A2Z Infra Engineering Ltd

BSE: 533292 | NSE: A2ZINFRA | ISIN: INE619I01012 
Market Cap: [Rs.Cr.] 124.50 | Face Value: [Rs.] 10
Industry: Engineering

Director's Report


The Members,

Your Directors have pleasure in presenting the Thirteenth Annual Report on the businessand operations of the Company, together with the Standalone and Consolidated financialsfor the financial year ended on 31st March, 2014.


The highlights of financial results on Standalone and Consolidated basis for thefinancial year ended on 31st March, 2014 are as follows:

(Rs. in Million)

Standalone Consolidated
Particulars 2013-14 2012-13 2013-14 2012-13
Revenue from Operations 3,362.88 5,549.58 6,987.53 9,028.15
Add: Other Income 73.63 101.10 171.55 365.55
Total Income 3,436.51 5,650.68 7,159.08 9,393.71
(Loss)/Profit before Interest, Tax & Depreciation (1,109.96) (186.54) (946.32) (53.02)
Less: Interest 822.19 702.44 1,213.85 1,073.26
Profit before Tax & Depreciation (1,932.15) (888.98) (2,160.17) (1,126.28)
Less: Depreciation/ Amortization 71.21 71.81 323.95 394.03
(Loss)/Profit before Tax & Extra Ordinary Items (2,003.36) (960.79) (2,484.12) (1,520.31)
Less: Tax Expenses 16.98 (321.03) 54.09 (311.42)
Net Profit/(Loss) after Tax but before Extraordinary item (2,020.34) (639.76) (2,538.21) (1,208.89)
Less: Previous Period Item - - - -
Add : Exceptional Item - Gain 70.71 101.66 70.72 147.66
Net Profit/(Loss) after Tax & before Minority Interest (1,949.63) (538.10) (2,467.49) (1,061.23)
Less: Share in Minority Interest - - 3.05 (2.54)
Net Profit/(Loss) after Tax & Minority Interest (1,949.63) (538.10) (2,470.54) (1,058.69)
Balance brought forward from previous year 2,525.45 3,063.55 1,529.53 2,566.35
Less: Adjustment on account of further acquisition in subsidiaries - - - (21.86)
Less: Share in Minority Interest on dilution of holding - - - -
Net Profit available for appropriation 575.82 2,525.45 (941.01) 1,529.53

Operations Review


• During the year under review, the Company has achieved total income of Rs.3,436.51 Million as against Rs. 5,650.68 Million in the previous year. The Company hasmade net loss after tax of Rs. 1,949.63 Million as against a loss of Rs. 538.10 Million inthe previous year.

• The Net Worth of the Company has decreased to Rs. 9096.47 Million as at the endof the current year from Rs. 11,046.10 Million as at the end of the previous year.

• The Debt Equity ratio of the Company has gone up to 0.96 as at the end of thecurrent year as compared to 0.64 as at the end of the previous year.


• The Consolidated total income of the Company for the current financial year isRs. 7,159.08 Million as against Rs. 9,393.71 Million in the previous year. The Company onconsolidated basis has made a net Loss after minority interest and extra ordinary items ofRs. 2470.54 Million as against Rs. 1058.69 Million in the previous year.

• The consolidated Net Worth of the Company has come down to Rs. 7,586.90 Millionas at the end of the current year from Rs. 10,045.06 Million as at the end of previousyear.

• The consolidated Debt Equity ratio of the Company has gone up to 1.86 as at theend of the current year compared to1.22 as at the end of previous year.


In view of losses incurred during the year under review, the Board of Directors of theCompany has not recommended any dividend to the shareholders for this financial year.


Your Company is primarily engaged in providing EPC services in power transmission anddistribution sectors with focus mainly on distribution. The Company has also moved intothe generation of power from renewable energy sources like biomass (Renewable EnergyGeneration) and Municipal Solid Waste Management (MSW). The Company is amongst very fewcompanies that are qualified to provide EPC services in the transmission and distributionsector to Power Grid Corporation of India Limited (PGCIL). The Company also providesservices to other verticals such as Telecommunications Services and operation &maintenance for wire lines and erection of optical fiber cable network for telecomcompanies.

The Company has two business verticals:

EPC Division: The Company undertakes the EPC contracting business through thisdivision, more particularly in erection and laying of distribution and transmission linesand erection of sub-stations for power distribution companies. It provides integrateddesign, testing, installation, construction and commissioning services on a turn-keybasis. Its activities include erection, laying and maintenance of electric transmissionlines, renovation and segregation of feeders, setting up of substations and other alliedservices. Its EPC services include the installation of distribution line infrastructure upto 33 KV, construction of substations etc. In the transmission line, its services includeExtra High Tension (EHT) substations and transmission lines.

Power Plants Division: The Company has also forayed in the renewable energygeneration business through this division by setting up biomass based three power plantsin Punjab in collaboration with sugar mills on Built Own Operate and transfer (BOOT)basis.

The Company’s operations are geographically spread across India and conductedeither directly through the Company or its direct and indirect subsidiaries. Through itssubsidiary companies, the Company provides municipal solid waste (MSW) management serviceswhich involve collection & transportation (C&T) of waste and its scientificprocessing and disposal (P&D) like recycling, manufacturing of organic compost andgreen fuel such as Refused Derived Fuel (RDF) & subsequent disposal of remnants,facility management (FMS) & environmental services and developing informationtechnology (IT) solutions for power utilities (Power IT Solutions). The Company along withits subsidiaries has a mission of creating a cleaner climate and environment.


During the year under review, the Company had taken a decision to undertake a debtrestructuring exercise under the CDR mechanism that is governed by the Corporate DebtRestructuring Scheme issued by Reserve Bank of India vide Circular No RBI/2008-09/143,DBOD.No.BP.BC.No.37/ 21.04.132/ 2008-09 and the Corporate Debt Restructuring Guidelinesformulated thereunder in consultation with State Bank of Patiala (SBOP) the lead bank ofthe Consortium Banks. The Corporate Debt Restructuring Proposal ("CDR Proposal")was recommended by State Bank of Patiala, the lead lender and after approval by majorityof the secured lenders (hereinafter referred to as the "CDR Lenders") the finalCorporate Debt Restructuring Package ("CDR Package") has been approved by CDREmpowered Group ("CDR EG") on December 24, 2013 and the same has beencommunicated to the CDR Lenders by CDR Cell vide its Letter of Approval dated December 28,2013 further amended by letter dated February 03, 2014 (hereinafter collectively referredto as "CDR LOA"). The Master Restructuring Agreement ("MRA") betweenthe Company and the CDR Lenders has been executed on March 27, 2014, by virtue of whichthe restructured facilities are governed by the provisions specified in the MRA having cutoff date of January 1, 2013.

The total Restructured Facilities under the CDR Package amounts to Rs. 1727.46 Croreswhich includes Restructured Term Loan and Working Capital Facilities and the moratoriumfor repayment of Term Loan, and Working Capital Facilities and Interest thereof for theinitial period of 2 years from Cutoff Date.

In terms of the CDR Scheme, the Promoter/Promoter Group were required to bring inequity to the extent of Rs. 34.54 Crores i.e. 2% restructured debts of Rs. 1,727.46 croreupfront into the Company in stipulated time frame, which has already been infused.

The key features of the CDR Proposal are given in detail under Notes to FinancialStatements forming part of this Annual Report.

Furthermore the Corporate Debt Restructuring (CDR) Package as approved by the CDR EGhas been confirmed/ approved by the Shareholders of the Company through postal ballot videnotice dated May 6, 2014, the results of which have been declared on June 24, 2014.


After the year under review, the Authorised Share Capital of the Company has beenincreased from Rs.100,00,00,000/-(Rupees One Hundred Crores only) divided into10,00,00,000 (Ten Crores) equity shares of Rs.10/- (Rupees Ten only) each to115,00,00,000/- (Rupees One Hundred Fifteen Crores only) divided into 11,50,00,000 (ElevenCrore Fifty Lacs) equity shares of 10/- (Rupees Ten only) each.

The Paid Up Share Capital of the Company is Rs.74,17,76,940/- (Rupees Seventy FourCrores Seventeen Lacs Seventy Six Thousand Nine Hundred Forty only) divided into7,41,77,694 (Seven Crores Forty One Lac Seventy Seven Thousand Six Hundred Ninety Four)fully paid-up Equity Shares of Rs. 10 each. There is no change in the issued and paid upshare capital of the Company during the year.


After the year under review, in terms of the said CDR LOA the Company had sought theapproval of the shareholders by way of postal ballot vide notice dated May 6, 2014, theresults of which have been declared on June 24, 2014, inter alia for following items Boardof Directors of the Company has been authorised to create, issue and offer the following:

a. To issue up to 3,45,40,000 (Three Crore Forty Five Lacs Forty Thousand) EquityShares of Rs.10/- each of the Company from time to time in one or more tranches, onPreferential Basis to the Promoter/Promoter Group in terms of Chapter VII of Securitiesand Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations,2009 ("ICDR Regulations");

b. To issue up to 14,91,40,000 (Fourteen Crore Ninety One Lacs Forty Thousand) EquityShares of Rs.10/-each of the Company from time to time in one or more tranches, onPreferential Basis to the CDR Lenders on conversion of Funded Interest Term Loan (FITL)and Working Capital Term Loan (WCTL) in terms of CDR Package;

c. To issue up to 8,32,40,000 (Eight Crore Thirty Two Lacs Forty Thousand) EquityShares of Rs.10/- each of the Company from time to time in one or more tranches, onPreferential Basis to the Non CDR Lenders on conversion of Funded Interest Term Loan(FITL) and Working Capital Term Loan (WCTL), if they wish to participate in the CDRPackage in accordance with the CDR Guidelines.


a) Composition of Board:

The Board comprises of five (5) Directors consisting three (3) Non-ExecutiveIndependent Directors one of whom is an additional director and two (2) ExecutiveDirectors, one of whom is a Managing Director of the Company. Mr. Amit Mittal and Ms.Dipali Mittal continue to be the Directors of the Company.

b) Change in Composition of Board:

During the period under review, following changes in composition of the Board tookplace:


Sr. No Name of Director Category Date of Resignation
1. Mr. Gaurav Mathur Non- Executive& Non Independent 2nd May, 2013
(Nominee Director of Lexington Equity Holdings Limited)
2. Mr. Supratim Banerjee Non-Executive & Non Independent 2nd May, 2013
(Alternate Director to Mr. Gaurav Mathur

The Board places on record their sincere appreciation towards the valuable contributionand guidance provided by the above said directors during their tenure as Directors ofCompany.


Dr. Ashok Kumar appointed as an Additional Director of the Company effective from 1stMay, 2013, he was further re-appointed as director of the Company in the Annual GeneralMeeting of the Company duly held on 28th September, 2013.

Mr. Suresh Prasad Yadav was appointed as an Additional Director of the Companyeffective from 3rd February, 2014 in accordance with the provisions of Section 260 of theerstwhile Companies Act, 1956 read with Article 44 of the Articles of Association of theCompany. Mr. Suresh Prasad Yadav shall hold office up to the date of the ensuing AnnualGeneral Meeting.

Mr. Surender Kumar Tuteja, Dr. Ashok Kumar and Mr. Suresh Prasad Yadav, directors ofthe Company, if approved, shall be appointed as independent directors for five consecutiveyears from the date of the ensuing Annual General Meeting as per provisions of Section149, 150 & 152 and, if any, other applicable provisions of the Companies Act, 2013.

Necessary resolutions for the appointment/reappointment of the aforesaid directors havebeen included in the notice convening the ensuing AGM and details of the proposal forappointment/re-appointment are mentioned in the explanatory statement of the notice. Yourdirectors recommend their appointment/reappointment. All the directors of the Company haveconfirmed that they are not disqualified from being appointed as directors in terms ofSection 164(2) of the Companies Act, 2013 and they have also filed their consent for suchappointment.

c) Reappointment of director(s) retire by rotation

In terms of Article 70 of the Articles of Association of the Company, Ms. Dipali Mittalis liable to be retire by rotation at the ensuing Annual General Meeting, and beingeligible, offer herself for re-appointment. The brief resumes of the Directors who are tobe appointed/ re-appointed, the nature of their expertise in specific functional areas,names of companies in which they hold directorships, committee memberships/ chairmanships,their shareholding etc., are furnished in the Annexure-I to the notice of the ensuingAnnual General Meeting.


Disinvestments in Madhya Bijlee Private Limited, Proficient Disaster Management &Innovative Response Education Private Limited (previously known as A2Z Disaster Management& Innovative Response Education Private Limited), Pioneer Waste Management PrivateLimited and Mirage Bijlee Private Limited

During the year under review, pursuant to the Share Purchase Agreement dated 23rdDecember, 2013, the Company had sold its entire shareholding in Madhya Bijlee PrivateLimited, Proficient Disaster Management & Innovative Response Education PrivateLimited and Pioneer Waste Management Private Limited. The above said companies have ceasedto be subsidiary of the Company.

Further pursuant to the Share Purchase Agreement entered on 1st March, 2014,the Company had sold its entire shareholding in Mirage Bijlee Private Limited hence it hasceased to be a subsidiary of the Company.


During the year the Company has the following Schemes/ Plan in operation for grantingstock options to the eligible employees/directors of the Company and its subsidiarycompanies, in accordance with the Securities Exchange Board of India (Employee StockOption Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

- A2Z Stock Option Plan 2010

- A2Z Employees Stock Option Plan 2013

A2Z Employees Stock Option Plan 2013

During the year under review, your Company pursuant to a special resolution of theshareholders of the Company at the Annual General Meeting held on 28thSeptember, 2013 adopted the A2Z Employees Stock Option Plan 2013 ("A2Z ESOP")for the grant of options. The ESOP Compensation Committee in its meeting held on February3, 2014 has granted 16,95,000 stock options convertible into equivalent number of equityshares of Rs. 10/- each to the eligible employee/ directors of the Company and/or itsSubsidiary Companies at the exercise price of Rs 10.35 each which is NSE closing marketprice on 31st January, 2014 (i.e. previous trading day of the grant date). Theentire granted stock options shall vest and will be exercisable on the first anniversaryof the grant date till completion of four (4) years since then.

Further the ESOP Compensation Committee in its meeting held on July 03, 2014 hasgranted 19,05,000 stock options convertible into equivalent number of equity shares of Rs.10/- each to the eligible employee/ directors of the Company and/or its SubsidiaryCompanies at the exercise price of Rs 19.95 each which is NSE closing market price on 2ndJuly, 2014 (i.e. previous trading day of the grant date). The granted option shall bevested in the ratio of 30:30:40 to each of the eligible employees employee/ directors ofthe Company and/ or its Subsidiary Companies on each anniversary of the Grant Date andwill be exercisable till completion of four (4) years from the vesting date.

As required under the Securities and Exchange Board of India (Employee Stock OptionScheme and Employee Stock Purchase Scheme) Guidelines, 1999, the information pertaining toA2Z STOCK OPTION PLAN, 2010 and A2Z EMPLOYEES STOCK OPTION PLAN 2013 as on March 31, 2014of the Company has been provided in an Annexure I which forms part of the Directors’Report.

Auditor’s Certificate under clause 14.1 of SEBI (ESOP) Guidelines 1999 shall beplaced at ensuing Annual General Meeting.


At the time of the public issue 1,035 Equity Shares were transferred to suspenseaccount as were unclaimed. At the end of last year i.e. as on 31st March, 2013,105 shares were lying in the suspense account. During the year no share has beentransferred from suspense account to shareholders. Detail of Shares in Suspense Account isas follows:

Particulars No. of Cases No. of Shares
Aggregate No. of Shareholders and outstanding shares in suspense account lying at the beginning of the year - 01.04.2013 01 105
Number of Shareholders who approached to issuer/ registrar for transfer of shares from suspense account during the year – 01.04.2013 - 31.03.2014 NIL NIL
Number of Shareholders to whom shares were transferred from suspense account during the year-01.04.2013-31.03.2014 NIL NIL
Aggregate No. of Shareholders and outstanding shares in the suspense account lying at the end of the year-01.04.2013-31.03.2014 01 105*

*The voting rights on these shares shall remain frozen till the rightful owner of suchshares claims the shares.


As on the date of this Report, Company had 33 (Thirty Three) direct and step downsubsidiary Companies and an association of person (AOP) in which Company is having 60%sharing in profits, a list of which is given in the notes to financials.

As per the General Circular 08/2014 No. 1/19/2013-CL-V dated 4th April 2014issued by the Ministry of Corporate Affairs, the financial statements (and documentsrequired to be attached thereto), auditors report and board’s report in respect offinancial years that commenced earlier than 1st April 2014 shall be governed by therelevant provisions/ schedules/rules of the Companies Act, 1956. The Ministry of CorporateAffairs, Government of India has, vide General Circular No. 2/2011 dated 8thFebruary, 2011 read together with General Circular No. 3/2011 dated 21stFebruary, 2011, granted exemption under Section 212(8) of the Companies Act, 1956, for notattaching Annual Report of subsidiary companies, subject to fulfilment of certainconditions by the holding company. As stated in the said circulars, the Board ofDirectors, vide its resolution dated 14th August, 2014 accorded its consent fornot attaching the balance sheet of the subsidiaries.

The detailed financial statements and audit reports of each of the subsidiaries areavailable for inspection at the registered office of the Company during office hoursbetween 11 a.m. to 1 p.m.

The Annual Report of the Company contains the consolidated audited financial statementsprepared pursuant to clause 41 of the Listing Agreement entered into with the stockexchanges and in accordance with the mandatory accounting standards as notified by theCompanies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions ofthe Companies Act, 1956.


The Company has a proper, efficient & adequate internal control system. It ensuresthat all the assets are safeguarded and protected against loss from unauthorized use ordisposition and the transactions are authorized, recorded and reported correctly.

An effective programme of internal audit and management review supplements the processof internal control. Properly documented policies, guidelines and procedures are laid downfor this purpose. The internal control system has been designed so as to ensure that thefinancial and other records of the Company are reliable for preparing the financial andother statements and for maintaining accountability of assets of the Company.

The Company has also constituted an Audit Committee comprising of 4 (Four)professionally qualified directors, who regularly interact with the Statutory Auditors andInternal Auditors in dealing with the matters specified within its terms of reference. TheCommittee mainly deals with accounting matters, financial reporting and internal controls.


During the year under review there was no such recommendation of the Audit Committeewhich was not accepted by the Board. Hence there is no need for disclosure of the same inthis report.


Risks are an integral part of any business and the risk profile, to a great extent,depends on the climatic conditions, economic and business conditions and the markets andcustomers we serve.

Your Company has adopted a comprehensive & effective system of Risk Management. TheCompany has adopted a procedure for risk assessment and its minimization. It ensures thatall the risks are timely identified and mitigated in accordance with the well-structuredRisk Management process. The Board of directors & the Audit Committee periodicallyreview the Risk management process.


The Equity shares of the Company continue to remain listed on BSE Limited (Previouslyknown as Bombay Stock Exchange Limited) and National Stock Exchange of India Limited andthe stipulated listing fees for FY 2014-15 have been paid to both the Stock Exchanges.


During the year under review the company has not accepted any deposit from publicwithin the meaning of section 58A of the Companies Act, 1956 and rules made there under.


The auditors, M/s. Walker Chandiok & Co. LLP (Firm Registration No. 001076N)Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmedtheir eligibility and willingness to accept office as Statutory Auditors, if re-appointed.The proposal for their reappointment is included in the notice for the ensuing AnnualGeneral Meeting.

On recommendation of the Audit Committee the Board has recommended the re-appointmentof M/s Walker Chandiok & Co LLP, Chartered Accountants as Statutory Auditors. M/ sWalker Chandiok & Co LLP, Chartered Accountants, if re-appointed by members asStatutory Auditor shall hold office from the conclusion of the Company’s this AnnualGeneral Meeting to the conclusion of the Annual General Meeting to be held for theFinancial Year 2018-19, subject to ratification at every Annual General Meeting of theCompany. Certificate from the said Auditors has been obtained to the effect that theirre-appointment, if made, would be within the limits specified under section 141 of theCompanies Act, 2013.

The auditor’s report presented by M/s Walker Chandiok & Co LLP, StatutoryAuditors on the accounts of the company for the financial year ended 31st March, 2014 isself-explanatory and requires no comments and the Management replies to the auditobservations are as under:

Explanation to para 6 of Auditor’s report on Consolidated Financials of A2ZMaintenance & Engineering Services Limited, its subsidiaries and joint ventures &para 6 of Auditor’s report on Standalone Financials of A2Z Maintenance &Engineering Services Limited

The Company continues to carry deferred tax assets of Rs. 396.07 Million on itemscomprising unabsorbed losses and other timing differences between the accounting andtaxable income, which, in view of the management, shall be realized on generation oftaxable income in future years. The Group follows Accounting Standard (AS-22)"Accounting for taxes on Income" as notified by the Companies (AccountingStandards) Rules, 2006, (as amended). The company has entered into agreements with itscustomers for providing engineering services and based on developments in certain newprojects, the Company will have certain revenue and sufficient taxable profits againstwhich the deferred tax asset shall be adjusted. Due to accumulated losses, somesubsidiaries have recognised deferred tax assets to the extent there is virtual certaintysupported by convincing evidence of realization of such deferred tax assets in the nearfuture.

Explanation to para 8 (a) of Auditor’s report on Consolidated Financials of A2ZMaintenance & Engineering Services Limited, its subsidiaries and joint ventures &para 8 of Auditor’s report on Standalone Financials of A2Z Maintenance &Engineering Services Limited

The Company has incurred a net loss of Rs. 1,949.63 Million for the year ended 31stMarch, 2014 and is currently facing liquidity problems on account of delayed realisationof trade receivables coupled with delays in commencement of commercial production at itsbiomass based power generation plants. Management is evaluating various options and inaddition to consolidation of business by focusing on core operations and disposing off thenoncore assets, had also made reference to Corporate Debt Restructuring Cell (‘CDRCell’) for restructuring of its existing debt obligations, including interest andother related terms and conditions (hereinafter referred to as the ‘CDRscheme’). Management believes that the approved CDR scheme of the Company and theaspects like inviting strategic investors, disposal of non-core assets would also bring inthe additional cash flows into the system, and hence no adjustments are required in thefinancial statements and accordingly, these have been prepared on a going concern basis.

The Corporate debt restructuring (CDR) proposal to restructure existing debtobligations, including interest, additional funding and other terms (hereafter referred toas "the CDR Scheme") of the Company, having January 01, 2013 as the"cut-off date", was approved by the CDR Cell vide its Letter of Approval (LOA)dated December 28, 2013 as further modified dated February 03, 2014. Out of seventeenlenders, twelve lenders (herein after termed as ‘CDR lenders’) agreed to be partof the CDR scheme. One of the non CDR lenders filed a civil suit in the Hon’ble HighCourt of Delhi on the Company against creation of second charge on power plants under theCDR scheme inter alia other matters. The Hon’ble High Court vide its Order datedMarch 20, 2014 has permitted the signing of Master Restructuring Agreement (MRA) keepingthe hearing in the suit adjourned to August 21, 2014. Upon execution of the MasterRestructuring Agreement (MRA) with ten CDR lenders Company started the process offulfilling the other conditions precedent. Pursuant to the CDR Scheme, inter alia otherconditions, the promoters were required to bring in Promoter contribution, which hasalready been infused. On the basis of MRA executed with the CDR lenders, the Company hasaccounted for impact of the CDR scheme (reclassifications and interest calculations) inthe financial results for the year ended March 31, 2014 up to the extent agreed with thoseCDR lenders. From the "cut- off date" the interest on the restructured debts hasbeen

Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

Surender Kumar Tuteja , Chairman

Amit Mittal , Managing Director

Dipali Mittal , Whole-time Director

Atul Kumar Agarwal , Company Secretary

Company Head Office / Quarters:

O-116 1st Fl DLF Shopping Mall,
Arjun Marg DLF City Phase I,
Phone : Haryana-91-124-4300426 / Haryana-
Fax : Haryana-91-124-2566651 / Haryana-
E-mail : info@a2zemail.com
Web : http://www.a2zgroup.co.in


Fund Holding
Scheme Name No. of Shares
Mon Tue Wed Thu Fri Sat Sun
06 07 08 09 10 11 12