Madhucon Projects Ltd

BSE: 531497 | NSE: MADHUCON | ISIN: INE378D01032 
Market Cap: [Rs.Cr.] 239.11 | Face Value: [Rs.] 1
Industry: Construction

Director's Report
DIRECTORS

Your Directors have pleasure in presenting the 24th Annual Report of theCompany together with the Audited Financial Statements for the year ended March 31, 2014.

A. FINANCIAL RESULTS:

(Rupees in Lakhs)

2013-2014 2012-2013
Gross Income 89779.64 106384.24
Profit before Depreciation & Taxation 9673.90 8880.65
Depreciation 4701.86 5459.18
Profit before Taxation 4972.04 3421.47
Provision for Taxation
i) Current Tax 1042.17 684.56
ii) Deferred Tax 758.19 (639.99)
Profit after Taxation 3171.68 3376.90
Profit available for appropriation 3171.68 3376.90
APPROPRIATION
General Reserve 317.17 337.69
Proposed Dividend 73.79 73.79
Corporate Tax on Proposed Dividend 11.97 11.97
Balance transferred to Balance Sheet 2768.75 2953.45
Earnings per Share (Rs.) 4.30 4.58
Book Value (Rs.) 95.71 91.53
Paid-up Equity Share Capital 740.32 740.32
Reserves & Surplus 69888.83 66802.92

* Provision of proposed dividend for the year 2013-14 was made @ 10%

B. DIVIDEND:

Your Directors are pleased to recommend an Equity Dividend of 20% (20 Paisa per share)on paid up equity capital for the year ended 31.03.2014, subject to approval of themembers at this Annual General Meeting.

C. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under section 217 (2AA) of the Companies Act, 1956, it ishereby confirmed:

i. That in the preparation of annual accounts for the financial year ended 31stMarch, 2014; the applicable Accounting Standards have been followed along with properexplanation relating to material departures.

ii. That the Directors have selected Accounting Policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent, so as to give a true andfair view of the state of affairs of the Company, at the end of the financial year and ofthe profit or loss of the Company for that period.

iii. That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies

Act, 1956, for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities.

iv. That the Directors have prepared the annual accounts for the year ended 31stMarch 2014 on a "Going Concern" basis.

D. MANAGEMENT DISCUSSION AND ANALYSIS:

I. Industry Structure and Developments

Infrastructure is a major sector that propels overall development of the Indianeconomy. India's focus on infrastructure over the last decade made the country the secondfastest growing economy in the world. India's constant growth gives investors a tremendousopportunity in the transportation and power segments. India has second largest Roadnetwork in the world with 33 lakh Kms.

Considering the enhanced focus on this sector by the Indian Government, policy makersexpect the infrastructure spend on an average to be around 8.18% of the GDP at the end ofthe twelfth five-year plan, targeting an overall investment of Rs. 55.75 trillion over theduration. Moreover, the role of private sector investments has been further projected toenhance at 48% by the completion of twelfth five-year plan.

II. Opportunities and Strengths:

Madhucon has made a successful transition from being just an EPC Contractor to a follyintegrated infrastructure developer. Infrastructure development and service deliverythrough Public Private Partnerships (PPPs) Policy increases vast investment opportunitiesin different infrastructure sectors both in rural and urban areas. Your Company is havingopportunities and strengths with an order book position of Rs. 9360 Crores andparticipating in various Tenders and RFPs valued at Rs. 4200 Crores in various projects inIndia and abroad.

III. Segment Wise Performance:

1. Transportation Division:

a) BOT Toll and Annuity based Projects:

Your company has completed 1459 lane Kms of 4 BOT projects and 2018 lane Kms in 5 Tolland Annuity Projects are under progress as detailed below:

SI. No. Name of the Project No. of Lane Kms. Name of the SPV Status of the Project
1 Chhapra-Hajipur,NH-19 DBFOT Annuity Basis Project 280 Chhapra-Hajipur Expressways Limited In Progress
2 Barasat-Krishnagar NH-34 DBFOT Annuity Basis, West Bengal 336 Barasat-Krishnagar Expressways Limited In progress
3 Ranchi -Jamshedpur, NH-33 DBFOT Annuity Basis. Jharkhand 715 Ranchi Expressways Limited In Progress
4 Vijayawada-Machilipatnam, NH-9 DBFOT Toll Basis Project, Andhra 258 Vijayawada-Machilipatnam In Progress*
Pradesh Expressways Limited
5 Rajauli-Bakhtiyarpur, NH-31 of BSRDCL, DBFOT Toll Basis Project, Bihar 429 Rajauli-Bakhtiyarpur Expressways Limited In Progress*

* Financial closure of Vijayawada-Machilipatnam Project and Rajauli-BakhtiyarpurProject are under process and expected to be completed by 30.09.2014.

b) Item Rate Projects:

Your Company has been awarded an item rate project of Construction of Concrete Pavementin the Coal Transport Roads in different projects of Talcher Coalfields (except KanithaOCP) by Mahanadi Coalfields Limited. Total road Length of the Project is 23 Kms and thecost Rs. 165.92 Crores. The Agreement has been signed on 23.04.2014.

The Status of ongoing projects is as follows:

SI. No. Name of the Project No. of Lane Kms. Status of the Project
1 Jhanjapur-Dharbanga Section NH-57, Bihar, NHAI. 168 Completed
2 Nagaon- Dharamtul, NH-37, Assam, NHAI 120 Substantially completed
3 Anik Panjarpole Link Road Project (APLR), MMRDA, Maharashtra 30 Completed

2. Irrigation Projects:

Your Company is now executing 10 projects valued Rs.2172.13 Crores of which Rs.1433.25Crores related to Irrigation Projects of Andhra Pradesh and Telangana.

3. Energy Projects:

Thermal Power Plant -Tamminapatnam, Chillakur Mandal, SPSRNellore District.

The EPC Contract of Phase-I (2X150MW) of Simhapuri Energy Limited was completed andgenerating power with full capacity.

The Phase-II (2X150 MW) Third Unit has already generating power and the fourth unit isexpected to start its commercial operation by Oct' 2014.

4. Mining Division:

The work for removal of OB 416.46 Lakhs Cub. Mtrs. and Coal 159.39 Lakhs Metric Tonsvalued Rs.42,206 Lacs at Phularitand (BCCL) Project within the period of 7 years vide workorder dated 07.02.2012 is under progress.

The highest production of coal in a month is 2.31 Lakhs Metric Tons.

5. Overseas Division:

Your Company has been allotted 8,663 hectares coal mine in South Sumatra, Indonesia inthe name of PT Madhucon Indonesia with mineable reserves of 550mn tons and mining rightsfor 40 years. The mine is in initial stage of operation.

Your Company is setting up of Mine Mouth Coal Fired 2 XI50 MW Thermal Power Plant inIndonesia through PT Madhucon Sriwijaya Power (SPV) for generation and supply of power toPT PLN (PERSERO), Government Electricity Company of Indonesia for a period of 25 years andentered into Power Purchase Agreement. Financial tie-up for project finance is underprocess.

IV. Future Outlook

Government of India envisaged the investment of US$ 1 trillion for the infrastructuredevelopment under PPP and FDI during the 12th Five-Year Plan (2012-17), with 40percent of the funds coming from the country's private sector. Your company will getsignificant growth.

The Company has been participating in International tenders and is confident of winningthe Projects in Roads 8c Infrastructure sector.

V. Risks and Concerns:

Your company may envisage the commercial, political, legal and technological risk whichmay affect the business and earning potential of your company.

VI. Internal Control System:

Your Company has adequate system of Internal Control developed by our in-house InternalAudit team consisting of qualified and experienced accounting, costing and technicalprofessionals. The Internal Audit Team suggests various means of cost reduction and costcontrol measures in all resources used in the Company. The Internal Control Systems andthe Reports of Internal Audit will be reviewed by the Audit Committee in consultation withthe Internal Auditors and Statutory Auditors and experts in the field thereafter by Boardof Directors.

VII. Discussion on financial performance with respect to operational performance

During the year under review, your Company has achieved a gross income of Rs. 897,79.64lakhs as against Rs. 1063,84.24 lakhs in the previous year. The Company has earned a netprofit of Rs. 31,71.68 lakhs as against Rs. 33,76.90 lakhs in the previous year afterproviding for depreciation of Rs.47,01.86 lakhs as against Rs.54,59.18 lakhs in theprevious year.

Your Company has consolidated its financial statements combining the financialinformation from its various subsidiary companies as per the applicable AccountingStandards and as a result, the consolidated turnover and consolidated profit/(loss) afterelimination of intra group transactions are shown as Rs. 1636,20.09 lakhs and Rs.(223,80.83) lakhs respectively.

VIII. Material developments in Human Resources / Industrial Relations:

Your Company has recruited competent Professionals at all levels of management for allverticals of the Company like Roads, Irrigation, Power, Mining, Building & PropertyDivision as a part of corporate restructuring process and strengthening its OrganizationalHierarchy to meet the pace of growth of your Company. The industrial relation is verycordial.

E. Accounting Standards;

The Financial statements of the Company have been prepared in accordance with theGenerally Accepted Accounting Principles in India (Indian GAAP) to comply with theAccounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (asamended) and the relevant provisions of the Companies Act, 1956.

F. Share Capital:

The Paid-Up Equity Share Capital of the Company is Rs.7,37,94,940/- consisting of7,37,94,940 Equity Shares of Re. 1/- each.

G. Subsidiary Companies:

The Company has 9 (Nine) Indian Subsidiaries and 1 (One) Foreign Subsidiary as on31.03.2014. The details of investments held by Madhucon Projects Limited in the followingsubsidiary companies are given below:

INDIAN SUBSIDIARY COMPANIES:

SI. No Name of the Company Date of incorporation No. of Equity Shares held by Madhucon Projects Limited Face Value of Equity Shares (Rs) Value of Equity shares (Rs) Percent age (%)
1 Madhucon Infra Limited (CIN: U45200TG2006PLC049235) 22.02.2006 122,20,27,045 10 1222,02,70,450 94.89
2 Madurai-Tuticorin Expressways Limited (CIN-U45203TG2006PLC050114) 11.05.2006 8,85,61,500 10 88,56,15,000 54.12
3 Madhucon Energy Limited (CIN- U45309TG2000PLC034007) 24.03.2000 1,00,090 5 5,00,450 99.95
4 Madhucon Mega Mall Private Limited (CIN-U45400TG2007PTC056734) 18.12.2007 20,000 10 2,00,000 66.66
5 i Nama Hotels Private Limited (CIN-U55101TG2007PTC056818) 24.12.2007 2,71,21,200 10 27,12,12,000 99.96
6 Madhucon Heights Private Limited (CIN-U45209TG2007PTC056733) 18.12.2007 20,000 10 2,00,000 66.66
7 Agastyamuni Hydro Power Private Limited (CIN-U40108TG2010PTC068128) 28.04.2010 6,000 10 60,000 60.00
8 Rudraprayag Hydro Power Private Limited (CIN-U40108TG2010PTC068130) 28.04,2010 6,000 10 60,000 60.00
9 Tilwara Hydro Power Private Limited (CIN-U403 00TG2010PTC068127) 28.04.2010 6,000 10 60,000 60.00

FOREIGN SUBSIDIARY COMPANIES:

Sl.No Name of the Company Date of incorporation No. of Equity Shares held by Madhucon Projects Limited Face value of Equity Share Value of Equity Shares held Percent age (%)
1 Madhucon Natural Resources Limited, Singapore (200603264W) 09.03.2006 750 S$ 1/- S$ 750 (Equivalent to Rs.36075) 75.00

STEP DOWN SUBSIDIARIES:

1. Madhucon Agra-Jaipur Expressways Limited

2. TN (DK) Expressways Limited

3. Trichy-Thanjavur Expressways Limited

4. Chhapra-Hajipur Expressways Limited

5. Simhapuri Energy Limited

6. Madhucon Toll Highways Limited

7. Barasat Krishnanagar Expressways Limited

8. Ranchi Expressways Limited

9. Vijayawada Machlipatnam Expressways Limited

10. Rajauli-Bakhtiyarpur Expressways Limited

11. PT Madhucon Indonesia, Indonesia

12. PT Madhucon Sriwijaya Power, Indonesia

H. Consolidation of Accounts;

In accordance with the Accounting Standards AS-21 on "Consolidated FinancialStatements" and AS-23 on "Accounting for Investments in Associates inConsolidated Financial Statements" read with Accounting Standard AS-27 on"Financial Reporting of Interests in Joint Ventures", Listing Agreement andSection 212 of the Companies Act 1956, the figures of the subsidiary Companies areconsolidated with figures of Madhucon Projects Limited.

The Board of Directors of the Company has, by resolution, given consent for notattaching the Balance Sheet of Subsidiary Companies concerned. The Company has presentedthe Consolidated Financial Statements of Holding Company and all its Subsidiaries in thisAnnual Report duly audited by its Statutory Auditors.

I. Corporate Governance:

In terms of compliance with the requirement of clause 49(VI) (i) of Listing Agreement,a separate section titled "Corporate Governance" containing the due complianceon corporate governance is given in the Directors' Report forming the part of this AnnualReport.

In terms of compliance with the requirement of clause 49(VII) of Listing Agreement, theAuditors' certificate confirming the compliance of the conditions of the CorporateGovernance is annexed hereto which form the part of this Annual Report and the same willbe sent to National and Bombay Stock Exchanges along with the Annual Report.

J. Directors:

Sri Kandimalla KVN Prasad (DIN-00084398) has been appointed as an Additional Directorunder the category of Independent Director by your Board at its meeting held on 09.08.2014and he will continue in office till the ensuing Annual General Meeting and in respect ofwhom the Company has received a notice in writing u/s 160 of the Companies Act, 2013 froma member proposing his candidature to hold office for a term of 3 (Three) years for theoffice of Independent Director.

Smt. Ch. Lakshimi Kumari (DIN-06942473) has been appointed as an Additional Directorunder the category of Independent -Woman Director by your Board at its meeting held on09.08.2014 and she will continue in office till the ensuing Annual General Meeting and inrespect of whom the Company has received a notice in writing u/s 160 of the Companies Act,2013 from a member proposing her candidature to hold office for a term of 3 (Three) yearsfor the office of Director under Independent and Woman Category.

Dr. C.Venkateswara Rao, (DIN-00385987) Independent Director who ceased the office atthe ensuing Annual General Meeting in terms of Section 149 of the Companies Act, 2013 readwith the Companies (Appointment and qualification of Directors) Rules, 2014 and ListingAgreement dated 17.04.2014 requires re-appointment for a fresh term. Dr. C.VenkateswaraRao expressed his unwillingness to seek fresh term of appointment.

K. Industrial Relations:

The relations with the employees are cordial.

L. Deposits:

The Company has not accepted any deposits from the public within the meaning of Section58A of the Companies Act, 1956.

M. Transfer To Investor Education and Protection Fund ::

During the financial year 2013-14, the Company has transferred a sum of Rs. 1,00,747/-to the Investor Education and Protection fund established by the Central Government, incompliance with Section 205C of the Companies Act, 1956. The said amount represents theamount in the unpaid dividend account for the financial year 2005-06 which is lying inUnpaid Dividend Account with Bank for a period of 7 years from the due dates of payment.

N. Particulars of Employees:

As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975, as amended and forming part of theDirectors' Report for the year ended 31st March, 2014, none of the employees of theCompany was in receipt of remuneration, which exceeds the limits fixed under Section 217(2A) of the Companies Act, 1956, except Sri N. Seethaiah, Managing Director of theCompany.

O. Quality Management System - ISO 14001:2004

The Company has established a Quality Management System in Design, Execution, Operation& Maintenance of Irrigation & Water Resources Projects, Highway/ Road Projects,Power Transmission Projects, Building and Property Development Projects and Design &Execution of Power Projects and Over Burden Removal in Opencast Mining Projects incompliance with the International Quality System Standards - ISO 14001:2004. TheCertificate No.IND13.5479U/E dated 18.02.2013 is valid up to 17.02.2016. The Company isbeing obtained EMS-ISO 14001:2004 and OHSAS-18001:2007 registration.

P. Auditors:

M/s Kota & Company, Statutory Auditors (FRN-011982S) of the Company, expressedtheir willingness to be re-appointed for the financial year 2014-2015 and to hold officeup to the conclusion of the next Annual General Meeting, if they are appointed at thisAnnual General Meeting. They have furnished a certificate to the effect that theirproposed appointment, if made, will be in accordance with the limits specified under 224(1-B) of the Companies Act, 1956.

Q. Information as per Sec- 217(1) (E) of The Companies Act, 1956 read with Companies(Disclosure of Particulars in the report of The Board of Directors) Rules, 1988):

The information as required Under Section 217(1) (e) of the Companies Act, 1956relating to conservation of energy, technology absorption and foreign exchange earningsand outgo are set out in the annexure attached to this Report.

R. Acknowledgements:

Your Directors express their appreciation for the support and co-operation of theBankers, Central and State Government Authorities including National Highway Authoritiesof India (NHAI), Irrigation & CAD Department, Central Government, Government ofvarious States, Clients, Consultants, Employees, Suppliers etc., for their continuedsupport and encouragement from time to time.

For and on behalf of the Board

Place: Hyderabad N. SEETHAIAH K. SRINIVASA RAO
Date: 09.08.2014 Managing Director Whole-time Director

ANNEXURE-I TO THE DIRECTORS REPROT

(Information as per Sec- 217(1) (e) of the Companies Act, 1956 read with Companies(Disclosure ofparticulars in the Report of the Board of Directors) Rules, 1988)

I. CONSERVATION OF ENERGY:

The Company is engaged in Civil Construction Activity which is not a predominantlypower intensive. However, energy conservation measures are taken up wherever required.

II. TECHNOLOGY ABSORPTION:

The Company is constantly updating its technology in the areas wherever necessary forimproving the productivity, efficiency and quality of its performance.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO:

(Rs. in lakhs)

PARTICULARS 2013-14 2012-13
Foreign Exchange Earnings: Nil Nil
Foreign Exchange Outgo:
i. Towards traveling 0.78 22.10
ii. Towards import of capital goods (CIF) 0.18 Nil
iii. Towards payment to equipment suppliers 868.89 21,337.21
iii. On account of others:
a) Investment Nil 657.38
b) Interest 29.40 52.12
iv. Others 27.34 2027.15

 

For and on behalf of the Board

Place: Hyderabad N. SEETHAIAH K. SRINIVASA RAO
Date: 09.08.2014 MANAGING DIRECTOR WHOLE-TIME DIRECTOR
   
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Key Information

Key Executives:

N Seethaiah , Managing Director

K Srinivasa Rao , Whole-time Director

P Madhava Rao , Director

C Bharathi , Company Secretary


Company Head Office / Quarters:

1-7-70 Madhu Complex,
Jubilipura,
Khammam,
Andhra Pradesh-507003
Phone : Andhra Pradesh- / Andhra Pradesh-
Fax : Andhra Pradesh- / Andhra Pradesh-
E-mail : cs@madhucon.com
Web : http://www.madhucon.com

Registrars:

Karvy Computershare Pvt Ltd
Plot No 17-24 ,Vittal Rao Nagar ,Madhapur ,Hyderabad-500081

 
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