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Directors Report of PNC Infratech Ltd.

Mar 31, 2015

Dear members,

On behalf of the Board of Directors, it is our pleasure to present the 16th Annual Report on the business and operations of the Company together with the Audited Financial Statement of PNC Infratech Limited ("the Company") for the financial year ended March 31, 2015.


The summarized standalone and consolidated financial results of your Company are given below:

(Rs. in Lacs)

Particulars Financial Year ended


31/03/2015 31/03/2014

Total Income from operations 1,56,098.54 1,15,212.30

Total Expenses 1,38,073.10 1,03,506.88

Profit from operations before 18,025.44 1 1,705.42 other Income, finance cost

Other Income 1382.08 1058.97

Profit from ordinary activities 19,407.52 12,764.39 before finance cost and exceptional items

Finance cost 4,623.51 2,340.82

Profit from Ordinary 14,784.01 10,423.57 activities before tax

Provision for Taxation 4,747.97 3,408.86

Net Profit from Ordinary 10,036.04 7014.71 Activities

Minority Interest - -

Net Profit after Taxes 10,036.04 7014.71 and Minority Interest

Earnings before Interest, 21,662.07 14,188.33 Tax, Depreciation and Amortization (EBITDA)

Amount available for 10036.04 7014.71 appropriation

Proposed Divided 769.59 298.56

Dividend Tax 156.66 50.74

Reserves 67,863.40 58,918.27

Earnings Per share 25.21 17.62 (Basic/Diluted)

Particulars Consolidated

31/03/2015 31/03/2014

Total Income from operations 1,86,088.62 1,35,995.52

Total Expenses 1,64,135.60 1,22,468.81

Profit from operations before 21,953.02 13,526.71 other Income, finance cost

Other Income 1214.47 1080.89

Profit from ordinary activities 23,167.49 14,607.60 before finance cost and exceptional items

Finance cost 9,251.39 6,087.45

Profit from Ordinary 13,916.10 8520.15 activities before tax

Provision for Taxation 4,787.74 3,456.70

Net Profit from Ordinary 9,128.36 5,063.45 Activities

Minority Interest 0.06 454.43

Net Profit after Taxes 9,128.42 5,517.88 and Minority Interest

Earnings before Interest, 27,987.36 17,544.61 Tax, Depreciation and Amortization (EBITDA)

Amount available for _ _ appropriation

Proposed Divided _ _

Dividend Tax _ _

Reserves 83,127.34 66,991.91

Earnings Per share 22.93 13.86 (Basic/Diluted)

*previous year figures have been regrouped/rearranged wherever necessary.


On a standalone basis, the Company recorded total revenue of C 1,560 crores, which is 35% higher than the previous year's Rs. 1,152 crores. Correspondingly, EBITDA and PAT went up from Rs.142 crores and C 70 crores, respectively, to C 217 crores and Rs.100 crores, respectively, marking an increase of 53% in EBITDA and 43% in PAT. While the EBITDA margin improved from 12.3% to 13.9%, PAT margin went up from 6.1% to 6.5%.

On a consolidated basis, the Company reported total income from operations at C 1,861 crores in FY 2014-15, up 37% from C 1,360 crores in FY 2013-14. The break-up between EPC and BOT (toll and annuity) income was C 1,600 crores and C 261 crores, respectively, in comparison to C1,210 and C150 crores in FY 2013-14. Consolidated EBITDA for the year was at C 280 crores, which was 60% higher than C175 crores in the previous year, while profit after tax (PAT) up by 65%, at C91 crores compared to C 55 crores in 2013-14. EBITDA margin improved from 12.9% to 15.0%, while PAT margin went up from 4.1% to 4.9%.


During the year and up to the date of this Report, the Company has bid for and been awarded/become L1 for the following projects:

Name and description of the contract

Development of Agra to Firozabad (Village Gurha) (Km. - 2.634 to 0.000 to 53.500) Access Controlled Expressway (Green Field) Project in the state of Uttar Pradesh on EPC mode, awarded by Chief Executive Officer, UPEIDA.

Company has become L1 (lowest) Bidder for the project of resurfacing/strengthening of runway at Air Force Station, Kanpur for a total contract cost of C 167.25 Crore.

Two PNC Infratech Limited-led joint ventures have been declared the L1 (lowest) Bidders for two roads projects of National Highways Authority of India for an aggregate project cost of C 1,506.84 crores.

PNC Kanpur Highways Limited, a wholly owned subsidiary of PNC Infratech Limited, has commenced toll operations with effect from 7th May 2015 on the Kanpur-Kabrai section of National Highway - 86.

Ghaziabad Aligarh Expressway Pvt. Ltd (GAEPL), an associate company of PNC Infratech Limited, has commenced toll operations with effect from 24th June 2015 on the Ghaziabad-Aligarh section of National Highway - 91.

The total outstanding contract value pending execution was Rs.344476.00 Lacs as on March 31, 2015.

The Company is presently executing the following major projects:

Sr. Category Name of the Project

1 Highways EPC Contract for-Design, Engineering, Finance, Construction, Operation and Maintenance of Ghaziabad- Aligarh Section of NH-91 from Km.23.600 to km 140.200 in the State of Uttar Pradesh Under NHDP Phase III on Design, Build, Finance, Operate and Transfer (the "DBFOT") basis.

2 Highways Construction of Balance work of New Four Lane Agra Bye pass connecting Km 176.800 of NH-2 to Km .13.03 of NH-3 in the state of UP.

3 Highways Four laning of km 51 to 61 (Including Chambal Bridge) on Dholpur-Morena Section of NH-3 on North- South corridor in the state of Rajasthan - Madhya Pradesh (This project consist of 850 m long State of the art high level PSC Bridge across Chambal river, besides one No. ROB, Two Flyovers and 10 Km long 4 Lane highways).

4 Highways EPC Contract for Two Laning with Paved Shoulders of Raebareli to Jaunpur Section (Km 0 000 to Km 166.4000) of NH-231 in the State of Uttar Pradesh Under NHDP IV on BOT (Annuity)

5 Highways EPC Contract for Construction of four laning of Bareilly - Almora - Bageshwar Road (upto Uttrakhand Border) (SH-37).

6 State Four laning widening and strengthening of Agra - Highways Samasbad Road.

7 State Widening & strengthening of Pilibhit -Bareilly Highways -Mathura-Bharatpur Marg (SH-33) Km.55 to Km.78 for Four Lane under Dist. Bareilly.

8 State Widening & strengthening of Pilibhit-Bareilly -Mathura Bharatpur Marg (SH-33) Km.79 to Km.99(800) for

Highways Four Lane under Dist. Badaun

9 State Rehabilitation and upgradation of Sonauli to Highways Gorakhpur section (Km.0 000 to Km.80 000) of NH-29E in Uttar Pradesh to two lane with paved shoulders on EPC mode under NHDP Phase-IV.

10 State Rehabilitation and upgradation of Barabanki-Jarwal Highways section of NH-28C (Km. 0.000 to Km. 43.000) in the state of Uttar Pradesh under NHDP-IV on EPC Basis

11 State Development of Agra to Firozabad (Village Gurha) Highways (Km. - 2.634 to 0.000 to 53.500) Access Controlled (new) Expressway (Green Field) Project in the state of Uttar Pradesh on EPC mode.

12 Airport Resurfacing of runway and allied works at AFS Runways PANAGARH (WB).

13 Airport Resurfacing of runway at AFS GORAKHPUR (UP). Runways

14 Water Construction of Pipe Bridge across Yamuna River. Supply (This Project envisages Construction of Pipe cum Road Bridge across river Yamuna including its approaches near Kailash Mandir, Sikandra, Agra)

15 Power Supply & Installation of 132 KV & 220 KV T/L in various part of U.P.


Keeping in view the continued good performance, future funds requirements of the Company and policy of the Company for rewarding shareholders, your Directors are pleased to recommend a dividend of 15 %, i.e. Rs. 1.50 per equity share on 5,13,07,833 equity shares of Rs.10/- each for the financial year ended 31st March, 2015.

The dividend shall be subject to tax on dividend to be paid by your Company but will be tax-free in the hands of the Members. The dividend together with the dividend distribution tax will entail a cash outflow of C 926.25 Lacs (previous year C 349.30 Lacs).


The credit rating of the Company is CARE A (low credit risk and adequate degree of safety) for long term and CARE A1 (lowest credit risk and very strong degree of safety) for short term, during the financial year.


In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.


During the year under review, none of the Company have become or ceased to be Company's subsidiaries, joint ventures or associate companies.

A report on the performance and financial position of each of the subsidiaries, associates and joint venture companies as per the Companies Act, 2013 is provided as an Annexure to the consolidated financial statement and hence not repeated here for the sake of brevity.

The Policy for determining material subsidiaries as approved may be accessed on the Company's website at the link: http:// www.pncinfratech.com/investors.


The Company has completed its Initial Public Offering (IPO), in May, 2015, pursuant to which 1,29,21,708 number of equity shares of C10 each were allotted at a price of C378 per equity share, consisting of fresh issued 1,15,00,000 equity shares and offer for sale of 14,21,708 equity shares by NYLIM Jacob Ballas India (FVCI)III LLC. The equity shares of the company were listed on National Stock Exchange of India Limited and BSE Limited on 26th May, 2015.

As the Company got listed in May 2015, therefore, the provisions of the Companies Act, 2013, as applicable to a listed company and Listing Agreement were not applicable during the financial year 2014-15, however, the Company endeavors to voluntary comply the provisions, to the extent possible during the financial year 2014-15.


In accordance with the provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them 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 at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) during the financial year ended March 31, 2015, the Company was unlisted, and hence the comments are not required; and

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


The compliance with clause 49 of the listing agreement was first time applied to your Company on the listing of its shares on the stock exchanges on May 26, 2015. However, your Company has voluntarily complied with the code of corporate governance in accordance with Clause 49 of listing agreement to a large extent, particularly in respect of Board of Directors and other committees of the Board. From the date of listing, the company is fully compliant with Listing Agreement.

The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from a Practicing Company Secretary confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.


The Company has adopted a Policy on Risk Management, to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the Company's business. In order to achieve the key objective, this Policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues.

The Company's management systems, organizational structures, processes, standards, code of conduct, Internal Control and Internal Audit methodologies and processes that governs how the Company conducts the business of the Company and manages associated risks.

Pursuance to Clause 49 of the Listing Agreement, the Company is not required to constitute a Business Risk Management Committee. At present the Company has not identified any element of risk which may threaten the existence of the Company.


In line with the requirements of the Companies Act, 2013 and Equity Listing Agreement, your Company has formulated a Policy on Related Party Transactions which is also available on Company's website accessible at weblink http://www. pncinfratech.com/investors. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties. This Policy specifically deals with the review and approval of Material Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All Related Party Transactions are placed before the Audit Committee for review and approval. All Related Party Transactions entered/continued during the year were in Ordinary Course of the Business and on Arm's Length basis.

No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is not applicable.


The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board.

The CSR Policy may be accessed on the Company's website at the link: http://www.pncinfratech.com/investors. The Annual Report on CSR activities is annexed herewith marked as Annexure-I.


During the year the Company, being an un-listed entity, was not required to comply the guiding provisions of Internal Financial Control, as required under Companies Act, 2013 and Listing Agreement. Existing systems and procedures adopted in the Company were sufficient for adequate Internal Financial Control and no reportable material weakness in the design of operation were observed.


Mr. S K Awasthi resigned as a Director of the Company w.e.f. 02.06.2014 due to personal reasons.

During the year, members approved the appointment of Mr. C R Sharma, Mr. A K Gupta, Mr. D V Sharma, Mr. S C Kalia, Mr. R K Gupta and Mrs, Deepika Mittal, as Independent Directors, who are not liable to retire by rotation, for a period of five years.

In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Naveen Kumar Jain and Mr. Anil Kumar Rao, Whole Time Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for reappointment.

Your Directors recommend their re-appointment at the ensuing Annual General Meeting.

During the year under review, Mr. C K Jain, Managing Director was appointed as Chief Financial Officer on Sep 22, 2014 and resigned from the same position on Feb 10, 2015.

Further, Mr. Devendra Kumar Agarwal was appointed as Chief Financial Officer of the Company w.e.f. February 10, 2015.


The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act and Clause 49 of the Listing Agreement with the Stock Exchanges.


The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual directors. On the basis of Policy approved by the Board of Directors for performance evaluation of Independent Directors, Board, Committees and other individual Directors, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. The details of programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the weblink: http://www.pncinfratech.com/investors. The Nomination and Remuneration Policy of the Company is attached herewith marked as Annexure -II.

During the period under review, the Company was not listed, hence details as required under Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 regarding ratio of remuneration of Executive directors to the median remuneration of the employees and increase in remuneration of executive Director , Chief financial officer and company Secretary during the financial year, has not been provided.


Your Company treats its "Human Resources" as one of its most important assets. Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. Your Company believes in the promotion of talent internally through job rotation and job enlargement.


During the year under review, your Company's authorised share capital was increased from Rs.50.00 crores to Rs.55.00 crores (Rupees Fifty Five Crore only) comprising of 5,50,00,000 equity shares of Rs.10 each.

During the year under review, your Company's paid up share capital has remain unchanged at Rs.39,80,78,330 (Rupees Thirty Nine Crores Eighty Lacs Seventy Eight Thousands Three Hundred Thirty only) comprising of 3,98,07,833 (Three Crores Ninety Eight Lacs Seven Thousands Eight Hundred Thirty Three) equity shares of C10 each. However, the Company has raised the issued and paid up capital by issue and allotment of equity shares through Initial Public Offer (IPO) in May, 2015.


In the last AGM held on September 11, 2014, M/s. Purushottam Agrawal & Co. and S.S. Kothari Mehta & Co., Chartered Accountants have been appointed Statutory Auditors of the Company upto the conclusion of 17th AGM. Ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing AGM. They have confirmed their eligibility to the effect that their confirmation, if made, would be within the prescribed limits under the Act and that they are not disqualified to be confirmed as Auditors.

The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments.


The Board had appointed M/s. Rajesh Gupta & Associates, Cost Accountants, as Cost Auditors for conducting the audit of cost records of the Company for the financial year 2014-15 and necessary application for their appointment was filed by the Company with the Ministry of Corporate Affairs. The said Auditors have conducted the audit of Cost records for the year ended 31st March 2015 and have submitted their report, which is self explanatory and do not call for any further comments.

Your Company shall submit the Cost Audit Report with the Ministry of Corporate Affairs within the stipulated time period.

The Board has also appointed M/s. R K G & Associates, Cost Accountants, as Cost Auditors to conduct Cost Audit for the financial year 2015-16 and their remuneration has also been recommended for the ratification and approval of the Shareholders.


In terms of Section 204 of the Act and Rules made thereunder, M/s. Anuj Ashok & Associates, Practicing Company Secretary were appointed as Secretarial Auditors for the financial year 2014-15. The Secretarial Audit Report for the financial year ended on March 31, 2015 is annexed herewith marked as Annexure-III to this Report. There are no qualifications or adverse remark in their Report.

The Board has appointed M/s. DR Associates, Company Secretaries, as Secretarial Auditors to conduct Secretarial Audit for the financial year 2015-16.

DISCLOSURES Audit Committee

The Audit Committee comprises of Mr. C R Sharma, Independent Director (Chairman), Mr. Sunil Chawla, Nominee Director and Mr. Ashok Kumar Gupta, Independent Director as other members. The scope and terms of reference of Audit Committee is mentioned in the Corporate Governance Report. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Vigil Mechanism of the Company also incorporates a whistle blower policy in terms of the Listing Agreement and under Section 177 of the Companies Act, 2013. Protected disclosures can be made by a whistle blower through an e-mail, or a letter to the Vigilance Officer for this purpose/Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at the weblink: http://www.pncinfratech.com/investors.

Meetings of the Board

Five meetings of the Board of Directors were held during the year. The detail of dates of board meeting and attendance of directors and similar details of Board Committees are given in Corporate Governance Report.

Particulars of Loans given, Investments made, Guarantees given and securities Provided

Your Company is exempted from the applicability of the provisions of Section 186 of the Companies Act, 2013 (Act) read with Rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Companies (Meetings of Board and its Powers) Amendment Rules, 2015 as your Company is engaged in the business of providing infrastructural facilities.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure -IV to this Report.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure -V to this Report.

Particulars of Employees and related disclosures

The particulars of employees drawing remuneration in excess of the limits set out in 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, is annexed to this report, as Annexure -VI.

Unpaid/Unclaimed Dividend

During the year under review no amount which remained unclaimed and unpaid for a period of seven years, is due for transfer to Investor's Education and Protection Fund.


Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Change in the nature of business.

3. Voluntary revision of Financial Statements or Board's Report.

4. Issue of equity shares with differential rights as to dividend, voting or otherwise.

5. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

6. No director is in receipt of commission from the Company and Neither the Managing Director nor the Whole-time Directors of the Company received any remuneration or commission from any of its subsidiaries Companies.

7. No significant or material orders were passed by the Regulators or Courts or Tribunals which impacts the going concern status and Company's operations in future.

8. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

9. There was no instance of reporting of fraud to the Audit Committee and of Directors.


Your Directors would like to acknowledge and place on record their sincere appreciation to all stakeholders, banks and financial institutions, clients, vendors, Intermediaries associated with IPO of the Company, for their co-operation and continued support for the growth of the Company. The Directors also wish to acknowledge the assistance received from various regulatory bodies, NHAI, MPRDC, UPSHA, HSRDC, MES, DSIIDC, UPEDA and other Central and State Government agencies and thank them for the same and look forward to their continued support.

Your Directors also wish to place on record their sincere thanks to M/s. NYLIM Jacob Ballas India (FVCI) III LLC, our private equity partner, who has reposed trust in your Company.

Your Directors take this opportunity to recognise and appreciate the efforts and hard work of all the employees of the Company at all levels and thank them for their competence, sincerity, hard work and commitment.

For and on behalf of the Board of Directors Pradeep Kumar Jain

Place: Agra (Chairman and Managing Director) Date: August 07, 2015 DIN:-00086653

Oct 26, 11:40 am
Oct 26, 11:34 am
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