 2013 and implementation requirements of IndianAccounting Standards ('IND-AS') Rules on Accounting and disclosure requirements which isapplicable from current year and as prescribed by Regulation 33 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (hereinafter referred to as"SEBI Listing Regulations") the audited Consolidated Financial Statements areprovided in this Annual Report.
Pursuant to Section 129(3) of the Companies Act 2013 a statement containing thesalient features of the financial statements of each of the subsidiary and joint venturein the prescribed form AOC-1 is annexed to this annual report.
Pursuant to Section 136 of the Companies Act 2013 the financial statements of thesubsidiaries are kept for inspection by the shareholders at the Registered Office of theCompany. The said financial statements of the subsidiaries are also available on thewebsite of the Company www.supremeinfra . com under the Investors Section.
7. DETAILS OF SUBSIDIARY COMPANIES JOINT VENTURES AND ASSOCIATES COMPANIES
As on 31st March 2019 the Company had Fifteen Subsidiaries (Direct & Indirect) ofwhich Fourteen are incorporated and based in India & one Overseas. The Company alsohad one Associate Companies as on 31st March 2019. Some Joint Venture Projects havebecome non operative on account of the completion of the projects.
The Company has adopted a policy for determining material subsidiaries in terms of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015. The said policy is available on the Company's website. A statementcontaining the salient features of the financial statements of the subsidiary companies isattached to the financial statements in Form AOC-1.
The Company's two Subsidiary Companies viz. Supreme Infrastructure BOT Private Limitedand Supreme Infrastructure BOT Holdings Private Limited undertake various BOT projectsalong with its holding Company. The BOT projects are housed in the Special Purpose VehicleCompany ('SPV Company') incorporated for the purpose.
1. SUPREME INFRASTRUCTURE BOT PRIVATE LIMITED ( SIBPL)
As per the Audited financials for year ended 31st March 2019 SIBPL registered a totalincome of Rs. 179.37 Lakhs as against Rs. 49.19 Lakhs in the previous year. SIBPL has thefollowing operative subsidiary companies:
i. SUPREME MANOR WADA BHIWANDI INFRASTRUCTURE PRIVATE LIMITED ( SMBIPL)
Incorporated as SPV Company for execution of the Project of 'widening of Manor- Wada(24.25 Kms) and Wada Bhiwandi Road (40.07 Kms) on SH-34 and SH-35 respectively in theState of Maharashtra and to convert it into a 4 lane highway on BOT basis. The totallength of the project aggregates to 64.32 Kms. The Concession period of the project is 28years and 6 months from the date of work order. EPC work is executed by the SupremeInfrastructure India Ltd. The Company commenced tolling operations for this project on 4thMarch 2013. The Company is also in the process of executing additional bypass road fromSH-35 at Vishwabharati Phata-Bhinar- Vadpa Junction (KM 0/000 to 7/900 (Total Length -7.90km) Dist. Thane Maharashtra on BOT (Toll) basis. Once completed the bypass road wouldattract more road traffic for the main road project. Income from toll collection for theyear ended 31st March 2019 was Rs. 3980.06 Lakhs as compared to Rs. 4315.40 Lakhs in theprevious year.
The lenders had invoked Strategic Debt Restructuring (SDR) with reference date of 24November 2016. The joint lender's forum (JLF) of SMBIPL agreed to proceed with theimplementation of SDR scheme by invoking pledged equity shares of the promoters in theirfavour. Pursuant to the invocation of SDR the lenders have invoked 5100 equity shares ofRs. 10 each held by its Promotors at par aggregating Rs. 0.51 lakhs on 16 May 2017representing 51% of the equity share capital of the Company by conversion of outstandingborrowings of an equivalent amount.
ii. PATIALA NABHA INFRA PROJECTS PRIVATE LIMITED
Incorporated as SPV Company for execution of 'Patiala Nabha Malerkotla (PNM) RoadProject. This partially completed project was awarded by Punjab Industrial DevelopmentBoard (PIDB) taken over from the earlier owner. The Company commenced tolling operationson 24th June 2012. The concession period is 13 years. The total length of the road isapproximately 56 kms. Income from toll collection for the year ended 31st March 2019 wasRs. 1022.41 Lakhs as compared to Rs. 1015.20 Lakhs in the previous year.
iii. SUPREME SUYOG FUNICULAR ROPEWAYS PRIVATE LIMITED
Incorporated as SPV Company for execution of the Project for construction of funicularrailway system at Haji Malang Gad Ambarnath in Thane District Maharashtra on BuiltOperate and Transfer (BOT) basis. SIBPL is the majority stakeholder in the SPV Company.The project envisages a funicular trolley system for transporting devotees and luggagefrom the foot of the hill to Haji Malang Durgah and return. The total cost of the projectis Rs. 997.30 Million. The concession period is 24 years and 5 months includingconstruction period.
iv. SUPREME VASAI BHIWANDI TOLLWAYS PRIVATE LIMITED (SVBTPL)
SVBTPL was incorporated as SPV Company for execution of 4 laning ofChinchoti-Kaman-Anjurphata to Mankoli road (Major SH No. 4) section from km 00.00 to km26.425 of the existing road in the state of Maharashtra on Build- Op e ra te -Tra n s fet(BOT) basis. This partially completed project with existing tolling operations was awardedby PWD Maharashtra taken over from the earlier owner. The total length of the stretch is26.425 kms. SIBPL is the majority stakeholder in the SPV Company. The total concessionperiod is 24.3 years. Income from toll collection for the year ended 31st March 2019 wasRs. 2258.90 Lakhs as compared to Rs. 2718.48 Lakhs in the previous year.
v. KOPARGAON AHMEDNAGAR TOLLWAYS (PHASE I) PRIVATE LIMITED
Public Works Department had awarded the work of construction of four (4) lane of BOTproject viz. "Four Lanning of Kopargaon Ahemdnagar Road SH 10 km 78/200 to120/000(42.60 Kms) and construction of Two Lane Shirdi- Rahata Bypass (23.30 Kms) (ProjectI). The project has been executed and the tolling collection started during the currentyear. Income from toll collection for the year ended 31st March 2019 was Rs. 2663.36Lakhs as compared to Rs. 1431.34 Lakhs in the previous year.
vi. KOTKAPURA MUKTSAR TOLLWAYS PRIVATE LIMITED(KMTPL)
KMTPL incorporated for execution of "Two laning From km 0+000 to km 29+996(approximately 30.000 km) on the Kotkapura Muktsar Road of State Highway No.16(hereinafter called the "SH -16") in the State of Punjab" on design buildfinance operate and transfer ("DBFOT") basis. SIBPL is the majority stakeholderin the SPV Company. The concession period is 18 years including construction period. Thestarting point of the project corridor is Kotkapura. The project has been executed and thetolling collection started during the current year. Income from toll collection for theyear ended 31st March 2019 was Rs. 1049.12 Lakhs as compared to Rs. 628.28 Lakhs in theprevious year
2. SUPREME INFRASTRUCTURE BOT HOLDINGS PRIVATE LIMITED (SIBHPL)
SIBHPL was incorporated during the year 2011-12 and is the subsidiary of SupremeInfrastructure India Ltd. 3i India Infrastructure Fund an investment fund established byinternational investor 3i Group plc has through its affiliates viz. Strategic RoadInvestments Limited invested Rs. 2000 Million in SIBHPL. As per the Audited financials ofthe Company for year ended 31st March 2019 SIBHPL registered a total income of Rs. 15.31Lakhs as against 10.20 Lakhs in the previous year. SIBHPL has road BOT portfolio housed inthe following subsidiaries companies:
i. Supreme Kopargaon Ahmednagar Tollways Private Limited
This partially completed project was awarded by Maharashtra PWD taken over from theearlier owner. The Company commenced tolling operations for this project on September 262011. The concession period of the project is up to May 2019. EPC work is executed bySupreme Infrastructure India Ltd. This was the first road BOT project of the Company wheretoll operations were commenced. Income from toll collection for the year ended 31st March2019 was Rs. 2217.91 Lakhs as compared to Rs. 4059.76 Lakhs in the previous year.
ii. Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Pvt. Ltd.
Incorporated as SPV Company for execution of the project of 'construction operationmaintenance and augmentation of widening of 2-lane undivided carriage way to 4 lanesbetween Shiroli and Baswankhind Ankali to Miraj Phata on SH - 3 Miraj Phata to Sangli onSH -75 and strengthening of existing 2 lanes between Baswankhind and Ankali one way viaJainapur and the other way via Jaisingpur (SH -3) on Design Build Finance Operate andTransfer (DBFOT) toll basis' in the State of Maharashtra. The estimated cost of project isRs. 3840 Million. Total envisaged length for 4 laning is 25.66 Kms. & 2 laning is26.95 Kms. The concession period of the project is 22 years and 9 months includingconstruction period.
iii. Supreme Ahmednagar Karmala Tembhurni Tollways Pvt. Ltd. (SAKTTPL)
Incorporated as SPV Company for execution of the project of "Construction of FourLaning of 61.71 kms. of roads at Ahmednagar-Karmala-Tembhurni ch.80/600 to ch.140/080 inthe State of Maharashtra on Build Operate and Transfer ( BOT ) basis. The cost of theproject is Rs. 6382 Million. The concession period of the project is 22 years and 9 monthsincluding construction period.
The lenders of SAKTTPL had invoked SDR with reference date of 24 October 2016. The JLFof SAKTTPL in its meeting held on 11 May 2017 agreed to proceed with the implementation ofSDR scheme. Pursuant to the invocation of SDR scheme the lenders have been allotted291429 equity shares of Rs. 10 each at par aggregating Rs. 29.14 lakhs on 22 May 2017representing 51% of the equity share capital of SAKTTPL by conversion of outstandingborrowings of an equivalent amount.
3. SUPREME PANVEL INDAPUR TOLLWAYS PRIVATE LIMITED (SPITPL)
Incorporated as SPV Company for execution of the Project of 'Panvel - Indapur sectionof NH-17 from Km.0.00 to Km.84.00' in the State of Maharashtra by widening the existing2-lane dual carriageway to a 4-lane dual carriageway on BOT basis at an estimated cost ofproject of Rs. 12060 Million. Supreme Infrastructure India Limited (SIIL) holds 26% andits subsidiary SIBPL holds 38% Equity. SPITPL has achieved the desired milestone of NHAIbeing completion of fifty percent of the EPC work as per the independent engineer of NHAI.The balance EPC work is being loan financed by NHAI. The total concession period is 24years including additional extension in the concession period of three years. The projectis under implementation.
4. SUPREME MEGA STRUCTURES PRIVATE LIMITED (SMSPL)
Supreme Infrastructure India Limited holds 60% Equity in SMSPL. SMSPL is carrying outthe business of Rentals of staging scaffolding shuttering steel pipes and structuralfabrication steel fabrication work & job work. Substantial part of the Company'sshuttering and fabrication job is undertaken by Supreme Mega Structures Private Limited.Income from operation for the year ended 31st March 2019 was Rs. 303.59 Lakhs as comparedto Rs. 546.76 Lakhs in the previous year.
5. SUPREME INFRASTRUCTURE OVERSEAS LLC
With a view to tap the potential of overseas opportunities Supreme InfrastructureIndia Limited incorporated a subsidiary Company viz. Supreme Infrastructure Overseas LLCin Sultanate of Oman by investing Rs. 21.2 Million for a 60% Equity stake in the saidCompany. The rest 40% Equity is held by Ajit Khimji Group LLC & AL Barami InvestmentLLC.
ASSOCIATE COMPANIES ASSOCIATES
SANJOSE SUPREME TOLLWAYS DEVELOPMENT PRIVATE LIMITED (SSTDPL)
Sanjose Supreme Tollways Development Private Limited (SSTDPL) a joint venture companyhas been incorporated for undertaking the project of six laning of Jaipur Ring Road fromAjmer Road to Agra Road Section in Jaipur (Rajasthan) on DBFOT (Toll) Basis (Project)awarded by Jaipur Development Authority (JDA) Jaipur. During the year under review theproject being undertaken by SSTDPL was foreclosed under amicable settlement between SSTDPLand JDA as the project was taken over by NHAI pursuant to declaration of the said projectas National Highway in place of State Highway. In furtherance to the same the projectunder an amicable settlement was foreclosed.
During the year under review your Company has not accepted any deposit from the publicor its employees during the year under review. As such no amount of Principal or Interestis outstanding as on the Balance Sheet date.
9. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
Detailed information on CSR Policy developed and implemented by the Company and CSRinitiatives taken during the year pursuant to Sections 134 & 135 of the Companies Act2013 is given in the 'Annexure-I' as CSR Report.
10. ENVIRONMENT & SAFETY
The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all applicable compliances of environmental regulations and preservationof natural resources.
Your Directors further state that during the year under review no complaints werereported to the Board as required by the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013
11. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tasted and no reportablematerial weaknesses in the operations were observed.
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL DIRECTORS
During the year under review Mr. Vikas Sharma Director resigned from the Board citinghis preoccupation in his other business and various social causes. The Board wishes toplace on record its deep sense of appreciation for the valuable contributions made by himto the Board and the Company during his tenure as Director.
In accordance with the provisions of the Companies Act 2013 and in terms of theArticles of Association of the Company Mr. Vikram Sharma (DIN 01249904) and Mr.Dakshendra Agrawal (DIN 01010363) retires by rotation at the forthcoming Annual GeneralMeeting and being eligible offers themselves for reappointment.
It is proposed the continuation of reappointment of Mr. V. P. Singh as non - retiringindependent for a second term up to March 31 2024 subject to approval by shareholders. Itis also proposed the continuation of reappointment of Mr. Vinod Agarwala as non - retiringindependent for a second term up to March 312024 subject to approval by shareholders.
The Company has received declarations from the Independent Directors confirming thatthey meet the criteria of independence as prescribed both under Section 149 (6) of theCompanies Act 2013 and Regulation 16(b) of
the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and thatthere is no change in their status of Independence.
KEY MANAGERIAL PERSONNEL
The Company has designated Mr. Bhawanishankar Sharma Executive Chairman Mr. VikramSharma Managing Director Mr. Sandeep Khandelwal as Chief Financial Officer and Mr. VijayJoshi Company Secretary as Key 'Managerial Personnel' of the Company in terms Section 203of the Companies Act 2013 read with Section 2(51) of the said Act.
Familiarisation Program for the Independent Directors
In compliance with the requirement of Listing Regulations the Company has put in placea Familiarisation Program for the independent directors to familiarize them with theirrole rights and responsibility as directors the working of the Company nature of theindustry in which the Company operates business model etc. The details of theFamiliarisation Program are explained in the Corporate Governance Report. The said detailsare also available on the website of the Company www.supremeinfra.com .
A. BOARD EVALUATION
Pursuant to the provisions of Section 134(3)(p) 149(8) and Schedule IV of theCompanies Act 2013 and Regulation of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 annual performance evaluation of the Directors as well asthat of the Audit Committee Nomination and Remuneration Committee and Stakeholders'Relationship Committee has been carried out. The performance evaluation of the IndependentDirectors was carried out by the entire Board and the performance evaluation of theChairman and Non-Independent Directors was carried out by the Independent Directors.
B. REMUNERATION POLICY
The Company has adopted a remuneration policy for the Directors Key ManagerialPersonnel and other employees pursuant to the provisions of the Act and Regulation of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The remunerationpolicy is annexed as Annexure II to this Report.
A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year five Board Meetings and four Audit Committee Meetings were convened and held thedetails of which are given in the Corporate Governance Report. The intervening gap betweenthe meetings was within the period prescribed under the Companies Act 2013.
13. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013 that the Board of Directors have:
a. in the preparations of the annual accounts for the year ended March 31 2019 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any;
b. selected such accounting policies as mentioned in the annual accounts and appliedthem consistently and judgement and estimates have been made that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as at31st March 2019 and of the loss of the Company for the year ended on that date;
c. taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Companies Act 2013 for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities;
d. prepared the annual accounts on a going concern basis;
e. laid down internal financial controls to be followed by the Company and that suchfinancial controls are adequate and were operating effectively; and devised proper systemsto ensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating effectively.
f. devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.
14. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT2013
Details of loans guarantees and investments covered under the provisions of Sections186 of the Companies Act 2013 are given in notes to the financial statements.
15. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. During the year theCompany has not entered into any contract/ arrangement/ transaction with related partieswhich could be considered material in accordance with the policy of the Company onmaterially of related party transactions. Thus the disclosure in 'Form AOC- 2' is notapplicable.
All Related Party Transactions are placed before the Audit Committee as also the Boardof Directors for approval. Prior omnibus approval of Audit Committee and the Board ofDirectors is obtained on an annual basis for the transactions which are foreseen and ofrepetitive nature. The transactions entered into pursuant to the omnibus approval sogranted are audited and a statement giving details of all related party transactions isplaced before the Audit Committee and the Board of Directors for their approval on aquarterly basis.
The Company has a Related Party Transactions Policy duly approved by the Board and thesame is uploaded on the Company's website. The details of Related Party Transactions aregiven in the notes to the financial statements.
A. STATUTORY AUDITORS AND THEIR REPORT
M/s Walker Chandiok & Co LLP Chartered Accountants would be completing theirmaximum term of office at the ensuing Annual General Meeting. Hence they will not bereappointed as auditors. M/s Ramanand & Associates Chartered Accountants the JointStatutory Auditors holds office upto the date of ensuing Annual General Meeting (AGM) .It is proposed to re-appoint M/s. Ramanand & Associates Chartered Accountants (FirmRegistration No. 117776W) as statutory auditors of the Company. The Company has receivedletter from M/s Ramanand & Associates Chartered Accountants to the effect that theirappointment if made would be within the prescribed limit under Section 141 of theCompanies Act 2013. It is proposed to re-appoint M/s Ramanand & Associates CharteredAccountants as statutory Auditor to hold the office from the conclusion of the ensuingAGM upto the conclusion of the AGM of the Company to be held in the year 2020. Members arerequested to appoint the Statutory Auditors.
B. EXPLANATION TO THE QUALIFICATION IN AUDITORS' REPORT
The Directors submit their explanation to the qualifications made by the Auditors intheir report for the year 2018-2019. The relevant Para nos. of the report and reply are asunder:
Auditor's Qualification and Management's Reply on standalone financial results :
(a) As stated in Note 2 to the accompanying standalone financial results the Company'scurrent financial assets as at 31 March 2019 include trade receivables aggregating Rs.45680.90 lakhs (31 March 2018: Rs. 55396.37 lakhs) in respect of projects which wereclosed/substantially closed and where the receivables have been outstanding for asubstantial period. Management has assessed that no adjustments are required to thecarrying value of the aforesaid balances which is not in accordance with the requirementsof Ind AS 109 'Financial Instruments'. Consequently in the absence of sufficientappropriate evidence to support the management's contention of recoverability of thesebalances we are unable to comment upon the adjustments if any that are required to thecarrying value of the aforesaid balances and consequential impact if any on theaccompanying standalone financial results. Our opinion on the standalone financial resultsfor the year ended 31 March 2018 was also modified in respect of this matter.
(b) As stated in Note 3 to the accompanying standalone financial results the Company'snon-current borrowings short-term borrowings and other current financial liabilities asat 31 March 2019 include balances aggregating Nil (31 March 2018: Rs. 9324.24 lakhs) Nil(31 March 2018: Rs. 294.21 lakhs) and Rs. 11925.03 lakhs (31
March 2018: Rs. 11510.27 lakhs) respectively in respect of which confirmations/statements from the respective lenders have not been received. These borrowings have beenclassified into current and non-current basis the original maturity terms stated in theagreements which is not in accordance with the terms of the agreements in the event ofdefaults in repayment of borrowings. Further whilst we have been able to performalternate procedures with respect to certain balances in the absence ofconfirmations/statements from the lenders we are unable to comment on the adjustments ifany that may be required to the carrying value of these balances on account of changesif any to the terms and conditions of the transactions and consequential impact on theaccompanying standalone financial results. Our opinion on the standalone financial resultsfor the year ended 31 March 2018 was also modified in respect of this matter.
(c) As stated in Note 5 to the accompanying standalone financial results the Company'snon-current investments as at 31 March 2019 include non-current investments in one of itssubsidiary aggregating Rs. 142556.83 lakhs. The subsidiary has significant accumulatedlosses and its consolidated net-worth is fully eroded. Further the subsidiary is facingliquidity constraints due to which it may not be able to realise projections as per theapproved business plans. Based on the valuation report of an independent valuer as at 31March 2019 and other factors described in the aforementioned note Management hasconsidered such balance as fully recoverable. Management has assessed that no adjustmentsare required to the carrying value of the aforesaid balances which is not in accordancewith the requirements of Ind AS 109 'Financial Instruments. In the absence of sufficientappropriate evidence to support the management's assessment as above and other relevantalternate evidence we are unable to comment upon adjustments if any that may berequired to the carrying values of these non-current investments and aforementioned duesand the consequential impact on the accompanying standalone financial results.
(ii) Auditor's Qualification on the Internal Financial Controls relating to abovematters:
In our opinion according to the information and explanations given to us and based onour audit procedures performed the following material weaknesses has been identified inthe operating effectiveness of the Company's Internal Financial Controls over FinancialReporting as at 31 March 2019:
Matter II(a)(i)(a): The Company's internal financial control in respect of supervisoryand review controls over process of determining impairment allowance for trade receivableswhich are doubtful of recovery were not operating effectively. Absence of detailedassessment conducted by the management for determining the recoverability of tradereceivables that remain long outstanding in our opinion could result in a potentialmaterial misstatement to the carrying value of trade receivables and consequently couldalso impact the loss (financial performance including comprehensive income) after tax.
Matter II(a)(i)(c): The Company's internal financial control in respect of supervisoryand review controls over process of determining the carrying value of non-currentinvestments were not operating effectively. Absence of detailed assessment conducted bythe management for determining the carrying value of non-current investments in ouropinion could result in a potential material misstatement to the carrying value ofnoncurrent investment and consequently could also impact the loss (financial performanceincluding comprehensive income) after tax.
A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the Company's annual financial statements or interimfinancial statements will not be prevented or detected on a timely basis.
We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the standalonefinancial statement of the Company as at and for the year ended 31 March 2019 and thematerial weakness has affected our opinion on the standalone financial statements of theCompany and we have issued a qualified opinion on the standalone financial statements.
Management Reply to the above Auditor's Qualification
(i) (a) : Trade receivables as at 31 March 2019 include Rs. 45680.90 lakhs (31 March2018: Rs. 55396.37 lakhs) in respect of projects which were closed/substantially closedand which are overdue for a substantial period of time. Based on the contract terms andthe ongoing recovery/ arbitration procedures (which are at various stages) Management isreasonably confident of recovering these amounts in full. Accordingly these amounts havebeen considered as good and recoverable.
(i) (b) : Non-current borrowings short-term borrowings and other current financialliabilities as at 31 March 2019 include balances amounting to Rs. Nil (31 March 2018: Rs.9324.24 lakhs) Rs. Nil (31 March 2018: Rs. 294.21 lakhs) and Rs. 11925.03 lakhs (31March 2018: Rs. 11510.27 lakhs) respectively in respect of whichconfirmations/statements from the respective lenders have not been received. In theabsence of confirmations/statements from the lenders the Company has provided forinterest and other penal charges on these borrowings based on the latest communicationavailable from the respective lenders at the interest rate specified in the agreement. TheCompany's management believes that amount payable on settlement will not exceed theliability provided in books in respect of these borrowings. Accordingly classification ofthese borrowings into current and non-current as at 31 March 2019 is based on the originalmaturity terms stated in the agreements with the lenders.
(i) (c) : The Company as at 31 March 2019 has non-current investments in SupremeInfrastructure BOT Private Limited ('SIBPL') a subsidiary company amounting to Rs.142556.83 lakhs. SIBPL is having various Build Operate and Transfer (BOT) SPVs under itsfold. While SIBPL has incurred losses during its initial years and has accumulated lossescausing the net worth of the entity to be fully eroded as at 31 March 2019 the underlyingprojects are expected to achieve adequate profitability on substantial completion of theunderlying projects. Further in case of Supreme Manorwarda Bhiwandi InfrastructurePrivate Limited ('SMBIPL') a subsidiary of SIBPL lenders have referred SMBIPL to NCLTunder RBI circular dated 12 February 2018 for which response is awaited from NCLT.Further commercial operation date (COD) in respect of few subsidiaries of SIBPL has beendelayed due to various reasons attributable to the clients primarily due tonon-availability of right of way environmental clearances etc. and in respect of fewsubsidiaries the toll receipts is lower as compared to the projected receipts on accountof delay in receiving compensation from government for exempted vehicles. Further therehave been delays in repayment of principal and interest in respect of the borrowings andthe respective entity is in discussion with their lenders for the restructuring of theloans.
Management is in discussion with the respective lenders clients for the availabilityof right of way and other required clearances and is confident of resolving the matterwithout any loss to the respective SPVs. Therefore based on certain estimates like futurebusiness plans growth prospects ongoing discussions with the clients and consortiumlenders the valuation report of the independent valuer and other factors Managementbelieves that the net-worth of SIBPL does not represent its true market value and therealizable amount of SIBPL is higher than the carrying value of the non-currentinvestments as at 31 March 2019 and due to which these are considered as good andrecoverable.
(ii) Management believes that Company's internal financial controls in respect ofassessment of the recoverability of trade receivables and determining the carrying valueof non-current investments were operating effectively and there is no material weakness insuch controls and procedures.
The Auditor's qualification in respect of Consolidated Financial Statements andManagement Response thereof is in line with the above.
Further the other observations made by the Auditors in their report areself-explanatory and do not call for any further comment. The Notes on financial statementreferred to in the Auditors' Report are self-explanatory and do not call for any furthercomments.
C. COST AUDITORS
Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintained by the Companyin respect of its Infrastructure activity is required to be audited. Your Directors hadon the recommendation of the Audit Committee appointed M/s. Shashi Ranjan &Associates to audit the cost accounts of the Company for the financial year 2019-20.Accordingly a Resolution seeking Member's ratification for the appointment andremuneration payable to M/s. Shashi Ranjan & Associates Cost Auditors is included atthe Notice convening the Annual General Meeting.
D. SECRETARIAL AUDITORS
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Nidhi Bajaj & Associates Company Secretary in Practice to undertakethe Secretarial Audit of the Company. The Secretarial Audit Report for the financial year2018-19 is annexed herewith as Annexure IIP The Secretarial Audit Report does not containany qualification reservation or adverse remark.
17. BOARD COMMITTEES
The Board of Directors of your Company had already constituted various Committees incompliance with the provisions of the Companies Act 2013 / SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 viz. Audit Committee Nomination andRemuneration Committee Stakeholders Relationship Committee and Corporate SocialResponsibility Committee.
Details of the role and composition of these Committees including the number ofmeetings held during the financial year and attendance at meetings are provided in theCorporate Governance Section of the Annual Report.
18. VIGIL MECHANISM
The Vigil Mechanism of the Company also incorporates a whistle blower policy in termsof the Listing Regulations. Protected disclosures can be made by a whistle blower throughan e-mail or a letter to the Ombudsperson Task Force or to the Chairman of the AuditCommittee.
19. CORPORATE GOVERNANCE
As per Regulation of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 with the Stock Exchanges a separate section on corporate governancepractices followed by the Company together with a certificate from the Practicing CompanySecretary confirming compliance forms an integral part of this Report.
20. MANAGEMENT DISCUSSION AND ANALYSYS
A detailed review of the operations performance and future outlook of the Company andits business is given in the Management Discussion and Analysis appearing as Annexure tothis Report.
21. COMPLIANCE WITH SECRETARIAL STANDARDS
Pursuant to the approval given on April 10 2015 by Central Government to theSecretarial Standards specified by the Institute of Company Secretaries of India theSecretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings(SS-2) came into effect from July 1 2015. These secretarial Standards were thereafterrevised and made effective from October 12017. The Company is in compliance with thesame.
22. REPORTING OF FRAUD
The Auditors of the Company have not reported any instances of fraud committed againstthe Company by its officers or employees as specified under Section 143(12) of the Act.
Equity Shares of the Company are listed on the National Stock Exchange of India Limited(NSE) and BSE Limited (BSE). The Company has paid listing fees for the year 2019-2020.
24. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules 2014 is given hereunder:
A. CONSERVATION OF ENERGY
The Company's main activity is of construction which does not require any utilities.However Power is required for (a) running the crushing unit (b) operating the ready mixconcrete plant (c) operating the asphalt plant and (d) at the various project sites foroperating the machinery/ equipment and lighting. The power requirement of manufacturingunits are met from local distribution sources and from generator sets. The power requiredat the project sites for operating the machinery/equipment and lighting are met from theregular distribution sources and are arranged by the clients who award the contracts. Atthe project sites where the power supply cannot be arranged diesel generator sets areused to meet the requirement of power.
The conservation of energy in all possible areas is undertaken as an important means ofachieving cost reduction. Savings in electricity fuel and power consumption receive dueattention of the management on a continuous basis.
B. TECHNOLOGY ABSORPTION ADAPTATION RESEARCH & DEVELOPMENT AND INNOVATION
The Company has not acquired any technology for its manufacturing division. Howeverthe technology adopted and applied is the latest technology available in the Industry andmain thrust has always been put to adapt the latest technology.
In terms of Research and Development it is the Company's constant endeavor to be moreefficient and effective in planning of construction activities for achieving andmaintaining the highest standard of quality.
In view of the above the rules regarding conservation of Energy and TechnologyAbsorption are not applicable to the Company.
C. FOREIGN EXCHANGE EARNINGS AND OUT GO
During the year under review there was no foreign exchange outgo as also no foreignexchange earnings.
25. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as 'Annexure V.
26. EMPLOYEE STOCK OPTION SCHEME
With an objective of participation by the employees in the ownership of the Companythrough share based compensation scheme/ plan your company has implemented ESOS Schemeafter having obtained the approval of the shareholders at the Annual General Meeting ofthe Company held on 30th September 2015. However no ESOS have been granted during theyear under review.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
a. Details relating to deposits covered under chapter V of the Act.
b. Neither the Managing Director nor the Whole-time Director of the Company receivesany remuneration or commission from any of its subsidiaries.
c. No significant or material orders in view of the management were passed by theRegulators or Courts or Tribunals which impact the going concern status and Company'soperations in future.
Your Directors wish to place on record their appreciation for their continued supportand co-operation by financial institutions banks government authorities and otherstakeholders. Your Directors place on record their sincere appreciation to all employeesof the Company for their unstinted commitment and continued contribution to the Company.
ON BEHALF OF THE BOARD OF DIRECTORS
Date: 17th September 2019
Supreme House Plot.No.94/C
Opp. I.I.T. Main Gate Pratap Gad Powai
Mumbai- 400 076