Mar 31, 2018
The Members IL&FS Engineering and Construction Company Limited
Your Directors take pleasure in presenting the Twenty-Ninth Annual Report along with the Audited Financial Statements for the Financial Year Ended March 31, 2018
(I) STANDALONE FINANCIAL RESULTS :
Your Company has adopted Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2017. Accordingly, the Standalone and Consolidated Financial Statements along with the comparatives for the year ended March 31, 2018 have been prepared in accordance with Ind AS prescribed under Section 133 of the Companies Act, 2013 read with Rules made thereunder. The effect of transition to Ind AS has been given in detail in Financial Statement section
(Rs. in Crore)
Particulars |
FY 2018 |
FY 2017 |
Revenue from Operations |
1868.76 |
1817.38 |
Other Income |
250.86 |
202.06 |
Companyâs share of profit from integrated joint ventures |
32.00 |
5.77 |
Total Income |
2151.62 |
2,025.21 |
Profit before Interest, Depreciation, Exceptional Items and Tax |
443.78 |
384.40 |
Less: Finance Cost |
396.03 |
330.97 |
Profit before Depreciation, Exceptional Items and Tax |
||
Less: Depreciation and Amortization Expenses |
44.54 |
47.97 |
Profit before Exceptional Items & Tax |
3.21 |
5.46 |
Exceptional Item (Net) |
0.00 |
0.00 |
Profit Before Tax |
3.21 |
5.46 |
Provision for Tax |
(3.71) |
0.43 |
Profit After Tax |
6.92 |
5.03 |
Other comprehensive income/(loss) for the year |
1.04 |
0.24 |
Total Comprehensive Income for the year |
7.96 |
5.27 |
Paid up Equity Capital |
131.12 |
131.12 |
Earnings per share (in Rupees) |
||
- Basic |
0.53 |
0.41 |
- Diluted |
0.53 |
0.41 |
(II) FINANCIAL PERFORMANCE REVIEW :
During the year ended March 31, 2018, your Company achieved a turnover of Rs.1,868.76 crore on standalone basis as against Rs.1,817.38 crore in FY 2017. The Net Profit for the year amounted to Rs.6.92 crore as against net profit of Rs.5.03 crore in FY 2017
(III) DIVIDEND :
Due to accumulated losses of the Company from the previous years, your Directors express their inability to recommend any dividend for the year on Preference as well as on Equity Shares
(IV) RESERVES :
No amount is recommended for transfer to Reserves of the Company for FY 2018
(V) THE STATE OF AFFAIRS OF THE COMPANY :
During the year under review, your Company bagged various orders in the Roads, Buildings & Structures, Power and Oil & Gas Sectors. The Orders received during the year under review amounted to Rs.1,632.70 crore. Also, the Company already had orders worth Rs.10,649 crore at the beginning of the year. Out of the total orders in hand, the unexecuted order value stands at Rs.10,140 crore (approx.) at the end of the year
Your Company is having operations beyond the territorial limits of India and is now operating from Saudi Arabia under a separate Joint Venture Subsidiary, and through Companyâs branches in Fujairah and Abu Dhabi
The Board of Directors is hopeful of securing sizeable orders in the future and is confident of effective execution of the existing works in the order book
(VI) SHARE CAPITAL :
During the year under review, there were no change in the share capital of the Company Shares held by Directors :
Mr Karunakaran Ramchand, Non-Executive Chairman of the Company holds 40,000 Equity Shares of the Company. No other Director of the Company holds any Shares or convertible instruments of the Company
(VII) DEPOSITS :
During the year under review, your Company had not accepted any deposit from public under Chapter V of the Companies Act, 2013
(VIII) DIRECTORS :
Mr Rajiv Sarin, Additional and Non-Executive Independent Director of the Company passed away on May 11, 2017. Your Directors express their deepest sorrow on the sad demise of Mr Sarin and place on record their sincere appreciation on the contribution made by him during his short stint with the Company
Further, Mr Saleh Mohammed A Binladen, Non-Executive Director resigned from the Directorship of the Company wef May 29, 2018. Consequent to the resignation of Mr Binladen, Mr Akberali Mohamedali Moawalla, Alternate Director to Mr Binladen, ceased to be a Director of the Company. Your Directors place on record their sincere appreciation on the contribution made by Mr Binladen and Mr Moawalla towards the Company
In terms of the provisions of the Companies Act, 2013, Mr Karunakaran Ramchand, Non-Executive Director of the Company, shall retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The brief profile of Mr Ramchand for re-appointment as a Director of the Company is included in the notice of Annual General Meeting in terms of the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and Secretarial Standard 2. Your Directors recommend the re-appointment of Mr Ramchand as a Director of the Company at the ensuing Annual General Meeting of the Company
None of the Directors of the Company are inter-se related to each other Statement on Declaration given by Independent Directors :
The Independent Directors of the Company have given their declaration of Independence in terms of sub-section (6) of Section 149 of the Companies Act, 2013 read with rules made thereunder and Regulation 16 of Listing Regulations
Familiarization Programme of Independent Directors :
The Company through its Managing Director and Senior Management conducts programmes/ presentations periodically to familiarize the Independent Directors with the strategy, operations and functions of the Company. The programmes/ presentations also familiarizes the Independent Directors with their roles, rights and responsibilities. The details of familiarization programmes imparted to Independent Directors of the Company during FY 2018 is available on the website of the Company at: http://www.ilfsengg.com/Document/FamiliarizationProgramme.pdf
Non-Executive Directors :
The Non-Executive Directors are entitled for sitting fee of Rs.30,000 per meeting for attending the Meetings of the Board and/ or Committee(s) thereof. Additionally, the actual out of pocket expenses incurred by the Non-Executive Directors for attending the meetings are also borne by the Company. Except as mentioned above, no other payments were made by the Company to Non-Executive Directors and the Company does not have any pecuniary relationship or transactions with the Non-Executive Directors. The details of amount paid to the Directors of the Company towards Sitting Fee are mentioned in the Form MGT-9 annexed to the Directorsâ Report as well as the Corporate Governance Section of this Annual Report
Performance Evaluation :
In terms of the provisions of the Companies Act, 2013 and Listing Regulations, the Board of Directors of the Company had in its Meeting held on November 10, 2014 approved the policy on Performance Evaluation of the Board of Directors, which laid down the criteria for performance evaluation of Board of Directors, its Committees, Executive Directors, Independent Directors and Non-Executive Directors. Further, in terms of the provisions of Section 178 of the Companies Act, 2013 read with Companies Amendment Act, 2017, the Nomination and Remuneration Committee of the Board had decided that the evaluation of performance of the Board, its Committees, individual directors and the Chairman will be carried out by the Board of Directors as per the parameters evolved from the policy on Performance Evaluation of the Board of Directors. The Board of Directors thereafter, in its Meeting held on July 31, 2018, evaluated the performance of its own, all its Committees, and Individual Directors (excluding the Director being evaluated) as satisfactory. The policy on performance evaluation is available on the website of the Company at http://www.ilfsengg.com/html/policies/PerformanceEvaluationPolicy.pdf
Managerial Remuneration Policy :
In terms of the provisions of Section 178 of the Companies Act, 2013 read with Rules made thereunder and Regulation 19 of Listing Regulations, the Board of Directors of the Company had framed Managerial Remuneration Policy which includes the criteria for determining qualifications, positive attributes, independence of directors and other matters as specified under Section 178(3) of the Companies Act, 2013 and Regulation 19 read with Part D of Schedule II of Listing Regulations. The policy is available on the website of the Company at http://www.ilfsengg.com/html/policies.php
(IX) KEY MANAGERIAL PERSONNEL :
In terms of the provisions of Section 203 of the Companies Act, 2013, the Board of Directors have designated Mr Mukund Sapre- Managing Director, Dr Sambhu Nath Mukherjee- Chief Financial Officer and Mr Sushil Dudeja- Company Secretary as the Key Managerial Personnel of the Company
(X) DIRECTORS RESPONSIBILITY STATEMENT :
In terms of Section 134 (5) of the Companies Act, 2013, the Board of Directors wish to state 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) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; 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
(XI) DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND
OUTGO:
(A) |
Conservation of energy |
|
i) |
The steps taken or impact on conservation of energy; |
The conservation of energy in all the possible areas is undertaken by the Company as an important means of achieving cost reduction. Savings in electricity, fuel and power consumption receive due attention of the management on a continuous basis |
ii) |
The steps taken by the Company for utilizing alternate sources of energy; |
NIL |
iii) |
The capital investment on energy conservation equipments; |
NIL |
(B) |
Technology absorption |
|
i) |
the efforts made towards technology absorption; |
Timely completion of the projects as well as meeting the budgetary requirements are the two critical areas where different techniques help to a great extent. Many innovative techniques have been developed and put to effective use in the past and the efforts to develop new techniques continue unabated. |
ii) |
the benefits derived like product improvement, cost reduction, product development or import substitution; |
NIL |
iii) |
in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - |
NIL |
a) the details of technology imported; |
||
b) the year of import; |
||
c) whether the technology been fully absorbed |
||
d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; |
NA |
|
iv) |
The expenditure incurred on Research and Development |
Nil |
(C) |
FOREIGN EXCHANGE |
|
Foreign Exchange earned in terms of actual inflows during the year |
Nil |
|
Foreign Exchange Outgo during the year in terms of actual outflows |
Rs.7.47 crore |
(XII) BOARD AND ITS COMMITTEES :
(a) Board of Directors :
During the year under review the Board of Directors of the Company met four times on May 29, 2017, August 28, 2017, November 28, 2017 and February 12, 2018. The attendance, along with such other details as required, of each of the Directors is mentioned in the Corporate Governance Report section of this Annual Report
(b) Audit Committee :
The Audit Committee of the Board of Directors of the Company consists of four Members. During the year under review, there were no change in the composition of the Committee. The dates of meetings of Audit Committee held during FY 2018, attendance of Members in the Meetings and other details are mentioned in the Corporate Governance Report section of this Annual Report
During the year under review, all the recommendations of the Audit Committee were accepted by the Board of Directors. Further, the Committee comprises with majority of Independent Directors including its Chairman, all of whom have the ability to read and understand the Financial Statements
(c) Corporate Social Responsibility Committee :
The Board of Directors of the Company constituted Corporate Social Responsibility (CSR) Committee on March 18, 2014 and formulated a policy on CSR which is available on the website of the Company at http://www.ilfsengg.com/html/policies/CSR_Policy.pdf.
During the year under review due to demise of Mr Rajiv Sarin, the CSR Committee was reconstituted by the Board of Directors in its Meeting held on May 29, 2017. In place of Mr Sarin, Mr Debabrata Sarkar was inducted as a Member of the Committee
For details relating to composition of CSR Committee, number of meetings held during the year under review and other details, Members are requested to refer the Corporate Governance Report which forms part of this Annual Report
As per Section 135(5) of the Companies Act, 2013, the Company was required to spend two percent of the average net profits calculated on the basis of preceding three financial years. However, no CSR activities have been conducted during the year due to negative average net profits of the Company for the preceding three financial years. The details of CSR policy and other details as per Rule 9 of Companies (Corporate Social Responsibility) Rules, 2014 are enclosed as Annexure 1 to this Report
(d) Other Committees :
The details of composition, number of Meetings and such other information as required regarding Nomination and Remuneration Committee, Stakeholders Relationship Committee and other Committees are mentioned in the Corporate Governance section of this Annual Report
(XIII) RISK MANAGEMENT :
The Board of Directors in its Meeting held on February 11, 2015 formulated a Risk Management Policy consisting of various elements of risk and mitigation measures
Further, the Board of Directors in its Meeting held on May 29, 2017, re-constituted the Risk Management Committee comprising of Mr Debabrata Sarkar, Mr Ganapathi Ramachandran, Ms Sutapa Banerjee, Mr Bhaskar Chatterjee - Independent Directors and Mr Mukund Sapre, Managing Director of the Company. The Risk Management Committee of the Company is responsible for overseeing the implementation of the Policy. In the opinion of the Board, the policy on Risk Management addresses the risks associated with the business including identification of elements of risk which may threaten the existence of the Company. The Board of Directors/Audit Committee reviews the risk assessment and mitigation procedures across the entity from time to time. As on March 31, 2018, there were no risks which may threaten the existence of the Company
(XIV) SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES :
As per Section 129 (3) of the Companies Act, 2013 and Regulation 34 of the Listing Regulations, the Consolidated Financial Statements of the Company forms part of this Report. The copies of Audited Financial Statements of the Subsidiaries are available on the website of the Company at www.ilfsengg.com and a copy of the same will be provided upon written request to the Company Secretary
SUBSIDIARY ENTITIES:
Following are the Subsidiaries of your Company:
Angeerasa Greenfields Private Limited,
Ekadanta Greenfields Private Limited,
Saptaswara Agro-farms Private Limited,
Maytas Infra Assets Limited,
Maytas Metro Limited,
Maytas Vasishta Varadhi Limited; and
Maytas Infra Saudi Arabia Company (Foreign Subsidiary)
ASSOCIATES & JOINT VENTURES :
During the year under review, the following entities have been Associates and Joint Ventures of your Company:
Associate :
Hill County Properties Limited
Joint Ventures (Association of Persons) :
NCC-Maytas (JV)
NEC-NCC-Maytas (JV)
Maytas-NCC (JV)
NCC-Maytas (JV) (Singapore Classtownship)
Maytas-CTR (JV)
NCC-Maytas-ZVS (JV)
Joint Ventures (Jointly Controlled Operations) :
Maytas- KBL (JV)
Maytas KCCPL Flow Mbre (JV)
Maytas MEIL KBL (JV)
Maytas MEIL ABB AAG (JV)
MEIL Maytas ABB AAG (JV)
MEIL Maytas KBL (JV)
MEIL Maytas WPIL (JV)
MEIL Maytas AAG (JV)
MEIL-SEW-Maytas-BHEL (JV)
L&T KBL Maytas (JV)
Maytas Ritwik (JV)
Maytas Sushee (JV)
Maytas Gayatri (JV)
IL&FS Engg-Kalindee (JV)
AMR-Maytas-KBL-WEG (JV)
ITDC-Maytas JV IL&FS GPT JV
Further, none of the entities have been associated / disassociated as Joint Ventures of your Company during the year under review
The performance and financial position of the Subsidiaries, Joint Venture and Associate Companies are enclosed as Annexure 2 to this Report
(XV) AUDITORS AND AUDITORSâ REPORT :
(a) Statutory Auditors :
In terms of provisions of Section 139 of the Companies Act, 2013 read with Rules made thereunder, BSR & Associates LLP Chartered Accountants (Firm Registration Number 116231W/W-100024) and M Bhaskara Rao & Co, Chartered Accountants (Firm Registration Number 000459S) were appointed as the Joint Statutory Auditors of the Company for a period of five consecutive years to hold office from the conclusion of 28th AGM till the conclusion of 33rd AGM of the Company to be held in the year 2022, subject to ratification by the Members at every AGM. Accordingly resolution for ratification of appointment of Joint Statutory Auditors by the Members of the Company is included in Notice of AGM for approval of the Members
Further, in terms of provisions of the Companies (Amendment) Act, 2017, the ratification of appointment of Joint Statutory Auditors by the Members of the Company was no longer required. Accordingly, the appointment of BSR & Associates LLP Chartered Accountants and M Bhaskara Rao & Co, Chartered Accountants, as Joint Statutory Auditors of the Company for the remaining period i.e. 3 years till the conclusion of 33rd Annual General Meeting, shall not be subject to ratification by the Members of the Company
The Board noted that there were following qualifications in the Auditorâs Report for the Standalone and Consolidated Financial Statements for the Year Ended March 31, 2018:
(1) Standalone Financial Statements :
"The accompanying financial statement as at March 31, 2018, the Company has investment (including advance of Rs.258 Lakhs) amounting to Rs.3,577 Lakhs made in an overseas subsidiary. Based on the latest available unaudited standalone financial statements of the aforesaid subsidiary as at March 31, 2018, the net worth of the subsidiary is fully eroded and the Company may have potential obligation to share further liabilities of the said subsidiary, which is presently under negotiation and hence undeterminable. Based on the reasons fully explained in the aforesaid note, the management is of the view that no provision is required for diminution in the value of such investment/ potential obligation, as the Company is evaluating options to restore the carrying value of the investment. However in the absence of sufficient and appropriate audit evidence, we are unable to comment on the carrying value of such investment, potential obligation and any other consequential impacts, if any, that may be required in this regard in the Standalone Ind AS financial statement"
(2) Consolidated Financial Statements :
"The accompanying consolidated Ind AS financial statements include aggregate assets of Rs.769 Lakhs, aggregate revenues (including other income) of Rs.2,625 Lakhs and net cash inflows amounting to Rs.42 Lakhs of an overseas subsidiary, consolidated based on its unaudited financial statements. The accompanying consolidated Ind AS Financial statements do not include adjustments, if any that may have been required had the audited financial statements of the subsidiary for the year ended March 31, 2018 been available and accordingly we are unable to comment on the same."
(3) Internal Financial Controls :
The following material weaknesses has been identified in the operating effectiveness of the Companyâs internal financial controls over financial reporting as at March 31, 2018:
(i) Standalone Financial Statements :
The Companyâs internal financial controls system over estimation of diminution in the carrying value of investments and accrual of potential obligation in case of an overseas subsidiary was not operating effectively which could potentially result in misstatement in the financial statements by way of Company not providing for adjustments/ provisions, if any, that may be required
(ii) Consolidated Financial Statements :
The Holding Companyâs internal financial control system over preparation of consolidated financial statements was not operating effectively as the consolidated financial statements were prepared based on un-audited financial statements of an overseas subsidiary which could result in potential misstatements / adjustments, if any, in the consolidated financial statements
The Board of Directors explanations on the aforementioned qualification are given below:
(a) Qualification on Standalone Financial Statements :
"Management is in discussion with the other shareholder of the subsidiary on various options to restore the carrying value of the investment and on conclusion of the ongoing restructuring of their management, options to revive the operations of the subsidiary including approval of claims submitted to them is likely to be resolved and therefore no provision considered necessary for diminution in the value of such investment/potential obligations in respect of the aforesaid"
(b) Qualification on Consolidated Financial Statements :
"Management is of the view that adjustment, if any, that may have been required had the audited financial statements of the subsidiary been available would not be material. Accordingly, any adverse impact on the Financials of the Company is unlikely"
(b) Cost Auditors :
In terms of the provisions of the Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended, Company maintains cost records and accounts in respect of the Roads and other infrastructure projects
The Board of Directors on the recommendation of Audit Committee appointed Narasimha Murthy & Co as the Cost Auditors of the Company for FY 2018 for conducting the Cost Audit of the Company and the remuneration payable to them was approved by the Members at the Twenty Eighth AGM of the Company held on August 28, 2017. The Cost Auditors have submitted their report for FY 2018 to the Board of Directors in its Meeting held on July 31, 2018. The Cost Audit Report of the Company for FY 2018 does not contain any qualification, reservation or adverse remark
Further, on the recommendation of Audit Committee, the Board of Directors in its Meeting held on July 31, 2018 re-appointed Narasimha Murthy & Co, Cost Accountants as the Cost Auditors of the Company for FY 2019 at a remuneration of Rs.7.5 lakh plus applicable taxes and out of pocket expenses. Necessary resolution for ratification of their remuneration in terms of the provisions of the Companies Act, 2013 read with Rules made there under is included in the Notice of AGM for the approval of the Members
(c) Secretarial Auditors :
In terms of the provisions of Section 204 of the Companies Act, 2013, the Board of Directors had appointed RPR & Associaties, Company Secretaries to conduct the Secretarial Audit for FY 2018. The Secretarial Audit Report for the Financial Year Ended March 31, 2018 is enclosed as Annexure 3 to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark
The Board of Directors of the Company had in its Meeting held on July 31, 2018, re-appointed RPR & Associates, Company Secretaries as the Secretarial Auditor of the Company for FY 2019
(XVI) CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES :
It is the endeavor of the Company to enter its contracts/arrangements/ transactions with the related parties in the ordinary course of business and on armsâ length basis. In terms of the provisions of Section 188 of the Companies Act, 2013 read with Rules made thereunder, all transactions with Related Parties were in ordinary course of business and on armâs length basis. Accordingly, details of related party transactions as per section 188 of Companies Act, 2013 in Form AOC-2 is not required. All contracts / arrangements / transactions entered by the Company were in compliance with the applicable provisions of the Companies Act, 2013 and Listing Regulations
The Company had framed Related Party Transaction Policy for the purpose of approval and identification of Related Party Transactions. All Related Party Transactions entered into by the Company in terms of the Policy were placed before the Audit Committee for its review and approval from time to time. The Related Party Transaction Policy approved by the Board of Directors is uploaded on the website of the Company at www.ilfsengg.com
(XVII) EMPLOYEES STOCK OPTION SCHEME :
The Companyâs Employee Stock Option Scheme 2009 (ESOP Scheme 2009) was in place since year 2009 and the Company had made grants under ESOP scheme 2009 to the eligible employees of the Company from time to time. The ESOP Scheme 2009 was rendered unattractive due to fall in the price of shares in the stock market and with the consent of employees who were holding the options vested under the said scheme, ESOP Scheme 2009 had been withdrawn by the Company during FY 2018
The Company has received a certificate from the Statutory Auditors of the Company that the ESOP scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the Members. The Certificate is enclosed as Annexure 4 with this report. Also, the disclosure as required under SEBI (Share Based Employee Benefits) Regulations, 2014 relating to ESOP 2009 scheme of the Company is available on the website of the Company at www.ilfsengg.com
Further, the Board of Directors in its Meeting held on July 31, 2018, subject to the approval of Members of the Company at the ensuing Annual General Meeting, approved the IL&FS Engineering and Construction Compant Limited Employees Stock Option Scheme 2018. The special resolution for approval of the said Scheme is included in the Notice of Annual General Meeting. The Board recommends passing of said resolution
(XVIII) MANAGEMENT DISCUSSION AND ANALYSIS :
A separate section titled "Management Discussion and Analysis" consisting of details as required under Regulation 34 read with Schedule V of the Listing Regulations forms part of this Annual Report
(XIX) CORPORATE GOVERNANCE:
A separate section titled "Report on Corporate Governance" including a certificate from the Practising Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under Listing Regulations is enclosed to the Report on Corporate Governance and forms part of this Annual Report
Further, the declaration signed by the Managing Director affirming the compliance with Code of Conduct for Board of Directors and Senior Management Personnel is also enclosed to the Report on Corporate Governance
(XX) DISCLOSURES :
(a) Extract of Annual Return :
The extract of Annual Return as per Section 92(3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014 is enclosed as Annexure 5 to this Report
(b) Vigil Mechanism :
In terms of the provisions of the Section 177 of the Companies Act, 2013 and Listing Regulations, the Company had established a Vigil Mechanism through its Whistle Blower Policy for directors and employees to report concerns about unethical behavior, actual/suspected frauds and violation of Companyâs Code of Conduct. Please refer to the Corporate Governance section of the Annual Report for further details
(c) Policy on Prevention of Sexual Harassment :
In terms of the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company had formulated and implemented a policy for Prevention of Sexual Harassment of Women at workplace. The Company from time to time conducts workshops or awareness programmes against sexual harassment at works place
The Company had also constituted an Internal Committee comprising of employees of the Company and an Independent NGO representative. The scope of the Internal Committee encompasses all incidents / occurrences of sexual harassment which take place at the workplace and where either of the party (aggrieved / accused) is an employee of the Company, During the year under review, the Company has not received any complaints under the policy
Further, the Company has many systems, processes and policies to ensure professional ethics and harmonious working environment. The Company follows Zero Tolerance towards Corruption and unethical conduct. These are ensured through Whistle Blower Policy, Sexual Harassment Policy and Redressal Guidelines
(d) Particulars of Loans, Guarantees or Investments under Section 186 :
Your Company is into the business of providing Infrastructure Facilities. Accordingly, the provisions of Section 186 pertaining to providing Loan or Guarantee to other corporates are exempted. All information regarding Loans, Guarantees and Investments are mentioned in the notes to financial statements for FY 2018 which are self-explanatory
(e) Particulars of employees and related disclosures :
The disclosures relating ratio of remuneration of each directors to the median employeeâs remuneration and other details as per Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure 6 to this Report
The disclosure pertaining to remuneration and other details as required under Section 197 (12) of the Act read with rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure 7 to this Report
(f) Material changes and comments, if any, affecting the financial position of the Company : Nil
(g) Reporting of Fraud : The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under section 143(12) of the Companies Act, 2013
(h) Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company : During the year under view no significant and material orders passed by any Regulator or Courts or Tribunal which may impact the going concern status of the Company
(i) Details in respect of adequacy of internal financial controls : The details of internal financial controls and their adequacy is given in Management Discussion and Analysis Report
(XXI) ACKNOWLEDGMENTS :
Your Directors place on record their gratitude to the Bankers, Media, Financial Institutions, various agencies of the State and the Central Government Authorities, Clients, Consultants, Suppliers, Sub-Contractors, Members and the Employees for their valuable support and co-operation and look forward to continued enriched relationships in the years to come
By order of the Board
For IL&FS Engineering and Construction Company Ltd
Sd/-
Place: Mumbai Karunakaran Ramchand
Date: July 31, 2018 Chairman
DIN: 00051769
Mar 31, 2017
The Members
IL&FS Engineering and Construction Company Limited
The Directors take pleasure in presenting the Twenty-Eighth Annual Report along with the Audited Financial Statements for the Financial Year Ended March 31, 2017
I. FINANCIAL RESULTS : (Rs in Crore)
Particulars |
STANDALONE |
|
FY 2017 |
FY 2016 |
|
Gross Income |
2015.55 |
1983.16 |
Profit/ (Loss) before Interest, Depreciation, Exceptional Items and Tax |
378.15 |
159.20 |
Interest and Finance Charges |
327.88 |
304.06 |
Depreciation |
47.97 |
43.66 |
Profit/ (Loss) before Exceptional Items, Tax and Prior Period Items |
2.30 |
(188.52) |
Exceptional Items (net) |
- |
- |
Profit/ (Loss) before Tax and Prior Period Items |
2.30 |
(188.52) |
Provision for Taxes |
- |
- |
Less: Prior Period Expenses ( net) |
- |
- |
Profit/ (Loss) after Tax |
2.30 |
(188.52) |
Paid up Equity Capital |
131.12 |
121.16 |
Preference Share Capital |
39.75 |
92.75 |
Reserves and Surplus |
(44.97) |
(90.31) |
Net Worth |
125.90 |
123.60 |
Earnings per share (In Rupees) |
||
- Basic |
(0.05) |
(16.65) |
- Diluted |
(0.05) |
(16.65) |
II. DIVIDEND :
During FY 2017, the Company earned Net Profit of Rs 2.30 crore which is inadequate for declaration of dividend. Your Directors, therefore express their inability to recommend any dividend for the year on Preference as well as Equity Shares
III. FINANCIAL PERFORMANCE REVIEW :
Your Company achieved a turnover of Rs 1,820.22 crore on standalone basis for FY 2017 as against Rs 1,844.87 crore in FY 2016. The marginal decrease in revenue was due to delay in handing over of work front by clients, environmental clearances, etc The Net Profit for the year amounted to Rs 2.30 crore as against loss of Rs 188.52 crore in FY 2016. The increase in profit was due to recognition of contractual claims and profit on sale of fixed assets
IV. RESERVES :
Due to inadequacy of profits, no amount is recommended for transfer to Reserves of the Company for FY 2017
V. THE STATE OF AFFAIRS OF THE COMPANY :
During the year under review, your Company had bagged various orders in the Roads, Buildings & Structures, Power and Oil & Gas Sectors. The Orders received during the year under review amounted to Rs 2,776 crore. Also, the Company already had orders worth Rs 10,026 crore at the beginning of the year. Out of the total orders in hand, the unexecuted order value stands at Rs. 10,649 crore (approx.) at the end of the year
Your Company is having operations beyond the territorial limits of India and is now operating from Saudi Arabia under a separate Joint Venture Subsidiary, and through Companyâs branches in Fujairah and Abu Dhabi
The Board of Directors is hopeful of securing sizeable orders in the future and is confident of effective execution of the existing works in the order book
VI. SHARE CAPITAL :
During the year under review, in terms of the provisions of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (SEBI (ICDR) Regulations) your Company allotted 9,962,407 equity shares of Rs. 10/- each at a price of Rs. 53.20 per share on Preferential Basis to the following entities on March 24, 2017
# |
Name of the Entity |
Number of Shares |
Total amount paid incl. premium (in Rs.) |
1 |
Infrastructure Leasing and Financial Services Limited- Promoter |
4,981,203 |
265,000,000.00 |
2 |
IL&FS Financial Services Limited- Promoter Group |
4,981,204 |
265,000,052.80 |
TOTAL |
9,962,407 |
530,000,052.80 |
Accordingly, the movement in the Paid-up Equity Share Capital of the Company is as under:
Particulars |
Number of Shares |
Amount (in Rs.) |
Opening Balance as on April 1, 2016 |
121,158,671 |
1,211,586,710 |
Add: Allotment under Preferential issue |
9,962,407 |
99,624,070 |
Closing Balance as on March 31, 2017 |
131,121,078 |
1,311,210,780 |
The Company received the Listing Approvals for 9,962,407 Equity Shares of the Company from BSE Limited (BSE) on April 5, 2017 and National Stock Exchange of India Limited (NSE) on March 29, 2017. Thereafter, necessary Corporate Action Forms for credit of the said shares to Promoter and Promoter Group were submitted with NSDL and CDSL (Depositories) on April 6,
2017. After receipt of confirmation of credit of shares, necessary applications were filed by the Company with NSE and BSE for obtaining their trading approval. NSE and BSE vide their letters dated April 12, 2017 granted trading approval for 9,962,407 equity shares which was effective from April 13, 2017
During the year under review, your Company had redeemed preference shares amounting to Rs 53 crore out of the proceeds of the said preferential issue and the movement is shown below :
Particulars |
No. of 6% OCCRPS* |
Amount (in Rs.) |
No. of 6% CRPS** |
Amount (in Rs.) |
Opening Balance as on April 1, 2016 |
8,750,000 |
875,000,000 |
525,000 |
52,500,000 |
Less: Redeemed on March 28, 2017 |
(5,000,000) |
(500,000,000) |
(300,000) |
(30,000,000) |
Closing Balance as on March 31, 2017 |
3,750,000 |
375,000,000 |
225,000 |
22,500,000 |
*OCCRPS: Optionally Convertible Cumulative Redeemable Preference Shares
**CRPS: Cumulative Redeemable Preference Shares
Shares held by Directors :
Mr. Karunakaran Ramchand, Non-Executive Chairman of the Company holds 40,000 Equity Shares of the Company. No other
Non-Executive Director of the Company holds any Shares or convertible instruments of the Company
VII. DEPOSITS :
During the year under review, your Company had not accepted any deposit from public under Chapter V of the Companies Act, 2013
VIII. DIRECTORS AND KEY MANAGERIAL PERSONNEL :
During the year under review, following changes took place in the composition of Board of Directors and Key Managerial Personnel:
Appointments :
(a) Mr. . Sushil Dudeja was appointed as the Company Secretary and Key Managerial Personnel of the Company with effect from April 4, 2016
(b) Mr. . Debabrata Sarkar was appointed as an Additional and Non-Executive Independent Director of the Company at the Board Meeting held on August 11, 2016. Further, his appointment was approved by the Members of the Company at the Twenty Seventh Annual General Meeting held on September 23, 2016. He was appointed for a period of 5 years with effect from August 11, 2016
(c) Mr. . Ganapathi Ramachandran, Mr. Rajiv Sarin and Ms Sutapa Banerjee were appointed as Additional and Non-Executive Independent Directors of the Company for a period of 5 years with effect from October 6, 2016
(d) Mr. . Ahmad Mohamad Dabbous was also appointed as Additional and Non-Executive Director with effect from October 6, 2016
(e) Mr. . Mukund Sapre was appointed as Managing Director of the Company with effect from October 7, 2016 for a period of 5 years
(f) Mr. . Bhaskar Chatterjee was appointed as an Additional and Non-Executive Independent Director of the Company with effect from November 2, 2016 for a period of five years
Resignations / Cessation :
(a) Mr. Dhananjay Mungale, Non-Executive Independent Director of the Company resigned from the Directorship of the Company with effect from July 1, 2016
(b) Mr. . El Mouhtaz El Sawwaf, Non-Executive Director of the Company resigned from the Directorship of the Company with effect from September 1, 2016. Consequent to his resignation Mr. . Ahmad Mohamad Dabbous, Alternate director to Mr. Sawwaf ceased to be Alternate Director of the Company with effect from September 1, 2016
(c) Mr. . Ved Jain and Mr. Anil Agarwal, Non-Executive Independent Directors of the Company resigned from the Directorship of the Company with effect from September 2, 2016
(d) Ms Kanika Tandon Bhal and Ms Alpa Sheth, Non-Executive Independent Directors of the Company resigned from the Directorships of the Company with effect from September 12, 2016 and September 16, 2016 respectively
(e) Mr. . Murli Dhar Khattar resigned from the position of Managing Director as well as from the Directorship of the Company with effect from October 6, 2016
(f) Mr. Ahmad Mohamad Dabbous, Additional and Non-Executive Director of the Company resigned from the Directorship of the Company with effect from March 28, 2017
The Board of Directors took note of the aforementioned resignations / cessation of the Directors and placed on record sincere appreciation of the contribution made by them towards the Company
Further, Mr. . Rajiv Sarin, Additional and Non-Executive Independent Director of the Company had passed away on May 11, 2017. Your Directors express their deepest sorrow on the sad demise of Mr. Sarin and place on record its sincere appreciation on the contribution made by him during his short stint with the Company
Mr. . Saleh Mohammed A Binladen, Non-Executive Director of the Company, shall retire by rotation at the ensuing Annual General Meeting, in terms of the provisions of the Companies Act, 2013 and being eligible offers himself for re-appointment. Further, necessary resolutions for approval of appointment of Mr. . Ganapathi Ramachandran, Ms Sutapa Banerjee, Mr. . Bhaskar Chatterjee and Mr. Mukund Sapre as Directors of the Company are included in the Notice of Annual General Meeting along with their brief profile and other details as required under the Listing Regulations and Secretarial Standard-2 for appointment and re-appointment of Directors. Your Directors recommend the appointment and re-appointment of aforementioned Directors of the Company at the ensuing Annual General Meeting of the Company
None of the Directors of the Company are inter-se related to each other
Statement on Declaration given by Independent Directors :
The Independent Directors of the Company have given their declaration of Independence in terms of sub-section (6) of Section 149 of the Companies Act, 2013 read with rules made there under and Regulation 16 of Listing Regulations.
Familiarization Programme of Independent Directors :
The Company through its Managing Director and Senior Management conducts programmes/ presentations periodically to familiarize the Independent Directors with the strategy, operations and functions of the Company. The programmes/ presentations also familiarizes the Independent Directors with their roles, rights and responsibilities. The details of familiarization programmes imparted to Independent Directors of the Company during FY 2017 is available on the website of the Company at: http://www, ilfsengg.com/Document/FamiliarizationProgramme.pdf
Non-Executive Directors :
The Non-Executive Directors are entitled for sitting fee for attending the Meetings of the Board and/or Committee thereof. During the year under review, with effect from March 1, 2017, the sitting fees payable to the Directors for attending Board and other Committee Meetings had been revised from Rs. 20,000 to Rs 30,000 per Meeting. Additionally, the actual out of pocket expenses incurred by the Non-Executive Directors for attending the meetings are also borne by the Company. Except as mentioned above, no other payment is made by the Company to the Non-Executive Directors and the Company does not have any pecuniary relationship or transactions with the Non-Executive Directors. The details of amount paid to the Directors of the Company towards Sitting Fee are mentioned in the Corporate Governance Section of this Annual Report
Performance Evaluation :
In terms of the provisions of the Companies Act, 2013 and Listing Regulations, the Board of Directors of the Company had at its Meeting held on November 10, 2014 approved the policy on Performance Evaluation of the Board of Directors, which laid down the criteria for performance evaluation of Board of Directors, its Committees, Executive Directors, Independent Directors and Individual Directors. As per the policy, the Board of Directors had at its Meeting held on May 29, 2017, evaluated the performance of its own, all its Committees, Executive Directors, Independent Directors and Individual Directors (excluding the Director being evaluated) as satisfactory. The manner of performance evaluation process followed by the Board is given in detail in the Corporate Governance Report. The policy on performance evaluation is available on the website of the Company at http://www.ilfsengg.com/html/policies/PerformanceEvaluationPolicy.pdf
Managerial Remuneration Policy :
In terms of the provisions of Section 178 of the Companies Act, 2013 read with Rules made there under and Regulation 19 of Listing Regulations, the Board of Directors of the Company had framed Managerial Remuneration Policy which includes the criteria for determining qualifications, positive attributes, independence of directors and other matters as specified under Section 178(3) of the Companies Act, 2013 and Regulation 19 read with Part D of Schedule II of Listing Regulations. The policy is available on the website of the Company at http://www.ilfsengg.com/html/policies.php
IX. DIRECTORS RESPONSIBILITY STATEMENT :
In terms of Section 134 (5) of the Companies Act, 2013, the Board of Directors wish to state 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) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; 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
X. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo :
(A) |
Conservation of energy |
|
i) |
The steps taken or impact on conservation of energy; |
The conservation of energy in all the possible areas is undertaken as an important means of achieving cost reduction. Savings in electricity, fuel and power consumption receive due attention of the management on a continuous basis |
ii) |
The steps taken by the Company for utilizing alternate sources of energy; |
NIL |
iii) |
The capital investment on energy conservation equipments; |
NIL |
(B) |
Technology absorption |
|
i) |
the efforts made towards technology absorption; |
Timely completion of the projects as well as meeting the budgetary requirements are the two critical areas where different techniques help to a great extent. Many innovative techniques have been developed and put to effective use in the past and the efforts to develop new techniques continue unabated. |
ii) |
the benefits derived like product improvement, cost reduction, product development or import substitution; |
NIL |
iii) |
in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - |
NIL |
a. the details of technology imported; |
||
b. the year of import; |
||
c. whether the technology been fully absorbed |
||
d. if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; |
NA |
|
iv) |
The expenditure incurred on Research and Development |
NIL |
(C) |
FOREIGN EXCHANGE |
|
Foreign Exchange earned in terms of actual inflows during the year |
NIL |
|
Foreign Exchange Outgo during the year in terms of actual outflows |
Rs 0.42 crore |
XI. BOARD AND ITS COMMITTEES :
(a) Board of Directors :
During the year under review the Board of Directors of the Company met five times on May 30, 2016, August 11, 2016, October 6, 2016, November 02, 2016 and February 10, 2017. The attendance, along with such other details as required, of each of the Directors is mentioned in the Corporate Governance Report section of this Annual Report
(b) Audit Committee :
The Audit Committee of the Board of Directors of the Company consists of four members of which majority are Independent Directors. In view of the resignations of Mr. . Ved Jain, Mr. Anil Agarwal, Mr. . Dhananjay Mungale and Mr. . Murli Dhar Khattar from the Board of the Company, Mr. Jain, Mr. . Agarwal, Mr. . Mungale and Mr. . Khattar ceased to be the Members of the Audit Committee
The Board of Directors of the Company in its Meeting held on August 11, 2016, inducted Mr. . Debabrata Sarkar as a Member of the Audit Committee. Further, the Board of Directors had at its Meeting held on October 6, 2016, reconstituted the Audit Committee and appointed Mr. . Debabrata Sarkar as the Chairman of the Committee and Mr. . Ganapathi Ramachandran, Ms Sutapa Banerjee and Mr. . Mukund Sapre as other Members of the Committee. The attendance of Members in the Meetings of Audit Committee and other details are mentioned in the Corporate Governance Report section of this Annual Report
All the recommendations of the Audit Committee were accepted by the Board of Directors during the year under review. Further, the Committee comprises with majority of Independent Directors including its Chairman, all of whom have the ability to read and understand the Financial Statements
(c) Corporate Social Responsibility Committee :
The Board of Directors of the Company had constituted Corporate Social Responsibility (CSR) Committee on March 18, 2014 and had formulated a policy on CSR which is available on the website of the Company at www.ilfsengg.com. In view of the resignations of Mr. Anil Agarwal, Mr. Murli Dhar Khattar and Ms Alpa Sheth from the Board of Directors of the Company, they ceased to be the Members of the CSR Committee
Further, the Board of Directors had at its Meeting held on October 6, 2016, reconstituted the CSR Committee and appointed Ms Sutapa Banerjee as Chairperson of the Committee and Mr. Rajiv Sarin and Mr. Mukund Sapre as the other Members of the Committee. However, in view of sudden demise of Mr. Rajiv Sarin, the Board of Directors had reconstituted the CSR Committee at its Meeting held on May 29, 2017 and inducted Mr. Debabrata Sarkar as a Member of CSR Committee in place of Mr. Sarin
The Company is required to spend two percent of the average net profits for preceding three financial years as per Section 135(5) of the Companies Act, 2013. However, no CSR activities have been conducted during the year as the Company has incurred losses in previous years. The details of CSR policy and other details as per Rule 9 of Companies (Corporate Social Responsibility) Rules, 2014 are enclosed as Annexure 1 to this Report
(d) Other Committees :
The details of composition, number of Meetings and such other information as required regarding Nomination and Remuneration Committee and Stakeholders Relationship Committee are mentioned in the Corporate Governance section of this Annual Report
XII. RISK MANAGEMENT :
The Board of Directors had in its Meeting held on February 11, 2015 formulated a Risk Management Policy consisting of various elements of risk and mitigation measures
The Board of Directors had in its Meeting held on May 29, 2017, constituted the Risk Management Committee comprising of Mr. Debabrata Sarkar, Mr. Ganapathi Ramachandran, Ms Sutapa Banerjee, Mr. Bhaskar Chatterjee - Directors and Mr. Mukund Sapre, Managing Director of the Company. The Risk Management Committee of the Company is responsible for overseeing the implementation of the Policy. The Chief Internal Auditor of the Company acts as Chief Risk Coordinator. In the opinion of the Board, the policy on Risk Management addresses the risks associated with the business including identification of elements of risk which may threaten the existence of the Company. The Board of Directors / Audit Committee reviews the risk assessment and mitigation procedures across the entity from time to time. As on March 31, 2017, there were no risks which may threaten the existence of the Company
XIII. SUBSIDIARIES :
As per Section 129 (3) of the Companies Act, 2013 and Regulation 34 of the Listing Regulations, the Consolidated Financial Statements of the Company forms part of this Report. The copies of Audited Financial Statements of the Subsidiaries are available on the website of the Company at www.ilfsengg.com and a copy of the same will be provided upon written request to the Company Secretary
SUBSIDIARIES :
Following are the Subsidiaries of your Company:
Angeerasa Greenfields Private Limited Ekadanta Greenfields Private Limited Saptaswara Agro-farms Private Limited Maytas Infra Assets Limited Maytas Metro Limited Maytas Vasishta Varadhi Limited
Maytas Infra Saudi Arabia Company (Foreign Subsidiary)
ASSOCIATES & JOINT VENTURES :
During the year under review, the following have been Associates and Joint Ventures of your Company:
Associate :
Hill County Properties Limited
Joint Ventures (Association of Persons) :
NCC-Maytas (JV)
NEC-NCC-Maytas (JV)
Maytas-NCC (JV)
NCC-Maytas (JV) (Singapore Classtownship)
Maytas-CTR (JV)
NCC-Maytas-ZVS (JV)
Joint Ventures (Jointly Controlled Operations) :
Maytas- KBL (JV)
Maytas KCCPL Flow More (JV)
Maytas MEIL KBL (JV)
Maytas MEIL ABB AAG (JV)
MEIL Maytas ABB AAG (JV)
MEIL Maytas KBL (JV)
MEIL Maytas WPIL (JV)
MEIL Maytas AAG (JV)
MEIL- SEW-Maytas-BHEL (JV)
L&T KBL Maytas (JV)
Maytas Ritwik (JV)
Maytas Sushee (JV)
Maytas Gayatri (JV)
IL&FS Engg-Kalindee (JV)
AMR. -Maytas-KBL-WEG (JV)
ITDC-Maytas JV
Further, none of the entities have been associated / disassociated as Joint Ventures of your Company during the year under review
The performance and financial position of the Subsidiaries, Joint Venture and Associate Companies are enclosed as Annexure 2 to this Report
XIV. AUDITORS AND AUDITORSâ REPORT :
(a) Statutory Auditors :
S. R. Batliboi and Associates LLP Chartered Accountants were appointed as Statutory Auditors of the Company to hold office from the conclusion of 25th Annual General Meeting (AGM) of the Company till the conclusion of 28th AGM of the Company to be held in the year 2017. Accordingly, their term of appointment shall expire at the ensuing AGM
In terms of provisions of Section 139 of the Companies Act, 2013 read with Rules made there under, the Audit Committee and the Board of Directors had recommended the appointment of BSR & Associates LLP Chartered Accountants (Firm Registration Number 116231W/W-100024) and M Bhaskara Rao & Co, Chartered Accountants (Firm Registration Number 000459S) as the Joint Statutory Auditors of the Company to hold office from the conclusion of 28th AGM till the conclusion of 33rd AGM of the Company to be held in the year 2022. Necessary resolution for appointment of BSR & Associates LLP and M Bhaskara Rao & Co. as Joint Statutory Auditors of the Company is included in the Notice of AGM
The Board noted that there are following qualifications in the Auditorâs Report for the Standalone and Consolidated Financial Statements for the Year Ended March 31, 2017:
(1) Standalone Financial Statements :
The Company has investment amounting to Rs. 33.19 Crores made in an overseas subsidiary. Based on the unaudited financial statements of the aforesaid subsidiary as on March 31, 2017, the net worth of the subsidiary is fully eroded and the Company may have potential obligation to share further liabilities of the said subsidiary, which is presently under negotiation and hence undeterminable. Based on the reasons fully explained in the aforesaid note, the management is of the view that no provision is required for diminution in the value of such investment/ potential obligation, as the Company is evaluating options to restore the carrying value of the investment. However, in the absence of sufficient appropriate audit evidence, we are unable to comment on the carrying value of such investment, potential obligation and any other consequential impacts, if any, that may be required in this regard in the standalone financial statements
(2) Consolidated Financial Statements :
The accompanying consolidated financial statements include aggregate assets of Rs. 12.23 crores, aggregate revenues of Rs. 0.33 crore and net cash outflows amounting to Rs.0.00 Crore of an overseas subsidiary, consolidated based on its unaudited financial statements. The accompanying Consolidated Financial Statements do not include adjustments, if any that may have been required had the audited financial statements of the subsidiary for the year ended March 31, 2017 been available and accordingly we are unable to comment on the same
(3) Internal Financial Controls :
The following material weaknesses has been identified in the operating effectiveness of the Companyâs internal financial controls over financial reporting as at March 31, 2017
Standalone Financial Statements :
The Companyâs internal financial controls system over estimation of diminution in the carrying value of investments and accrual of potential obligation in case of an overseas subsidiary was not operating effectively which could potentially result in misstatement in the financial statements by way of Company not providing for adjustments/ provisions, if any, that may be required
Consolidated Financial Statements :
The Holding Companyâs internal financial control system over preparation of consolidated financial statements was not operating effectively as the consolidated financial statements were prepared based on un-audited financial statements of an overseas subsidiary which could result in potential misstatements / adjustments, if any, in the consolidated financial statements
The Board of Directors explanation on the aforementioned qualification is given below:
(i) Qualification on Standalone Financial Statements :
The Management of the Company is in discussion with the other shareholder of the Subsidiary on various options and is confident to restore the carrying value of the investment and therefore no provision is required for diminution in the value of such investment / potential obligation. Accordingly, any adverse impact on the Financials of the Company is unlikely
(ii) Qualification on Consolidated Financial Statements :
The Board is of the view that adjustment, if any, that may have been required had the audited financial statements of the subsidiary been available would not be material. Accordingly, any adverse impact on the Financials of the Company is unlikely
(b) Cost Auditors :
In terms of the provisions of the Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended, the Board of Directors on the recommendation of Audit Committee appointed S Mahadevan & Co as the Cost Auditors of the Company for FY 2017 and the remuneration payable to them was approved by the Members at the Twenty Seventh AGM of the Company held on September 23, 2016. The Cost Auditors have submitted their report for FY 2017 to the Board of Directors at its Meeting held on May 29, 2017
Further, on the recommendation of Audit Committee, the Board of Directors in its Meeting held on May 29, 2017 appointed Narasimha Murthy & Co, Cost Accountants as the Cost Auditors of the Company. Necessary resolution for approval of their remuneration in terms of the provisions of the Companies Act, 2013 read with Rules made there under is included in the Notice of AGM
(c) Secretarial Auditor :
In terms of the provisions of Section 204 of the Companies Act, 2013, the Board of Directors had appointed Mr. . Y Ravi Prasada Reddy, Practicing Company Secretary to conduct the Secretarial Audit for FY 2017. The Secretarial Audit Report for the Financial Year Ended March 31, 2017 is enclosed as Annexure 3 to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark
The Board of Directors of the Company had at its Meeting held on May 29, 2017, appointed RPR & Associates, Company Secretaries as the Secretarial Auditor of the Company for FY 2018
XV. CONTRACTS AND ARRANGEMENTS 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 armâs length basis and are in compliance with the applicable provisions of the Companies Act, 2013 and Listing Regulations. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in terms of Section 188 of the Companies Act, 2013 read with Rules made there under and accordingly, the disclosure of related party transactions as required under Section 134 of the Companies Act, 2013 read with Rules 8(2) of the Companies (Accounts) Rules, 2014 in Form AOC-2 is not required
The Company had framed Related Party Transaction Policy for the purpose of approval and identification of Related Party Transactions. All Related Party Transactions entered into by the Company in terms of the Policy are placed before the Audit Committee for its approval from time to time. The Related Party Transaction Policy approved by the Board of Directors is uploaded on the website of the Company at www.ilfsengg.com
XVI. EMPLOYEE STOCK OPTION SCHEME :
During the year under review, the Company has not granted any stock options to the Employees. Further, the Company has received a certificate from the Statutory Auditors of the Company that the ESOP scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the Members. The Certificate is enclosed as Annexure 4 with this report
Further, the disclosure as required under SEBI (Share Based Employee Benefits) Regulations, 2014 relating to ESOP 2009 scheme of the Company is available on the website of the Company at www.ilfsengg.com
XVII. MANAGEMENT DISCUSSION AND ANALYSIS :
A separate section titled "Management Discussion and Analysis" consisting of details in compliance with Regulation 34 read with Schedule V of the Listing Regulations is covered under separate section titled "Management Discussion and Analysis Reportâ in this Annual Report
XVIII. CORPORATE GOVERNANCE:
A separate section titled "Report on Corporate Governance" including a certificate from the Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under Listing Regulations is enclosed to the Report on Corporate Governance and forms part of this Annual Report
Further, the declaration signed by the Managing Director affirming the compliance with Code of Conduct for Board of Directors and Senior Management Personnel is enclosed to the Report on Corporate Governance
DISCLOSURES :
(a) Extract of Annual Return :
The extract of Annual Return as per Section 92(3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014 is enclosed as Annexure 5 to this Report
(b) Vigil Mechanism :
The Company had established a Vigil Mechanism which incorporates Whistle Blower Policy to identify and report fraud. Please refer to the Corporate Governance section of the Annual Report for further details
(c) Policy on Prevention of Sexual Harassment :
The Company had formulated and implemented a policy for Prevention of Sexual Harassment of Women at workplace. The Company time to time conducts workshops or awareness programmes against sexual harassment at works place. During the year under review, the Company has not received any complaints under the policy
The Company has many systems, processes and policies to ensure professional ethics and harmonious working environment. The Company follows Zero Tolerance towards Corruption and unethical conduct. These are ensured through Whistle Blower Policy, Sexual Harassment Policy and Redressal Guidelines
(d) Particulars of Loans, guarantees or investments under Section 186 :
Your Company is into the business of providing Infrastructure Facilities. Accordingly, the provisions of Section 186 pertaining to providing Loan or Guarantee to other corporate are exempted. All information regarding Loans, Guarantees and Investments are mentioned in the notes to financial statements for FY 2017 which are self-explanatory
Further, during FY 2017, your Company has not made any investments covered under Section 186 of the Companies Act, 2013 and hence, the provisions of Section 186 are not attracted
However, the Company had sought approval of the Members of the Company to invest in Maytas Infra Saudi Arabia, Foreign Subsidiary up to SAR 30 Million, which was approved by the Members of the Company by way of postal ballot and e-voting on March 20, 2017
(e) Particulars of employees and related disclosures :
The disclosures relating ratio of remuneration of each directors to the median employeeâs remuneration and other details as per Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure 6 to this Report
The disclosure pertaining to remuneration and other details as required under Section 197 (12) of the Act read with rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure 7 to this Report
(f) Material changes and comments, if any, affecting the financial position of the Company : Nil
(g) Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company : During the year under view no significant and material orders passed by any Regulator or Courts or Tribunal which may impact the going concern status of the Company
(h) Details in respect of adequacy of internal financial controls : The details of internal financial controls and their adequacy is given in Management Discussion and Analysis Report
XIX. ACKNOWLEDGMENTS :
Your Directors place on record their gratitude to the Bankers, Media, Financial Institutions, various agencies of the State and the Central Government Authorities, Clients, Consultants, Suppliers, Sub-Contractors, Members and the Employees for their valuable support and co-operation and look forward to continued enriched relationships in the years to come.
By order of the Board
For IL&FS Engineering and Construction Company Ltd
Sd/-
Karunakaran Ramchand
Place: Mumbai Chairman
Date: May 29, 2017 DIN: 00051769
Mar 31, 2015
The Shareholders
IL&FS Engineering and Construction Company Limited
The Directors take pleasure in presenting the Twenty-Sixth Annual
Report along with the Audited Financial Statements for the Financial
Year ended March 31, 2015
I. FINANCIAL RESULTS:
Particulars 2014-15 2012-14
(12 Months) (18 Months)
Gross Income 2477.76 3427.01
(Loss)/Profit before Interest,
Depreciation, exceptional items
and Tax 314.71 266.16
Interest and Finance Charges 268.31 331.82
Depreciation 43.73 85.32
(Loss)/Profit before exceptional
items, tax and Prior period items 2.67 (150.98)
Exceptional items (net) - -
(Loss)/Profit before Tax and
Prior period items 2.67 (150.98)
Provision for Taxes
Less: Prior Period Expenses (net)
(Loss)/Profit after Tax 2.67 (150.98)
Paid up Equity Capital 112.12 89.79
Preference Share Capital 137.00 249.86
Reserves and Surplus 30.35 (78.61)
Net worth 279.47 261.04
Earnings per share (In Rupees)
-Basic (0.85) (19.72)
- Diluted (0.85) (19.72)
Previous year''s figures have been regrouped / rearranged to conform to
those of the current year
II. DIVIDEND
Due to inadequate profits of the Company, your directors express their
inability to recommend any dividend for the year to Preference as well
as to Equity Shareholders
III. RESERVES
The Board of Directors do not propose to carry any amounts to Reserves
of the Company for the Financial Year ended March 31,2015
IV THE STATE OF AFFAIRS OF THE COMPANY
During the year under review, your Company had bagged various orders in
the Roads, Buildings & Structures, Power and Oil & Gas Sectors. The
Orders received during the year under review amounted to Rs. 2,166
Crores. Also, the Company already had orders worth Rs. 10,063 Crores at
the beginning of the year. Out of the total orders in hand, the
unexecuted order value stands at Rs. 10,088 Crores at the end of the
year
Your Company is having operations beyond the territorial limits of
India and is now operating from Saudi Arabia under a separate
Joint Venture Subsidiary, and through Company''s branches in Fujairah
and Abu Dhabi
The Board of Directors is hopeful of securing sizeable orders in the
future and is confident of effective execution of the existing works of
the order book. Also, the business support from the Promoter and
Investor is facilitating entry into new market segments and in turn
increasing capabilities of the Company
V SHARE CAPITAL
During the year under review, your Company had allotted 10,61,133
Equity Shares of Rs. 10 each fully paid at a price of Rs. 58.90 upon
exercise of equal number of Employee Stock Options issued to Employees/
Directors/ Directors of Subsidiary Companies under ESOP 2009 Scheme, as
detailed below:
Date of allotment No.of shares Amount incl.
Alloted premium (in Rs)
June 07,2014 70,500 41,52,450.00
February 27,2015 4,32,206 2,54,56,933.40
March 23,2015 5,58,427 3,28,91,350.30
TOTAL 10,61,133 6,25,00,733.70
Additionally, your Company had allotted 2,12,74,442 Equity Shares of
Rs. 10 each at a price of Rs. 60.50 per share on Preferential Basis to
the following entities on March 13,2015:
Sl Name of the entity No.of Amount incl
no the entity Shares premium
1 Infrastructure Leasing and
Financial Services Limited 48,51,745 29,35,30,572.50
2 IL&FS Financial
Services Limited 49,44,101 29,91,18,110.50
3 SBG Projects
Investments Limited 1,14,78,596 69,44,55,058.00
TOTAL 2,12,74,442 128,71,03,741.00
Accordingly, the movement in the Paid-up Equity Share Capital of the
Company is as follows:
Particulars No.of Shares Amount (in Rs)
Opening Balance
as on April 01, 2014 8,97,87,243 89,78,72,430
Add: Allotment
under ESOP Scheme 10,61,133 1,06,11,330
Add: Allotment
under Preferential issue 2,12,74,442 21,27,44,420
Total addition by
way of allotments 2,23,35,575 22,33,55,750
Closing Balance
as on March 31,2015 11,21,22,818 112,12,28,180
During the year under review,an amount of Rs.3.83 Crpertaining to the
expenses incurred towards Proposed Rights Issue of the Company were
written off from the Securities Premium Account since, the Draft Letter
of Offer filed with SEBI for Rights Issue was withdrawn by the Company.
Accordingly, the Securities Premium Account stood at Rs. 171.38 Cr as
on March 31, 2015. The movementinsecuritiespremiumaccountisasfollows:
Particulars Amount (in Rs.Cr)
Opening Balance as on April 01,2014 62.59
Add:Premium on issue of 10,61,133 Equity
Shares under ESOP Scheme @ Rs. 48.90 5.19
Add: Premium on issue of 2,12,74,442
Equity Shares under Preferential issue
@ Rs. 50.50 107.43
Less: Rights issue expenses written
off (3.83)
Closing Balance as on March 31, 2015 171.38
During the year under review, your Company had redeemed certain
preference shares and the movement is as shown below:
Particulars No.of 6% Amount (in Rs) No.of 6% Amount (in Rs)
OCCRPS CRPS
Opening Balance
as on April
01,2014 1,75,00,000 175,00,00,000 74,85,780 74,85,78,000
Less:
Redemption on
March 23,2015
(originally
due for
redemption on
September
30, 2014 but
extended up to
March 25,2015) (50,00,000) (50,00,00,000) (3,00,000) (3,00,00,000)
Less:
Redemption on
March 31,2015
due for
redemption
on March 31,
2015 - - (59,85,780) (59,85,78,000)
Total
redemption
made during
the year (50,00,000) (50,00,00,000)(62,85,780) (62,85,78,000)
Closing
Balance as
on March
31,2015 1,25,00,000 125,00,00,000 12,00,000 12,00,00,000
Shares held by Directors
Mr. Ramchand Karunakaran, Non-executive Chairman of the Company holds
40,000 Equity Shares in the Company. No other non- executive director
of the Company holds any Shares or convertible instruments in the
Company.
Further, Mr. MurliDhar Khattar, Managing Director of the Company holds
70,000 Equity Shares in the Company
Deposits:
Your Company has not accepted any Fixed Deposits during the year under
review
VI. DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review, Mr. Ved Jain, Mr. Anil K Agarwal and Mr.
Dhananjay Narendra Mungale, Ms. Alpa Ramesh Sheth and Ms. KanikaTandon
Bhal were appointed as Independent Directors on August 08,2014 for a
period of 5 years in terms of Listing Agreement and Section 149 of the
Act. With the appointment of Ms. Alpa Ramesh Sheth and Ms. Kanika
Tandon Bhal, the requirement of Women Director on the Board of the
Company is complied with. The appointment of the Independent Directors
is being proposed for the approval of the members in the forthcoming
Annual General Meeting.
Mr. Sundaram Srinivas Ranjan, Nominee Director appointed by State
Bankof India, Industrial Finance Branch, Hyderabad on behalf of CDR
participating banks had resigned from his position and the same was
taken on record with effect from August 23,2014.
During the year, Mr. Ahmad Dabbous, Alternate Director to Mr. El
Mouhtaz El Sawaf had vacated his office since Mr. Sawaf had attended
the Board Meeting on November 10, 2014. Mr. Ahmad Dabbous was appointed
as Alternate Director to Mr. Sawaf in the same meeting on November 10,
2014. Mr. Akber Moawalla, Alternate Director to Mr. Saleh Mohamad Bin
Laden and Mr. Ahmad Dabbous, Alternate Director to Mr, Sawaf had
vacated their offices since Mr. Binladen and Mr. Sawaf had attended the
Board Meeting on February 11, 2015.
Thereafter, on the same day i.e., on February 11, 2015, Mr. Akber
Moawalla and Mr. Ahmad Dabbous were again appointed as Alternate
Directors to Mr. Saleh MohamadBinLaden and Mr. El Mouhtaz El Sawaf
respectively.
None of the directors of the Company are inter-se related to each
other.
Mr. Murli Dhar Khattar who was appointed on December 26,2013 as the
Managing Director of the Company continued in the same capacity
throughout the year under review. Dr. Sambhu Nath Mukherjee was
appointed as Chief Financial Officer of the Company within the meaning
of Section 203 of the Companies Act, 2013 with effect from January 01,
2015. The Company had already appointed Mr. G. Venkateswar Reddy in the
earlier years who continue to be the Company Secretary of the Company
during the year under review
Independent Directors
The Independent Directors were appointed in the meeting held on August
08, 2014 for a period of 5 years subject to the approval of the
members. The appointments of Independent Directors are being proposed
in the ensuing Annual General Meeting for the approval of the members.
None of the Independent Directors are considered for re-appointment in
the ensuing Annual General Meeting.
Statement on Declaration given by Independent Directors
The Independent Directors appointed in the Board Meeting held on August
08, 2014 have given declaration of Independence in terms of sub-section
(6) of Section 149.
Familiarization programme of Independent Directors
The Company had appointed two new Independent Directors and appointment
of three Independent Directors already holding office of directors in
the Company was formalized by issuing Appointment Letter for
Independent Directors. All the Independent Directors appointed are well
versed in the business of Infrastructure Development. A Separate
session was conducted in the Board Meeting held on November 10,2014 and
the independent directors were provided with the operations and
projects of the Company as a part of familiarization programme to the
Independent Directors of the Company. The details of such
familiarization program have been provided under the head Corporate
Governance section of the website of the Company i.e., www.ilfsengg.com
Non-executive Directors
The Non-executive directors are entitled for payment of sitting
feeofRs.20,000permeetingforattendingthemeetingsofthe Board and its
Committees. Additionally, the actual out of pocket expenses
incurredbythemforattendingthemeetingsarealso borne by the Company.
Except as mentioned above, no other payment is made by the Company to
the Non-executive Directors and the Company does not have any pecuniary
relationship or transactions with the Non-Executive Directors. The
details of amount of Sitting Fee paid to the Directors is mentioned in
the Corporate GovernanceSection of thisAnnual Report.
However, Non-executive Directors, except Independent Directors,
are/were entitled to employee stock options under the Employee Stock
Option Schemes of the Company subject to compliance of applicable laws
Performance Evaluation
The Board has evaluated its performance during the Financial Year
2014-15 in the Meeting held on May 29, 2015. The evaluation was carried
out as per the policy of the Company The Board had assured that the
performance of the Board was in line with the organization strategy.
The Board had further assured that the Committees of the Board have
performed as per the scope attributed to them. The Independent
Directors have attended most of the Meetings and have sought adequate
information required for arriving at decisions.
Policies
The following policies were formulated by the Board and are placed in
the Corporate Governance Section of the website of the Company i.e.,
www.ilfsengg.com
I. Directors Appointment and Remuneration Policy on matters specified
in sub-section (3) of Section 178 of the Act
ii. Policy on Corporate Social Responsibility as per Section 135 of
the Act
iii. A Policy on Performance Evaluation of the Board of Directors and
Individual Directors was formulated during the year under review which
consists of the annual evaluation plan , of the Board
iv Vigil Mechanism Policy
v. Policyon Material Subsidiaries
vi. Policyon dealing with Related Party Transactions
VII. DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act, 2013 (Act). the
Board of Directors state 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 accordancewith 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; and
(e) the directors had laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively.
(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.
Details of conservation of energy, technology absorption, foreign
exchange earnings and outgo
(A) Conservation of energy
(i) The steps taken or impact on conservation of energy:
The conservation of energy in all the possible areas is undertaken as
an important means of achieving cost reduction. Savings in electricity,
fuel and power consumption receive due attention of the management on a
continuous basis.
(ii) The steps taken by the company for utilizing alternate sources of
energy; NIL
(iii) The capital investment on energy conservation equipments; NIL
(B) Technology absorption
(i) the efforts made towards technology absorption:
Timely completion of the projects as well as meeting the budgetary
requirements are the two critical areas where different techniques help
to a great extent. Many innovative techniques have been developed and
put to effective use in the past and the efforts to develop new
techniques continue unabated.
(ii) the benefits derived like product improvement, cost reduction
product development or import substitution: NIL
(iii) in case of imported technology (imported during the last three
years reckoned from the beginning of the financial year)- NIL
a) the details of technology imported;
b) the year of import;
c) whether the technology been fully absorbed
(C) FOREIGN EXCHANGE
Foreign Exchange Earnings Rs. 272.48 Crores (accrual
basis)
Foreign Exchange Outgo Rs. 253.60 Crores (accrual
basis)
VIII. BOARD AND ITS COMMITTEES
a) Board of Directors :
During the year under review the Board of Directors of the Company have
met five times on May 19,2014,August 08. 2014, November 10, 2014,
November 28, 2014 and February 11,2015. The attendance, along with such
other details as required. of each of the Directors is mentioned in the
Corporate Governance section of this Annual Report
b) Audit Committee
The Audit Committee of the Company consists of 4 members and a
permanent invitee. Mr. Ved Kumar Jain. Independent Director in the
Company is the Chairman of the Committee. Mr. Anil Kumar Agarwal, Mr.
MurliDhar Khattar and Mr. DhananjayNarendra Mungale are the members of
the Audit Committee. The attendance of members to the meetings of Audit
Committee and such other details are mentioned in the Corporate
Governance report section of this Annual Report
All the recommendations of the Audit Committee were accepted by the
Board of Directors during the year under review. The Committee
comprises with majority of Independent Directors
c) Risk management policy
The Board of Directors had formulated a Risk Management Policy
consisting of various elements of Risk and mitigation measures.
The Risk Management Committee of the Company is overseeing the
implementation of the Policy. In the opinion of the Board, the policy
on Risk Management addresses the risks associated with the business
including identification of elements of risk which may threaten the
existence of the Company
d) Corporate Social Responsibility Committee
The Board of Directors of the Company had constituted Corporate Social
Responsibility Committee on March 18, 2014 and had formulated a policy
on Corporate Social Responsibility which is available in the Corporate
Governance Section of the website of the Company i.e..
www.ilfsengg.com. The CSR Committee of the Company was constituted with
Mr. Anil Kumar Agarwal as the Chairman of the Committee. Mr. MurliDhar
Khattar and Mr. Sundaram Srinivas Ranjan were the members. Ms. Alpa
Ramesh Sheth was inducted as member of the Committee on November 10,
2014 after the resignation of Mr. Ranjan as director of the Company.
The Committee met once on February 11,2015 during the period under
review.The members of the Committee are eminent persons with background
in various social responsibility activities.
The Company is required to spend two per cent of the average net
profits for preceding three financial years as per Section 135 (5) of
the Act. However, the Company has not made any profitsduring the
previous three financial years and hence.the Company could not spend
any amount on CSR activities. The details of CSR policy and activities
as per Rule 9 of Companies (Corporate Social Responsibility) Rules,
2014 are attached as an Annexure
e) Other Committees
The details of composition, number of meetings and such other
information as required regarding Nomination and Remuneration Committee
and Stakeholders Relationship Committee are mentioned in the Corporate
Governance section of this Annual Report.
K. SUBSIDIARIES
As per Section 129 (3) of the Companies Act, 2013 and Clause 32 of the
Listing Agreement, the consolidated financial statements of the Company
forms part of this Report. The copies of Audited Financial Statements
of the Subsidiaries. Joint Ventures and Associates are available on
the website of the Company www.ilfsenaa.com and a copy of the same will
be provided upon written request to the Company Secretary
Angeer as a Greedfields Private Limited, Ekadanta Greenfields Private
Limited, SaptaswaraAgro-farms Private Limited, Maytas Infra Assets
Limited, Maytas Metro Limited, Maytas Vasishta Varadhi Limited and
Maytas Infra Saudi Arabia Company are the subsidiaries of your Company.
A step down subsidiary namely Maytas Infra for Construction W.L.L. was
incorporated as Subsidiary of Maytas Infra Saudi Arabia Company and the
same was in the process of closing subsequent to Financial Year 2014-15
The performance and financial position of the Subsidiaries. Joint
Venture and Associate Companies is attached as an Annexure to this
Report
ASSOCIATES & JOINT VENTURES
During the year under review, the following have been associates and
Joint Ventures of your Company:
Associate:
Hill County Properties Limited
Joint Ventures (Association of Persons):
NCC-Maytas(JV)
NEC-NCC-Maytas(JV)
Maytas-NCC(JV)
NCC-Maytas (JV) (Singapore Classtownship)
Maytas-CTR(JV)
NCC-Maytas-ZVS(JV)
Further, none of the entities have been associated / disassociated as
Joint Ventures of your Company during the year under review:
X. AUDITORS AND AUDITORS'' REPORT
a) Statutory Auditors
M/s S. R. Batliboi & Associates LLR Chartered Accountants were
appointed as Statutory Auditors of the Company to hold office from the
25th Annual General Meeting of the Company till the conclusion of 28th
Annual General Meeting of the Company. The appointment of Statutory
Auditors of the Company for the financial year 2015-16 is placed for
ratification of the members of the Company in the ensuing 26th Annual
General Meeting of the Company.
The notes on financial statements referred to in the Auditors'' Report
are self explanatory and do not call for any further comments. The
Auditors'' Report does not contain any qualification, reservation or
adverse remark.
b) Cost Auditor
The Board has appointed M/s S Mahadevan and Co. Cost Accountants as
Cost Auditors of the Company for the Financial Year 2014-15. The
remuneration payable to the Cost Auditors was approved by the members
in the 25th Annual General Meeting of the Company.
M/s S Mahadevan & Co are re-appointed as Cost Auditors of the Company
for the Financial Year 2015-16 and the remuneration payable to them is
recommended for the approval of the members in the ensuing Annual
General Meeting.
c) Secretarial Auditor
The Board has appointed Mr. Y Ravi Prasada Reddy. Practising Company
Secretary to conduct the Secretarial Audit for the financial year
2014-15. The Secretarial Audit Report for the financial year ended
March 31, 2015 is annexed herewith marked as Annexure to this report.
The Secretarial Audit Report does not contain any qualification,
reservation or adverse remark.
XI. CONTRACTS AND ARRANGEMENTS 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 /arrangement/transaction with
related parties which could be considered material in accordance with
the policy of the Company on materiality of related party transactions,
except with Infrastructure Leasing and Financial Services Limited
wherein the Company has entered into following agreements which
together constituted as a material related party transactions.
I. Term loan of Rs. 100 Cr at an interest rate of 13% p.a. calculated
at quarterly rests
ii. Term loan of Rs. 100 Cr at an interest rate of 13% p.a. calculated
at quarterly rests
iii. Term Loan of Rs. 280 Cr at an interest rate of 13% p.a.
calculated at quarterly rests
iv Corporate Guarantee for an amount of Rs. 123.20 Cr against Bank
guarantee provided by IL&FS from its Bank Limits and commission @ 1.15%
thereon
v. Corporate Guarantee for an amount of Rs.67.75 Cr against Bank
guarantee provided by IL&FS from its Bank Limits and commission® 1.15%
thereon
vi. To provide Letter of Comfort and / or Letter of awareness on behalf
of the Company in favour of the CDR Lenders for an amount of Rs.973 Cr
in the manner as may be decided by the Board in consultation with the
CDR Lenders / any other lenders of the Company from time to time
vii. IL&FS agreed to CDR Banks of IECCL to keep the loan amount of
Rs.400 Cr extended to IECCL as Core Funding in the Company
The a fore mentioned transactions are not falling in the list of
transactions specified in Section 188of the Companies Act. 2013.
However, the definition of Related Party Transaction in the Listing
Agreement has awider scope and covers the aforementioned transactions
with related parties
XII. EMPLOYEE STOCK OPTION SCHEME
During the year under review, the Employee Stock Option Scheme 2007 was
expired since all the options granted under the scheme were lapsed. The
Company has allotted 10,61,133 Equity of Rs.10/- each at a price
Rs.58.90 per share (including premium) upon exercise of the same number
of ESOPs under ESOP 2009 Scheme.
The Company has received a certificate from the Statutory Auditors of
the Company that the ESOP scheme has been implemented in accordance
with the SEBI Guidelines and the resolution passed by the members. The
Certificate is mentioned elsewhere in this report and is available for
inspection at the Meeting for the members. Further, the information
regarding Grant I and Grant II of the Employee Stock Option Scheme 2009
are provided as an Annexure to this Report.
XIII. MANAGEMENT DISCUSSION AND ANALYSIS
A separate section titled-Management Discussionand Analysis" consisting
of details incompliance with Clause 49 of the Listing Agreement is
annexed here to and forms part of the Annual Report.
XIV. CORPORATE GOVERNANCE
A separate section titled "Report on Corporate Governance including a
certificate from the Practising Company Secretary confirming compliance
with the conditions of Corporate Governance as stipulated under Clause
49 of the Listing Agreement is annexed here to and forms part of this
Annual Report
Further, the declaration signed by the Managing Director affirming the
compliance with code of conduct for Board of Directors and senior
management personnel is annexed to the Report on Corporate Governance.
XV. DISCLOSURES
a) Extract of Annual Return
The extract of Annual Return as per Section 92(3) of the Companies Act,
2013 and rule 12 (1) of the Companies (Management and Administration)
Rules, 2014 is appended to this Report.
b) Viail Mechanism
The Company established a Vigil Mechanism which incorporates Whistle
Blower policy to identify and report fraud. Please refer to the
Corporate Governance section of the Annual Report for further details.
c) Policy on Prevention of Sexual Harassment
The Company has formulated and implemented a policy for Prevention of
Sexual Harassment of Women at workplace. During the year under review,
the Company has not received any complaints under the policy.
The company has many systems, processes and policies to ensure
professional ethics and harmonious working environment. We follow Zero
Tolerance towards Corruption and unethical conduct. These are ensured
through Whistle Blower Policy, Gift Policy, Sexual Harassment Policy
and Redressal Guidelines.
d) Transfers to IEPF
During the year under review, the Company had transferred an amount of
Rs. 3,18,780 which was unclaimed share application money, received at
the time of Initial Public Offer of the Company in the year 2007.
e) particulars of Loans, guarantees or investments under Section 186
Your Company is into the business of providing Infrastructure
Facilities. Accordingly, the provisions of Section 186 pertaining to
providing Loan or Guarantee to other corporates are exempted. All
information regarding
loans, guarantees and investments is mentioned in the notes to
financial statements for the financial year ended 2014-15 which are
self-explanatory. Further, your Company has made no further investments
during the year 2014-15 and hence, the provisions of Section 186 are
not attracted.
However, your Company is proposing to make a further investment in the
shares of its Subsidiary, Maytas Infra Saudi Arabia Company in the
Financial Year 2015-16. The approval under Section 186 for this
investment is being sought in the ensuing Annual General Meeting
f) particulars of employees and related disclosures
The disclosures relating to particulars of employees as per 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
appended as an Annexure with this Report.
The disclosure 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 is
appended as Annexure with this Report.
XVI. ACKNOWLEDGMENTS:
Your Directors place on record their gratitude to the Bankers.
Financial Institutions, various Agencies of the State and the Central
Government Authorities, Clients, Consultants, Suppliers,
Sub-Contractors, Members and the Employees for their valuable support
and co-operation and look forward to continue enriched relationships in
the years to come.
By order of the Board
For IL&FS Engineering and Construction Company Ltd
Place:New Delhi Ramchand Karunakaran
Date:May 29,2015 Chairman
Mar 31, 2014
The Shareholders
IL&FS Engineering and Construction Company Limited and reduced
The Directors take pleasure in presenting the Twenty-Fifth Annual
Report along with the Audited Financial Statements for the Financial
Year (18 months) ended March 31, 2014
COMPANIES ACT 2013:
The Government of India had repealed the Companies Act, 1956 and
promulgated the Companies Act, 2013 ("the New Act") on August 28, 2013.
The majority of provisions of the New Act came in to effect by April
01, 2014. However, the Ministry of Corporate Affairs in its General
Circular 08/2014 dated April 04, 2014 had clarified that the Financial
Statements (and documents required to be attached thereto), Auditor''s
Report thereon and Board''s Report in respect of Financial Years
commencing before April 1, 2014 shall be prepared as per the provisions
of the Companies Act, 1956. Accordingly, the Financial Statements,
Board''s Report and the documents attached to the Financial Statements
are prepared as per the provisions of Companies Act, 1956
EXTENSION OF FINANCIAL YEAR:
The previous Financial Year of your Company consisted of 18 months and
ended on September 30, 2012. Your Company has extended the current
Financial Year by a period of six months i.e. up to March 31, 2014 to
align the Financial Year in terms of the Companies Act, 2013 and
accordingly has prepared its Financial Statements for a period of 18
months i.e. from October 01, 2012 to March 31, 2014
FINANCIAL RESULTS: (Rs. in Crores)
Particulars 2012-14 2011-12
18 Months 18 Months
Gross Income 3427.01 2145.40
(Loss) / Profit before Interest,
Depreciation, exceptional items
and Tax 266.16 170.64
Interest and Finance Charges 331.82 213.31
Depreciation 85.32 94.00
(Loss) / Profit before exceptional
items, tax and Prior period items (150.98) (136.67)
Exceptional items (net) - (10.26)
(Loss) / Profit before
Tax and Prior
period items (150.98) (126.41)
Provision for Taxes - 8.90
Less: Prior Period
Expenses ( net)
(Loss)/Profit after Tax (150.98) (135.31)
Adjustment as per the
Scheme of arrangement - 179.82
Profit after
Adjustment as per
the Scheme of arrangement (150.98) 44.51
Paid up Equity Capital 89.79 89.79
Preference Share Capital 249.86 249.86
Reserves and Surplus (78.61) 72.37
Net worth 261.04 412.02
Earnings per share (In Rupees)
-Basic (19.72) (21.80)
-Diluted (19.72) (21.80)
Previous year''s figures have been regrouped / rearranged to conform to
those of the current year.
SHARE CAPITAL:
Your Company did not allot any fresh shares during the year under
review.
Out of the existing 1,75,00,000; 6% Optionally Convertible Cumulative
Redeemable Preference Shares (OCCRPS) of Rs. 100 each, 37,50,000 OCCRPS
were redeemable on September 30. 2013. Also, out of the existing
15,00,000; 6% Cumulative Redeemable Preference Shares (CRPS) of Rs. 100
each issued as Bonus Shares on OCCRPS, 2,25,000 CRPS were redeemable on
September 30, 2013.
The Company had extended the period of redemption of these shares by a
period of six years with an early redemption right to the Company
before the extended period of six years by giving 30 days notice in
writing i.e. the new redemption date for these 37,50,000 OCCRPS and
2,25,000 CRPS was fixed at September 30,2019 unless they are redeemed
earlier by giving 30 days notice to the concerned shareholders
RIGHTS ISSUE:
The Board of Directors of your Company had resolved on October 9, 2013
to issue Equity Shares of Rs. 10 each for an aggregate amount of Rs.
300 Crores on Rights Basis to the existing Equity Shareholders of the
Company as on the record date to be fixed later by the Board. The price
of the Equity Shares shall be fixed at a later date
Your Company had filed Draft Letter of Offer (DLOF) with the Securities
and Exchange Board of India (SEBI) on March 28, 2014 and also filed the
DLOF with BSE Limited (BSE) and the National Stock Exchange of India
Limited (NSE) on March 31, 2014. As on May 19, 2014, your Company has
received in-principle approval from BSE but is awaiting response of NSE
and also comments on the DLOF from SEBI.
DIVIDEND:
Due to the absence of profit, your Directors express their inability to
recommend any dividend to the Shareholders for the year. However,
dividend on Preference Shares issued by the Company shall be cumulative
and will accrue to the shareholders.
OVERVIEW:
During the year under review, your Company had bagged various orders in
the Roads, Buildings & Structures, Power and Oil & Gas Sectors. The
Orders received during the year under review amounted to Rs. 4,696
Crores. Also, the Company already had orders worth Rs. 8,400 Crores at
the beginning of the year. Out of the total orders in hand, the
unexecuted order value stands at Rs. 10,063 at the end of the year.
Your Company is having operations beyond the territorial limits of
India and is now operating from Saudi Arabia under a separate Joint
Venture Subsidiary and through Company''s branches in Fujairah and Abu
Dhabi
The Board of Directors is hopeful of securing sizeable orders in the
future and is confident of effective execution of the existing works of
the order book. Also, the business support from the Promoter and
Investor is facilitating entry into new market segments and in turn
increasing capabilities of the Company.
The Industry Scenario has seen a change towards end of the year under
review and is presented in detail in the Management Discussion &
Analysis Section of this Annual Report.
FUTURE OUTLOOK:
With a healthy order book of Rs. 10,063 Crores on hand, the Company
looks forward to increasing turnover and better performance in future.
RECOVERY OF INTER CORPORATE DEPOSITS (ICDs):
During the year, your Company continued pursuing recovery of Inter
Corporate Deposits (ICDs). Your Company had a major legal battle with
the then Satyam Computer Services Ltd. (SCSL) on the merger petition
filed by SCSL for its proposed merger with Tech Mahindra Ltd. (TML).
Though the Company could not succeed at single bench level, it had
filed appeals through its Subsidiaries in Division Bench, which is
still pending for hearing. Separately, your Company is pursuing civil
suits for recovery of the amount. Therefore, your Company is taking
necessary steps to recover ICDs through available legal means
FIXED DEPOSITS:
Your Company did not invite or accept deposits from the public during
the year under review.
SUBSIDIARIES AND JOINT VENTURES:
A statement pursuant to Section 212 of the Companies Act, 1956
containing the details of the Subsidiaries together with financial data
thereof, forms part of the Annual Report. The following are the
Subsidiaries of the Company:
(1) Maytas Infra Assets Limited (MIAL):
MIAL was incorporated in February 2008, as a wholly owned Subsidiary,
to carry on the business of infrastructure projects and for
consolidation of all investments made by your Company in BOT projects.
Your Company has invested an amount of Rs. 0.05 crores in Equity and
paid Rs.18.96Crores towards Sub-debt and reimbursement of expenses in
MIAL till March 31, 2014. No projects were secured during the year. Out
of the amount advanced, Rs 11.74 Crores approximately has been
considered as impaired as they are not represented by any realizable
assets and therefore have been provided in full during the earlier
years.
(2) Maytas Metro Limited (MML):
The Maytas Infra Limited / Nava Bharat Ventures Limited /
Infrastructure Leasing & Financial Services Limited / Italian- Thai
Development Public Company Limited consortium had technically qualified
in the bids and won the financial bid to undertake development of the
Hyderabad Metro Rail Project. Subsequently, the Consortium had formed
the "MML as SPV in September 2008 to develop the Hyderabad Metro Rail
Project on BOT basis and signed Concession Agreement with Government of
Andhra Pradesh (GoAP) on September 19, 2008 for a period of 35 years
including five years of construction period. The GoAP had cancelled the
Concession Agreement on July 7, 2009 without giving any prior notice to
the Company as per the terms and conditions of the Concession Agreement
and invoked the security deposit of Rs.60 Crores. The Writ Petition
filed by MML in High Court of Andhra Pradesh was disposed off with a
direction to settle the dispute under Arbitration mechanism as
available in the Concession Agreement. MML had appointed Arbitrator on
its behalf in April, 2012 and GoAP had also appointed an Arbitrator on
its behalf in May, 2014 The arbitration proceedings have started. Your
Company has invested an amount of Rs. 0.05 Crores towards the equity
and arranged funds to the extent of Rs.74. 82 crores. The investment
and the amount advanced aggregating to Rs 74.87 Crores have been
written off fully during the earlier years.
(3) Maytas Vasishta Varadhi Limited (MWL):
MWL, a Subsidiary of your Company, was incorporated in April 2008 for
executing the construction of bridge across Godavari River at Narasapur
on BOT (Annuity) Basis, awarded by Andhra Pradesh Road Development
Corporation
(APRDC). Your Company has invested an amount of Rs. 0.05 Crores
towards the equity and Rs 2.82 Crores as sub- debt towards project cost
and reimbursement of expenses. As the project could not be taken up by
MWL post-Satyam developments, assigned Coastal Projects Ltd., to take
up the project and made application to the State Government for
approval of new partner. The Government of Andhra Pradesh approved the
entry of Coastal Projects Ltd. However, when MWL filed application with
the Government for extension of time, the Government of Andhra Pradesh
unilaterally cancelled the Project and invoked the Bank Guarantee
submitted by MWL. MWL contested the unilateral cancellation in the
Court of Law and obtained stay order against invocation of Bank
Guarantee by the Government. Currently, the matter is before the
Hon''ble High Court of Andhra Pradesh for its adjudication. However, as
a matter of prudence, your Company has provided for an amount of Rs.
2.82 crores in earlier years.
(4) Angeerasa Greenfields Private Limited (AGPL):
Your Company had acquired AGPL in the Financial Year 2010-11. AGPL in
the earlier years had advanced Rs.50 Crores in the form of Inter
Corporate Deposits (ICDs) to various other Companies which ultimately
had gone to the credit of the bank accounts of Satyam Computer Services
Limited (SCSL). AGPL has initiated legal action for the recovery of the
said deposits through the Companies to whom it had lent the monies with
various Authorities and AGPL is hopeful of receiving the same in due
course.
(5) Ekadanta Greenfields Private Limited (EGPL):
Your Company has acquired EGPL in the Financial Year 2010- 11. EGPL in
the earlier years had advanced Rs.18.58 Crores (net of repayment of Rs.
17.92 Crores by SCSL) in the form of ICDs to SCSL. EGPL has initiated
legal action for the recovery of the said deposits with various
authorities and EGPL is hopeful of receiving the same in due course.
(6) Saptaswara Agro-farms Private Limited (SAPL):
Your Company has acquired SAPL in the Financial Year 2010- 11. SAPL in
the earlier years had advanced Rs. 19.75 Crores (net of repayment of
15.25 Crores by SCSL) in the form of ICDs to SCSL. SAPL has initiated
legal action for the recovery of the said deposits under various
authorities and SAPL is hopeful of receiving the same in due course.
(7) Maytas Infra Saudi Arabia Co. (MISA):
During the previous year, your Company has incorporated Maytas Infra
Saudi Arabia Co. (MISA) in Joint Venture with Saudi Bin Ladin Group in
Kingdom of Saudi Arabia. Your Company owns 55% shareholding out of a
total capital of SAR 50,000,000 (Indian Rupees equivalent 33.19 Crores)
as on March 31, 2014 in this Joint Venture with a right to appoint 3
Director Positions out of 5 Director Positions. Accordingly, this
Joint Venture became subsidiary of your Company.
CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements of your Company together with its
Subsidiaries, Associates and Joint Venture Entities for the Financial
Year ended March 31, 2014, prepared in accordance with the Accounting
Standard 21. 23 and 27 notified by Companies (Accounting Standards)
Rules, 2006, are attached herewith.
DIRECTORS:
The members are already aware that in the month of December 2012, Mr.
Hari Sankaran was appointed as
Director of the Company and Mr. Arun Kumar Saha had resigned as
Director of the Company.
Mr. Sundaram Srinivas Ranjan was appointed as Nominee Director on
behalf of the lenders under Corporate Debt Restructuring (CDR) Scheme
with effect from August 4,2013. He was nominated by State Bank of
India to hold the office as Nominee Director for a period of two years.
On November 13, 2013, the term of office of Mr. G. Venkateswar Reddy
as Manager of the Company had ended. Mr. Murli Dhar Khattar, Chief
Executive Officer of the Company was appointed as Director of the
Company with effect from November 14, 2013. Thereafter, in the meeting
held on December 26, 2013, the Board of Directors had appointed Mr.
Murli Dhar Khattar as Managing Director of the Company to hold the
office for a period of three years and the appointment was approved by
means of a special resolution by the members of the Company in the
Extraordinary General Meeting held on March 18, 2014.
Your Company had entered into Amendatory Shareholder Agreement with
Saudi Binladen Group (SBG) and as per the agreement, SBG was entitled
to appoint two directors on the Board of your Company. Consequently,
Mr. Akber Moawallaand Mr. Ahmad Dabbous resigned as Directors of the
Company and were appointed as Alternate Directors to Mr. Saleh
Moahammad BinLaden and Mr. El Mouhtaz El Sawaf respectively on March
18, 2014.
Mr. Hari Sankaran had resigned as Director of the Company on March 18,
2014. Mr. Dhananjay Narendra Mungale was appointed as Additional
Director of the Company with effect from March 18, 2014. His
appointment is being put up for approval of the members in the
Twenty-Fifth Annual General Meeting.
The Board of Directors wishes to place on record their sincere
appreciation of Mr. Arun Kumar Saha, Mr. Hari Sankaran, Mr. Akber
Moawalla and Mr. Ahmad Dabbous for the contribution made by them as
Directors of your Company in carrying out the business of the Company.
None of the Directors are related to each other.
CAPITAL RESTRUCTURING SCHEME:
The Members are aware of the Capital Restructuring Scheme sanctioned by
the Hon''ble High Court of Andhra Pradesh and your Company has taken all
steps to give effect to the sanction of the said Scheme in the previous
Financial Year. However, your Company is required to use the words
"and reduced" as its last words in the name up to and until the end of
the Financial Year 2012-13; and in the Balance Sheet. Profit and Loss
Account, and the Annexures for the said period. The Financial Year
2012-13 has been extended by a period of 6 months till March 31, 2014
and hence, the words "and reduced" are used as the last words of the
name of your Company in the Financial Statements for the Financial Year
ended on March 31, 2014.
REGISTERED OFFICE:
The Registered Office of your Company was shifted to Door No.
8-2-120/113/3/4F, Sanali Info Park, Cyber Towers, Road No.2, Banjara
Hills, Hyderabad - 500033 on May 13, 2013.
DISCLOSURES UNDER SECTION 217(1) (D) OF THE COMPANIES ACT, 1956:
Except as disclosed elsewhere in this report, there have been no
material changes and commitments which can affect the financial
position of the Company occurred between the end of the financial year
of the Company and date of this report.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Section 217 (2AA) of the Companies Act, 1956 as amended in December
2000 requires the Board of Directors to provide a statement to the
members of the Company in connection with maintenance of books, records
and preparation of Annual Accounts in conformity with accepted
accounting standards and past practices followed by the Company.
Pursuant to the foregoing, and on the basis of representations received
from operating management and after due enquiry, it is confirmed that:
(1) In the preparation of the accounts for the Financial Year ended
March 31, 2014, the applicable accounting standards have been followed
and that there are no material departures in the preparation of annual
accounts;
(2) The Directors have 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 as at March 31, 2014 and of the profit of the Company
for the year ended on that date;
(3) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records, in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(4) The Directors have prepared the accounts on a going concern basis.
MANAGEMENT DISCUSSION AND ANALYSIS (MDA):
A separate section titled "Management Discussion and Analysis"
confirming compliance with the conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreement is annexed hereto
and forms part of this Annual Report.
CORPORATE GOVERNANCE:
A separate section titled "Report on Corporate Governance" including a
certificate from the Practicing Company Secretaries confirming
compliance with the conditions of Corporate Governance as stipulated
under Clause 49 of the Listing Agreement is annexed hereto and forms
part of this Annual Report.
AUDITORS:
The Statutory Auditors of the Company M/s S. R. BATLIBOI & ASSOCIATES
LLP, Chartered Accountants, retire at the conclusion of the forthcoming
Annual General Meeting. M/s S. R. BATLIBOI & ASSOCIATES LLP, Chartered
Accountants, being eligible, offer themselves for re-appointment. As
per the provisions of the Companies Act 2013 read with relevant rules,
S. R. BATLIBOI & ASSOCIATES LLP can be appointed for a maximum period
of three years as Statutory Auditors of the Company. Therefore, S. R.
BATLIBOI & ASSOCIATES LLP are proposed to be appointed as Statutory
Auditors of the Company to hold office from the conclusion of this
Annual General Meeting for a period of three years. The Company has
received letter from them to the effect that their re- appointment, if
made, would be within the limits prescribed under Section 139 of the
Companies Act, 2013 read with rules thereon and that they are not
disqualified for such re- appointment within the meaning of the said
Act.
Replies to the Audit Qualifications:
(1) Replies to the Audit Qualifications - Standalone Financial
Statements:
Clause (a) under Basis for Qualified Opinion: Recovery of
Inter-Corporate Deposits
Reply: Prior to April 1, 2009 the erstwhile promoters had given certain
Inter Corporate Deposits (ICDs) to various companies aggregating to Rs.
343.78 Crores Of the foregoing, documentary evidences had been
established that, for an amount of Rs 323.78 Crores the then Satyam
Computer Services Limited (SCSL) was the ultimate beneficiary and for
which a claim together with interest receivable had been lodged by the
Company. During the year, SCSL had merged into Tech Mahindra Limited
(TML) pursuant to a Scheme of Arrangement u/s.391- 394 of the Companies
Act 1956. As provided in the scheme and as per the judgment of Hon''ble
High Court of Andhra Pradesh on the said scheme, the aforesaid amount
in books of SCSL was now transferred to TML. The Company through its
subsidiaries preferred an Appeal before the Division Bench of Hon''ble
High Court of A.R against the single judge''s Order approving the merger
scheme of SCSL which is pending as on date. TML, in its audited
financial results for March 31, 2014 continued to disclose as Amounts
Pending Investigation Suspense Account (Net) Rs.1,230.40 (Crores)" as
disclosed by SCSL earlier. Management is of the opinion that the claim
made by the Company on SCSL is included in the aforesaid amount
disclosed by TML in their Audited Financial Results. Management is
confident of recovering the Inter Corporate Deposits together with
interest due thereon.
Clause to) under Basis for Qualified Opinion: Un-audited Financial
Statements of Joint Ventures:
Reply: The qualification in respect of adoption of Unaudited Financial
Statements relates to the Joint Ventures of the Company. Accounting
year of the Company was from October 1, 2012 to March 31, 2014
(consisting of 18 months), and the Joint ventures being AOPs are not
required to prepare audited accounts for 18 months. However, they
provided Unaudited Management Accounts which have been adopted by the
Company.
Clause (iii)fc) of Annexure to Audit Report: Loans granted to Companies
Reply: The loan amount of Rs.47.87 Crores pertains to an Inter
Corporate Deposit given to Hill County Properties Limited (HCPL) in the
Financial Year 2008-09 by the erstwhile Promoters. The Company ceased
to be a Company to be covered in the Register maintained under Sec.301
of the Companies Act 1956 with effect from September 29, 2009. The
Company is confident of recovering the Inter Corporate Deposit along
with interest in view of acquisition of Hill County Properties Limited
by IL&FS Group as per the CLB Order of January 2011 Further, during the
year, the Company has entered into a restructuring arrangement with
HCPL where in the loan has been converted into Funded Interest Term
Loan (FITL). The maximum amount due as at March 31, 2014 is Rs. 97 Cr.
Clause fix) (a) - Delays in remittance of Statutory Dues : Reply: The
Company in general has been regular in remitting the statutory dues in
time. The Management has taken steps to avoid delays and as a matter of
internal control statutory dues are being monitored for timely
remittances.
Clause (x) - Cash loss during the year and in the immediately preceding
Financial Year:
Reply: The Company has started bidding for new business both in India
and abroad and has been successful in bagging new projects
considerably. The Company is confident of the future business
performance and growth based on the following:
- Healthy Order book
- The Promoter Group continued credit facilities to the tune of
Rs.958.06 Crores to support the liquidity position of the Company
- The Company has also unutilized limit of Rs. 65 Crores from
Infrastructure Leasing & Financial Services Limited (IL & FS) and Rs.
45 Crores from IL&FS Financial Services Limited. The Lending Banks
released additional Cash Credit facilities of Rs.113.99 Crores and non
fund based limits to the extent of Rs.249.25 Crores approved by them in
the previous year
- CARE has assigned BBB- and A3 ratings for long-term and short-term
banking facilities of the Company respectively
- An overseas branch in Fujairah was opened to undertake works outside
India
- The Company has resolved to issue further equity in the form of
rights to the existing shareholders. Draft Letter of Offer (DLOF) has
been filed on March 28, 2014.
(2) Replies to the Audit Qualifications - Consolidated Financial
Statements :
Clause (a) under Basis for Qualified Opinion: Recovery of Inter
Corporate Deposits :
Reply: Prior to April 1, 2009 the erstwhile promoters had given certain
Inter Corporate Deposits (ICDs) to various companies aggregating to
Rs.362.36 Crores. Of the foregoing, documentary evidences had been
established that, for an amount of Rs 342.11 Crores the then Satyam
Computer Services Limited (SCSL) was the ultimate beneficiary and for
which a claim together with interest receivable had been lodged by the
Company. During the year, SCSL had merged into Tech Mahindra Limited
(TML) pursuant to a Scheme of Arrangement u/s.391- 394 of the Companies
Act 1956. As provided in the scheme and as per the judgment of Hon''ble
High Court of Andhra Pradesh on the said scheme, the aforesaid amount
in books of SCSL was now transferred to TML. The Company through its
subsidiaries preferred an Appeal before the Division Bench of Hon''ble
High Court of A.R against the single judge''s Order approving the merger
scheme of SCSL which is pending as on date. TML, in its audited
financial results for March 31, 2014 continued to disclose the same as
Amounts Pending
Investigation Suspense Account (Net) Rs.1,230.40 (Crores)1'' as
disclosed by SCSL earlier. Management is of the opinion that the claim
made by the Company on SCSL is included in the aforesaid amount
disclosed by TML in their Audited Financial Results. Management is
confident of recovering the Inter Corporate Deposits together with
interest due thereon.
Clause to) under Basis for Qualified Opinion: Unaudited Financial
Statements of Joint Ventures & Subsidiaries:
Reply: The Auditors have qualified their Report for the period ended
March 31, 2014 stating that four Joint Ventures and two Subsidiaries
have been consolidated based on the Unaudited Financial Statements. The
Company has taken its share as on March 31, 2014 pursuant to extension
of its Financial Year based on Unaudited Management Accounts of the
Joint Ventures and subsidiaries which were provided to the Auditors.
Hence, consolidation was done on the basis of accounts certified by the
Management of these investee companies.
EMPLOYEES:
The relations with the employees have been cordial throughout the year
under review. Your Directors place on record their sincere appreciation
in respect of the services rendered by the employees of the Company at
all levels.
PARTICULARS OF EMPLOYEES:
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975, as amended, forms part of this Report. However, in pursuance of
Section 219(1) (b) (iv) of the Companies Act, 1956, this Report is
being sent to all the Shareholders of the Company excluding the
aforesaid information and the said particulars are made available at
the Registered Office of the Company. The Members interested in
obtaining such particulars may write to the Company Secretary at the
Registered Office of the Company.
ESOP 2007 and 2009
Your Company has not granted any stock options to the employees during
the year under review. Further, all the stock options issued under ESOP
2007 had expired as on April 13, 2014 since the ESOP 2007 scheme is
expired effective April 13, 2014
Disclosure as required by Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Stock Purchase
Scheme), Guidelines, 1999, as amended, are as per the annexure enclosed
Undertaking Pursuant to General Circular No: 2 /2011 No: 51 /
12/2007-CL-lll
The Company, hereby undertake to comply with the following;
- The annual accounts of the Subsidiary Companies and the related
detailed information shall be made available to shareholders of the
Holding and Subsidiary Companies seeking such information at any point
of time.
- The annual accounts of the Subsidiary Companies shall also be kept
for inspection by any shareholders in the head office of the Holding
Company and of the Subsidiary Companies concerned.
- The Company shall furnish a hard copy of details of accounts of
Subsidiaries to any shareholder on demand.
ENVIRONMENTAL POLICY:
Your Company is committed to carrying out all its activities with
requisite measures to protect the environment. Accordingly, your
Company is committed by policy to not only abide by the prevailing
legal requirements but also to have a futuristic approach in carrying
out continuous improvement in this regard.
DETAILS U/S 217(1) (e) OF THE COMPANIES ACT, 1956:
Particulars as per Section 217(1) (e) of the Companies Act. 1956, read
with Companies (Disclosure of particulars in the report of Board of
Directors) Rules, 1988 are as under:
Conservation of Energy:
The conservation of energy in all the possible areas is undertaken as
an important means of achieving cost reduction. Savings in
electricity, fuel and power consumption receive due attention of the
management on a continuous basis.
Technology Absorption:
Timely completion of the projects as well as meeting the budgetary
requirements are the two critical areas where different techniques help
to a great extent. Many innovative techniques have been developed and
put to effective use in the past and the efforts to develop new
techniques continue unabated.
Foreign Exchange Earnings & Outgo:
(Rs. Crores)
Earned 310.78
Outgo 320.39
ACKNOWLEDGMENTS:
Your Directors place on record their gratitude to the Bankers.
Financial Institutions, various Agencies of the State and the Central
Government Authorities, Clients, Consultants, Suppliers, Sub-
Contractors, Members and the Employees for their valuable support and
co-operation and look forward to continued enriched relationships in
the years to come
By order of the Board
For IL&FS Engineering and Construction Company Ltd
and reduced
Place : New Delhi Ramchand Karunakaran
Date: May 19, 2014 Chairman
Sep 30, 2012
The Shareholders
IL&FS Engineering and Construction Company Limited and reduced
The Directors take pleasure in presenting the Twenty-Fourth Annual
Report along with the Audited Accounts for the Financial Year ended
September 30, 2012
EXTENSION OF FINANCIAL YEAR :
Your Company has extended its Financial Year 2011-12 by a period of six
months i.e. up to September 30, 2012 to give effect to the Capital
Restructuring Scheme (details provided elsewhere in this report) during
the same financial year and accordingly has prepared its Financial
Statements for a period of 18 months i.e. from April 1, 2011 to
September 30, 2012
FINANCIAL RESULTS: (Rs. in Crores)
Particulars 2011-12 2010-11
18 Months 12 Months
Gross Income 2145.40 1067.33
(Loss) / Profit before Interest, 170.64 10.80
Depreciation, exceptional items and Tax
Interest and Finance Charges 213.31 74.36
Depreciation 94.00 56.96
(Loss) / Profit before exceptional
items, tax and Prior period items (136.67) (120.52)
Exceptional items (net) (10.26) (129.08)
(Loss) / Profit before Tax and Prior
period items (126.41) 8.56
Provision for Taxes 8.90 (6.07)
Less: Prior Period Expenses (net) - 11.72
(Loss) / Profit after Tax (135.31) 2.91
Adjustment as per Scheme of 179.82 -
arrangement
Profit after adjustment as per the 44.51 2.91
Scheme of arrangement
Paid up Equity Capital 89.79 77.37
Preference Share Capital 249.86 307.50
Reserves and Surplus 72.37 197.18
Net worth 412.02 582.05
Earnings per share (In Rupees)
-Basic (21.80) (2.64)
-Diluted (21.80) (2.64)
Previous year''s figures have been regrouped / rearranged to conform to
those of the current year
SHARE CAPITAL:
75,00,000 Optionally Convertible Cumulative Redeemable Preference
Shares of Rs.100/- each (OCCRPS) were converted into 1,24,17,218 Equity
Shares of Rs.10/- each at a price of Rs.60.40 per share as per the
terms of issue of the said OCCRPS pursuant to the Corporate Debt
Restructuring Scheme (CDR Scheme) and the same were allotted to the
concerned OCCRPS holders on September 30, 2012
The Company has issued 15,00,000 and 2,36,280 6% Cumulative Redeemable
Preference Shares (CRPS) as bonus CRPS on OCCRPS and CRPS respectively
on September 29, 2011
Out of the above 15,00,000 6%-CRPS, 4,50,000 CRPS were due for
redemption on September 30, 2012. The Company had extended the period
of redemption of these shares by a period of three years with an early
redemption right to the Company before the extended period of three
years by giving 30 days notice period i.e. the new redemption date for
these 4,50,000 CRPS shall be September 30, 2015 unless they are
redeemed earlier by giving 30 days notice to the concerned shareholders
DIVIDEND:
Due to the current financial conditions faced by the Company, your
Directors express their inability to recommend any dividend to the
equity Shareholders for the year
However, your Directors recommend to pay 6% Preference Dividend to the
Preference Shareholders for the Financial Years 2010-11 and 2011-12, as
extended, on pro-rata basis for the number of days the preference
shares are outstanding during the respective years from the profit
arising out of Capital Restructuring Scheme, as your Company has an
obligation to pay the dividend on Preference Shares
OVERVIEW:
During the year under review, your Company successfully undertaken
Capital Restructuring Scheme to set off accumulated losses against the
Securities Premium Account etc. which enabled the Company to declare
dividends to the Shareholders as and when balance is available in
Profit and Loss account of the Company. The details of the Capital
Restructuring Scheme are provided elsewhere in this report
Four of Saudi Bin Ladin Group''s representatives joined the Board as
Directors and are taking active role in the business operations of the
Company
The Company has extended its operations beyond the territorial limits
of India and are now operating from Saudi Arabia under a separate joint
venture subsidiary and through its branches in Fujairah and Abu Dhabi
A new team of top officials was inducted in the Company which ensured
increased efficiency in the operations of the Company
The Company has been getting good number of sizeable orders from
various sectors and from both Government and Private Parties which
provide better future for the Company
FUTURE OUTLOOK:
With a healthy order book of Rs.8,400 Crores on hand, the Company looks
forward to increasing turnover and better performance in future.
RECOVERY OF INTER CORPORATE DEPOSITS (ICDs):
During the year, your Company continued pursuing recovery of Inter
Corporate Deposits (ICDs). Your Company is taking necessary steps to
recover ICDs through available legal means
FIXED DEPOSITS:
Your Company did not invite or accept deposits from the public during
the year under review
SUBSIDIARIES AND JOINT VENTURES:
A statement pursuant to Section 212 of the Companies Act, 1956
containing the details of the Subsidiaries together with financials
thereof, forms part of the Annual Report. The following are the
Subsidiaries of the Company:
(1) Maytas Infra Assets Limited (MIAL):
MIAL was incorporated in February 2008, as a wholly owned Subsidiary,
to carry on the business of infrastructure projects and for
consolidation of all investments made by your Company in BOT projects.
Your Company has invested an amount of Rs. 0.05 crores in Equity and
paid Rs. 18.57 Crores towards Sub-debt and reimbursement of expenses in
MIAL till September 30, 2012. No projects were secured during the year.
Out of this amount advanced, Rs.11.28 Crores approximately has been
considered as impaired as they are not represented by any realizable
assets and therefore have been provided in full
(2) Maytas Metro Limited (MML):
The Maytas/Navabharat/IL&FS/ITD lead consortium had technically
qualified in the bids and won the financial bid by offering highest
premium to the GoAP in July 2008. Subsequently, the Consortium had
formed the "MML''asSPV in September 2008 to develop the Hyderabad Metro
Rail Project on BOT basis and signed Concession Agreement with
Government of Andhra Pradesh (GoAP) on September 19, 2008 for a period
of 35 years of concession including the five years of construction
period. The GoAP had cancelled the Concession Agreement on July 7, 2009
without giving any prior notice to the Company as per the terms and
conditions of the Concession Agreement and invoked the security deposit
of Rs.60.00 Crores. The Writ Petition filed by MML in High Court of
Andhra Pradesh was disposed off with a direction to settle the dispute
under Arbitration mechanism as available in the Concession Agreement.
MML has appointed arbitrator on its behalf and awaiting appointment of
arbitrator by the Government of Andhra Pradesh. Your Company has
invested an amount of Rs. 0.05 Crores towards the equity and arranged
funds to the extent of Rs. 74.78 crores. The investment and the amount
advanced aggregating to Rs. 74.83 Crores have been written off fully
during the earlier years
(3) Maytas Vasishta Varadhi Limited (MVVL):
MVVL, a Subsidiary of your Company, was incorporated in April 2008 for
executing the construction of bridge across Godavari River at Narasapur
on BOT (Annuity) Basis, awarded by Andhra Pradesh Road Development
Corporation (APRDC). Your Company has invested an amount of Rs. 0.05
Crores towards the equity and Rs 2.80 Crores towards sub-debt and
reimbursement of expenses till September 2012. As the project could not
be taken up by the Company post-Satyam developments, it had found out a
partner M/s. Coastal Projects Ltd., to take up the project and made
application to the State Government for approval of new partner. The
Government of Andhra Pradesh approved the entry of M/s. Coastal
Projects Ltd. However, when the Company filed application with the
Government for extension of time, the Government of Andhra Pradesh
unilaterally cancelled the Project and invoked the Bank Guarantee
submitted by the Company. The Company contested the unilateral
cancellation in the Court of Law and obtained stay order against
invocation of Bank Guarantee by the Government. Currently, the matter
is before the Hon''ble High Court of Andhra Pradesh for its
adjudication. However, as a matter of prudence, the Company has
provided for an amount of Rs.2.80 Crores during the year under review
(4) Angeerasa Greenfields Private Limited (AGPL):
Your Company has acquired AGPL in the previous Financial Year. The
subsidiary in the earlier years has advanced Rs.50 Crores in the form
of Inter Corporate Deposits (ICDs) to various other Companies which
ultimately credited to the bank accounts of M/s Satyam Computer
Services Limited (SCSL). AGPL has initiated legal action for the
recovery of the said deposits through the Companies to whom it has lent
the monies with various authorities and AGPL is hopeful of receiving
the same in due course
(5) Ekadanta Greenfields Private Limited (EGPL):
Your Company has acquired EGPL in the previous financial year. The
subsidiary in the earlier years has advanced Rs.18.58 Crores (net of
repayment of Rs.17.92 Crores by SCSL) in the form of ICDs to SCSL. EGPL
has initiated legal action for the recovery of the said deposits with
various authorities and EGPL is hopeful of receiving the same in due
course
(6) Saptaswara Agro-farms Private Limited (SAPL):
Your Company has acquired SAPL in the previous financial year. The
subsidiary in the earlier years has advanced Rs.19.75 Crores (net of
repayment of 15.25 Crores by SCSL) in the form of ICDs to SCSL. SAPL
has initiated legal action for the recovery of the said deposits under
various authorities and SAPL is hopeful of receiving the same in due
course
(7) Maytas Infra Saudi Arabia Co. (MISA):
During the year, your Company has incorporated Maytas Infra Saudi
Arabia Co. (MISA) in Joint Venture with Saudi Bin Ladin Group in
Kingdom of Saudi Arabia. Your Company owns 55% shareholding out of a
total capital of SAR 50,000,000 (Indian Rupees 33.19 Crores) in this
joint venture with three director positions out of 5 director
positions. Accordingly, this Joint Venture became subsidiary of your
Company
CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements of your Company, together with
its Subsidiaries, Associates and Joint Venture Entities for the
Financial Year ended September 30,2012, prepared in accordance with the
Accounting Standard 21,23 and 27 notified by Companies (Accounting
Standards) Rules, 2006, are attached herewith
DIRECTORS:
During the year, Mr. Ravi Parthasarathy and Mr. Vimal Kishore Kaushik
stepped down as Chairman and Managing Director of the Company
respectively. Mr.Arun Saha has resigned as Director of the Company on
December 12, 2012. Further, nominations of Mr. Ved Jain and Mr. Anil K
Agarwal were withdrawn by the Government of India, with effect from
September 01,2011 pursuant to completion of their term as nominee
directors in terms of Order of Company Law Board. Following the
cessation of their Directorship pursuant to the aforementioned
withdrawal, Mr. Ved Jain and Mr. Anil K Agarwal were inducted on the
Board as Independent Directors with effect from November 13, 2011. Mr.
Hari Sankaran was appointed as an Additional Director on the Board of
the Company with effect from December 11, 2012
Mr. Gogireddy Venkateswar Reddy was appointed as Manager of the Company
for a period of two years with effect from November 14, 2011. Mr.
Ramchand Karunakaran has been appointed as Chairman of the Board. Mr.MD
Khattar was appointed as Chief Executive Officer of the Company
CAPITAL RESTRUCTURING SCHEME:
The Company had undertaken a Scheme of Arrangement ("the Scheme") under
Sections 391 to 394 of the Companies Act, 1956 (the Act) read with
Sections 78, 100 to 104 of the Act for restructuring of its Capital.
The same was sanctioned by the Hon''ble High Court of Andhra Pradesh
(the Court) vide its Order dated October 17, 2012, as modified by
Orders dated October 19, 2012 and November 7, 2012. The said orders of
the Court were registered with the Registrar of Companies on November
21, 2012. Pursuant to the said Scheme, an amount of Rs.612.24 Crores
being balance in Securities Premium Account as on the appointed date
i.e. July 1,2011, was adjusted with its past losses. The balance in
the Statement of Profit and Loss after this adjustment was Rs.179.82
Crores as on the appointed date
The Court, while sanctioning the Scheme, laid down the following
conditions:
- The Company shall within four weeks of this order, furnish an
unconditional Bank Guarantee for Rs.70.02 Crores and deposit the
guarantee with the Registrar (Judicial), High Court of Andhra Pradesh,
to be retained to the credit of, and till the final outcome of Company
Petition No.199 of 2010, or any directions passed therein. The debt due
to the other two unsecured creditors, who voted against the scheme, of
Rs.8.38 lakhs shall be repaid to them within four week from October 19,
2012 and proof of payment shall be filed by way of an application,
supported by an affidavit, in the Company Petition
- The Company shall add to its name, as its last words "and reduced"
for the period up to and until the end of the Financial Year 2012-13;
and in the balance sheet, the profit and loss account, and the annexure
for the said period
- The balance of Rs.179.82 Crores in the Statement of Profit and Loss
arising pursuant to the Scheme of Arrangement can be utilized only for
payment of dividend to the Preference Shareholders, to set-off losses,
if any, from the current Financial Year onwards and for redemption of
Preference Shares, but not for payment of dividend to Equity
Shareholders
The Company has complied with the conditions stipulated by the Order of
High Court of Andhra Pradesh referred above and has given effect to the
Scheme in the Financial Statements of the Company for the Financial
Year ended September 30, 2012.
DISCLOSURES UNDER SECTION 217(1) (D) OF THE COMPANIES ACT, 1956:
Except as disclosed elsewhere in this report, there have been no
material changes and commitments which can affect the financial
position of the Company occurred between the end of the financial year
of the Company and date of this report
DIRECTORS'' RESPONSIBILITY STATEMENT:
Section 217 (2AA) of the Companies Act, 1956 as amended in December
2000 requires the Board of Directors to provide a statement to the
members of the Company in connection with maintenance of books, records
and preparation of Annual Accounts in conformity with accepted
accounting standards and past practices followed by the Company.
Pursuant to the foregoing, and on the basis of representations received
from operating management and after due enquiry, it is confirmed that:
(1) in the preparation of the accounts for the Financial Year ended
September 30, 2012 , the applicable accounting standards have been
followed and that there are no material departures in the preparation
of annual accounts;
(2) the Directors have 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 as at September 30, 2012 and of the profit of the
Company for the year ended on that date;
(3) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records, in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(4) the Directors have prepared the accounts on a going concern basis
MANAGEMENT DISCUSSION AND ANALYSIS (MDA):
A separate section titled "Management Discussion and Analysis"
confirming compliance with the conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreement is annexed hereto
and forms part of this Annual Report
CORPORATE GOVERNANCE:
A separate section titled "Report on Corporate Governance" including a
certificate from the Practicing Company Secretaries confirming
compliance with the conditions of Corporate Governance as stipulated
under Clause 49 of the Listing Agreement is annexed hereto and forms
part of this Annual Report
AUDITORS:
The Statutory Auditors of the Company M/s S R Batliboi & Associates,
Chartered Accountants, retire at the conclusion of the forthcoming
Annual General Meeting. M/s S R Batliboi & Associates, Chartered
Accountants, being eligible, offer themselves for re- appointment and
are proposed to be appointed as Statutory Auditors of the Company to
hold office from the conclusion of this Annual General Meeting until
the conclusion of the next Annual General Meeting. The Company has
received letters from them to the effect that their re-appointment, if
made, would be within the limits prescribed under Section 224(1B) of
the Companies Act, 1956 and that they are not disqualified for such
re-appointment within the meaning of Section 226 of the said Act
Replies to the Audit Qualifications:
Replies to the Audit Qualifications - Standalone Financial Statements:
(1) Clause No5(a) & 5(b) : Non-preparation of Un-audited Financial
Statements of Joint Ventures:
Reply: The qualification in respect of non-preparation of Financial
Statements relates to Maytas SNC JV (presently known as SNC Power
Corporation Pvt Limited) which could not produce its accounts before
adoption of the accounts of the Company. Hence, the impact of
Profit/(Loss) in the said Joint Venture has not been considered in the
Financial Statements of the Company
The qualification in respect of adoption of Unaudited Financial
Statements relates to all the Joint Ventures of the Company.
Accounting year of the Company has been extended by 6 months i e upto
September 30, 2012, and the Joint Ventures being AOPs do not have the
practice or requirement to get their accounts audited for 18 months.
Hence, they provided unaudited Management signed accounts which have
been adopted by the Company
(2) Clause No.6 : Recovery of Inter-Corporate Deposits :
Reply: Prior to April 1, 2009 the erstwhile promoters had given Inter
Corporate Deposits aggregating to Rs.391.64 Crores to various
companies. As at September 30,2012, the outstanding balance of Inter
Corporate Deposits to various companies aggregated to Rs.713.64 Crores
(including Rs.369.85 Crores to Maytas Properties Limited [MPL]). Of the
foregoing, documentary evidences had been established that, for an
amount of Rs.323.78 Crores, Satyam Computer Services Limited (SCSL) is
the ultimate beneficiary and for which a claim together with interest
receivable had been lodged by the Company. SCSL had accounted
Rs.1230.40 Crores as liability in its Audited Financial Statements as
at March 31,2012 under the head "Amounts Pending Investigation Suspense
Account (Net)". Management is of the opinion that the claim made by the
Company on SCSL is included in the amount disclosed by them in their
Audited Financial Statements. The Company is confident of recovering
the Inter Corporate Deposits together with interest due thereon. During
the earlier year and the year under review, the qualification on ICDs
has been restricted to the extent of Rs.343.78 Crores in the Audit
Reports in view of acquisition of MPL by IL&FS Group and the Company
was confident of recovering ICD amounts of Rs.369.85 Crores from MPL
along with interest
(3) Clause (iii)(c) of Annexure to Audit Report : Loans granted to
Companies
Reply: The maximum amount of Rs.47.87 Crores pertains to an Inter
Corporate Deposit given to Maytas Properties Limited in the Financial
Year 2008-09 by the erstwhile Promoters. The Company ceased to be a
Company to be covered in the Register maintained under Sec.301 of the
Companies Act 1956 with effect from September 29, 2009. The Company is
confident of recovering the Inter Corporate Deposit along with interest
in view of acquisition of Maytas Properties Limited by IL&FS Group as
per the CLB order. Further, during the year, the Company has accrued
gross interest income of Rs.12.96 Crores on the said Inter Corporate
Deposit
(4) Clause (ix) (a) - Delays in remittance of Statutory Dues :
Reply: The Company in general has been regular in remitting the
statutory dues in time. The Management has taken steps to avoid delays
and as a matter of internal control also, statutory dues are being
monitored for timely remittances
(5) Clause (x) - Cash loss during the year and in the immediately
preceding Financial Year:
Reply: The Company has started bidding for new business both in India
and abroad and has been bagging new projects considerably. The Company
is confident of the future business performance and growth based on the
following:
- Healthy Order book
- The Promoter Group has extended credit facilities to the tune of
Rs.676.50 Crores to support the liquidity position of the Company
- The Company has also unutilized limit of Rs.143 Crores from IL&FS
- The Company has undertaken a Capital Restructuring Scheme which was
approved by Hon''ble High Court of Andhra Pradesh whereby all
accumulated losses have been wiped out
- The Lender Banks had approved additional working capital facilities
of Rs.399.48 Crores
Replies to the Audit Qualifications - Consolidated Financial
Statements:
(1) Clause 4 (a): Unaudited Financial Statements of Joint Ventures &
Subsidiaries:
Reply: The Auditors have qualified their Report for the period ended
September 30, 2012 stating that six joint ventures and seven
subsidiaries have been consolidated based on the Unaudited Financial
Statements. The Company has taken its share as on September 30, 2012
pursuant to extension of its Financial Year based on the unaudited
signed Management Accounts of the Joint Ventures and subsidiaries which
were provided to the Auditors. Hence, consolidation was done on the
basis of accounts certified by the Management of these investee
companies
(2) Clause 4(b): Non submission of Financial Statement of Jointly
Controlled Entity:
Reply: This qualification relates to Maytas SNC JV (presently known as
SNC Power Corporation Pvt Limited) which could not produce its accounts
before adoption of the accounts of the Company. Hence, the Company has
consolidated based on the Audited Financial Statements as at and for
the year ended March 31, 2010
(3) Clause 5 : Recovery of Inter Corporate Deposits :
Reply: Prior to April 1,2009 the erstwhile promoters had given Inter
Corporate Deposits aggregating to Rs.391.64 Crores to various
companies. As at September 30,2012, the outstanding balance of Inter
Corporate Deposits to various companies aggregated to Rs.713.64 Crores
(including Rs.369.85 Crores to Maytas Properties Limited [MPL]). Of the
foregoing, documentary evidences had been established that, for an
amount of Rs.323.78 Crores, Satyam Computer Services Limited (SCSL) is
the ultimate beneficiary and for which a claim together with interest
receivable had been lodged by the Company. SCSL had accounted
Rs.1230.40 Crores as liability in its Audited Financial Statements as
at March 31,2012 under the head "Amounts Pending Investigation Suspense
Account (Net)". Management is of the opinion that the claim made by the
Company on SCSL is included in the amount disclosed by them in their
Audited Financial Statements. The Company is confident of recovering
the Inter Corporate Deposits together with interest due thereon. During
the earlier year and the year under review, the qualification on ICDs
has been restricted to the extent of Rs.343.78 Crores in the Audit
Reports in view of acquisition of MPL by IL&FS Group and the Company
was confident of recovering ICD amounts of Rs.369.85 Crores from MPL
along with interest
EMPLOYEES:
The relations with the employees have been cordial throughout the year
under review. Your Directors place on record their sincere appreciation
in respect of the services rendered by the employees of the Company at
all levels
PARTICULARS OF EMPLOYEES:
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975, as amended, forms part of this Report. However, in pursuance of
Section 219(1) (b) (iv) of the Companies Act, 1956, this Report is
being sent to all the Shareholders of the Company excluding the
aforesaid information and the said particulars are made available at
the Registered Office of the Company. The Members interested in
obtaining such particulars may write to the Company Secretary at the
Registered Office of the Company
ESOP 2007 and 2009:
Your Company has granted 28,49,984 options under ESOP 2009 Scheme as
Grant - II to the employees of the Company / Directors of Subsidiaries
as decided by the Remuneration Committee on June 28, 2012
Disclosure as required by Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Stock Purchase
Scheme), Guidelines, 1999, as amended, are as per the annexure enclosed
Undertaking Pursuant to General Circular No: 2 /2011 No: 51 /
12/2007-CL-III:
The Company, hereby undertake to comply with the following;
- The annual accounts of the subsidiary companies and the related
detailed information shall be made available to shareholders of the
holding and subsidiary companies seeking such information at any point
of time
- The annual accounts of the subsidiary companies shall also be kept
for inspection by any shareholders in the head office of the holding
company and of the subsidiary companies concerned
- The Company shall furnish a hard copy of details of accounts of
subsidiaries to any shareholder on demand
ENVIRONMENTAL POLICY:
Your Company is committed to carrying out all its activities with
requisite measures to protect the environment. Accordingly, your
Company is committed by policy to not only abide by the prevailing
legal requirements but also to have a futuristic approach in carrying
out continuous improvement in this regard
DETAILS U/S 217(1) (e) OF THE COMPANIES ACT, 1956:
Particulars as per Section 217(1) (e) of the Companies Act, 1956, read
with Companies (Disclosure of particulars in the report of Board of
Directors) Rules, 1988 are as under:
Conservation of Energy:
The conservation of energy in all the possible areas is undertaken as
an important means of achieving cost reduction. Savings in electricity,
fuel and power consumption receive due attention of the management on a
continuous basis
Technology Absorption:
Timely completion of the projects as well as meeting the budgetary
requirements are the two critical areas where different techniques help
to a great extent. Many innovative techniques have been developed and
put to effective use in the past and the efforts to develop new
techniques continue unabated
Foreign Exchange Earnings & Outgo:
(Rs. Crores)
Earned Nil
Outgo 8.22
ACKNOWLEDGMENTS:
Your Directors place on record their gratitude to the Bankers,
Financial Institutions, various Agencies of the State and the Central
Government Authorities, Clients, Consultants, Suppliers, Sub-
Contractors, Members and the Employees for their valuable support and
co-operation and look forward to continued enriched relationships in
the years to come
By order of the Board
For IL&FS Engineering and Construction Company Ltd. and
reduced
Place : Dubai Ramchand Karunakaran
Date: December 22, 2012 Chairman
Mar 31, 2011
The Shareholders
IL&FS Engineering and Construction Company Limited
The Directors take pleasurein presenting the Twenty-Third Annual Report
along with the Audited Accounts for the Financial Year ended March
31,2011.
FINANCIAL RESULTS:
(Rs. in Crores)
Particulars 2010-11 2009-10
Gross Income 1097.11 1003.96
(Loss) / Profit before Interest, 10.8 (46.46)
Depreciation, exceptional items and Tax
Interest and Finance Charges 74.36 150.94
Depreciation 56.96 83.67
(Loss)/Profit before exceptional items, (120.52) (281.07)
tax and Prior period items
Exceptional items (net) 129.08 39.48
(Loss) /Profit before Tax and
Prior period items 8.56 (241.59)
Provision for Taxes (6.07) -
Less: Prior Period Expenses (net) 11.72 8.05
(Loss) / Profit after Tax 2.91 (249.64)
Transfer (from)/to General Reserves
Paid up Equity Capital 77.37 58.85
Preference Share Capital 307.50 Nil
Share application money pending Nil 354.27
allotment
Reserves and Surplus-Net of Profit 197.18 (145.41)
& Loss A/c debit balance
Net worth 582.05 268.04
Earnings per share (In Rupees)
-Basic (2.64) (42.42)
-Diluted (2.64) (42.42)
Previous year's figures have been regrouped / rearranged to conform to
those of the current year.
DIVIDEND:
Due to the current financial conditions faced by the Company, your
Directors express their inability to recommend any dividend to the
Shareholders for the year.
OVERVIEW:
During the year under review, the operations of your Company have been
largely stabilized. Various new personnel were inducted in the top
level management of the Company. The Company could successfully execute
Master Restructuring Agreement (MRA) for restructuring of its existing
debt, under Corporate Debt Restructuring (CDR) Scheme. Your Company
could also successfully complete One Time Settlements with 5 other
banks during the year. Your Company was able to induct Saudi Binladin
Group (SBG) of Saudi Arabia as a Strategic Partner in the
Shareholders' Consortium. SBG Projects Investments Limited, a part of
SBG, has executed a Shareholders' Agreement on June 19,2010 for
investment of 20% in the equity share capital of your Company i.e. Rs.
301.92 crores. The Promoters of your Company, namely Infrastructure
Leasing and Financial Services Ltd. (IL&FS) had lent its brand name and
the name of your Company had been changed from Maytas Infra Ltd., to
IL&FS Engineering and Construction Company Ltd. SBG and IL&FS had
completed Open Offer to acquire up to an additional 20% from the market
as per SEBI(SAST) Regulations.
The Company has proposed to issue Bonus Preference Shares to existing
Preference Shareholders. The Company also proposes to undertake Capital
Restructuring Scheme to set off accumulated losses against the
Securities Premium Account etc. so that going forward the Company would
be able to declare dividend to the Shareholders as and when balance in
profit and loss account is available in the Company.
With all these measures, your Company is now confident of undertaking
and meeting future obligations.
(1) Induction of SBG:
Your Company had approached the Hon'ble Company Law Board (CLB) for its
permission to allow four nominee Directors of SBG Projects Investments
Limited (SBG) on the Board of your Company. However, the Management
Control of the Company was to remain with IL&FS Group and the IL&FS
Group would also continue to hold a minimum of 26% share holding in the
Company as per Order dated August 31,2009 of the Hon'ble CLB. The
Hon'ble CLB vide its Order dated November 4, 2010 has approved the
appointment of four nominees of SBG on the Board of the Company and
further advised, the nominee directors of Central Government, that they
shall ensure thatthe Management Control ofthe Company rests solely with
IL & FS and in case of any apprehension to the contrary they shall
approachthe CLB forthwith for appropriate directions.
(2) Change of Name of the Company:
Your Company has been renamed as 'IL&FS Engineering and Construction
Company Limited' pursuant to completion of all formalities and process
under the provisions of the Companies Act, 1956, and on receipt of
Certificate of Incorporation dated January 7, 2011 issued by Registrar
of Companies, Andhra Pradesh, Ministry of Corporate Affairs, Government
of India. The Company had conducted the process of Postal Ballot
pursuant to provisions of Section 192A of the Companies Act, 1956 ("the
Act") for passing a Special Resolution under Section 21 ofthe Act, for
change of name ofthe Company.
(3) Capital:
(a) Increase in Authorised Capital of the Company and alteration of
Memorandum
During the year under review, your Company has increased its Authorised
Share Capital from Rs. 75,00,00,000/- (Rupees Seventy-Five Crore only)
to Rs.500,00,00,000/- (Rupees Five hundred Crore only) at the
Extra-Ordinary General Meeting ofthe Members held onJuly19,2010.
(b) Allotment of Shares to SBG Projects Investments Ltd.
Pursuant to the resolution of the Shareholders at the Extra Ordinary
General Meeting held on July 19,2010, the Board of Directors of the
Company had allotted 1,54,59,133 equity shares of Rs. 10/- each at a
premium of Rs. 185.30 per share
(c) Allotment of Shares to CDR Banks
During the year under review, your Company made allotments of shares to
CDR Banks, pursuant to the MRA entered into with them, the details of
which are follows:
i) 30,60,086 equity shares of Rs.10/- each at a premium of Rs.177.89/-,
were allotted on November 29,2010.
II) 57,49,500 - 6% Cumulative Redeemable Preference Shares (CRPS) of
Rs.100/- each at par, were allotted on December 06,2010. The CRPS are
redeemable at par on March 31,2015.
ill) 2,50,00,000 - 6% Optionally Convertible Cumulative Redeemable
Preference Shares (OCCRPS) of Rs.100/ - each at face value, were
allotted on March 31,2011. Out of the 2,50,00,000 (Two Crore Fifty
Lakhs) OCCRPS of Rs. 100/- each, allotted, 30% (i.e., 75,00,000 OCCRPS
of Rs. 100/- each) shall be convertible into equity on
September30,2012, if opted for, by the allottees. The price at which
the same shall be converted will be determined as perthe SEBI (ICDR)
Regulations, 2009. Remaining 1,75,00,000 (One Crore Seventy Five Lakh)
OCCRPS of Rs. 100/- each shall be redeemed in four tranches from 2013
to 2016.
(4) One Time Settlement with Banks (OTS):
The Company had completed OTS with certain Banks who were outside
Corporate Debt Restructuring (CDR) Scheme. Accordingly, the Company
successfully completed OTS Settlements with all Banks which were
outside the purview of CDR Package.
OPEN OFFER:
SBG Projects Investments Ltd. ("SBG") along with Infrastructure Leasing
and Financial Services Ltd. and IL&FS Financial Services Limited
("Acquirers"), made an Open Offer, for acquiring 20% stake from the
Shareholders in the Company, at a price of Rs. 195.72/- per share,
pursuant to and in compliance with Reg. 10 and 11(1) of the SEBI (SAST)
Regulations, 1997. The said Open Offer had opened on March 30, 2011 and
closed on April 18, 2011. The Acquirers had acquired 1,45,63,755 equity
shares of Rs. 10/- each constituting 18. 82% of the paidup capital of
the Company in the open offer. Post Open Offer, IL&FS and SBG hold
34.56% and 32.39% respectively of Equity Share Capital of the Company.
FUTURE OUTLOOK:
The near-normalcy of the operations of the Company was restored by
active and aggressive focus on both the acquisition of new orders and
effective implementation of existing projects.
YourCompany expects these efforts to bring-incomplete normalcy in the
current Financial Year and return to healthy operational situation. The
overseas foray has also started to yield results with mandates coming
in from both Saudi Arabia and UAE.
Your Company expects the contributions of these International
Operations to gradually increase and create a geographical
diversification to enable the Company to address any flip in one local
geography.
With the Open Offer having been completed, your Company expects the
benefit of huge experience of SBG to propel the growth of Company to
larger projects which would position the Company to less-competitive
niche area environment.
RECOVERY OF INTER CORPORATE DEPOSITS (ICDs):
During the year, your Company continued pursuing recovery of Inter
Corporate Desposits (ICDs). Your Company is taking necessary steps to
recover ICDs through available legal means.
FIXED DEPOSITS:
Your Company did not invite or accept deposits from the public during
the year under review.
SUBSIDIARIES AND JOINT VENTURES:
Astatement pursuantto Section 212 of the Companies Act, 1956 containing
the details of the Subsidiaries together with f inancials thereof,
forms part of the Annual Report. The following are the Subsidiaries of
the Company:
(1) Maytas Infra Assets Limited (MIAL):
MIALwas incorporated in February 2008, as a wholly owned Subsidiary, to
carry on the business of infrastructure projects and for consolidation
of all investments made byyourCompany in BOT projects. Your Company has
invested an amount of Rs. 0.05 crores in Equity and paid Rs. 17.46
Crores towards Share Application Money and reimbursement of expenses in
MIAL till March 31, 2011. No projects were secured during the year.
Outofthisamountadvanced, Rs. 11.08 Crores approximately has been
considered as impaired as they are not represented by any realizable
assets and therefore have been provided in full during the year
(2) Maytas Metro Limited (MML):
The Maytas/Navabharat/IL&FS/ITD lead consortium had technically
qualified in the bids and won the financial bid by offering highest
premium to the GoAP in July 2008. Subsequently, the Consortium had
formed the "MML as SPV in September 2008 to develop the Hyderabad Metro
Rail Project on BOT basis and signed Concession Agreement with
Government of Andhra Pradesh (GoAP) on September 19, 2008 for a period
of 35 years of concession including the five years of construction
period. The GoAP had cancelled the Concession Agreement on July 7, 2009
without giving any prior notice to the Company as perthe terms and
conditions of the Concession Agreement and invoked the security deposit
of Rs. 60.00 Crores. The Writ Petition filed by MML in High Court of
Andhra Pradesh is pending for adjudication. Your Company has invested
an amount of Rs. 0.05 Crores towards the equity and arranged funds to
the extent of Rs. 74.78 crores. The investment and the amount advanced
aggregating to Rs. 74.83 Crores have been provided for fully during
the previous year.
(3) Maytas Vasishta Varadhi Limited (MWL):
MWL, a Subsidiary of your Company, was incorporated in April 2008 for
executing the construction of bridge across Godavari River at Narasapur
on BOT (Annuity) Basis, awarded
by Andhra Pradesh Road Development Corporation (APRDC). Your Company
has invested an amount of Rs. 0.05 Crores towards the equity and Rs
2.70 Crores towards share application money and reimbursement of
expenses till March 31,2011. As the project could not be taken up by
the Company post-Satyam developments, it had found out a partner M/
s.Coastal Projects Ltd., to take up the project and made application to
the State Government for approval of new partner. The Government of
Andhra Pradesh approved the entry of M/ s.Coastal Projects Ltd.
However, when the Company filed application with the Government for
extension of time, the Government of Andhra Pradesh unilaterally
cancelled the Project and invoked the Bank Guarantee submitted by the
Company. The Company contested the unilateral cancellation in the Court
of Law and obtained stay order against invocation of Bank Guarantee by
the Government. Currently, the matter is before the Hon'ble High Court
of Andhra Pradesh for its adjudication.
(4) Acquisition of new Subsidiaries:
During the Year, your Company has acquired Angeerasa Green Fields
Private Limited, Ekadanta Green Fields Private Limited and Saptaswara
Agro-Farms Private Limited and they became wholly owned subsidiaries of
yourCompany.
Further, your Company had also closed one of its subsidiaries namely,
Maytas Mineral Resources Limited under Section 560 of the Companies
Act, 1956, as the same could not carry on its stated objectives.
CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements of your Company, together with
its Subsidiaries, Associates and Joint Venture Entities for the
Financial Year ended March 31, 2011, prepared in accordance with the
Accounting Standard 21,23 and 27 notified by Companies (Accounting
Standards) Rules, 2006, are attached herewith.
DIRECTORS:
During the year under review, there is no change in the composition of
the Board of Directors of the Company. MrArun KSaha, Director and
Chairman of the Executive Committee of the Board, retires by rotation
at the ensuing Annual General Meeting (AGM) of the Company and being
eligible offers himself for re-appointment.
DISCLOSURES UNDER SECTION 217(1)(D) OF THE COMPANIES ACT, 1956:
Except as disclosed elsewhere in this report, there have been no
material changes and commitments which can affect the financial
position of the Company occurred between the end of the financial year
of the Company and date of this report.
DIRECTORS' RESPONSIBILITY STATEMENT:
Section 217 (2AA) of the Companies Act, 1956 as amended in December
2000 requires the Board of Directors to provide a statement to the
members of the Company in connection with maintenance of books, records
and preparation of Annual Accounts in conformity with accepted
accounting standards and past practices followed by the Company.
Pursuant to the foregoing, and on the basis of representations received
from operating management and after due enquiry, it is confirmed that:
(1) in the preparation of the accounts forthe Financial Year ended
March 31, 2011, the applicable accounting standards have
been followed and that there are no material departures in the
preparation of annual accounts;
(2) the Directors have 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 as at March 31,2011 and of the profit of the Company for
the year ended on that date;
(3) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records, in accordance with the
provisions of the Companies Act, 1956,forsafeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities;
(4) the Directors have prepared the accounts on a going concern basis.
MANAGEMENT DISCUSSION AND ANALYSIS (MDA):
A separate section titled "Management Discussion and Analysis-
confirming compliance with the conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreement is annexed hereto
and forms part of this Annual Report.
CORPORATE GOVERNANCE:
A separate section titled "Report on Corporate Governance- including a
certificate from the Practicing Company Secretaries confirming
compliance with the conditions of Corporate Governance as stipulated
under Clause 49 of the Listing Agreement is annexed hereto and forms
part of this Annual Report.
AUDITORS:
The Statutory Auditors of the Company M/s S R Batliboi & Associates,
Chartered Accountants, retire at the conclusion of the forthcoming
Annual General Meeting. M/s S R Batliboi &Associates, Chartered
Accountants, being eligible, offer themselves for re- appointment and
are proposed to be appointed as Statutory Auditors of the Company to
hold office from the conclusion of this Annual General Meeting until
the conclusion of the next Annual General Meeting. The Company has
received letters from them to the effect that their re-appointment, if
made, would be within the limits prescribed under Section 224(1 B) of
the Companies Act, 1956 and that they are not disqualified for such
re-appointment within the meaning of Section 226 of the said Act.
Replies to the Audit Qualifications:
(1) Clause No.6 : Un-audited Financial Statements of two Joint
Ventures:
Reply: Auditors have qualified their Report for the year ended March
31,2011, stating that-
i) One of the integrated Joint ventures has not prepared its financial
statements. This qualification relates to Maytas SNC JV (presently
known as SNC Power Corporation Limited) which could not produce its
accounts before adoption of the accounts of the Company. Hence impact
of ProfiV(Loss) in the said Joint venture has not been considered in
the Financial Statements.
ii) The Company has included its share of loss of Rs. 0.11 Crore from
an Integrated Joint Venture based on its Unaudited Financial
Statements. This qualification relates to NCC Maytas JV (Pocharam)
whose accounts were not
audited as on the date of adoption of accounts. Certified accounts
provided by the Management of this JV were provided to the auditors
based on which the Company's share of loss was considered in the
Financial Statements.
(2 Clause 7 - Recovery of Inter-Corporate Deposits:
Reply : Prior to April 1, 2009 the erstwhile promoters had given inter
Corporate Deposits aggregating to Rs.391.64 Crores to various
companies. As at March 31, 2011, the outstanding balance of Inter
Corporate Deposits to various companies aggregated to Rs 415.63 Crores
[including Rs. 71.85 Crores to Maytas Properties Ltd (MPL)]. Of the
foregoing, documentary evidences had been established that, for an
amount of Rs 323.78 Crores, Satyam Computer Services Limited (SCSL) is
the ultimate beneficiary and for which a claim together with interest
receivable had been lodged by the Company. SCSL had accounted certain
liability in its Audited Consolidated Statement of Assets and
Liabilities as at March 31,2011 as "Amounts Pending Investigation
Suspense Account (Net) Rs. 1230.40 Crores ". Management is of the
opinion that the claim made by the Company on SCSL is included in the
amount disclosed by them in their Audited Accounts. The Company is
confident of recovering the Inter Corporate Deposits together with
interest due thereon. During the year, the qualification on ICDs has
been restricted to the extent of Rs. 343.78 Crores in the Audit Reports
in view of acquisition of MPL by IL & FS Group and the Company was
confident of recovering ICD amount of Rs.71.85 Cr from MPL along with
interest.
(3) Clause fflfc) of Annexure to Audit Report- Loans granted to
Companies:
Reply: The maximum amount of Rs. 47.87 Crores pertains to an Inter
Corporate Deposit given to Maytas Properties Limited in the Financial
Year 2008-09 by the erstwhile Promoters. The Company ceased to be a
Company to be covered in the Register maintained under Sec.301 of the
Companies Act, 1956 with effect from September 29,2009. The Company is
confident of recovering the Inter Corporate Deposit along with interest
in view of acquisition of Maytas Properties Limited by IL&FS Group as
per the CLB order. Further, during the year the Company has accrued
gross interest income of Rs.23.59 Crores on the said Inter Corporate
Deposit.
(4) Clause (x)(a) - Delays in remittance of Statutory Dues:
Reply: The Company in general has been regular in remitting the
statutory dues in time. The Management has taken steps to avoid delays
and as a matter of internal control also, statutory dues are being
monitored for timely remittances. This is evidenced by change in the
audit qualification from "serious delays" in the previous year to
"delay in deposit of statutory dues have not been serious in the
current year.
(5) Clause M - Cash loss during the year and in the immediately
preceding Financial Year:
The Company has just come on to the revival path post unprecedented
events in 2009, which led to heavy liquidity crunch effecting
operations of the Company. Management has rejuvenated the operations in
the projects and had negotiations with the Clients who terminated the
projects for amicable settlement. Company has started bidding for new
business both in India and abroad. The Company is confident of the
future business performance and growth based on the following:
- Healthy Order book
- Restructuring of debt under the revised CDR package allowing
additional credit facilities to the company
- Strategic alliance with SBG Projects Investments Limited who was
inducted as a promoter during the year which would help in developing
ourforeign operations
- Critical supportand guidancefrom Government appointed Independent
Directors on the Board
(6) Clause fed) - Deafults in repayment of dues to banks which are not
part of CDR :
The Company has approached the CDR cell for Corporate Debt
Restructuring and the Masters Restructuring Agreement (MRA) was signed
in September 2010. Certain banks have opted out of the CDR package and
the Management has negotiated with them for One Time Settlement (OTS).
Accordingly, the Company negotiated with 5 banks and entered into OTS
with them. With these OTS, no defaults in repayment of dues to Banks
with whom OTS were arrived at, were outstanding at the end of the
Financial Year under review
Delay in payment of interest to CDR Banks was mainly on account of
negotiation and finalization of debt restructuring scheme in the first
quarter of the Financial Year which was made good subsequently. In the
last quarter, the Company made payment on due date only i.e. on March
31, 2011 but the Company's account was debited April 02,2011 by banks
subsequently.
Replies to the Audit Qualifications-Consolidated Financial Statements:
1. Clause 3 - Representations from Auditors of Subsidiaries/ Joint
Venture entities:
Reply: Representation letters were sent by the Company to Auditors of
Subsidiaries/Joint Venture entities but no response was received from
the Auditors of those Subsidiaries/Joint Ventures. The Management has
arranged for Audited Financial Statements in respect of these entities
except as mentioned in the qualification mentioned under clause 5 (a)
and (b).
2. Clause 5 (a) - Unaudited Financial Statements of three Joint
Ventures
Reply : The Auditors have qualified their Report for the year ended
March 31,2011 stating that three of the Joint Ventures have been
consolidated based on the Unaudited Financial Statements. The
qualification relates to NCC Maytas JV(Pocharam),Gulbarga Airport
Developers (P) Limited and Shimoga Airport Developers (P) Limited.
Audited accounts of these JVs could not be received before adoption of
accounts. Hence consolidation was done on the basis of accounts
certified by the Management of these Investee Companies.
3. Clause 5 (b) - Unaudited Financial Statements of three Joint
Ventures
Reply : The Auditors have qualified their Report for the year ended
March 31,2011 stating that the Company has consolidated a jointly
controlled entity based on the Audited Financial Statements as at and
for the year ended March 31, 2010. This relates to Maytas SNC JV (SNC
Power Corporation Limited) whose accounts were not made available as on
the date of adoption of accounts. Hence the Company has consolidated
based on the Audited Financial Statements as at and for the year ended
March 31,2010
4. Clause 6 - Recovery of Inter-Corporate Deposits :
Reply: Prior to April 1, 2009 the erstwhile promoters had given Inter
Corporate Deposits aggregating to Rs.391.64 Crores to various
Companies. As at March 31,2011, the outstanding balance of Inter
Corporate Deposits to various companies aggregated to Rs 415.63 Crores
[including Rs. 71.85 Crores to Maytas Properties Ltd (MPL)]. Of the
foregoing, documentary evidences had been established that, for an
amount of Rs 323.78 Crores, Satyam Computer Services Limited (SCSL) is
the ultimate beneficiary and for which a claim together with interest
receivable had been lodged by the Company. SCSL had accounted certain
liability in its Audited Consolidated Statement of Assets and
Liabilities as at March 31,2011 as "Amounts Pending Investigation
Suspense Account (Net) Rs. 1230.40 Crores". Management is of the
opinion that the claim made by the Company on SCSL is included in the
amount disclosed by them in their Audited Accounts. The Company is
confident of recovering the Inter Corporate Deposits together with
interest due thereon. During the year, the qualification on ICDs has
been restricted to the extent of Rs. 343.78 Crores in the Audit Reports
in lieu of acquisition of MPL by IL & FS Group and the Company was
confident of recovering ICD amount of Rs.71.85 Cr from MPL along with
interest.
EMPLOYEES:
The relations with the employees have been cordial throughout the year
under review. Your Directors place on record their sincere appreciation
in respect of the services rendered by the employees of the Company at
all levels.
PARTICULARS OF EMPLOYEES:
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975, as amended, forms part of this Report. However, in pursuance of
Section 219(1) (b) (iv) of the Companies Act, 1956, this Report is
being sent to all the Shareholders of the Company excluding the
aforesaid information and the said particulars are made available at
the Registered Office of the Company. The Members interested in
obtaining such particulars may write to the Company Secretary at the
Registered Office of the Company.
ESOP 2007 and 2009
Disclosure as required by Clause 12 of the Securities and Exchange
Board of India ( Employee Stock Option Scheme and Stock Purchase
Scheme), Guidelines, 1999, as amended, areas per the annexure enclosed
Undertaking Pursuant to General Circular No: 2 /2011 No: 51 /
12/2007-CL-lll
The Company, hereby undertake to comply with the following:
>- The annual accounts of the subsidiary companies and the related
detailed information shall be made available to shareholders of the
holding and subsidiary companies seeking such information at any point
of time.
>- The annual accounts of the subsidiary companies shall also be kept
for inspection by any shareholders in the head office of the holding
company and of the subsidiary companies concerned.
>- The Company shall furnish a hard copy of details of accounts of
subsidiaries to any shareholder on demand.
ENVIRONMENTAL POLICY:
Your Company is committed to carrying out all its activities with
requisite measures to protect the environment. Accordingly, your
Company is committed by policy to not only abide by the prevailing
legal requirements but also to have a futuristic approach in carrying
out continuous improvement in this regard.
DETAILS U/S 217(1)(e) OF THE COMPANIES ACT, 1956 :
Particulars as per Section 217(1 )(e) of the Companies Act, 1956, read
with Companies (Disclosure of particulars in the report of Board of
Directors) Rules, 1988 are as under:
Conservation of Energy:
The conservation of energy in all the possible areas is undertaken as
an important means of achieving cost reduction. Savings in electricity,
fuel and power consumption receive due attention of the management on a
continuous basis.
Technology Absorption :
Timely completion of the projects as well as meeting the budgetary
requirements are the two critical areas where different techniques help
to a great extent. Many innovative techniques have been developed and
put to effective use in the past and the efforts to develop new
techniques continue unabated.
Foreign Exchange Earnings & Outgo :
(Rs. Crores)
Earned NIL
Outgo 1.61
ACKNOWLEDGMENTS:
Your Directors place on record their gratitude to the Bankers,
Financial Institutions, various Agencies of the State and the Central
Government Authorities, Clients, Consultants, Suppliers, Sub-
Contractors, Members and the Employees for their valuable support and
co-operation and look forward to continued enriched relationships in
the years to come.
By order of the Board
For IL&FS Engineering and Construction Company Ltd.
Place : Hyderabad Ravi Parthasarathy
Date : August 8, 2011 Chairman
Mar 31, 2010
The Directors take pleasure in presenting the Twenty-Second Annual
Report along with the Audited Accounts for the Financial Year ended
March 31, 2010.
FINANCIAL RESULTS :
(Rs. in Crores)
Particulars 2009-10 2008-09
Gross Income 1003.96 1392.46
(Loss) / Profit before Interest,
(46.46) (148.08)
Depreciation, exceptional items and Tax
Interest and Finance Charges 150.94 180.88
Depreciation 83.67 67.59
(Loss) / Profit before exceptional items,
(281.07) (396.55)
tax and Prior period items
Exceptional items (net) 39.48 (65.30)
(Loss) / Profit before Tax and Prior period
(241.59) (461.85)
items
Provision for Taxes - 2.60
Less: Prior Period Expenses ( net) 8.05 25.34
(Loss) / Profit after Tax (249.64) (489.79)
Transfer ( from)/ to General Reserves - (11.05)
Paid up Capital 58.85 58.85
Share application money pending
354.27 -
allotment
Reserves and Surplus
(145.41) 104.23
(Net of Profit & Loss A/c debit balance)
Net worth 268.04 163.19
Earnings per share (In Rupees)
- Basic (42.42) (83.23)
- Diluted (42.42) (83.23)
Previous yearÃs figures have been regrouped / rearranged to conform to
those of the current year.
DIVIDEND :
Due to losses incurred by the Company, your Directors express their
inability to recommend any dividend to the Shareholders for the year.
OVERVIEW :
The operations of your Company are coming on track after an
unprecedented crisis as fallout of the Satyam episode. At the direction
of the Company Law Board (CLB), four nominees of Infrastructure Leasing
& Financial Services Limited (IL&FS), a new promoter of your Company,
are inducted on the Board of your Company. The reconstituted Board took
steps to restore confidence of all stakeholders and to rehabilitate the
operations of the Company. For operational convenience as well as to
focus on critical areas, Executive Committee and Audit Committee of the
Board of Directors of the Company had been re-constituted. Steps had
been taken to stabilize and revive operations, build up employee morale
as well as to co-operate with various Inspection Agencies to provide
requisite details for investigation process undertaken by them.
Pursuant to the foregoing, it is expected that your Company would make
a turnaround in the near term.
CAPITAL :
(1) Induction of New Investor :
Your Company was able to induct the Saudi BinLadin Group (SBG) of Saudi
Arabia as a Strategic Partner in the Shareholdersà consortium. SBG
Projects Investments Limited, a part of SBG, has executed a
Shareholdersà Agreement on June 19, 2010 for investment of 20% in the
equity share capital of your Company i.e. Rs. 301.92 crores. SBG and
IL&FS are in the process of making an Open Offer to acquire an
additional 20% from the market as per SEBI regulations. The induction
of SBG as a Strategic Partner would be a very positive development,
highlighting a closer working relationship between India and Saudi
Arabia in the area of construction and infrastructure.
SBG is one of the largest contractor, developer and diversified
conglomerate having headquarters in Jeddah, Saudi Arabia. The sectors
of the SBG Group mandated areas include Roads, Railways, Tunnels,
Buildings, Airports and Townships. Over the years, the Group has built
strong technological credentials in various areas of the EPC business
with execution of many prestigious projects in the region. The Group
has a work force of around 90,000 employees, of which 6,800 are
professional engineers in various disciplines. The underlying strategy
of SBG is to provide customers design and build options by adopting the
most advanced management, engineering and procurement systems resulting
in cutting edge technological solutions. SBG is seeking to augment its
portfolio and execution capacity in Saudi Arabia.
The partnership decision has been made by SBG after a thorough
operational due diligence of the Company and have found the
competencies and skill sets of your Company as satisfactory and
scalable. From a SBG perspective, your Company would provide an ideal
platform for developing a world class professionally managed EPC
Company in India.
The partnership of the SBG in your Company would envisage creation of a
strong amalgam of technological and financial resource pools with a
diversified presence across the entire infrastructure and contracting
space. This would enable your Company rebuild its strengths in the EPC
space through a steady flow of contracts, agglomeration of execution
capacity, access to the Indian infrastructure space and servicing of
large value national and international projects. IL&FS and SBG have
agreed to work closely and provide business support to your Company
over a period of time. SBG would have access to opportunities in the
booming Indian infrastructure space and simultaneously it would
leverage upon the talent pool of your Company for strengthening its
international capabilities. This partnership would enable SBG in
project development skills as well as financial structuring
capabilities in India.
Thus, with the induction of SBG, your Company would be well poised to
systematically exploit niche segments of the EPC business. The Company
is expected to be in a position to diversify its geographical and
sectoral mix and introduce newer and more efficient processes and
solutions to its customers. This would result in improved delivery
times, cost savings and other better quality of products.
(2) Capital through CDR Package :
The CDR Lenders have sanctioned a Corporate Debt Restructuring Scheme
whereby the CDR Lenders have agreed to convert the Secured Loan of
around Rs. 354.27
Crore into Equity and Preference Capital of the Company. This would
result in reducing the debt burden and increase in Networth of your
Company.
REVIVAL OF OPERATIONS :
After induction of IL&FS as the new Promoter of the Company, the
Company with the help of Government Nominees on the Board of your
Company, has taken following steps as a part of revival of business
operations :
- Corporate Debt Restructuring Package (CDR)
- Investments in BOT Projects
- One Time Settlement with Banks
- Recovery of Inter Corporate Deposits
- Review of HR and Appointment of Senior Executives
- Audit and Compliance Framework
(1) Corporate Debt Restructuring (CDR) Package :
Your Company had approached Corporate Debt Restructuring Cell for
restructuring its outstanding liabilities. The Empowered Group of CDR
Cell had sanctioned CDR package in July 2009. On IL&FS taking over the
mantle as new Promoters of the Company, discussions were held with
CDR/Non CDR Lenders with Monitoring Committee of CDR Lenders for
renegotiating the July 2009 CDR package. Subsequently, series of
meetings and discussions were held with Empowered Group of CDR Cell for
approval of the revised CDR package. As a result, the Letter of
Approval was issued by CDR Cell on June 26, 2010 sanctioning the
revised CDR package to the Company.
(2) BOT Investments :
The status in respect of various BOT Investments have been reviewed and
accordingly, comprehensive steps were taken to start the process of
resolving issues with JV Partners amicably.
Your Company has created a Trust and domiciled its investments at a
fair value of Rs. 575 Crores in the Trust pursuant to the terms and
conditions of the CDR package.
(3) One Time Settlement with Banks :
As a part of rehabilitation and revival process, your Company reviewed
the status of discussion with banks regarding settlement of dues and
CDR Package. The discussion progressed well and few non-CDR bankers
agreed for One Time Settlements in respect of outstanding dues.
Negotiation with other banks is in progress and amicable settlement is
expected in the near term.
(4) Recovery of Inter Corporate Deposits (ICDs) :
Your Company had placed ICDs of an aggregate amount of Rs 391.64 crores
in thirteen Companies. These Companies used the funds for onward
lending to other Private Limited Companies, who in turn transferred
these funds to Satyam Computer Services Ltd. (currently named as
Mahindra Satyam). Your Company has taken up the matter with Ministry of
Corporate Affairs, Government of India as well as communicated to
Mahindra Satyam for recovery of ICDs amount.
(5) Review of HR and Appointment of Senior Executives :
You would recall that due to crisis in the previous year, attrition
rate of your Company was significant compared to industry standards.
This had affected the morale of employees at all levels. Under the
circumstances, the Board had taken steps to build up morale and to
infuse confidence in employees by suitable measures including framework
for retention bonus,
ESOP schemes and a transparent performance appraisal process.
With the object of strengthening operations of the Company, senior
executives having proven track record have been recruited. Mr. Vimal
Kaushik had been appointed as Managing Director of the Company. He had
been associated with a reputed Engineering Company for 37 years and had
handled operations both in India and abroad. Several other key
positions have been filled in to strengthen the organization structure
and to gear up to meet the challenges before the Company. Senior
Executives of IL&FS Group have been appointed as Officers on Special
Duty to handle critical areas like Finance & Accounts and Banking
Relations.
(6) Audit and Compliance Framework :
With the object of ensuring compliance with policies, procedures as
well as various statutory provisions and obligations which your Company
were subjected to, Audit and Compliance Framework of the Company was
strengthened by the appointment of independent Chartered Accountants
firm as Internal Auditors of the Company in addition to the in-house
Internal Audit team. The In-house Audit team was mandated to focus on
project and other operational areas whereas the External Internal
Auditors would audit all corporate activities and take overview of
ongoing projects and operations of the Company.
FUTURE OUTLOOK :
With the various steps taken by the Management, the Board and the
Promoters and with the support of the Company Law Board and Government
Nominee Directors, the Company is in the process of restoring normalcy
in operations. The Management has taken steps with regard to completion
of the current projects under execution in an orderly manner. New
mandates have been provided by IL&FS, the new Promoters in
Transportation Sector.
With the induction of SBG, the Company would be able to tap the Market
for higher value added Projects both in India as well as in the Middle
East.
FIXED DEPOSITS :
Your Company did not invite or accept deposits from the public during
the year under review.
SUBSIDIARIES :
A statement pursuant to Section 212 of the Companies Act, 1956
containing the details of the Subsidiaries together with financials
thereof, forms part of the Annual Report. The following are the
Subsidiaries of the Company :
(1) Maytas Infra Assets Limited (MIAL) :
MIAL was incorporated in February 2008, as a wholly owned Subsidiary,
to carry on the business of infrastructure projects and for
consolidation of all investments made by your Company in BOT projects.
Your Company has invested an amount of Rs. 0.05 crores in Equity and
paid Rs. 19.40 Crores towards Share Application Money and reimbursement
of expenses in MIAL till March 31, 2010. No projects were secured
during the year. The investment and the amount advanced, Rs. 17.67
Crores approximately, have been considered as impaired as they are not
represented by any realizable assets and therefore have been provided
for fully during the year under review.
(2) Maytas Mineral Resources Limited (MMRL) :
MMRL was incorporated in February 2008 as a wholly owned Subsidiary for
exploring business in mining. MMRL was in
the process of identifying domestic and overseas mining opportunities
for various commodities like coal, iron ore and base metals. Your
Company had invested an amount of Rs 0.05 crores towards equity and Rs.
4.92 Crores towards share application money in MMRL till March 31,
2010. No projects were secured during the year. The investment and the
amount advanced aggregating to Rs. 4.94 Crores have been considered as
impaired as they are not represented by any realizable assets and
therefore have been provided for fully during the year under review.
(3) Pondicherry Tindivanam Tollway Limited (PTTL) :
PTTL, which was formed in March 2007 for executing the Pondicherry -
Tindivanam Section of the National Highway, awarded by National
Highways Authority of India, had ceased to be a Subsidiary of your
Company during the year since your Company divested part of its stake
in October 2009. The balance investment of Rs. 17.59 Crores has been
sold to Maytas Investment Trust, pursuant to the terms of CDR package
deal.
(4) Maytas Metro Limited (MML) :
The Maytas/Navabharat/IL&FS/ITD lead consortium had technically
qualified in the bids and won the financial bid by offering highest
premium to the GoAP in July 2008. Subsequently, the Consortium had
formed the ÃMMLÃ as SPV in September 2008 to develop the Hyderabad
Metro Rail Project on BOT basis and signed Concession Agreement with
Government of Andhra Pradesh (GoAP) on September 19, 2008 for a period
of 35 years of concession including the five years of construction
period. The GoAP had cancelled the Concession Agreement on July 7, 2009
without giving any prior notice to the Company as per the terms and
conditions of the Concession Agreement and invoked the security deposit
of Rs. 60.00 Crores. MML had filed the Writ Petition seeking for
natural Justice in High Court of Andhra Pradesh on July 24, 2008 and
the case is pending before the High Court.
MML has been considered as a Subsidiary of your Company by virtue of
current equity shareholding. Your Company has invested an amount of Rs.
0.045 Crores towards the equity and arranged funds to the extent of Rs.
74.78 crores. The investment and the amount advanced aggregating to Rs.
74.83 Crores have been considered as impaired as they are not
represented by any realizable assets and therefore have been provided
for fully during the year under review.
(5) Maytas Vasishta Varadhi Limited (MVVL) :
MVVL, a Subsidiary of your Company, was incorporated in April 2008 for
executing the construction of bridge across Godavari River at Narasapur
on BOT (Annuity) Basis, awarded by Andhra Pradesh Road Development
Corporation (APRDC). Your Company has invested an amount of Rs. 0.05
Crores towards the equity and Rs 2.62 Crores towards share application
money and reimbursement of expenses till March 31, 2010. Your Company
has entered into an agreement with the potential Contractors who will
assume the responsibility for the execution of the Project subject to
approval of the Andhra Pradesh State Road Development Corporation.
(6) Special Purpose Vehicles (SPVs) for BOT Projects :
In the case of project companies promoted for development of various
BOT projects, your Company could not meet certain equity calls from BOT
SPVs due to the severe liquidity crunch. In the interest of the
Projects, your Company has divested its equity holdings by inducting
Strategic Investors/
Partners in the following projects :
(a) Cyberabad Expressways Limited
(b) Hyderabad Expressways Limited
(c) Pondicherry Tindivanam Tollway Limited
(d) Western UP Tollway Limited
(e) Machilipatnam Port Limited
The Company has domiciled the following investments to Maytas
Investment Trust during the year :
(a) Cyberabad Expressways Limited
(b) Hyderabad Expressways Limited
(c) Pondicherry Tindivanam Tollway Limited
(d) Himachal Sorang Power Limited
(e) KVK Nilachal Power Private Limited
(f) SV Power Private Limited
(g) Gautami Power Limited
(h) Bangalore Elevated Tollway Limited
(i) Brindavan Infrastructure Company Limited
CONSOLIDATED FINANCIAL STATEMENTS :
The Consolidated Financial Statements of your Company, together with
its Subsidiaries, Associates and Joint Venture Entities for the
Financial Year ended March 31, 2010, prepared in accordance with the
Accounting Standard 21, 23 and 27 notified by Companies (Accounting
Standards) Rules, 2006, are attached herewith.
DIRECTORS :
Pursuant to the directions of Company Law Board (CLB), Directors
representing erstwhile Promoter Group, namely, Mr. Teja Raju and Mr B
Narasimha Rao submitted their resignation from the Board of Directors
of the Company. Similarly, in terms of CLB Order, the Government
withdrew nomination of Dr K Ramalingam and Mr. O. P. Vaish from the
Board of the Company.
At the Meeting of the Board of Directors held on September 29, 2009,
four nominees of IL&FS i.e. Mr. Ravi Parthasarathy, Mr. Hari Sankaran,
Mr. Arun K. Saha and Mr. K Ramchand were inducted on the Board of the
Company. In the same meeting, Mr. Ravi Parthasarathy was appointed as
Chairman of the Board of Directors unanimously. The Board also
constituted Executive Committee of the Board chaired by Mr. Arun K.
Saha to take various steps for day-to-day administrative and other
matters.
Subsequently, as a part of reorganization process, Mr. Hari Sankaran
stepped down from the Board of the Company and Mr. Vimal Kishore
Kaushik was appointed in his place. Mr. Kaushik was then appointed as
Managing Director of the Company for a term of three years effective
January 8, 2010.
In terms of provisions of the Companies Act, 1956 (the Act) and
Articles of Association of the Company, Mr Ravi Parthasarathy retires
by rotation at the ensuing Annual General Meeting (AGM) of the Company
and being eligible offers himself for re-appointment. Similarly,
approval of the Members of the Company for terms of appointment of Mr
Vimal Kaushik, Managing Director of the Company, would be obtained at
the ensuing AGM.
DIRECTORS RESPONSIBILITY STATEMENT :
Section 217 (2AA) of the Companies Act, 1956 as amended in December
2000 requires the Board of Directors to provide a statement to the
members of the Company in connection with maintenance of books,
records, and preparation of Annual Accounts in conformity with accepted
accounting standards and past practices followed by the Company.
Pursuant to the foregoing, and on the basis of representations received
from operating management, and after due enquiry, it is confirmed that
:
(1) In the preparation of the accounts for the Financial Year ended
March 31, 2010, the applicable accounting standards have
been followed and that there are no material departures in the
preparation of annual accounts;
(2) The Directors have 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 as at March 31, 2010 and of the profit of the Company
for the year ended on that date;
(3) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records, in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(4) The Directors have prepared the accounts on a going concern basis.
MANAGEMENT DISCUSSION AND ANALYSIS (MDA) :
A separate section titled "Management Discussion and Analysis"
confirming compliance with the conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreement is annexed hereto
and forms part of this Annual Report.
CORPORATE GOVERNANCE :
A separate section titled "Report on Corporate Governance" including a
certificate from the Auditors of the Company confirming compliance with
the conditions of Corporate Governance as stipulated under Clause 49 of
the Listing Agreement is annexed hereto and forms part of this Annual
Report.
AUDITORS :
The Statutory Auditors of the Company M/s SR Batliboi & Associates,
Chartered Accountants, retire at the conclusion of the forthcoming
Annual General Meeting.
M/s SR Batliboi & Associates, Chartered Accountants, being eligible,
offer themselves for re-appointment and are proposed to be appointed as
Statutory Auditors of the Company to hold office from the conclusion of
this Annual General Meeting until the conclusion of the next Annual
General Meeting.
The Company has received letters from them to the effect that their
re-appointment, if made, would be within the limits prescribed under
Section 224(1 B) of the Companies Act, 1956 and that they are not
disqualified for such re-appointment within the meaning of Section 226
of the said Act.
Replies to the Audit Qualifications :
(1) Clause No. 6 - Recovery of Inter Corporate Deposits :
Reply : Prior to April 1, 2009, the erstwhile Promoters had given Inter
Corporate Deposits aggregating to Rs. 391.64 Crores to various
Companies. Of the foregoing, documentary evidences have established
that for an amount of Rs. 323.78 Crores. Mahindra Satyam Computer
Services Limited, is the ultimate beneficiary. The Company has made a
claim of Rs. 323.78 Crores together with interest receivable thereon
from Mahindra Satyam Computer Services Limited. The Company is
confident of recovering the Inter Corporate Deposits together with
interest due thereon. During the current year, the management following
conservative policy has reversed the amount of interest already accrued
on ICD and no further interest has been accrued during the year.
(2) Clause i (b) - of Annexure to Audit Report à Physical verification
of assets- Reconciliation of book balances and physical balances is
under progress :
Reply : The Company maintained proper books of accounts and records
including those for Fixed Assets. Physical verification of fixed assets
was done at regular intervals both by internal and external agencies.
Due to the unprecedented events post January 2009, most of the projects
were either cancelled or preclosed. Access was denied to the Company by
the Client till recently. New management has initiated steps for
physical verification of the Fixed Assets at both active and cancelled
project sites. Demobilisation of machinery was taken up by the Company
from the cancelled projects and options for hiring the same have been
negotiated. Reconciliation of the book balances and physical balances
is under progress.
The Company also has put in place a process of verifying the Fixed
Assets periodically by the Internal Audit team. Based on this, the
Internal Audit team would be verifying Fixed Assets on an ongoing
basis.
(3) Clause ii (c) - Physical verification of inventory and shortage of
stock :
Reply : The Company maintained proper books of account and records
including those for inventories and physical verification was carried
out at regular intervals.
The Company had witnessed unprecedented events during the last
Financial Year and many of its projects were either cancelled or
preclosed with the Clients. Due to this, most of the staff have left
the organization. Inventory was under the control of the Client and the
Company was not allowed access upto some point in time.
In this scenario, the Company had initiated physical verification of
the inventory by the Internal Auditors and based on their Reports,
shortage of stock was accounted for in the books of accounts.
The Company also has put in place a process of verifying the stocks
periodically by the Internal Audit team. Based on this, the Internal
Audit team would be verifying stocks on an ongoing basis.
(4) Clause iii (a) and (c) - Loans granted to Companies :
Reply : The maximum amount of Rs. 47.87 Crs. pertains to Inter
Corporate Deposit given to a Company in the Financial Year 2008-09 by
the erstwhile Promoters. This Company ceased to be a company covered in
the Register maintained under Section 301 of the Companies Act, 1956
with effect from September 29, 2009. Steps have been initiated for
recovering the deposit together with interest thereon and the Company
is confident of recovering the deposit together with interest thereon.
During the current year, the management following conservative policy
has reversed the amount of interest already accrued on inter Corporate
Deposit and no further interest has been accrued during the year.
(5) Clause (iii) and (iv) Ã Documentation in relation to revenue and
expenditure at few project sites was weak:
Reply: This refers to revenue and expenditure from certain irrigation
projects executed under Joint Venture which are treated as Jointly
Controlled Operations but recognized on a proportionate basis in the
financial statements. Post-Satyam episode, the Company faced certain
problems with some of its Joint Venture partners. The said Joint
Venture partners during the period did not adhere to the documentations
as required by the agreements. After the CLB order of appointing IL & FS
as the new promoter, discussions have been initiated with the said
Joint Venture partners for adhering to the documentation. The Company
has put in place certain documentations and has also got the Joint
Venture partners to agree to such documentation. The company is
confident of setting right the documentation in the coming year.
(6) Clause ix (a) - Delays in remittance of statutory dues :
Reply : The Company in general has been regular in remitting the
statutory dues in time. Due to the unprecedented / extraordinary events
faced by the Company during the last Financial Year, the operations of
the Company suffered drastically. This led to severe liquidity crunch
in the first half of the year leading to delay in payment of the
statutory dues. These dues have been subsequently remitted
After the new Promoters have stepped in, emphasis has been laid on
total statutory compliance. As a matter of internal control system
also, statutory dues are being duly monitored for accurate and timely
remittances on an ongoing basis. This is evidenced by only slight
delays in deposit of statutory dues in the later part of the Financial
Year.
(7) Clause x - Accumulated losses at the end of the Financial Year are
more than fifty percent of net worth :
Reply : Due to the effects of unprecedented events and liquidity
crunch, the operations of the Company had been badly affected. Most of
the projects were cancelled or preclosed in the midst of operations
which led to the increase in operational losses. Apart from this, slow
realizations from the clients, stoppage of credit by vendors, loss from
the live projects have led to the increase in accumulated losses over
and above fifty percent of its net worth.
With the revival of operations by new Promoters in the later part of
the Financial Year, the Company is confident of the future business
performance and growth based on the following :
- Order book of the Company is more than 7,500 Crores.
- Critical support and guidance of the Government appointed Independent
Directors on the Board.
- Restructuring of Debt under the revised CDR package allowing
additional credit facilities to the Company which would gradually ramp
up operations in the current year.
- One time settlement with the non CDR banks.
- Induction of professionals at all the Management levels.
- Strategic alliance with the Saudi BinLadin Group Company, namely, SBG
Projects Investments Limited.
(8) Clause xi - Defaults in repayment of dues to banks which are not
part of CDR and OTS :
Reply : The Company was regular in payment of interest to banks until
the unprecedented events took place. Defaults have occurred due to the
severe liquidity crunch faced by the Company. The Company has
approached CDR cell for Corporate Debt restructuring and obtained an
approval from the CDR Empowered Group in July 2009. Upon induction of
IL&FS as the new Promoter, the Scheme has been modified and approval of
the Lenders was obtained at its Meeting held on March 30, 2010.
The Company has been negotiating with the banks other than those
covered under CDR for one time settlement and four of the banks have
come forward and settled during the Financial Year 2009-10. Subsequent
to the Balance Sheet date, two other banks have opted for one time
settlement with the Company. As per the terms of the settlement,
interest from January, 1 2009 to the date of settlement is waived off
by the banks.
Kotak Mahindra Bank Ltd. (KMBL) had sanctioned a loan of Rs. 35 Crore
for Pondicherry Tindivanam Tollway Limited (PTTL) Project against the
security of exclusive charge on the receivables from PTTL Project.
However, KMBL had appropriated an amount of Rs. 4.13 Crore received
from the GSPL project against the PTTL project loan. The Bank had
recalled the loan facility of the Company and initiated the recovery
proceedings through DRT Mumbai. Aggrieved by the same, the Company is
contesting the matter.
Negotiations are in progress with balance two non CDR Banks for one
time settlement.
Replies to the Audit Qualifications à Consolidated Financials :
(1) Clause 3 - Representations from Auditors of Subsidiaries / Joint
Venture entities :
Reply : Representation letters were sent by the Company to Auditors of
Subsidiaries / Joint Venture entities but no response was received from
the Auditors of those Subsidiaries /Joint Ventures. The Management has
arranged for Audited Financial Statements in respect of these entities.
(2) Clause 5 (a) - Unaudited Financial Statements of a Subsidiary:
Reply : The Auditors have qualified their Report for the year ended
March 31, 2010 stating that one of the Subsidiary has been consolidated
based on the unaudited financial statements. The qualification relates
to Pondicherry Tindivanam Tollway Limited whose accounts were not
audited. Hence Management certified accounts were provided to the
Auditors. The project was hived off during the year.
(3) Clause 5 (b) - Consolidation of a jointly controlled entity based
on unaudited accounts drawn up to December 31, 2009 :
Reply : The Auditors have qualified their Report stating that the
Financial Statements have been consolidated based on unaudited accounts
in respect of a Jointly Controlled entity. This relates to Himachal JV
which expressed its inability to provide audited financial accounts as
at March 31, 2010 as arbitration award in respect of the claims made by
them was at the final stage. Hence, the management certified accounts
of the Joint Venture as at December 31, 2009 were taken for
consolidation in the Financial Statements.
(4) Clause 7 - Recovery of Inter Corporate Deposits :
Reply : Prior to April 1, 2009 the erstwhile Promoters had given Inter
Corporate Deposits aggregating to Rs. 391.64 Crs. to various Companies.
Of the foregoing, documentary evidences have established that for an
amount of Rs. 323.78 Crs. Mahindra Satyam Computer Services Limited is
the ultimate beneficiary. The Company has made a claim of Rs. 323.78
Crs together with interest receivable thereon from Mahindra Satyam
Computer Services Limited. The Company is confident of recovering the
Inter Corporate Deposits together with interest due thereon. During the
current year, the management following conservative policy has reversed
the amount of interest already accrued on ICDs and no further interest
has been accrued during the year.
EMPLOYEES :
The relations with the employees have been cordial throughout the year
under review. Your Directors place on record their sincere appreciation
in respect of the services rendered by the employees of the Company at
all levels.
PARTICULARS OF EMPLOYEES :
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975 as amended forms part of this Report. However, in pursuance of
Section 219(1)(b)(iv) of the Companies Act, 1956, this Report is being
sent to all the Shareholders of the Company excluding the aforesaid
information and the said particulars are made available at the
Registered Office of the Company. The Members interested in obtaining
such particulars may write to the Company Secretary at the Registered
Office of the Company.
ESOP 2007, 2008 and 2009 :
Pursuant to the approval of the Members of the Company obtained at the
21st AGM held on November 9, 2009, the Company had implemented Employee
Stock Option Scheme 2009 (ESOP) for the employees of the Company as
well as for its subsidiaries. ESOP has been introduced to enable the
employees to participate in future growth and financial success of the
Company as well as to build up employee morale after the Satyam
episode.
Disclosure as required by Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme), Guidelines, 1999, as amended, are as per Annexure
enclosed.
ENVIRONMENTAL POLICY :
Your Company is committed to carrying out all its activities with
requisite measures to protect the environment. Accordingly, your
Company is committed by policy to not only abide by the prevailing
legal requirements but also to have a futuristic approach in carrying
out continuous improvement in this regard.
DETAILS U/S 217(1)(e) OF THE COMPANIES ACT, 1956 :
Particulars as per Section 217(1)(e) of the Companies Act, 1956, read
with Companies (Disclosure of particulars in the report of Board of
Directors) Rules, 1988 are as under :
Conservation of Energy :
The conservation of energy in all the possible areas is undertaken as
an important means of achieving cost reduction. Savings in electricity,
fuel and power consumption receive due attention of the management on a
continuous basis.
Technology Absorption :
Timely completion of the projects as well as meeting the budgetary
requirements are the two critical areas where different techniques help
to a great extent. Many innovative techniques have been developed and
put to effective use in the past and the efforts to develop new
techniques continue unabated.
Foreign Exchange Earnings & Outgo :
(Rs. Crores)
Earned NIL
Outgo 2.62
ACKNOWLEDGMENTS :
Your Directors place on record their gratitude to the Bankers,
Financial Institutions, various Agencies of the State and the Central
Government Authorities, Clients, Consultants, Suppliers,
Sub-Contractors, Members and the Employees for their valuable support
and co-operation and look forward to continued enriched relationships
in the years to come.
By Order of the Board
for Maytas Infra Limited
Ravi Parthasarathy
Chairman
Place : Hyderabad
Date : July 19, 2010
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