Your Directors have pleasure in presenting the Thirteenth Annual Report on the business and operations of the Company, together with the Standalone and Consolidated financials for the financial year ended on 31st March, 2014.
1. FINANCIAL RESULTS:
The highlights of financial results on Standalone and Consolidated basis for the financial year ended on 31st March, 2014 are as follows:
(Rs. in Million)
|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|
|(Loss)/Profit before Interest, Tax & Depreciation||(1,109.96)||(186.54)||(946.32)||(53.02)|
|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|
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 has made net loss after tax of Rs. 1,949.63 Million as against a loss of Rs. 538.10 Million in the previous year.
The Net Worth of the Company has decreased to Rs. 9096.47 Million as at the end of 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 the current 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 is Rs. 7,159.08 Million as against Rs. 9,393.71 Million in the previous year. The Company on consolidated basis has made a net Loss after minority interest and extra ordinary items of Rs. 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 Million as at the end of the current year from Rs. 10,045.06 Million as at the end of previous year.
The consolidated Debt Equity ratio of the Company has gone up to 1.86 as at the end 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 the Company has not recommended any dividend to the shareholders for this financial year.
3. NATURE OF OPERATIONS
Your Company is primarily engaged in providing EPC services in power transmission and distribution sectors with focus mainly on distribution. The Company has also moved into the generation of power from renewable energy sources like biomass (Renewable Energy Generation) and Municipal Solid Waste Management (MSW). The Company is amongst very few companies that are qualified to provide EPC services in the transmission and distribution sector to Power Grid Corporation of India Limited (PGCIL). The Company also provides services to other verticals such as Telecommunications Services and operation & maintenance for wire lines and erection of optical fiber cable network for telecom companies.
The Company has two business verticals:
EPC Division: The Company undertakes the EPC contracting business through this division, more particularly in erection and laying of distribution and transmission lines and erection of sub-stations for power distribution companies. It provides integrated design, testing, installation, construction and commissioning services on a turn-key basis. Its activities include erection, laying and maintenance of electric transmission lines, renovation and segregation of feeders, setting up of substations and other allied services. Its EPC services include the installation of distribution line infrastructure up to 33 KV, construction of substations etc. In the transmission line, its services include Extra High Tension (EHT) substations and transmission lines.
Power Plants Division: The Company has also forayed in the renewable energy generation business through this division by setting up biomass based three power plants in Punjab in collaboration with sugar mills on Built Own Operate and transfer (BOOT) basis.
The Companys operations are geographically spread across India and conducted either directly through the Company or its direct and indirect subsidiaries. Through its subsidiary companies, the Company provides municipal solid waste (MSW) management services which involve collection & transportation (C&T) of waste and its scientific processing and disposal (P&D) like recycling, manufacturing of organic compost and green fuel such as Refused Derived Fuel (RDF) & subsequent disposal of remnants, facility management (FMS) & environmental services and developing information technology (IT) solutions for power utilities (Power IT Solutions). The Company along with its subsidiaries has a mission of creating a cleaner climate and environment.
4. UPDATES ON CORPORATE DEBT RESTRUCTURING (CDR):
During the year under review, the Company had taken a decision to undertake a debt restructuring exercise under the CDR mechanism that is governed by the Corporate Debt Restructuring 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 Guidelines formulated thereunder in consultation with State Bank of Patiala (SBOP) the lead bank of the Consortium Banks. The Corporate Debt Restructuring Proposal ("CDR Proposal") was recommended by State Bank of Patiala, the lead lender and after approval by majority of the secured lenders (hereinafter referred to as the "CDR Lenders") the final Corporate Debt Restructuring Package ("CDR Package") has been approved by CDR Empowered Group ("CDR EG") on December 24, 2013 and the same has been communicated 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 referred to as "CDR LOA"). The Master Restructuring Agreement ("MRA") between the Company and the CDR Lenders has been executed on March 27, 2014, by virtue of which the restructured facilities are governed by the provisions specified in the MRA having cut off date of January 1, 2013.
The total Restructured Facilities under the CDR Package amounts to Rs. 1727.46 Crores which includes Restructured Term Loan and Working Capital Facilities and the moratorium for repayment of Term Loan, and Working Capital Facilities and Interest thereof for the initial period of 2 years from Cutoff Date.
In terms of the CDR Scheme, the Promoter/Promoter Group were required to bring in equity to the extent of Rs. 34.54 Crores i.e. 2% restructured debts of Rs. 1,727.46 crore upfront 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 Financial Statements forming part of this Annual Report.
Furthermore the Corporate Debt Restructuring (CDR) Package as approved by the CDR EG has been confirmed/ approved by the Shareholders of the Company through postal ballot vide notice dated May 6, 2014, the results of which have been declared on June 24, 2014.
5. CAPITAL STRUCTURE
After the year under review, the Authorised Share Capital of the Company has been increased from Rs.100,00,00,000/-(Rupees One Hundred Crores only) divided into 10,00,00,000 (Ten Crores) equity shares of Rs.10/- (Rupees Ten only) each to 115,00,00,000/- (Rupees One Hundred Fifteen Crores only) divided into 11,50,00,000 (Eleven Crore 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 Four Crores Seventeen Lacs Seventy Six Thousand Nine Hundred Forty only) divided into 7,41,77,694 (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 up share capital of the Company during the year.
6. PREFERENTIAL ISSUE:
After the year under review, in terms of the said CDR LOA the Company had sought the approval of the shareholders by way of postal ballot vide notice dated May 6, 2014, the results of which have been declared on June 24, 2014, inter alia for following items Board of 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) Equity Shares of Rs.10/- each of the Company from time to time in one or more tranches, on Preferential Basis to the Promoter/Promoter Group in terms of Chapter VII of Securities and 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) Equity Shares of Rs.10/-each of the Company from time to time in one or more tranches, on Preferential 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) Equity Shares of Rs.10/- each of the Company from time to time in one or more tranches, on Preferential 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 CDR Package in accordance with the CDR Guidelines.
7. BOARD OF DIRECTORS
a) Composition of Board:
The Board comprises of five (5) Directors consisting three (3) Non-Executive Independent Directors one of whom is an additional director and two (2) Executive Directors, 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 took place:
|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 contribution and guidance provided by the above said directors during their tenure as Directors of Company.
Dr. Ashok Kumar appointed as an Additional Director of the Company effective from 1st May, 2013, he was further re-appointed as director of the Company in the Annual General Meeting of the Company duly held on 28th September, 2013.
Mr. Suresh Prasad Yadav was appointed as an Additional Director of the Company effective from 3rd February, 2014 in accordance with the provisions of Section 260 of the erstwhile Companies Act, 1956 read with Article 44 of the Articles of Association of the Company. Mr. Suresh Prasad Yadav shall hold office up to the date of the ensuing Annual General Meeting.
Mr. Surender Kumar Tuteja, Dr. Ashok Kumar and Mr. Suresh Prasad Yadav, directors of the Company, if approved, shall be appointed as independent directors for five consecutive years from the date of the ensuing Annual General Meeting as per provisions of Section 149, 150 & 152 and, if any, other applicable provisions of the Companies Act, 2013.
Necessary resolutions for the appointment/reappointment of the aforesaid directors have been included in the notice convening the ensuing AGM and details of the proposal for appointment/re-appointment are mentioned in the explanatory statement of the notice. Your directors recommend their appointment/reappointment. All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 164(2) of the Companies Act, 2013 and they have also filed their consent for such appointment.
c) Reappointment of director(s) retire by rotation
In terms of Article 70 of the Articles of Association of the Company, Ms. Dipali Mittal is liable to be retire by rotation at the ensuing Annual General Meeting, and being eligible, offer herself for re-appointment. The brief resumes of the Directors who are to be 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 ensuing Annual General Meeting.
8. DISINVESTMENTS IN SUBSIDIARIES
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 Private Limited and Mirage Bijlee Private Limited
During the year under review, pursuant to the Share Purchase Agreement dated 23rd December, 2013, the Company had sold its entire shareholding in Madhya Bijlee Private Limited, Proficient Disaster Management & Innovative Response Education Private Limited and Pioneer Waste Management Private Limited. The above said companies have ceased to 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 has ceased to be a subsidiary of the Company.
9. EMPLOYEE STOCK OPTION PLANS
During the year the Company has the following Schemes/ Plan in operation for granting stock options to the eligible employees/directors of the Company and its subsidiary companies, in accordance with the Securities Exchange Board of India (Employee Stock Option 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 the shareholders of the Company at the Annual General Meeting held on 28th September, 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 February 3, 2014 has granted 16,95,000 stock options convertible into equivalent number of equity shares of Rs. 10/- each to the eligible employee/ directors of the Company and/or its Subsidiary Companies at the exercise price of Rs 10.35 each which is NSE closing market price on 31st January, 2014 (i.e. previous trading day of the grant date). The entire granted stock options shall vest and will be exercisable on the first anniversary of the grant date till completion of four (4) years since then.
Further the ESOP Compensation Committee in its meeting held on July 03, 2014 has granted 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 Subsidiary Companies at the exercise price of Rs 19.95 each which is NSE closing market price on 2nd July, 2014 (i.e. previous trading day of the grant date). The granted option shall be vested in the ratio of 30:30:40 to each of the eligible employees employee/ directors of the Company and/ or its Subsidiary Companies on each anniversary of the Grant Date and will be exercisable till completion of four (4) years from the vesting date.
As required under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, the information pertaining to A2Z STOCK OPTION PLAN, 2010 and A2Z EMPLOYEES STOCK OPTION PLAN 2013 as on March 31, 2014 of the Company has been provided in an Annexure I which forms part of the Directors Report.
Auditors Certificate under clause 14.1 of SEBI (ESOP) Guidelines 1999 shall be placed at ensuing Annual General Meeting.
10. SHARES HELD IN SUSPENSE ACCOUNT
At the time of the public issue 1,035 Equity Shares were transferred to suspense account 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 been transferred from suspense account to shareholders. Detail of Shares in Suspense Account is as 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 such shares claims the shares.
11. SUBSIDIARY COMPANIES
As on the date of this Report, Company had 33 (Thirty Three) direct and step down subsidiary 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 2014 issued by the Ministry of Corporate Affairs, the financial statements (and documents required to be attached thereto), auditors report and boards report in respect of financial years that commenced earlier than 1st April 2014 shall be governed by the relevant provisions/ schedules/rules of the Companies Act, 1956. The Ministry of Corporate Affairs, Government of India has, vide General Circular No. 2/2011 dated 8th February, 2011 read together with General Circular No. 3/2011 dated 21st February, 2011, granted exemption under Section 212(8) of the Companies Act, 1956, for not attaching Annual Report of subsidiary companies, subject to fulfilment of certain conditions by the holding company. As stated in the said circulars, the Board of Directors, vide its resolution dated 14th August, 2014 accorded its consent for not attaching the balance sheet of the subsidiaries.
The detailed financial statements and audit reports of each of the subsidiaries are available for inspection at the registered office of the Company during office hours between 11 a.m. to 1 p.m.
The Annual Report of the Company contains the consolidated audited financial statements prepared pursuant to clause 41 of the Listing Agreement entered into with the stock exchanges and in accordance with the mandatory accounting standards as notified by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.
12. INTERNAL CONTROL SYSTEMS
The Company has a proper, efficient & adequate internal control system. It ensures that all the assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.
An effective programme of internal audit and management review supplements the process of internal control. Properly documented policies, guidelines and procedures are laid down for this purpose. The internal control system has been designed so as to ensure that the financial and other records of the Company are reliable for preparing the financial and other 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 and Internal Auditors in dealing with the matters specified within its terms of reference. The Committee mainly deals with accounting matters, financial reporting and internal controls.
13. AUDIT COMMITTEE RECOMMENDATION
During the year under review there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence there is no need for disclosure of the same in this report.
14. RISK MANGEMENT SYSTEM
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 and customers we serve.
Your Company has adopted a comprehensive & effective system of Risk Management. The Company has adopted a procedure for risk assessment and its minimization. It ensures that all the risks are timely identified and mitigated in accordance with the well-structured Risk Management process. The Board of directors & the Audit Committee periodically review the Risk management process.
The Equity shares of the Company continue to remain listed on BSE Limited (Previously known as Bombay Stock Exchange Limited) and National Stock Exchange of India Limited and the stipulated listing fees for FY 2014-15 have been paid to both the Stock Exchanges.
16. PUBLIC DEPOSITS
During the year under review the company has not accepted any deposit from public within the meaning of section 58A of the Companies Act, 1956 and rules made there under.
17. AUDITORS AND AUDITORS REPORT
The auditors, M/s. Walker Chandiok & Co. LLP (Firm Registration No. 001076N) Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmed their 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 Annual General Meeting.
On recommendation of the Audit Committee the Board has recommended the re-appointment of M/s Walker Chandiok & Co LLP, Chartered Accountants as Statutory Auditors. M/ s Walker Chandiok & Co LLP, Chartered Accountants, if re-appointed by members as Statutory Auditor shall hold office from the conclusion of the Companys this Annual General Meeting to the conclusion of the Annual General Meeting to be held for the Financial Year 2018-19, subject to ratification at every Annual General Meeting of the Company. Certificate from the said Auditors has been obtained to the effect that their re-appointment, if made, would be within the limits specified under section 141 of the Companies Act, 2013.
The auditors report presented by M/s Walker Chandiok & Co LLP, Statutory Auditors on the accounts of the company for the financial year ended 31st March, 2014 is self-explanatory and requires no comments and the Management replies to the audit observations are as under:
Explanation to para 6 of Auditors report on Consolidated Financials of A2Z Maintenance & Engineering Services Limited, its subsidiaries and joint ventures & para 6 of Auditors report on Standalone Financials of A2Z Maintenance & Engineering Services Limited
The Company continues to carry deferred tax assets of Rs. 396.07 Million on items comprising unabsorbed losses and other timing differences between the accounting and taxable income, which, in view of the management, shall be realized on generation of taxable income in future years. The Group follows Accounting Standard (AS-22) "Accounting for taxes on Income" as notified by the Companies (Accounting Standards) Rules, 2006, (as amended). The company has entered into agreements with its customers for providing engineering services and based on developments in certain new projects, the Company will have certain revenue and sufficient taxable profits against which the deferred tax asset shall be adjusted. Due to accumulated losses, some subsidiaries have recognised deferred tax assets to the extent there is virtual certainty supported by convincing evidence of realization of such deferred tax assets in the near future.
Explanation to para 8 (a) of Auditors report on Consolidated Financials of A2Z Maintenance & Engineering Services Limited, its subsidiaries and joint ventures & para 8 of Auditors 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 31st March, 2014 and is currently facing liquidity problems on account of delayed realisation of trade receivables coupled with delays in commencement of commercial production at its biomass based power generation plants. Management is evaluating various options and in addition to consolidation of busine
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 : email@example.com
Web : http://www.a2zgroup.co.in