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Directors Report of Petron Engineering Construction Ltd.

Mar 31, 2016

TO THE MEMBERS,

The Directors of Petron Engineering Construction Limited are pleased to present the Fortieth Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2016.

A. The Company''s financial performance, for the year ended 31st March, 2016 is summarized below :

Financial Results

For The Year Ended 31st March, 2016 (In Rupees)

For The Year Ended 31st March, 2015 (In Rupees)

Income from Operations

4,219,076,945

4,141,828,827

Other Income

68,192,557

85,070,836

Total Income

4,287,269,502

4,226,899,663

Profit before Interest, Depreciation and Taxes

370,403,541

400,199,614

Finance Cost

245,882,611

283,805,646

Profit before Depreciation and Taxes

124,520,930

116,393,968

Depreciation

72,814,377

97,785,946

Profit before Tax

51,706,553

18,608,022

Tax Expenses (Including Taxes of Earlier Years)

8,076,891

12,380,456

Profit for the Year

43,629,662

6,227,566

B. The highlights of the Company''s performance are as under :

The FY 2015-16 has been a challenging year. We have sailed through and have done reasonably good despite financial constraints.

- Revenue from operations increased by 1.42% to Rs. 428,73 Lacs.

- Profit before Depreciation and taxation increased by 6.98% to Rs.12,45 Lacs.

- Profit before taxes increased by 178 % to Rs.517 Lacs.

- Net Profit increased by Rs.600% to Rs.436 Lacs.

C. DIVIDEND

No Dividend has been recommended by the Board due to inadequate profits during the year.

D. SHARE CAPITAL

The Paid-up Share Capital as on 31st March, 2016 was Rs.753.84 Lacs. During the year under review, the Company has not issued any shares. The Company has not issued shares with differential voting rights. It has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company. As on 31st March, 2016, none of the Directors of the Company hold shares of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS

1. INDUSTRY STRUCTURE & DEVELOPMENTS

We have been seeing a significant impact of "Make in India" initiative by the Government of India. This should boost the manufacturing activity and fast industrialization. This will also create demand for construction activities particularly in Cement and Power Sectors.

The Govt. of India has come out with a Comprehensive Reform Program for the Power Sector called "Ujwal Discom Assurance Yojna" (UDAY), envisaging financial and operational turn-around of Electrical Distribution Companies.

This scheme is beneficial because it provides for affordable power to all, financial turn-around to Power Distribution Companies and increases the Renewal Energy penetration.

With the concept of "Make in India" and scheme of UDAY, the demand for power is expected to rise year on year basis. We are expecting more Power Plants as well as Renewable Energy Projects coming up in the near future.

Further, Thermal Power Plants which are stalled for non-availability of coal- linkage are also expected to get the coal linkage from the Government of India under the Coal Allocation Policy and therefore your Company will have immense opportunity in the Power Sector.

The construction of Roads has been accelerated and this has paved huge demand for Cement and Steel and therefore your Company is expecting good amount of jobs in construction of cement plants in the near future.

Aver a period of time, your Company has developed the capabilities of executing vertical construction contracts covering below mentioned comprehensive scope across all sectors, which will be preferred mode of execution of future contracts and multiple project execution simultaneously.

Composite Construction Solutions are as follows :

- Civil & Structural Works

- Plate & Ducting Works

- Equipment Erection Works

- High Pressure and Low Pressure Plant Piping Works

- Offsite Fabrication Works

- Electrical & Instrumentation Works

- Refractory & Insulation Works

2. OPERATIONS DIVISION WISE

ENGINEERING & CONSTRUCTION

During the year execution of following contracts have been completed:

- Mechanical, Electrical and Instrumentation, Fabrication and Erection works for the proposed cement Grinding Unit at Anakapalli, Visakhapatnam of Ramco Cements Limited, Chennai, Tamilnadu.

- Engineering, Procurement, Construction and Commissioning Assistance (EPCC) of Fired Heaters for VGO-HDT, AVU and NHT/CCR unit of Paradip Refinery Project, for Indian Oil Corporation Limited at Paradip, Orissa .

- Cracker Furnace Package for Petrochemical Complex -II of GAIL (India) Limited, at Pata, Uttar Pradesh .

- Composite works for Gas Processing Unit(GPU) Package for Petrochemical Complex -II of GAIL (India) Limited, at Pata, Uttar Pradesh .

- Erection, Testing, Commissioning and Performance Guarantee (PG) Tests of Boiler & its Auxiliaries along with Critical Piping for Unit 1 & 2 of 1320 MW (Phase-I, 2 x 660MW) Kawai Thermal Power Project, for Adani Infra (India) Limited, at Kawai, Rajasthan.

- Design, Engineering, Manufacturing including Fabrication, Painting, Inspection, Testing, Packing and supply of the Platformer-3 New Convection Bank (F-9601 & E-9602) along with the associated ducting and supporting arrangement in two parts, Part-A and Part B (both included) for Essar Oil (UK) Ltd., Stanlow, United Kingdom.

The work on the following projects substantially progressed during the year:

- Erection, Testing, Commissioning, Performance and Guarantee Tests for Boiler and Auxiliaries Packages for Power Project (2x 660MW) Unit I & Unit II and critical piping work of NCC Limited at Nellore, Andhra Pradesh.

- Erection of Boiler Island, Boiler BOP for SEPCO Electric Power Construction Corporation in 3 x 600MW Power Plant at Nariyara, Champa, Chhattisgarh

- Erection, testing, Commissioning, trial operations and handing over 2 x 600 MW Boilers for Damodar Valley Corporation Power Project as Sub-contractors to Utility Energytech and Engineers Private Limited, Raghunathpur, West Bengal.

- Gas Cracker Unit (GCU) for Petrochemical Complex -II of GAIL (India) Limited at Pata, Uttar Pradesh

- Heater Package for VGO-HDT Unit , FCCU Unit, composite work for FCCU Unit and Civil, Structural & Underground piping works of Offsite New Area for Integrated Refinery Expansion Project (IREP) of Bharat Petroleum Corporation Ltd., Kochi Refinery, Kerala.

- Civil Construction work at Nagpur Cement Works for UltraTech Cement Limited, Village Tarsa, Tehsil - Mauda, Dist. Nagpur, Maharashtra.

- Civil construction work of Packing Plant Extension and Fly Ash Uploading system with Handling Conveyor Belt at Bangur Cement, Aurangabad of M/s. Shree Cement Limited, Rajasthan

- Mechanical works of LLDPE plant and other allied works in J-3 Project at Reliance Industries Ltd , Jamnagar , Gujarat .

The Work on the following recently awarded projects have commenced:

- Capacity up gradation work of Line- I Cement Plant and Captive Power Plant of Ramco Cements Limited at Jayanthipuram - Civil and Mechanical works in Tamilnadu .

- Civil &Structural work for JSW Cement Ltd. 2x1.2 MTPA Clinker and Slag Grinding Unit of JSW Cements Limited at Salboni, Paschim Medinipur, West Bengal

- Installation of Balance Mechanical, electrical and instrumentation works in the Boiler #1 & # 2 at M/s. Meenakshi Energy Pvt. Ltd., 2x350MW Power Plant, Thamminapatnam, Nellore District, Andhra Pradesh

ELECTRICAL & INSTRUMENTATION

During the year following contract has been completed:

- Electrical works for off-sites and utilities at Indian Oil Corporation Ltd., Paradip Refinery for KazStroyService Infrastructure India Pvt. Ltd, Gurgaon, Haryana.

- Electrical Installation Work for Purified Terepthalic Acid Plants- PTA- 5 and PTA-6 at Reliance Industries Ltd, Dahej Manufacturing Complex, Gujarat.

- Contract for Supply of Electrical Supply items for the Cement Grinding Unit at Anakapalli, Visakhapatnam of Ramco Cements Ltd., (formerly M/s. Madras Cements Ltd.)

Presently, the following Orders of the Division are under execution:

- Contract for Supply of Electrical Equipment, Installation, Testing, Commissioning and conducting Guarantee Tests for Super Thermal Power Project, Stage IV (2x500 MW) of National Thermal Power Corporation Limited, Vindhyachal, Madhya Pradesh.

- Contract for Supply of Electrical Equipment, Installation, Testing, Commissioning and conducting Guarantee tests for Super Thermal Power Project, Stage III (2x500 MW) of National Thermal Power Corporation Limited, Rihand, Uttar Pradesh.

- Electrical works for INDMAX (FCC) and PRU of Paradip Refinery Project, for Indian Oil Corporation Limited, Paradip, Odisha.

- Design, Engineering, Procurement, Manufacture, Supply, Inspection & Transportation, Insurance, Erection, Testing and commissioning of Electrical Installation work (Group 2&3 i.e. Boiler & Mill Areas and Common areas respectively) package for Prayagraj Thermal Power Project (3 x 660 MW) at Tehsil - Bara, Allahabad, Uttar Pradesh.

- Supply and erection Contract for Inland transportation, Insurance, Installation, testing, commissioning and conducting Guarantee tests under Electrical equipment supply & erection Package for Vindhyachal Super Thermal Power Project, Stage V (1 x 500MW) for National Thermal Power Corporation Limited.

- Supply and erection Contract for Inland transportation, Insurance, Installation, testing & commissioning of "Electrical equipment supply & erection Package" for Kudgi STPP, stage I (3x800 MW) for National Thermal Power Corporation Limited.

ROCKWOOL INSULATION & REFRACTORY:

During the year, the division has successfully completed the following contracts:

- VGO, AVU, NHT / CCR Heaters & Insulation work for Indian Oil Corporation Ltd, Paradeep, Odisha.

- Insulation for Composite Works - GCU & GPU for GAIL (India) Ltd, Pata, Uttar Pradesh.

- Insulation jobs (ARC) at Essar Oil Ltd, Jamnagar, Gujarat.

Presently, the following orders of the Division are under execution:

- Insulation & refractory work for VGO, HDT & FCCU heater, Bharat Petroleum Corporation Limited, Kochi, Kerala.

- Insulation work for Essar Projects (India) Ltd., Jamnagar and project is expected to be completed in September, 2016.

PETROFAB DIVISION

- No major work carried out at Petrofab works during 2015-16.

3. ACHIEVEMENTS

Your Company has successfully completed safe manhours at GAIL India Ltd., Pata, Uttar Pradesh, Indian Oil Corporation Ltd., Paradip, Orissa, Reliance Industries Ltd, Jamnagar, Gujarat, JBF Petro-chemicals Ltd., Mangalore and Bharat Petroleum Corporation Ltd., Kochi, Kerala.

Your Company has also received HSE Award from Ultratech Cements Ltd., Nagpur, Maharashtra.

4. OUTLOOK

TY 2015-16 has been a tough year. However, PECL booked orders aggregating to Rs.161.20 Crores and the accumulated backlog approximately amounted to Rs.975 Crores.

The Major Orders received are as follows :

Sr.

No.

Client

Description

Order Value (Rs.In lacs)

1.

M/s. Fine Tech Corporation Private Limited, 3rd floor, Court House, Lokmanya Tilak Marg, Dhobi Talao, Mumbai 400 002

Electrical works in C2 complex at Reliance Jamnagar in plants LDPE, LLDPE, Utility and ASU

1396.78

2

The Ramco Cements Limited (Formerly Madras Cements Ltd.)

Auras Corporate Centre, V Floor,

98-A, Dr. Radhakrishnan Salai, Mylapore, Chennai - 600 004, India.

Capacity up gradation work of Line- I Cement Plant and Captive Power Plant at Jayanthipuram - Civil and Mechanical works

2250.00

3

M/s. JSW Cement Limited JSW CENTRE,

Bandra Kurla Complex, Bandra (East), Mumbai - 400051

Civil &Structural work for JSW Cement Ltd. 2x1.2 MTPA Clinker and Slag Grinding Unit at Salboni, Paschim Medinipur, West Bengal

7500.00

4

M/s. Cethar Limited,

4, Dindigul Road, Tiruchirapalli 620 001. Tamil Nadu

Installation/erection of the Balance Mech. , Elect. and Instrumentation works for Boiler #1 & Boiler # 2 - 2 x 350 MW Power Plant at M/s. Meenakshi Energy Pvt Ltd., Nellore, Andhra Pradesh

4750.00

FY 2016-17, will bring prospects for sectors like Refinery, Petrochemical, Power, Cement and Fertilizer etc.

Tement Sector is expected to largely benefit from the development of Infrastructure & Construction of Highways which will have an immense growth potential. Road Construction Projects are at its peak. Therefore, your Company is foreseeing tremendous opportunity in the Cement sector.

The Indian power sector is undergoing a significant change that has redefined the Industry outlook. Sustained economic growth and "Make in India" initiative will continue to drive power demand in India. The Government of India''s focus to attain ''Power For All'' has accelerated capacity addition in the country. Therefore, the Power Sector is expected to throw ample opportunities to your Company which would be the key growth driver.

In the coming years, with the growth in Agriculture, Fertilizer Industry is also expected to grow. Your Company is expected to undertake construction jobs in the Fertilizer Industry.

5. OPPORTUNITIES

The Government of India has launched a major National Program "Make In India", which has been designed to facilitate investment, foster innovation, enhanced skill development, "build in best in" class manufacturing in the country as well as protect intellectual property. The primary objective of this initiative is to attract investments from across the globe and strengthen India''s manufacturing sector.

The "Make in India" program is very important for the economic growth of India as it aims at utilizing the existing Indian talent base, creating additional employment opportunities and empowering secondary and tertiary sector. "Make in India" program will be focusing on 25 sectors. These include: construction of roads, highways, ports, railways, thermal power and renewable energy.

This would give a boost to the Construction Industry as there would be major Cement Projects coming up giving an opportunity to your Company in Power & Cement sector.

Your Company though operating in midst of challenging market situation, is uniquely placed to survive & take its business forward. This is mainly due to the range of services it offers and to the variety of industries it caters to as under:

Cement

India has a lot of potential for development in the Infrastructure and Construction sector and the cement sector is expected to largely benefit from it. Cement Industry in India provides direct / indirect employment to a million people making it a vital part of Indian Economy. The industry is currently in a turnaround phase, trying to achieve global standards in production, safety, and energy-efficiency. On the back of growing demands, due to increased construction and infrastructural activities, the cement sector in India will lead to huge investments.

Major Companies are implementing expansion by awarding Turnkey/Composite construction contracts and therefore, your Company is taking necessary steps to participate in such contracts. Your Company is focused to achieve considerable volume in this sector. With Cement company''s trend of adding Offsite Grinding Units, Petron is constantly focusing on the same.

Oil & Gas, Refineries, Petrochemicals

The oil and gas sector is one of the six core industries in India. It plays a pivotal role in influencing decisions across other important spheres of the economy. With India''s economic growth closely linked to energy demand, the need for oil and gas is projected to grow further, rendering the sector a fertile ground for investment. The government''s participation has made the oil and gas sector in the country a better target of investment.

In order to meet the domestic demand and potential of exports of refined products demand, few strategic expansions are under way in India.

Large sized Petro-chemical Projects are expected to be implemented in the coming years as the demand for Fibers, Plastic, Rubber, Resins, and Specialty Chemicals are expected to rise. Your Company''s experience in Heaters, Crackers and related construction areas will result in good amount of business opportunity.

India is also poised to increase capacities in LNG terminals as an added Natural Gas supply source in some locations. Your Company with its past experience is well placed to do some business in this area as well.

Coal Gasification, Coal Bed Methane (CBM) and Coal to Liquid (CTL) are also gaining focus in India as alternative energy source to depleting Natural Gas source. Your Company will look out for business opportunity in this Sector.

Power

Power or Electricity is one of the most critical components of Infrastructure affecting economic growth and wellbeing of nations. The Indian power sector is one of the most diversified in the world. The demand for electricity in the country has been growing at a rapid rate and is expected to grow further in the years to come. In order to meet the increasing requirement of electricity, massive addition to the installed generating capacity in the country is required.

The Indian power sector is undergoing a significant change that is redefining the industry outlook. The concept of "Make in India" and the Government''s focus to attain ''Power For All'' has accelerated capacity addition in the country.

There is a large opportunity in Power Sector as there is a huge shortage of power due to increasing population and increased industrial consumption. However, due to supply constraints of coal and gas, major projects in the area of Thermal Power are not taking off. Major Corporates are tying up with foreign countries for their coal requirements so as to meet the power generation capacity. Your Company is looking forward to explore Joint Venture opportunities to get new orders in this sector

Fertilizer

Agriculture plays a vital role in India''s economy, due to which the requirement of Fertilizer is very huge for the growth of Agriculture Sector as the consumption of food grains has increased due to the increased population.

Normal monsoons will lead to enhanced requirement of Fertilizer and therefore the growth in Fertilizer Sector is expected. Your Company is well placed to execute projects in Fertilizer sector in the coming years.

Steel

The Steel Industry reflects the overall economic growth of an economy in the long term as demand for steel is derived from other sectors like automobiles, consumer durables and infrastructure.

The Indian Steel Industry is very modern with state-of-the-art steel mills. It has always strived for continuous modernization and up-gradation of older plants and higher energy efficiency levels.

India is expected to become the world''s second largest producer of crude steel.

6. THREATS

As the Government of India is poised to bring in reforms, it will bring threats along with opportunities. Stiff competition from Companies in the field of hydro-carbon, steel, cement and power sectors is expected as the economy is opening up for foreign direct investments.

7. CREDIT RATING

Tong Term Loan and Fund Based working capital facilities of Rs.152.47 crores have been assigned BBB - rating. AND Non-Fund Based working capital facilities of Rs.477 crores have been assigned A3 rating by India Ratings & Research Private Limited.

Ultimate Holding Company

KazStroyService Global BV

Holding Company

KSS Petron Pvt. Ltd.

Associate Companies

KazStroyService Hungary Kft.

Kazstroy Engineering India Private Limited

KazStroyService Management Services Pte. Limited

JSC OGCC KazStroyService

Joint Ventures

The Company has not entered into any Joint Ventures during the year under

review.

9. CONTRACTS AND ARRANGEMENT WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the Financial Year with related parties were in the Ordinary Course of business and on an arm''s length basis. During the Year, the Company had not entered into any Contract or arrangement / transactions with related parties which can be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Company has got a Policy to approve the Related Party Transactions and dealings with the Related Party by the Audit Committee / Board of Directors.

10. DIRECTORS'' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a. that in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b. that the selected accounting policies were applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the Profits of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts have been prepared on a going concern basis.

e. That Internal Financial Controls have been laid down to be followed by the Company and such Internal Financial Controls are adequate and are operating effectively.

f. That proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

11. CORPORATE GOVERNANCE

The Report on Corporate Governance pursuant to Clause - C of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements), Reg. 2015 confirming compliance with the conditions of Corporate Governance by a Practicing Company Secretary is given in the Annexure which forms part of the Directors'' Report.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

The Company has constituted a Corporate Social Responsibility (CSR) Committee to comply with the provisions of Section 135 of the Companies Act, 2013. The composition of CSR Committee is as under :

- Mr. Sanjay Jain, Chairman

- Mr. Ajay Hans, Member

- Mrs. Nandita Vijay Gupta, Member

The Company will have CSR Policy and accordingly will undertake such activities which are specified in Schedule VII of the Companies Act, 2013, subject to meeting the eligibility criteria as stated in Section 135 of the Companies Act, 2013 subject to availability of the funds.

Since Financial Year 2012-13, the Company is making miniscule profit (Average Net Profit for F.Y. 2012-13, 2013-14, 2014-15 is Rs.150 Lakhs only). The Company is also having Cash Flow crunch as huge amount of money have been stuck in Receivables due to stalled projects of our clients for more than Five years. Considering this neither CSR Budget is made nor CSR activities were undertaken and no CSR Expenditures have been incurred in F.Y. 2014-15 and 2015-16.

13. RISKS & CHALLENGES

Construction Companies are facing difficulty due to difficult market conditions, increased inflation, sporadic labour wage increase, fluctuating supply of feed-stocks, cost overruns due to the delay in Government approvals, land acquisition etc. Clients and consultants are also adopting the ''Wait and Watch'' situation and have become averse to take risky decisions due to the dynamic environment.

The cumulative effects of these conditions will have to be borne by your Company. Due to the uncertainty in the Indian Infrastructure Industry, your Company is also looking out to explore opportunities in the Middle East, Far East and Africa etc.

The Company manages / monitors the principal risks and uncertainties that can impact its ability to achieve its objectives. The Company''s management systems organizational structures, code of conduct governs the business of the Company and takes view of risks and put efforts to achieve risk mitigation through Internal Control Systems.

14. INTERNAL CONTROL SYSTEMS AND ADEQUACY

Your Company has a proper and adequate system of internal controls to ensure the timely and accurate recording of financial transactions and adherence to applicable accounting standards; optimum utilization & safety of assets; compliance with applicable laws, regulations, listing agreements and management policies; and an effective management information system.

There are well defined and documented procedures, policies and authority guidelines for each function in the Company. Your Company has in-house internal audit team who conduct audits across all locations, project sites and business units of the Company throughout the year to test check the internal control system.

Your Company has an Audit Committee whose Chairman is an Independent Director. The Committee meets periodically with the management, internal audit team and representatives of the statutory auditors to review your Company''s program of internal audits, findings & recommendations made in the auditors'' (both internal & statutory) reports and the follow-up & compliance status of its earlier observations.

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in undertaking engineering & construction projects, the disclosure of particulars under Section 134 of the Companies Act, in so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below:

Total Foreign Exchange used and earned:

i) Value of Imports on CIF basis Rs.513.53 Lacs

ii) Expenditure in Foreign Currency Rs.4.54 Lacs

iii) Foreign Exchange earned Rs.4346.14 Lacs

Further, it does not include Revenue recognized (Received / Receivables) in Foreign Currency from one of its clients amounting to Rs.73.06 Lacs for the services rendered / job execution done in Special Economic Zone.

16. MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT INCLUDING NUMBER OF PERSONS EMPLOYED

Though the Company is passing through a challenging period due to financial constraints including cash-flow problems, your Company''s relation with its staff / workers has remained cordial during the year.

The Company is having 639 employees as on 31st March, 2016.

17. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Ajay Hans, Managing Director of the Company is not liable to retire by rotation as per the Articles of Association of the Company.

Mr. Sanjay Jain and Mr. Sudhir Kumar Jain are Non-Executive (Independent) Directors as per the provisions of Section 149 (6) and Section 149(13) of the Companies Act, 2013. Both of them are not liable to retire by rotation in view of the amendment and their appointment at the last 38th Annual General Meeting.

Ms. Nandita Vijay Gupta was appointed as Women Director, w.e.f. 13th May, 2015, who is an Independent Director and therefore is not liable for retirement by rotation.

In accordance with the provisions of Section 152(6) of the Companies Act, 2013, Mr. Ravi Keswani, Non-Executive Director is liable to retire by rotation. He is eligible and offers himself for reappointment.

Details of Directors or Key Managerial Personnel who were appointed or have resigned during the year:

None of the Key Managerial Personnel have resigned during the year.

18. AUDITORS AND THEIR REPORT

The Auditors, M/s. Lodha & Co., Chartered Accountants, New Delhi, in their Report have drawn attention to Note No. 32 and 33 on the following matter:

Auditors'' Qualification No. 1:

Quote :

In respect of certain suspended / delayed contracts as of 31st March, 2016, trade receivables of Rs.1,923 lacs (net of mobilization advance of Rs.2,934 lacs) (as at 31st Dec., 2015 and 31st March, 2015 Rs.1,128 lacs and Rs.1,501 lacs net of Mobilization Advance of Rs.4,211 lacs and Rs.4,240 lacs respectively) And unbilled revenue of Rs.6,256 lacs (as at 31st December, 2015 and 31st March, 2015 Rs.7,805 lacs and Rs.7,756 lacs respectively) receivables from customers are pending confirmation/ negotiation; trade payables w.r.t. these stated customers aggregated to '' 819 lacs (as at 31st December, 2015 and 31st March, 2015 Rs.1,206 lacs and Rs.1,323 lacs respectively) are subject to negotiation/ confirmation, where we are unable to comment on the same and its corresponding impact on profit and assets / liabilities as at that date.

This matter was also qualified in the report of the predecessor auditors on the financial statements for the quarter/ year ended 31st March, 2015 and in our Limited Review Report for the Quarter Ended 31st December, 2015.

Unquote

The Company''s response with regard to above qualification is as under :

Quote :

The matter mainly relates to a mega project (the largest private investment in the region) - which is nearly 60% complete, which had hit a temporary roadblock because of the cost escalation, natural disaster and financial constraints at the client''s end. In March, 2015 and subsequently in the current year, the Company had meetings with the client wherein the client has confirmed that they are in discussions with various prospective investors for financial support to restart the project. Considering the recent developments, the management is confident that the project will restart in near future. Apart from the above, the same has also been reaffirmed by the top executives of the said customer.

Is commented by the auditors in their report, on the realization of trade receivables and unbilled revenue, the management hereby informs that the amount outstanding in the form of trade receivables is pending negotiations with client and the unbilled revenues are in the form of unfinished works and inventories, most of which are marketable, if required. The management is confident of its recovery upon restart of the project.

In respect of trade receivables and unbilled revenue of other contracts, the company is negotiating with the clients and is confident of realization of those receivables. In the current year the company was successful in arriving settlement with one client which has resulted in reduction in unbilled revenue.

Further, the accounts payables are subject to the reconciliation of the work performed at the said project and can be accurately ascertained after re-negotiation upon restart of the project or otherwise, as the case may be.

Unquote

Auditors'' Qualification No. 2 Quote:

T he Company has recognized revenue of Rs.1,353 lacs during earlier periods ( till 31st December, 2015 Rs.1,353 lacs) (till 31st March, 2015 Rs.2,555 lacs) on account of cost overruns on certain contracts, pending acceptance / confirmation from customers and our inability to comment on the amounts ultimately receivable in respect of these contracts and its impact on the reported profit for the quarter/ year ended 31st March, 2016 and corresponding assets as on date. This matter was also qualified in the report of the predecessor auditors on the financial statements for the quarter / year ended 31st March, 2015 and in our Limited Review Report for the Quarter Ended 31st December, 2015.

Unquote

The Company''s response with regard to above qualification is as under :

Quote:

The contracts have provisions for issuance of change orders due to modifications in specifications, scope and methodology of execution of work, escalation in rates due to prolongation of the contracts . During execution of works, some of the specifications, scope, methodology of execution have undergone changes for which change order requests have been sent to the respective clients.

The management is confident of receiving the recognized revenue after completion of pending formalities in due course of time.

Unquote

Auditors'' Qualification No. 3 Quote:

The Company has recognized revenues of Rs.1,621 lacs during nine months period ended 31st December, 2015 (till 31st March, 2015 Rs.1,301 lacs), on account of cost overruns on certain contracts, which are not in accordance with the principles set out in the Accounting Standards AS-7 ''Construction Contracts''. Accordingly the Revenue and profit is higher by Rs.1,621 lacs for the year ended 31st March, 2016 and also balance in retained earnings and unbilled revenue balance as at 31st March 2016 is higher by Rs.2,922 lacs (as at 31st March 2015 by Rs.1,301 lacs). This matter was also qualified in the report of the predecessor auditors on the financial statements for the quarter/ year ended 31st March 2015 and in our Limited Review Report for the Quarter Ended 31st December, 2015.

Unquote

The Company''s response with regard to above qualification is as under :

Quote:

T here are contractual provisions in some of the contracts for claims against extended stay at pre-determined rates per month as specified in the respective contracts. Accordingly the Company has lodged claims for the extended stay. Further, during execution of works, some of the specifications, scope and methodology of execution have undergone changes for which change order requests have been submitted with the respective clients.

T he Company is negotiating with the Clients and is confident of realization of those claims.

Unquote

The Auditors have also drawn attention to the following observations:

1. Confirmation of Balance

Quote

Regarding pending confirmation / reconciliation of balances of certain trade receivable, other liabilities and loan & advances as at 31st March, 2016, where the management is confident that there will not be any material impact on confirmation / reconciliation on profit for the quarter / year.

2. System of Internal Controls over financial control

Based on the information and explanation provided, in our opinion, the Company has system of internal financial control over financial reporting in place, however the Company needs to further improve in regard to project cost estimation process [read with para(i) above].

Unquote

The Company''s response with regard to above observations is as under :

Quote:

The Observations of the Auditors are self explanatory.

Unquote

19. STATUTORY AUDITORS

M/s. Lodha & Co., Chartered Accountants, (Registration No. 301051E), New Delhi were appointed as Independent (Statutory) Auditors of the Company at the 39th Annual General Meeting. They have been appointed as Independent Auditors from the conclusion of the 39th Annual General Meeting until the conclusion of the 44th Annual General Meeting, subject to ratification by the member/ shareholders at every Annual General Meeting.

The Company has received a letter from M/s. Lodha & Co., Chartered Accountants, New Delhi, to the effect that their appointment, if ratified, will be in accordance with the limits prescribed under Section 139(1) of the Companies Act,2013 and that, they are not disqualified within the meaning of Section 141 of the Act.

Accordingly, the appointment of M/s. Lodha & Co., Chartered Accountants, New Delhi is proposed for approval and ratification by the Shareholders at the 40th Annual General Meeting.

20. COST AUDITORS

The Board of Directors have appointed Mr. Dilip Athavale, Cost Accountant, as the Cost Auditor of the Company to conduct the audit of Cost Accounting records and submit Cost Audit Report and Cost Compliance Report for the Financial Year 2015-16.

21. SECRETARIAL AUDITORS

The Board of Directors have appointed M/s. Pradeep Purwar and Associates, Practicing Company Secretaries as Secretarial Auditors for providing the Secretarial Audit Report in terms of the provisions of Section 204 of the Companies Act, 2013 for the Financial Year 2015-16. The Secretarial Audit Report for the Financial Year ending 31st March, 2016 is annexed herewith the Directors Report (Page No. 48).

The Secretarial Audit Report has made the following observations:

Observation No. 1

Quote:

Delay in appointment of Women Director.

Unquote

The Company''s response with regard to above observation is as under :

Quote:

Women Director was appointed on 13th May, 2015.

Unquote

Observation No. 2 Quote :

Delay in filing of Financial Results for the Year Ended 31st March, 2015 and for the Quarter Ended 30th June, 2015. Unquote

The Company''s response with regard to above observation is as under :

Quote:

Delay in filing Financial Results for the year ended 31st March, 2015 is due to delay in completion of Audit.

Delay in filing the Financial Results for the quarter ended 30th June, 2015 was due to delay in completion of Audit of 31st March, 2015 which impacted preparation of Financial Results for the Quarter ended 30th June, 2015 and accordingly filing of Financial Result was delayed.

Unquote

22. DISCLOSURE:

Audit Committee

he Audit Committee comprises of Mr. Sanjay Jain, Chairman who is an Independent Director, Mr. Ravi Keswani, Member, who represents the Promoters, Mr. Sudhir Kumar Jain, Member and Mrs. Nandita Vijay Gupta, who are also Independent Directors. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism / Whistle Blower Policy

T he Vigil Mechanism of the Company which incorporates a Whistle Blower Policy in terms of the Listing Agreement. The Whistle Blower Policy was approved by the Board of Directors on 7th November, 2014. The Whistle Blower Policy may be accessed on the Company''s website www.petronengineering.com.

Policy on Prevention, Prohibition and Redressal of Sexual Harassment at work place

The Company is also having Policy on Prevention of Sexual Harassment of Employees.

The Company has zero tolerance for Sexual Harassment at workplace and has adopted a policy on Prevention, Prohibition and Redressal of Sexual Harassment at work place, in line with the provisions of Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under.

The Policy aims to provide protection to employees at the workplace and prevent and redress complaint of sexual harassment and/or matters connected or incidental thereto with the objective of providing a safe working environment, where women employees can feel secure.

The Company has constituted a Committee which has got the powers to enquire into the complaints of sexual harassment and recommend appropriate action.

Meetings of the Board

During the year under review, there were five meetings of the Board of Directors. For further details please refer Report on Corporate Governance on Page No. 35-47 of this Annual Report.

23. EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is annexed herewith as Annexure to this Directors'' Report.

24. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

T n terms of the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Annual Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The full Annual Report is being sent electronically to all those members who have registered their email addresses and is available on the Company''s website.

25. GENERAL INFORMATION

- Tour Company is continuing to execute the contracts related to fabrication, installation of Plant, Machinery and Equipments for cement, refinery, petrochemicals, power, fertilizer plants etc. It is also continuing to execute Turnkey / Composite Construction Projects.

Over a period of time, your Company has developed the capabilities of executing vertical construction contracts across all sectors, which will be preferred mode of execution of future contracts and multiple project execution simultaneously.

- Particulars of Loans given, Investments made, Guarantees given and Securities provided:

The Company has not given any loan or made any investments or provided guarantees or securities.

- The Company has not accepted public deposits during the year in terms of Chapter V. The Company does not have any deposit and therefore the provisions relating to deposits at our end in compliance with the requirements of Chapter -V of the Act is not applicable.

- To significant material orders were passed by the Regulators or Courts or Tribunals which would impact the going concern status or operations in future.

- The Managing Director of the Company did not receive any remuneration or commission from any of its subsidiaries or associate Companies.

26. TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 124 of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Act.

27. ACKNOWLEDGEMENTS

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the bankers, clients, dealers, vendors and members for their support and confidence placed in the Company. Your Directors also wish to place on record their deep sense of appreciation for committed services by the company''s executives, staff and workers at all levels for their unstinted efforts as well as their collective contribution to the Company''s performance.

The Directors would also like to offer its sincere thanks to the Company''s shareholders, bankers, customers, dealers, suppliers and all other business associates for their unstinted support and continued confidence in the Company.

28. CAUTIONARY STATEMENTS

Statements in this report on management discussion and analysis, describing the Company''s objectives or outlook, opportunities, expectations and estimates may be forward-looking statements within the meaning of applicable laws or regulations, actual results could, however, differ materially from those expressed or implied.

BY ORDER OF THE BOARD

Ajay Hans Ravi Keswani

Mumbai, 31st May, 2016 Managing Director Director


Mar 31, 2014

Dear Members,

The Directors of Petron Engineering Construction Limited have pleasure in presenting the Thirty-Eighth Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2014.

A. FINANCIAL RESULTS

During the year under review, the Income from Operations / Sales have declined to Rs. 37,587 Lacs as compared to Rs. 52,427 Lacs in the previous year (down by 28.31%). The Other Income has also decreased to Rs. 355 Lacs in the current year from Rs. 1,340 Lacs in the previous year. The Profit before Interest, Depreciation and Tax has improved to Rs. 4,278 Lacs in the current year as compared to Rs. 4,176 Lacs in the previous year. However, the Finance Cost has increased to Rs. 2,437 Lacs in the current year as compared to Rs. 2,236 Lacs in the previous year. The profit before Depreciation and Tax is Rs. 1,841 Lacs in the current year as compared to Rs. 1,940 Lacs in the previous year.

The profit after providing for Depreciation but before Tax is Rs. 183 Lacs in the current year as compared to Rs. 310 Lacs in the previous year. However, after providing tax expenses for the current year and writing back of earlier years, the profit for the year is Rs. 379 Lacs as compared to Rs. 9 Lacs in the previous year.

Financial Results For The Year Ended For The Year Ended 31.03.2014 31.03.2013 (Amount Rs ) (Amount Rs )

Income from Operations 3,758,717,359 5,242,660,310

Other Income 35,492,656 133,951,269

Total Income 3,794,210,015 5,376,611,579

Profit before Interest, Depreciation and Taxes 427,798,869 417,574,537

Finance Cost 243,657,138 223,619,594

Profit before Depreciation and Taxes 184,141,731 193,954,943

Depreciation 165,873,997 162,933,472

Profit before Tax 18,267,734 31,021,471

Tax Expenses (Including Taxes of Earlier Years) (19,667,259) 30,141,876

Profit for the Year 37,934,993 879,595

B. DIVIDEND

No Dividend has been recommended by the Board due to inadequate profits for the year.

1. OPPORTUNITIES

Your Company though operating in midst of challenging market situation, is uniquely placed to survive & take its business forward. This is mainly due to the range of services it offers and to the variety of industries it caters to.

CEMENT

Globally the Cement Industry is witnessing the creation of a cement giant with the consolidation of Lafarge and Holcim. This will have an effect in the Indian Cement Sector which is also the world''s second largest producer and consumer of Cement. Cement industry in India is poised for continuous growth to keep its pace with infrastructure growth in the country. Major Companies are implementing expansion by awarding EPC Contracts and therefore, Petron is taking necessary steps to participate in such EPC Contracts. Petron is focused to achieve considerable volume in this Sector. With Cement Company''s trend of adding Offsite Grinding Units, Petron is also concentrating in this sector.

OIL& GAS, REFINERIES, PETROCHEMICALS

Currently, although Indian Refining Industry has reached a refining capacity to meet domestic demand and potential of exports of refined products demand, few strategic expansions are under way in India.

Large sized Petro-chemical Projects are expected to be implemented in the coming years as the demand for Fibers, Plastic, Rubber, Resins, and Specialty Chemicals are expected to rise. Your Company''s experience in Heaters, Crackers and related construction areas will result in good amount of business opportunity.

India is also poised to increase capacities in LNG terminals as an added Natural Gas supply source in some locations. Your Company with its past experience is well placed to do some business in this area as well.

Coal Gasification, Coal Bed Methane (CBM) and Coal to Liquid (CTL) are also gaining focus in India as alternative energy source to depleting Natural Gas source. Your Company will look out for business opportunity in this Sector also.

POWER

There is a large opportunity in Power Sector as there is a huge shortage of power due to increasing population and increased industrial consumption. However, due to supply constraints of coal and gas, major projects in the area of Thermal Power are not taking off. Major Corporate are tying up with foreign countries for their coal requirements so as to meet the power generation capacity. With the new Government in place, changes in the overall scenario are expected. Your Company can expect to get orders in this Sector.

FERTILIZER

India is primarily an agricultural country. The requirement of Fertilizer is very huge for the growth of Agriculture Sector as the consumption of food grains has increased due to the increased population.

Normal monsoons will lead to enhanced requirement of Fertilizer and therefore the growth in Fertilizer Sector is expected. Your Company is well placed to execute projects in Fertilizer Sector in the coming years.

STEEL

The per capita consumption of steel in India is still at about 1/3rd of Global Average and to meet further demand from various infrastructure projects, the Indian Steel Industry has a major potential growth. In the last few years, Steel Industry is facing acute shortage of iron ore and coal on account of environmental considerations which is badly affecting further expansion. However, the Central Government and State Government are clearing some of the hurdles which will help for development of Steel Industry. Your Company, with its vast experience in other major sectors shall look out for opportunities in Steel Industry.

2. RISKS & CHALLENGES

Mechanical Construction Companies are facing difficulty due to difficult market conditions, increased inflation, sporadic labour wage increase, fluctuating supply of feed-stocks, cost overruns due to the delay in Government approvals, land acquisition etc. Clients and consultants are also adopting the "Wait and Watch" situation and have become averse to take risky decisions due to the dynamic environment.

The cumulative effects of these conditions will have to be borne by your Company. Due to the uncertainty in the Indian Infrastructure Industry, your Company is also looking out to explore opportunities in the Middle East, Far East and Africa etc.

3. INTERNAL CONTROLS

Your Company has a proper and adequate system of internal controls to ensure the timely and accurate recording of financial transactions and adherence to applicable accounting standards; optimum utilization & safety of assets; compliance with applicable laws, regulations, listing agreements and management policies; and an effective management information system.

There are well defined and documented procedures, policies and authority guidelines for each function in the Company. Your Company has engaged independent firms of Chartered Accountants apart from the in-house internal audit team who conduct audits across all locations, project sites and business units of the Company throughout the year to test check the internal control system.

Your Company has an Audit Committee whose Chairman is an Independent Director. The Committee meets periodically with the management, internal audit team and representatives of the statutory auditors to review your Company''s program of internal audits, findings & recommendations made in the auditors'' (both internal & statutory) reports and the follow-up & compliance status of its earlier observations.

4. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The Company is primarily engaged in undertaking engineering & construction projects, the disclosure of particulars under Section 217(1)(e) of the Companies Act, so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below:

Total Foreign Exchange used and earned:

i) Value of Imports on CIF basis Rs. 52,706,082

ii) Expenditure in Foreign Currency Rs. 2,884,744

iii) Foreign Exchange earned Rs. 24,836,584

5. DIRECTORS

In terms of Section 149 of the Companies Act, 2013, Mr. Sanjay Jain and Mr. Sudhir Kumar Jain were categorized as Independent Directors as per the definition contained in the Equity Listing Agreement.

The provisions of Section 149(4) of the Companies Act, 2013, pertaining to the appointment of Independent Directors have been notified by the Ministry of Corporate Affairs w.e.f. Aprii 1, 2014. The Company has re-assessed the status of its Directors with a view to determining their qualifying for classification as Independent Directors in terms of Section 149(6) of the Companies Act, 2013. Accordingly, Mr. Sanjay Jain and Mr. Sudhir Kumar Jain fulfil the criteria laid out in Section 149(6) of the Companies Act, 2013.

Section 149(10) of the Companies Act, 2013 restricts the tenure of Independent Director to two terms of upto ten years, with a single term not exceeding five years w.e.f. April 1, 2014. The revised Clause 49 of the Equity Listing Agreement issued by Securities & Exchange Board of India (SEBI), pursuant to Circular No. CIR/CFD/POLICY ceii/2/2014 dated April 17, 2014 also contains the same provisions. Mr. Sanjay Jain retires by rotation at the forthcoming Annual General Meeting (AGM) and he being eligible has offered himself for appointment as Independent Director of your Company, pursuant to the provisions of the Companies Act, 2013, to hold office upto March 31, 2019.

Pursuant to the provisions of Section 161 of the Companies Act, 2013, read with relevant provisions in the Articles of Association, Mr. Sudhir Kumar Jain was appointed as Additional Director by the Board of Directors of the Company w.e.f. October 4, 2013. He holds Office as Director upto the date of the forthcoming AGM. Your Company has received a Notice in writing from a member proposing his candidature for the Office of Independent Director.

Mr. Sudhir Kumar Jain qualifies to be an Independent Director pursuant to the provisions of Section 149(6) of the Companies Act, 2013, to hold office upto March 31, 2019.

Additional Information and brief profile, as stipulated under the Equity Listing Agreement for each of the above Directors seeking re-appointment / appointment, is annexed to the Notice of the AGM. Further, the business items relating to the re-appointment / appointment of above Directors have been included in the Notice of the AGM.

6. AUDITORS AND THEIR REPORT

M/s. S. R. Batliboi & Co. LLP (Registration No. 301003E), Chartered Accountants, Mumbai - the Statutory Auditors of the Company holds office until the conclusion of the ensuing Annual General Meeting.

The Auditors, M/s. S. R. Batliboi & Co. LLP, in their Report have drawn attention to Note No. 32 and 33 on the following matter:

Auditors'' Qualification No. 1:

"In respect of a contract, as at December 31,2013, trade receivables (net of mobilization advance of Rs. 2,926 Lacs), unbilled revenue and trade payables of Rs. 1,267 Lacs, Rs. 6,256 Lacs and Rs. 1,844 Lacs respectively, are subject to final confirmation as the said contract is under negotiation. In the absence of such confirmations and pending final outcome of the negotiations, we are unable to comment upon the amounts ultimately receivable/payable in respect of this contract and the consequential impact, if any, on the reported profit for the quarter ended December 31, 2013 and corresponding assets and liabilities as at that date. Our Audit Report on the financial statements for the year ended March 31, 2013 and our review reports on results for the quarters ended June 30, 2013 and September 30, 2013 were modified in respect of the above matter."

The Company''s response with regard to above qualifications is as under :

The Company has received a written communication in May, 2013 from the customer affirming their intent to revive the subject mega project (the largest private investment in the region) - which is nearly 60% complete - within this year, which had hit a temporary roadblock because of the cost escalation, natural disaster and financial constraints. As per the communication, the customer is persistently endeavoring to get required equity infusion from current and/or new investors to eventually do a financial closure. Apart from the above letter, the same has also been reaffirmed by the top executives of the customer in discussions. As qualified by the auditors in their report on the realization of trade receivables and unbilled revenue, the management hereby informs that the amount outstanding in the form of trade receivables is duly confirmed by the customer as payable while the unbilled revenues are in the form of unfinished works and inventories, most of which are marketable, if required. The management is confident of its recovery in due course of time.

Further, the accounts payable shall be subject to the reconciliation of the work performed at the said project and can be accurately ascertained after re-negotiation upon restart of the project or otherwise, as the case may be.

Auditors'' Qualification No. 2

"The Company has recognized revenue and receivables of Rs. 3,811 Lacs on certain projects arising out of design changes and/or scope variations for which acceptances by the clients are awaited. The amount of such acceptances cannot therefore be measured reliably. In the absence of sufficient appropriate audit evidence regarding the extent to which such claims /scope variations will be accepted by the clients, we are unable to comment on the appropriateness of such revenues as recognized in the financial statements, the amounts that will be ultimately realized and the consequential impact, if any, on the reported profit for the quarter ended March 31, 2014 and the reported profit for the year ended March 31, 2014 and corresponding assets and liabilities as at that date. Our review report on result for the quarter ended December 31, 2013 was modified in respect of the above matter."

The Company''s response with regard to above qualification is as under :

"Management is confident of receiving the recognized revenue after completion of pending formalities in due course of time. Therefore, there will not be any impact on reported profit for the quarter ending 31st March, 2014 / period ending 31st March, 2014 and on corresponding assets as at that date."

M/s. S. R. Batliboi & Co. LLP., shall resign at the conclusion of the ensuing Annual General Meeting.

Your company is proposing to appoint M/s. S.R.B.C. & Co. LLP (Registration No. 324982E) as a Statutory Auditors of your company from the conclusion of the ensuing Annual General Meeting to the next Annual General Meeting. The Company has received a letter from them, to the effect that their appointment, if made, will be in accordance with the limits prescribed under Section 139(1) of the Companies Act and that, they are not disqualified within the meaning of Section 141 of the Act.

7. PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company.

8. DIRECTORS'' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a. that in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b. that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the Profits of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts have been prepared on a going concern basis.

9. TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A(5) of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Act.

10. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance and Certificate from the Practicing Company Secretary thereon are given in the Annexure which forms part of Directors'' Report.

11. ACKNOWLEDGEMENTS

Your Directors wish to convey their appreciation to the Company''s employees at all levels for their enormous personal efforts as well as their collective contribution to the Company''s performance.

The Directors would also like to offer its sincere thanks to the Company''s shareholders, bankers, customers, dealers, suppliers and all other business associates for their unstinted support and continued confidence in the Company.

12. CAUTIONARY STATEMENTS

Statements in this report on management discussion and analysis, describing the Company''s objectives or outlook, opportunities, expectations and estimates may be forward-looking statements within the meaning of applicable laws or regulations, actual resuits could, however, differ materially from those expressed or implied.

By Order of the Board

Ajay Hans Managing Director

Ravi Keswani Mumbai, May 29, 2014 Director


Mar 31, 2013

TO THE MEMBERS,

The Directors of Petron Engineering Construction Limited have pleasure in presenting the Thirty- Seventh Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2013.

A. FINANCIAL RESULTS

During the year under review, the Income from Operations / Sales have declined to Rs. 52,427 Lacs as compared to Rs. 67,156 Lacs in the previous year (down by 21.95 %). However, the Other Income has increased to Rs. 1,340 Lacs in the current year from Rs. 134 Lacs in the previous year. The Profit Before Interest, Depreciation and Tax has declined to Rs. 4,176 Lacs in the current year as compared to Rs. 7,642 Lacs in the previous year. However, the Finance Cost has increased to Rs. 2,236 Lacs in the current year as compared to Rs. 1,273 Lacs in the previous year. The profit before Depreciation and Tax is Rs. 1,940 Lacs in the current year as compared to Rs. 6,369 Lacs in the previous year.

The profit after providing for Depreciation but before Tax is Rs. 310 Lacs in the current year as compared to Rs. 4,772 Lacs in the previous year. However, after providing tax expenses for the current year and earlieryears, the profit for the year is Rs. 8.79 Lacs as compared to Rs. 3,200 Lacs in the previous year.

For The Year Ended For The Year Ended 31st March, 2013 31st March, 2012 (Amount Rs. ) (Amount Rs.}

Income from Operations 5,242,660,309 6,715,639,333

Otherlncome 133,951,269 13,422,787

Total Income 5,376,611,578 6,729,062,120

Profit before Interest, Depreciation and Taxes 417,574,537 764,151,878

Finance Cost 223,619,595 127,259,555

Profit before Depreciation and Taxes 193,954,943 636,892,323

Depreciation 162,933,472 159,721,570

Profit before Tax 31,021,471 477,170,754

Tax Expenses (Including Taxes for Earlier Years) 30,141,879 157,156,239

Profit for the Year 879,592 320,014.515

B. DIVIDEND

No Dividend has been recommended by the Board due to inadequate profit during the year.

MANAGEMENT DISCUSSION AND ANALYSIS

- 1. INDUSTRY TRENDS & DEVELOPMENTS

With Indian Government''s view to renew focus on Infrastructure development and prioritize the need for greater Infrastructure development, Infrastructure Industry in India is surely poised for Growth. Petron is optimistic in meeting its share of Engineering Construction business under a major challenging scenario.

Power, Cement and Refineries are considered major concentration areas for further business volumes for Petron. To bridge the ever increasing Gas demand and supply situation in Natural Gas, new LNG Terminals are being planned in India and Petron is focusing this sector. Few Fertilizer plants expansion projects are announced, this being one of its core area, Petron is also working in this sector.

Thus, Petron is geared up to align to participate for such Projects to achieve a sustainable business in its challenging times.

- 2. DIVISION WISE PERFORMANCE ENGINEERING & CONSTRUCTION

The work on the following projects substantially progressed during the year:

a) Erection and associated works of Boiler and Auxiliaries and TG Auxiliaries of Unit No. 01 & 03 for 3 x 660 MW Tiroda Thermal Power Project of Adani Power Maharashtra Limited at Tiroda, Dist. Gondia, Maharashtra.

b) Engineering, Procurement, Construction and Commissioning Assistance (EPCC) of Fired Heaters for VGO-HDT unit of Paradip Refinery Project, for Indian Oil Corporation Limited at Paradip, Orissa.

c) Engineering, Procurement, Construction and Commissioning Assistance (EPCC) of AVU Fired Heaters of Paradip Refinery Project for Indian Oil Corporation Limited at Paradip, Orissa.

d) Engineering, Procurement, Construction & Commissioning Assistance (EPCC) of NHT/CCR Fired Heaters for Paradip Refinery Project at Paradip, Orissa for Indian Oil Corporation Limited, Paradip.

e) Erection of Boiler Island, Boiler BOP for SEPCO Electric Power Construction Corporation in 3 x 600MW Power Plant at Nariyara, Champa, Chattisgarh.

f) Mechanical Erection & Electrical Installation at Chittaurgarh Cement Plant Project, Rajasthan of Laf arge India Pvt. Ltd., Chittaurgarh, Rajasthan.

g) Erection, testing, Commissioning, trial operations and handing over 2 x 600 MW Boilers for DVC Raghunathpur Power Project as Sub-contractors to Utility Energytech and Engineers Private Limited.

h) Composite works for Gas Processing Unit for Petrochemical Complex -II of Gail (India) Limited at Pata.Uttar Pradesh.

i) Composite works for Gas Cracker Unit for Petrochemical Complex -II of Gail (India) Limited at Pata, Uttar Pradesh.

j) Cracker Furnace Package for Petrochemical Complex -II of Gail (India) Limited, at Pata, Uttar Pradesh

k) Erection, Testing, Commissioning and performance Guarantee (PG) Tests of Boiler and its Auxiliaries alongwith Critical Piping for Unit 1 & 2 of 1320 MW (Phase-I, 2 x 660MW) Kawai Thermal Power Project, for Adani Infra (India) Limited, at Kawai, Rajasthan.

The Work on the following recently awarded projects have commenced:

a) Mechanical, Electrical and Instrumentation, Fabrication and Erection works for the proposed cement Grinding Unit at Anakapalli.Visakhapatnam of Madras Cements Limited, Chennai.

b) Erection, Testing, Commissioning, Performance and Guarantee testing for Boiler and Auxiliaries Packagesfor NCC Power Project ( 2x 660MW) Unit I & Unit II at Nellore, Andhra Pradesh for NCC limited

PETRON MECHANICAL INDUSTRIES

During the year, the Division has successfully executed the following contracts:

a) Design, Engineering, Manufacturing , Supply, Erection andCommissioning of 6 numbers of EOT Cranes of 10 T, 15 T and 20 T Capacities for Inox India Ltd, Kalol, Gujarat.

b) Design, Manufacturing and Supply of 10 T Capacity, Double Girder Gantry Crane for Hydac (India ) Pvt. Ltd., Bhiwandi, Maharashtra.

c) Manufacture and Supply of Skid Mounted Modules to Sterling & Wilson Co-Gen Solutions Pvt. Ltd, MumbaifortheirAlusa Power Project at Nigeria.

d) Erection of various capacities of EOT Cranes at Bharat Aluminium Company Ltd, Korba, Chhattisgarh.

ELECTRICAL & INSTRUMENTATION

During the year following contract has been completed:

Erection, Testing and Commissioning of Electrical and Lighting equipment and instrumentation equipment at AriyalurLine-2 Project of Madras Cements Limited, Tamil Nadu.

Presently, the following Orders of the Division are under execution:

a) Contract for Supply of Electrical Equipment, Installation, Testing, Commissioning and conducting Guarantee Tests for Vindyachal Super Thermal Power Project, Stage IV (2x500) MW for National Thermal Power Corporation Limited, Madhya Pradesh.

b) Contract for Supply of Electrical Equipment, Installation, Testing, Commissioning and conducting Guarantee tests for Rihand Super Thermal Power Project, Stage III (2x500 MW) for National Thermal Power Corporation Limited, Uttar Pradesh.

c) Supply of Electrical Equipment Package (Part -1 - Cabling, Earthing and Lightning Protection, Part- II - Electrical Equipment and Part - III - Illumination system) for 2 x 371 MW combined cycle power plant - Stage III at Lanco Inf ratech Limited, Kondapalli, IDA, Dist. Krishna, Andhra Pradesh.

d) Erection, testing and commissioning of Electrical Erection Package (Part-1 - Cabling, Earthing and Lightning Protection, Part - II - Electrical Equipment and Part - III - Illumination System) for 2 x 371 MW Combined Cycle Power Plant - Stage III at Lanco Infratech Limited, Kondapalli IDA, Dist Krishna, Andhra Pradesh.

e) Electrical works for INDMAX(FCC) and PRU of Paradip Refinery Project, for Indian Oil Corporation Limited, Paradip, Orissa

f) Electrical works for off-sites and utilities at Indian Oil Corporation Ltd., Paradip Refineries for KazStroyService Infrastructure India Pvt. Ltd, Gurgaon, Haryana.

g) Supply and Erection of Electrical Equipment Package for CCR Projects for Bharat Petroleum Corporation Limited at Mahul, Chembur, Mumbai, Maharashtra.

h) Electrical Installation Work for Purified Terepthalic Acid (PTA) 5 at Reliance Industries Ltd, Dahej Manufacturing Complex, Gujarat.

I Design, Engineering, Procurement, Manufacture, Supply, Inspection and P. T. 0. Testing of Electrical Installation work package for Prayagraj Thermal Power Project (3 x 660 MW) at Tehsil - Bara, Allahabad, Uttar Pradesh.

R0CKW00L INSULATION & REFRACTORY

During the year, the division has successfully executed the following contracts:

a) Supply and Application of Wrapping and Coating material UG Pipes for Reliance Industries Ltd, Dahej, Gujarat.

b) Installation of Refractories for 10000 TPD Cement Plant for ABG Cement Ltd., Thumdi, Kutch, Gujarat.

c) Supply and application of Hot Insulation for Turbines of 3 x800 MW Ultra Mega Power Project of CGPL (TataPower),Mundra,Gujarat.

d) Refractory and Insulation Jobs at Reliance Industries Ltd at Jamnagar and Hazira Gujarat.

e) Refractory and Insulation Jobs at Essar Oil Ltd, Jamnagar, Gujarat.

f) Application of Refractories in Pallet Plant of BMM Ispat Ltd, Bella ry, Karnataka.

g) Wrapping and Coating of UG Pipelines at Reliance Industries Ltd, Silvasa, Union Territory.

Presently, the following orders of the Division are under execution:

a) Application of Refractory and Insulation work for Lafarge Cement Plant - Chittorgarh.Rajasthan.

b) VGO, AVU, NHT7 CCR Heaters and Insulation work for Indian Oil Corporation Ltd, Paradeep, Orissa.

c) Design Engineering, Supply and Application of Refractories for 3 Nos. Ethylene Gas Crackers at GAIL (India) Ltd, Pata, Uttar Pradesh.

d) Insulation for composite works - GCU and GPU for GAIL(lndia) Ltd, Pata, Uttar Pradesh.

e) Insulation jobs (ARC) at Reliance Industries Ltd, Jamnagar, SEZ and Hazira, Gujarat.

f) lnsulationjobs(ARC)atEssarOil Ltd,Jamnagar,Gujarat.

g) Application of Hot Insulation job for Piping/Equipment for PFY Project, at Reliance Industries Ltd, Silvasa Union Territory.

h) Wrapping and Coating for UG Pipelines at IDC for Reliance Industries Ltd, Jamnagar., Gujarat.

i) Supply and Application of Insulation and Refractory material along with all ancillaries for BTG and its auxiliaries for 660 MW Unit of Adani Infra Power Project, Kawai Thermal Power Project, Kawai, Rajasthan.

PETROFAB DIVISION

During the year, this Division has successfully completed the below mentioned projects:

a) Supply and Fabrication of Structures including Copper Slag Blasting and Painting for Daniel Measurement Solutions (Pvt.) Limited, Vadodara, Gujarat.

b) Fired Heater Steel Fabrication for Indian Oil Corporation Limited, Paradip FCC RR/Fresh Feed Pre- heaterfor JNK India Pvt. Ltd., Maharashtra for I0CL Paradip, Orissa.

c) Fired Heaters Steel Fabrication for OMPL MRAC-LSTK1 for JNK India Pvt. Ltd., Maharashtra for OMPL, Mangalore, Karnataka.

d) Supply and fabrication of Reformer Steel Structure and Combustion Air Ducts for Uhde India Pvt. Ltd., forlOCLParadip.Orissa.

e) Supply of convection Module for Modification of VBU to CDU Heater for Revamp Project and Supply of convection modules through Heurtey Petrochem India Pvt. Ltd, for Essar Projects Limited, Gujarat.

f) Design, Supply, Fabrication, Blasting, Painting and Transportation of Convection Bundle for Jhaghadia Plant for Linde Ltd., Vadodara, Gujarat.

Presently, the following orders of the Division are under execution:

a) Design, Fabrication Testing and Transportation of Helium Gas Pressure Vessel Installation for Government of India, DAE, Kolkata, West Bengal.

b) Fabrication, Testing, Painting and Assembly of Piping spools and Supply, Fabrication, Testing, Inspection of Structures including Surface preparation and Painting for Daniel Measurement Solutions (Pvt.) Ltd., Vadodara, Gujarat.

c) Detailing and Supply of Air Grid Distributor for Regenerator for Indian Oil Corporation Limited, Vadodara.

d) Supplyof Refractory MaterialsforAdani Infra Power Project, Kawai-Rajasthan.

e) Supply of 2 ton Capacity Overhead Crane of 19.5 M Span for JSC "OGCC KazStroyService", Kazakhstan.

- 3. ACHIEVEMENTS

a) Your Company has achieved 33.2 Million Man hours, in the FY 2012-13 and with ZERO fatality.

b) The Company has been re-certified for the Integrated Management System - combining both QMS ISO 9001:2008,OHSAS18001:2007and ISO 14001:2004.

* 4. OUTLOOK

Your Company has booked orders aggregating to Rs. 204 Crores during the year 2012-2013 compared to order book of Rs. 575 Crores during Financial Year 2011-12. The Company has accumulated orders of about Rs. 872 Crores of which EPC orders contributes apprx. 37%. The major orders received are given below:

Mechanical,Electrical,lnstrumentation,

1 Madras Cements Limited Fabrication and Erection work for a Cement 4,150

Grinding unit at Vishakapatnam.

Erection.Testing, Comissioning, Performance irnim;t„j and Guarantee Testing for Boiler and Auxiliary i-Kcn

2 NCC Limited Package for 2 x 660 MW power plant at 12''650

Nellore, Andhra Pradesh.

The sectors in which your Company is active are, oil and gas, petrochemicals, power and cement industries.

Out of these, Petro-chemicals, Power and Cement seems to be promising Sectors forthe year 2013-14. Power Sector was expected to move faster but due to inadequate supply of coal and gas, the Power Sector has not progressed in the past. However, various Power Companies are tying up with foreign countries for Coal. The Power Sector is expected to throw ample opportunities to your Company for growth.

With Indian government focusing on bringing reforms in Coal mining sector being opened to private participation coupled with government''s ambitious plan for independent Freight Corridor should be a boon to the Power sector.

In the coming years, with the growth in Agriculture, Fertilizer Industry is also expected to grow. Your

Company is expected to undertake EPC and Construction jobs in the Fertilizer Industry.

* S. OPPORTUNITIES

Your Company though operating in midst of challenging market situation, is uniquely placed to survive and take its business forward. This is mainly due to the range of services it offers and to the variety of industries it caters to.

CEMENT

Cement industry in India is poised for continuous growth to keep its pace with infrastructure growth in the country. Major Companies are implementing expansion by awarding EPC Contracts and therefore, Petron is taking necessary steps to participate in such EPC Contracts. Petron is focused to achieve considerable volume in this Sector. With Cement Company''s trend of adding Offsite Grinding Units, Petron is also concentrating in this sector.

OIL & GAS, REFINERIES, PETROCHEMICALS

Currently, although Indian Refining Industry has reached a Refining capacity to meet domestic demand and potential of exports of refined products demand, few strategic expansions are underway in India.

Large sized Petro-chemical Projects are expected to be implemented in the coming years as the demand for Fibers, Plastic, Rubber, Resins, and Specialty Chemicals are expected to rise. Your company''s experience in Heaters, Crackers and related construction areas will result in good amount of business opportunity.

India is also poised to increase capacities in LNG terminals as an added Natural Gas supply source in some locations. Your Company with its past experience is well placed to do some business in this area as well.

Coal Gasification, Coal Bed Methane (CBM) and Coal to Liquid (CTL) are also gaining focus in India as alternative energy source to depleting Natural Gas source. Your Company will look out for business opportunity in this Sector.

POWER

There is a large opportunity in Power Sector as there is a huge shortage of power due to increasing population and increased industrial consumption. However, due to supply constraints of coal and gas, major projects in the area of Thermal Power are not taking off. Major Corporates are tying up with foreign countries for their coal requirements so as to meet the power generation capacity. Your Company can expect to get orders in this Sector.

There is also a big scope in Hydro, Solar, Wind and Nuclear Power which is also expected to grow in the coming years.

FERTILIZER

India is primarily an agricultural country. The requirement of Fertilizer is very huge for the growth of Agriculture Sector as the consumption of food grains has increased due to the increased population. Normal monsoons will lead to enhanced requirement of Fertilizer and therefore the growth in Fertilizer Sector is expected. Your Company is well placed to execute projects in Fertilizer Sector in the coming years.

STEEL

The per capita consumption of steel in India is still at about 1/3rd of Global Average and to meet further demand from various infrastructure projects, the Indian Steel Industry has a major potential growth. In the last few years, Steel Industry is facing acute shortage of iron ore and coal on account of environmental considerations which is badly affecting further expansion. However, the Central Government and State Government are clearing some of the hurdles which will help for development of Steel Industry. Your Company, with its vast experience in other major sectors shall look out for opportunities in Steel Industry.

* 6. RISKS & CHALLENGES

Mechanical Construction Companies are facing difficulty due to difficult market conditions, increased inflation, sporadic labour wage increase, fluctuating supply of feed-stocks, cost overruns due to the delay in Government approvals, land acquisition etc.

The cumulative effects of these conditions will have to be borne by your Company, i

Due to the uncertainty in the Indian Infrastructure Industry, Your Company is also looking out to explore opportunities in the Middle East, Far East and Africa etc.

A challenging year is ahead foryour Company to come out with success.

* 7. INTERNAL CONTROLS

Your Company has a proper and adequate system of internal controls to ensure the timely and accurate recording of financial transactions and adherence to applicable accounting standards; optimum utilization and safety of assets; compliance with applicable laws, regulations, listing agreements and management policies; and an effective management information system.

There are well defined and documented procedures, policies and authority guidelines for each function in the Company. Your Company has engaged an independent firm of Chartered Accountants apart from the in-house internal audit team who conduct audits across all locations, project sites and business units of the Company throughouttheyearto test checkthe internal control system.

The Board of directors has an Audit Committee whose Chairman is an Independent Director. The Committee meets periodically with the management, internal audit team and representatives of the statutory auditors to review your Company''s program of internal audits, findings and recommendations made in the auditors'' (both internal and statutory) reports and the follow-up and compliance status of its earlier observations.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in undertaking engineering and construction projects, the disclosure of particulars under Section 217(1)(e) of the Act (hereinafter referred to as the Act), in so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below:

Total Foreign Exchange used and earned:

a. Value of Imports on CIF basis - 317,162,688

b. Expenditure in Foreign Currency X 14,649,349

c. Foreign Exchange earned NIL

9. DIRECTORS

Mr. Ajay Hans has been appointed as an Additional Director and designated as the Managing Director of the Company with effect from 5th October, 2012 for a period of 3 years. His appointment is subject to approval by Shareholders at the ensuing 37th Annual General Meeting.

Mr. Ajay Hans is a Mechanical Engg. Graduate with Masters in Business Finance (MBF) and Masters in Business Administration ( MBA) with specialization in Marketing. He is a versatile professional having more than 20 yrs of work experience in Business Development, Tendering and Estimation, Contracts Management, Project Management and Execution, Finance Management, Procurement and Materials Management of Engg, Procurement and Construction (EPC) Projects on various National and International Projects.

He has worked with KazStroyService Group in Almaty, Kazakhstan as Executive Director / Director - Contracts andCommercial. He had also worked with other reputed MNCs like DLF, Sumitomo Corporation, Enron, Dodsal, HIRCO etc.

He has worked with Petron Civil Engg. Pvt. Ltd., India as Jt. Managing Director andhas contributed in expanding the operations including EPC developments in India andOverseas.

He has been an honorable recipient of "Udyog Ratan Award" for outstanding performance in the field of Industrial Development.

In terms of Article 127 of the Articles of Association of the Company, Mr. Ravi Keswani, Director of the Company retires by rotation andbeing eligible offers himself for re-appointment at the ensuing Annual General Meeting.

Mr. T. S. Das was appointed as an Additional Director with effect from 14th May, 2007. He was a Managing Director w.e.f. 10th January, 2008 andresigned on 5th October, 2012.

Mr. R. Sankaran was appointed as an Additional Director being Non-Executive (Independent) Director with effect from on 29th June, 2009, He expired on 28th February, 2013.

Mr. G. K. Roy was appointed as an Additional Director anddesignated as Director (Operations) w.e.f. 5th October, 2012. He has resigned from the Board on 8th March, 2013.

Dr. S. Rama Iyer, was appointed as an Additional Director being Non-Executive (Independent) Director with effect from on 30th January, 2009. He has resigned from the Board w.e.f. 17th May, 2013.

Mr. Sanjay Jain has been appointed as an Additional Director being Non-Executive (Independent) Director w.e.f. 17th May, 2013. His appointment is subject to approval by Shareholders at the ensuing 37th Annual General Meeting.

- 10. AUDITORS AND THEIR REPORT

M/s. S. R. Batliboi & Co. LLP (Registration No - 301003E), Chartered Accountants, Mumbai - the statutory auditors of the Company - holds office until the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment. The Company has received a letter from them, to the effect that their appointment, if made, will be in accordance with the limits prescribed under Section 224(1B) of the Act &that, they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

The Auditors in their Report have drawn attention to Note No. 3 on the following matter

Auditors'' Qualification:

We report that as at March 31,2013 Trade receivables of Rs. 1,278 lacs (net of mobilization advance of Rs. 2,926 Lacs), unbilled revenue being dues receivable from a customer amounting to Rs. 6,256 Lacs andtrade payables of Rs. 1,866 Lacs relating to a contract, are subject to final confirmations from the

respective parties as the matter is under negotiation. In the absence of such confirmation andpending final outcome of the negotiations, we are unable to comment upon the amounts ultimately receivable / payable in respect of this contract andthe consequential impact, if any, on the reported loss for the quarter ended March 31, 2013 andthe reported profit for the year ended March 31, 2013 andcorresponding Assets andLiabilities as at that date.

Company''s Response

The Company has received a written communication in May, 2013 from the customer affirming their intent to revive the subject mega project (the largest private investment in the region) - which is nearly 60% complete - within this year, which had hit a temporary roadblock because of the cost escalation, natural disaster and financial constraints. As per the communication, the customer is persistently endeavoring to get required equity infusion from current and/or new investors to eventually do a financial closure. Apart from the above tetter, the same has also been reaffirmed by the top executives of the customer in discussions. As qualified by the auditors in their report on the realization of trade receivables and unbilled revenue, the management hereby informs that the amount outstanding in the form of trade receivables is duly confirmed by the customer as payable while the unbilled revenues are in the form of unfinished works and inventories, most of which are marketable, if required. The management is confident of its recovery in due course of time.

Further, the accounts payable shall be subject to the reconciliation of the work performed at the said project andean be accurately ascertained after re-negotiation upon restart of the project or otherwise, asthecase maybe.

11. PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules 1975 forms part of this Report. As per provisions of Section 219(l)(b)(iv) of the Act, the Report andAccounts are being sent to the Shareholders of the Company, excluding the statement of particulars of the employee under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the statement may write to the Company Secretary at the Registered Office of the Company.

12. DIRECTORS'' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a. that in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b. that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2013 and of the profit of the Company fortheyearended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts have been prepared on a going concern basis.

¦ 13. TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A(5) of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Act.

*- 14. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance andCertificate from the Practicing Company Secretary thereon are given in the Annexure which forms part of Directors'' Report.

15. ACKNOWLEDGMENTS

Your Directors wish to place on record their appreciation of the contribution from employees at all levels.

The Company takes this opportunity to offer its sincere thanks to the Company''s bankers for their unstinted support and continued confidence in the Company and also places on record its sincere thanks to all clients fortheir co-operation.

- 16. CAUTIONARY STATEMENTS

Statements in this report on management discussion and analysis, describing the Company''s objectives or outlook, opportunities, expectations and estimates may be forward-looking statements within the meaning of applicable laws or regulations, actual results could, however, differ materially from those expressed or implied.

By Order of the Board

Mumbai, 29th May, 2013 Ajay Hans Ravi Keswani

Managing Director Director


Mar 31, 2012

The Directors of Petron Engineering Construction Limited have pleasure in presenting the Thirty-sixth Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2012.

A.FINANCIAL RESULTS

During the year under review, the Income from Operations Sales have increased toRs. 71,313 Lacs as compared to Rs.49,910 Lacs in the previous year (up by 42.88%). The Other Income has declined toRs. 134 Lacs in the current year from Rs. 233 Lacs in the previous year. The Profit Before Interest, Depreciation and Tax has increased to Rs. 7,642 Lacs in the current year as compared to Rs. 6,089 Lacs in the previous year. However, the Finance Cost has increased to Rs. 1,273 Lacs in the current year as compared toRs. 381 Lacs in the previous year. The profit before Depreciation and Tax isRs. 6,369 Lacs in the current year as compared to Rs. 5,708 Lacs in the previous year.

The profit after providing for Depreciation but before Tax is Rs. 4,772 Lacs in the current year as compared to Rs. 4,615 Lacs in the previous year. However, after providing for tax expenses for the current year, the profit for the year is Rs. 3,200 Lacs as compared toRs. 3,095 Lacs in the previous year.

For The For The Year Ended Year Ended 31-Mar-12 3l-Mar-11 amountRs. amountRs.

Income from Operations 7,131,315,207 4,991,040,073

Other income 13,422,787 23,254,663

Total Income 7,1447,737,994 5,014,294,736

Profit before Interest, Depreciation and Taxes 764,151,878 608,888,959

Finance Cost 127,259,555 38,092,134

Profit before Depreciation and Taxes 636,892,323 570,796,825

Depreciation 159,721,570 109,267,359

Profit before Tax 477,170,754 461,529,466

Tax Expenses 157,156,239 151,991,936

Profit for the Year 320,014,515 309,537,530

B. DIVIDEND

Your Directors are pleased to recommend a Dividend of Rs. 2/- (20%) per Equity Share on 7538400 Equity Shares of Rs. 10/- each for the year ended 31st March, 2012 for declaration by the Shareholders at the Thirty-sixth Annual General Meeting. The Dividend will absorb Rs. 15,076,800/- and Corporate Dividend Tax thereon will be Rs. 2,445,834/-, aggregating toRs. 17,522,634/-.

6. RISKS & CHALLENGES

Mechanical construction companies in India are facing more difficulties due to difficult market conditions, currency fluctuations, countries sloping growth rate & increase in inflation, sporadic labour wage increase, increase in project overlays, fluctuating supplies of fuel & feed-stocks, pending Govt, policy on coal allotments, land acquisition etc. The cumulative effects of these conditions are to be borne by the Company like yours., inspite of being one among many of the critical contributors to the Infrastructure industry and to the country's economy.

With uncertainties prevailing in the Indian Infrastructure industry, your Company is embarking upon to explore opportunities abroad, mainly in the Middle East, Far East, Africa etc. Your Company is hopeful of getting suitable opportunities only in its core areas, as these are restricted markets, the emphasis would be in selecting the right partner . This could be a challenge for your Company to counter the trend and come out with good success.

7. INTERNAL CONTROLS

Your Company has a proper and adequate system of internal controls to ensure the timely and accurate recording of financial transactions and adherence to applicable accounting standards; optimum utilization & safety of assets; compliance with applicable laws, regulations, listing agreements and management policies; and an effective management information system.

There are well defined and documented procedures, policies and authority guidelines for each function in the Company. Your Company has already engaged two independent firms of Chartered Accountants apart from the in- house internal audit team who conduct audits across all locations, project sites and business units of the Company throughout the year to test check the internal control system.

The Board of directors has an Audit Committee whose Chairman is an independent director. The Committee meets periodically with the management, internal audit team and representatives of the statutory auditors to review your Company's program of internal audits, findings & recommendations made in the auditors' (both internal & statutory) reports and the follow-up & compliance status of its earlier observations.

8. CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in undertaking engineering & construction projects, the disclosure of particulars under Section 217(1 )(e) of the Act (hereinafter referred to as the Act], in so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below:

9. DIRECTORS

Mr.Arvind Dabar was appointed as an Additional Director on 29th October, 2010. He has resigned from the Board with effect from 17th May, 2011.

In terms of Article 127 of the Articles of Association of the Company, Mr. Ravi Keswani, Director of the Company, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

10. AUDITORS AND THEIR REPORT

M/s. S. R. Batliboi & Co., Chartered Accountants, Mumbai - (Registration No - 301003E), the statutory auditors of the Company - holds office until the conclusion of the ensuing Annual General Meeting and is eligible for re- appointment. The Company has received a letter from them, to the effect that their appointment, if made, will be in accordance with the limits prescribed under Section 224(1 B) of the Act and that, they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

The Auditors in their Report have drawn attention to Note No.k on the following matter:

The balance of the Sundry Creditors are in process of confirmation/reconciliation. Consequently we are unable to comment on the carrying values of these balances as recorded in these financial statements and accordingly the impact of the consequential adjustments, if any, on the Profit and Assets /Liabilities cannot be ascertained.

The management expects to receive confirmation of balances from sundry creditors in due course of time and does not expect any material impact on profit and assets/liabilities.

11. PARTICULARS OF EMPLOYEES

Information as per Section 217 (2A) of the Act read with the Companies (Particulars of Employees] Rules 1975 forms part of this Report. As per provisions of Section 219(1 )(b](iv) of the Act, the Report and Accounts are being sent to the Shareholders of the Company, excluding the statement of particulars of the employee under Section 217 [2A] of the Act. Any shareholder interested in obtaining a copy of the statement may write to the Company Secretary at the Registered Office of the Company.

12. DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a. That in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b. That the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of the profit of the Company for the year ended on that date;

c. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. That the annual accounts have been prepared on a going concern basis.

13. TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A(5) of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund [I EPF) established by the Central Government pursuant to Section 205C of the Act.

14. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance and Certificate from the Practicing Company Secretary thereon are given in the Annexure which forms part of Directors' Report.

15. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the contribution from employees at all levels in sustaining the Company's performance.

The Company takes this opportunity to offer its sincere thanks to the Company's bankers for their unstinted support and continued confidence in the Company and also places on record its sincere thanks to all clients for their co-operation.

16. CAUTIONARY STATEMENTS

Statements in this report on management discussion and analysis, describing the Company's objectives or outlook, opportunities, expectations and estimates may be forward-looking statements within the meaning of applicable laws or regulations, actual results could, however, differ materially from those expressed or implied.

BY ORDER OF THE BOARD

T. S. Das Ravi Keswani

Mumbai, 18th May, 2012 MANAGING DIRECTOR DIRECTOR


Mar 31, 2011

The Directors of Petron Engineering Construction Limited have pleasure in presenting the Thirty-fifth Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2011.

A) FINANCIAL RESULTS

During the year under review, though the total revenue has declined to Rs. 50143 Lacs from Rs. 53376 Lacs in the previous year (down by 6.06%), the profit has increased to Rs. 6089 Lacs before interest, depreciation, tax and transfer from revaluation reserve as compared to Rs. 5165 Lacs in the previous year (increased by 17.89%). The interest has declined to Rs. 381 Lacs (Previous Year Rs. 675 Lacs) (Lower by 43.56%) and depreciation has increased to Rs. 1093 Lacs (previous year Rs. 903 Lacs) (Higher by 21.04%).

The improvement in the operational efficiency and reduction in interest cost has resulted into higher profit of Rs. 4615 Lacs as compared to Rs. 3587 Lacs in the previous year before providing for tax. The Net Profit for the year is higher at Rs. 3095 Lacs as compared to Rs. 2388 Lacs in the previous year.

For the year For the year ended 31st ended 31st March, 2011 March, 2010 (Rs.) (Rs.)

Total turnover (Sales & Other income) 5,014,294,736 5,337,551,115

Profit before interest, depreciation, tax & 608,888,959 516,476,770 transfer from revaluation reserve

Interest 38,092,133 67,506,454

Profit before depreciation, tax and transfer 570,796,826 448,970,316 from revaluation reserve

Depreciation 109,267,359 90,320,057

Profit/(Loss) before tax 461,529,466 358,650,259

Provision for taxation: Current tax 181,883,760 121,328,108

Deferred tax (38,738,185) (1,510,563)

Income-tax for earlier year 8,846,361

Profit/(Loss) after tax 309,537,530 238,832,714

Balance in profit & loss account brought forward 480,935,746 283,683,900

Amount available for appropriation 790,473,276 52,25,16,614

Proposed dividend for the year 15,076,800 15,076,800

Corporate dividend tax thereon 2,445,834 2,504,068

General reserve 32,500,000 24,000,000

Surplus carried over to balance sheet 740,450,642 480,935,746

790,473,276 522,516,614

B) DIVIDEND

Your Directors are pleased to recommend a Dividend of Rs. 2 (20%) per Equity Share of Rs. 10 each for the year ended 31st March, 2011 for declaration by the Shareholders at the Thirty-fifth Annual General Meeting. The Dividend will absorb Rs. 15,076,800 and Corporate Dividend Tax thereon will be Rs. 2,445,834, aggregating to Rs. 17,522,634.

8) CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in undertaking engineering & construction projects, the disclosure of particulars under Section 217(1)(e) of the Act (hereinafter referred to as the Act), in so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below:

9) RESTRUCTURING AND CHANGE IN CONTROL

Petron Engineering Construction Limited is a subsidiary of Petron Investments Private Limited ("PIPL"). (PIPL is owned by Amritha Sharanya Leasing & Investments Pvt. Ltd. ("ASLI"), SRA Finance & Investments Pvt. Ltd. ("SRA") and KazStroyService Hungary Kft. in the ratio 40:40:20.

Fraseli Investments S.a.r.l. ("Fl") acquired 33.34% of the issued and fully paid- up A ordinary share capital of KazStroyService Global B.V. ("KSS Global") from KazStroyService Holding B.V.("KSS Holding") and KazStroyService Infrastructure B.V. ("KSS Infra") pursuant to a share purchase agreement dated March 2, 2011. Consequent to the acquisition, there was a restructuring within the KazStroyService group whereby KSS Global acquired ASLI, SRA, PIPL and KazStroy Engineering (UK) Ltd. KSS Global thereby indirectly acquired the legal ownership of 52.47% of Petron Engineering Construction Limited.

Pursuant to the investment by Fl in KSS Global and the restructuring, the following constitute the group of Petron Engineering Construction Limited for purposes of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997:

- KazStroyService Global B.V. - SRA Finance and investments Private Limited

- KazStroyService Infrastructure B.V. - Petron Investments Private Limited

- KazStroyService Holding B.V. - KazStroyService Hungary Kft.

- CIS Drilling Pte Limited - Petron Civil Engineering Private

- Steppe Capital Pte Limited Limited

- Fraseli Investments S.a.r.l. - KazStroyService Infrastructure India Pvt. Ltd

- Mittal Investments S.a.r.l. - KazStroy Engineering India Pvt. Ltd

- Mr. ArvindTiku - JSC OGCC KazStroyService

- Mr. TimurKulibayev - KazStroyService Management

- KazStroy Engineering (UK) Limited Services Pte Ltd

- KazStroyService Limited - Bhubaneshwar Expressways Pvt. Limited

- Amritha Sharanya Leasing and Investments Private Limited - KazStroyService Investment Pte Ltd

In terms of the requirements of Regulations 10 & 12 of Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulation 1997, KSS Global along with persons acting in concert with it has appointed Citigroup Global Markets India Pvt. Ltd., Bakhtawar, 8/12th Floor, Nariman Point, Mumbai 400 021 as its Merchant Banker and made a public announcement on 23rd May, 2011 of an open offer to the public shareholders of Petron Engineering Construction Limited to acquire up to 20% of the paid-up share capital of the company.

10) DIRECTORS

Mr. Arvind Dabar was appointed as an Additional Director on 29th October, 2010. He has resigned from the Board with effect from 17th May, 2011.

Mr. D. K. Khare has resigned with effect from 12th October, 2010.

In terms of Article 127 of the Articles of Association of the Company, Mr. R. Sankaran, Director of the Company, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

11) AUDITORS

M/s. Lodha & Co., Chartered Accountants, New Delhi - the statutory auditors of the Company - holds office until the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment. The Company has received a letter from them, to the effect that their appointment, if made, will be in accordance with the limits prescribed under Section 224(1B) of the Act and that, they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

12) PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules 1975 forms part of this Report. As per provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the Shareholders of the Company, excluding the statement of particulars of the employee under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the statement may write to the Company Secretary at the Registered Office of the Company.

13) DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a) that in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b) that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and of the profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act

for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the annual accounts have been prepared on a going concern basis.

14)TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION PROTECTION FUND

Pursuant to the provisions of Section 205A(5) of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Act.

15) CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance and Certificate from the Practicing Company Secretary thereon are given in the Annexure which forms part of Directors Report.

16) ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the contribution from employees at all levels in sustaining the Companys performance.

The Company takes this opportunity to offer its sincere thanks to the Companys bankers for their unstinted support and continued confidence in the Company and also places on record its sincere thanks to all clients for their co-operation.

17) CAUTIONARY STATEMENTS

Statements in this report on management discussion and analysis, describing the Companys objectives or outlook, opportunities, expectations and estimates may be forward-looking statements within the meaning of applicable laws or regulations, actual results could, however, differ materially from those expressed or implied.



By order of the Board

T. S. Das Ravi Keswani Managing Director Director

Mumbai, 25th May, 2011


Mar 31, 2010

The Directors of Petron Engineering Construction Limited have pleasure in presenting the Thirty-fourth Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2010.

A. FINANCIAL RESULTS

During the year under review your Companys total revenue has increased to Rs. 53,376 Lacs from Rs. 46,176 Lacs in the previous year (higher by 15.6%). The profit before interest, depreciation, tax and transfer from revaluation reserve were Rs. 5,165 Lacs as compared to Rs. 2,538 Lacs in the previous year (103% higher). The interest has declined to Rs. 675 Lacs (Previous year: Rs. 709 lacs) (lower by 5%) and depreciation has increased to Rs. 903 Lacs (Previous year Rs. 683 Lacs) (higher by 32%). The rise in turnover and improved operational efficiency has resulted into higher profit of Rs. 3,587 Lacs as compared to Rs. 1,146 Lacs in the previous year before providing for tax. The Net Profit for the year is higher at Rs. 2388 Lacs as compared to Rs.647 Lacs in the previous year.

for the year ended for the year ended 31st March, 2010 31st March, 2009 Rupees Rupees

Total turnover (Sales & Other income) 5,33,75,51,115 4,61,76,45,843

Profit before interest, depreciation, tax and transfer from revaluation 51,64,76,770 25,37,78,820 reserve

Interest 6,75,06,454 7,08,87,339

Profit before depreciation, tax and transfer from revaluation reserve 44,89,70,316 18,28,91,481

Depreciation 9,03,20,057 6,82,76,692

Profit/(Loss) before tax 35,86,50,259 11,46,14,789

Provision for taxation

Fringe benefit tax -- 4,000,000

Current tax 12,13,28,108 1,73,38,052

Deferred tax (15,10,563) 2,46,28,558

Income-tax for earlier year -- 3,977,679

Profit/(Loss) after tax 23,88,32,714 6,46,70,500

Balance in profit and loss account brought forward 28,36,83,900 21,90,13,400

Amount available for appropriation 52,25,16,614 28,36,83,900

Proposed dividend for the year 1,50,76,800 -

Corporate dividend tax thereon 25,04,068 -

General reserve 2,40,00,000 -

Surplus carried over to balance sheet 48,09,35,746 283,683,900

Total 52,25,16,614 28,36,83,900

B. DIVIDEND

Your Directors are please to recommend a Dividend of Rs.2 (20%) per Equity Share of Rs.10 each for the year ended 31st March, 2010 for declaration by the Shareholders at the Thirty-fourth Annual General Meeting. The Dividend will absorb Rs. 1,50,76,800 and Corporate Dividend Tax thereon will be Rs.25,04,068, aggregating to Rs.1,75,80,868.

7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in undertaking engineering & construction projects, the disclosure of particulars under Section 217(1 )(e) of the Act (hereinafter referred to as the Act), in so far as it relates to the conservation of energy and technology absorption is not applicable. Particulars with regard to foreign exchange earnings and outgo are given below: Total Foreign Exchange used and earned:

i) Value of Imports on CIF basis Rs.15,75,94,126

ii) Expenditure in Foreign Currency Rs.1,37,41,136

iii) Foreign Exchange earned Rs.5,93,63,803

8. DIRECTORS

Mr. Ravi Keswani is a qualified Chartered Accountant and a law graduate. He is having an overall experience of 23 years working with large corporate in Finance & Treasury, Accounts, Taxation. Commercial. Project Costing & Budgetary Control, Corporate Strategy. Mergers & Acquisitions etc. He was involved in successful completion of IPO; private equity transaction with group of prestigious investors; subsequent fund raising in rough FCCBs and QIPs: setting up strategy and business plan development: acquisition cf a large desgn and construction company in Singapore and UK, Mergers and Demergers in the Group, both domestic and cross border, hiving off some of the non-core businesses, new ventures and initiatives; implementation of ERP system and continuous process and control improvements. He is currently employed with KazStroyService Group - since March, 2010 as Group CFO. Prior, to joining KSS Group he was working with Punj Lloyd Limited as President - Investors Relations and Group Accounts. He has also worked with Hero Cycles Limited as Assistant General Manager.

Mr. Dinesh Kumar Khare was appointed as an Additional Director being Non- Executive Director with effect from 27th April, 2010. He is 57 year old, qualified B.E. (Civil) and has an experience of 34 years in large infrastructure projects. Presently, he is the CEO of the associate companies in KSS Group and leading a team in the areas of infrastructure, industrial parks, SEZs, real estate and environmental management. He possesses in-depth exposure to power plant projects from Captive to Mega power plants. Hes also experienced in EPC, PPP models and international projects with specific reference to Gulf & South African regions.

Mr. Pravin Jain has resigned with effect from 16th November, 2009.

Mr. D. K. De Chaudhuri has resigned with effect from 27th April, 2010.

In terms of Article 127 of the Articles of Association of the Company, Dr. S. Rama Iyer, Director of the Company, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

9. AUDITORS AND THEIR REPORT

M/s. Lodha & Co., Chartered Accountants, New Delhi - the statutory auditors of the Company - holds office until the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment. The Company has received a letter from them, to the effect that their appointment, if made, will be in accordance with the limits prescribed under Section 224(1 B) of the Act and that, they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

The auditors have drawn attention vide clause no. 2(f) on the following matters:

i. Change in Accounting Policy

The auditors had, in earlier years, qualified that the Company was not following accrual basis of accounting for certain indirect taxes (i.e. service tax, VAT & sales tax etc.). During the year, the Company has changed its accounting policy in respect of these taxes to accrual basis, which has resulted into higher charge to the Profit & Loss a/c by Rs.1,648 lacs for the year. Further reference is drawn to the Note No. B8(a) of Schedule 21 to the Financial Statements.

ii. The auditors have qualified their opinion vide clause no. 2(g) in their report in respect of non- provision for shortfall, if any, in recovery against certain debtors and detention of the fixed assets.

The Company has initiated legal action for recovery of its dues and release of the assets detained and the management is hopeful of their recovery. Further reference is drawn to the Note No. B10 of Schedule 21 to the Financial Statements.

10. PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules 1975 forms part of this Report. As per provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the Shareholders of the Company, excluding the statement of particulars of the employee under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the statement may write to the Company Secretary at the Registered Office of the Company.

11. DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

a) that in the preparation of annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b) that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the annual accounts have been prepared on a going concern basis.

12. TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION PROTECTION FUND

Pursuant to the provisions of Section 205A(5) of the Act, the declared dividend which remained unpaid or unclaimed for a period of 7 years has been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Act.

13. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance and Certificate from the Practicing Company Secretary thereon are given in the Annexure which forms part of Directors Report.

14. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the contribution from employees at all levels in sustaining the Companys performance.

The Company takes this opportunity to offer its sincere thanks to the Companys bankers for their unstinted support and continued confidence in the Company and also places on record its sincere thanks to all clients for their co-operation.

BY ORDER OF THE BOARD

T.S. Das Ravi Keswani Managing Director Director

PLACE : MUMBAI

DATED : 31st May, 2010

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