A2Z Infra Engineering Ltd Directors Report.
The Members of
A2Z Infra Engineering Ltd.
Your Directors take pleasure in presenting the 18th Annual Report together with the annual audited financial statements for the year ended March 31,2019.
1. Financial summary or highlights/Performance of the Company
The highlights of financial results on Standalone and Consolidated basis for the financial year ended on March 31,2019 are as follows:
|Revenue from Operations||50,732.52||35,751.56||86,870.11||70,853.82|
|Add: Other Income||1,668.21||3,697.86||1,932.96||4,310.47|
|Cost of Material Consumed||39,921.52||27,804.66||47,827. 75||35,817.12|
|Purchase of Stock in Trade||-||2,602.17||-||2,602.17|
|Changes in Inventories||-||-||(0.58)||294.55|
|Employee benefit expenses||2,143.03||2,219.43||26,246.58||26,501.06|
|Depreciation and amortization expenses||1,108.48||1,284.70||2,698.67||3,264.75|
|Profit/(Loss) before Exceptional Items, share of net profit of investments accounted for using equity method and tax||640.69||(13,285.07)||(983.43)||(22,064.39)|
|Share of net loss of investments accounted for using equity method||-||-||(974.83)||-|
|Profit/ (Loss) before Exceptional Items and Tax||640.69||(13,285.07)||(1,958.26)||(22,064.39)|
|Profit/ (Loss) before Tax||3,331.24||(11,456.18)||29,385.81||(8,507.16)|
|Tax expense relating to prior years||-||-||-||1.39|
|Deferred Tax (Net)||47.47||(2.01)||144.43||45.01|
|Total Tax Expense||119.02||20.76||662.67||237.25|
|Profit/ (Loss) for the year||3,212. 22||(11,476.94)||28,723.14||(8,744.41)|
|Other Comprehensive Income|
|i) Items that will not be reclassified to profit and loss||35.32||40.31||272.94||71.26|
|ii) Income Tax relating to Items that will not be reclassified to profit and loss||-||-||(73.88)||-|
|Total Other Comprehensive Income||35.32||40.31||199.06||71.26|
|Total Comprehensive income (Comprising (Loss)/ Profit and other Comprehensive Income)||3,247.54||(11,436.63)||28,922.20||(8,673.15)|
Note: The above figures are extracted from the standalone and consolidated annual financial statements of the Company as per Indian Accounting Standards (Ind AS).
Operations Review Standalone:
During the year under review, the Turnover of the Company has shown an increase of 41.90%. The Company has achieved a Turnover of INR 50,732.52 Lakh as against INR 35,751.56 Lakh in the previous year. The Company has made net Profit after tax of INR 3,212.22 Lakh whereas in the previous year Company had incurred net Loss of INR 11,476.94 Lakh.
The Net Worth of the Company has increased to INR 64,775.29 Lakh as at the end of the current year from INR 61,336.63 Lakh as at the end of the previous year representing increase in Net Worth by 5.61%.
The Debt Equity ratio of the Company has improved/changed to 0.53 as at the end of the current year as compared to 1.20 as at the end of the previous year.
The Consolidated Turnover of the Company for the current financial year is INR 86,870.1 1 Lakh as against INR 70,853.82 Lakh in the previous year representing increase in Turnover by 22.60%. The Company on consolidated basis has made a net Profit of INR 28,723.14 Lakh as against a loss of INR 8,744.41 Lakh in the previous year.
The Consolidated Net Worth of the Company has increased to INR 68,551.96 Lakh as at the end of the current year from INR 37,195.45 Lakh as at the end of previous year representing increase in Net Worth by 84.30 %.
The Consolidated Debt Equity ratio of the Company has improved/changed to 0.63 as at the end of the current year compared to 3.39 as at the end of previous year.
2. Consolidated Financial Statements
The Audited Consolidated Financial Statements of your Company as on March 31, 2019, have been prepared in accordance with the relevant Indian Accounting Standards (Ind AS) issued by Accounting Standards Board(ASB) and Regulation 33 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and provisions of the Companies Act, 2013.
In accordance with Section 129(3) of the Companies Act, 2013 and Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Consolidated Financial Statements of the Company, including the financial details of all the subsidiary companies of the Company, forms a part of this Annual Report.
Due to inadequacy of profit, the Board of Directors does not recommend any dividend for the financial year ended March 31,2019.
4. Operational highlights
The key highlights of the Companys various businesses are as follows:
Power Transmission & Distribution:
Your Company is one of the leading players in Indias
Engineering & Urban Infrastructure Services sector. As part of the services, the Company provides integrated design, testing, installation, construction and commissioning services on a turn-key basis to its clients. The Companys projects include rural electrification, railway overhead electrification, reduction of AT&C losses, feeder renovation, underground cabling, feeder segregation, installing High Voltage Distribution System ("HVDS") and Low Voltage Distribution System ("LVDS") distribution lines and transmission lines. The Company has strong capabilities to build, operate and maintain:
Substations & Switchyards up to 765 kV.
Transmission lines up to 765 kV.11 / 33 kV distribution lines comprising of Feeder Renovation Projects, High Voltage Distribution System, AT&C Loss Reduction, Tube Well Connection, Segregation of Domestic and Agriculture load, Augmentation of Lines, Providing Laying of HT & LT Aerial Bunched Cables and Offering BPL Connections.
220kV substation Bay project in DVC West-Bengal.
Company has its overseas presence in Nepal, Zambia, Uganda and Tanzania.
Under Engineering Services segment we may pursue infrastructure projects like Sewage Network & Treatment Plants, Gas Distribution Networks, and Metro projects in select cities.
We have also completed projects in various states of India including Jammu & Kashmir, Rajasthan, Orissa, Bihar, Arunachal Pradesh, Jharkhand, Kerala and Himachal Pradesh.
Telecom Infrastructure EPC
Telecom Infrastructure Projects is the main business activity of the Company. Major offerings by Company in Telecom Infrastructure EPC are supplying, laying and maintaining of Optical Fibre Cables (OFC) networks. EPC services offered by the Company under this segment include:
Optical Fiber Cable NLD / Access Networking Construction & Maintenance
Telecom Infrastructure Operation & Maintenance Services
Material Planning & Project Management
Radio Frequency Engineering Services
Engineering Construction & Infrastructure Services
Your Company is successfully executing orders for construction of Telecom Network Backbone on Turnkey basis in the untapped toughest terrains of the country like Leh, Ladakh and North East India, which will help in building the optical Network to connect each and every part of the Nation. We combine a proven track record and professional skills woven together with a culture of trust. Your Company is now expanding its system integration capabilities while promoting latest IP Transport technology such as SDN (Software Defined Network) which will change the way current IP Transport and distribution networks are working and will help Telecom operators & large government organizations to unleash the potential of this latest technology by bringing down their CAPEX and OPEX cost to build & maintain such networks.
Your Company is also considering to promote 5G technology while working with large OEMs dealing with various types of sensors. This will eventually help in various Smart Cities solutions such as smart road, smart water, smart metering etc.
To cater to the vision of developing India through Smart Cities Project, your Company is also planning to foray into the area of building and operating Surveillance Networks, Aviation Sector, Smart Metering for Power and Water Sector.
Waste to Energy- Power Generation Projects (PGP)
The Company being an Infrastructure Company also provides solutions for Clean and Green Energy. The Company is planning to build scale in Green Technology solutions in all areas of the power sector, starting from generation of power to its distribution to end consumers. The Company has collaborated with sugar mills for setting up three power plants on Built, Own, Operate and Transfer (BOOT) basis for a period of 15 years in the state of Punjab.
To ensure continuous supply of Refuse Derived Fuel (RDF) to the respective the Power Plants, the Company has developed an indigenous process in its waste processing plant for running the said Plants on Refuse Derived Fuel (RDF) from Municipal Solid Waste. Currently Company is running its Nakodar Power Plant producing electricity using RDF as feed stock.
5. Change in the nature of business
There has been no change in the nature of business during the year under review.
6. Material Changes and Commitments
After the period under review and before the date of this report, the Company has entered into One Time Settlement (OTS) with DBS Bank Limited ("DBS Bank") and has signed the Settlement Agreement with DBS Bank on June 21,2019 to settle all the outstanding dues (including interest) for an amount of INR 3000 Lakh, in terms of the said Settlement Agreement.
7. Updates on Corporate Debt Restructuring (CDR)
Corporate Debt Restructuring (CDR) package of Company for restructuring of its debts was approved by Corporate Debt Restructuring Empowered Group ("CDR EG") and the same has been successfully implemented and CDR Lenders of the Company have appointed SBICAP Trustee Company Limited (SBICAP) as their Security Trustee on the terms and conditions contained in Security Trustee Agreement executed on March 27, 2014 among the Company, Lenders, and the Security Trustee.
Your Company is working assiduously to reduce the debt burden and in line with this strategy the Company has entered into One Time Settlement Agreements with various Lenders including SICOM Limited, Edelweiss Asset Reconstruction Company Limited as representative of EARC Trust SC 299 for the Loan assigned by Yes Bank Limited, Standard Chartered Bank, Hong Kong and Shanghai
Banking Corporation Limited, State Bank of India, Edelweiss Asset Reconstruction Company Limited as representative of EARC trust SC 217 for the Loan assigned by ICICI Bank Ltd. and DBS Bank Ltd. till date.
8. Scheme of Arrangement / Reconstruction / ReOrganization
The Scheme of Arrangement/Reconstruction/Re- Organization ("the Scheme") between your Company and its Secured Creditors under Sections 391 to 394 of the Companies Act, 1956 for implementation of the Corporate Debt Restructuring Package ("CDR Package") as approved by the Corporate Debt Restructuring Empowered Group ("CDR EG") on all the Secured Creditors of the Company was earlier approved by the Board of Directors during the F.Y. 2014-15.
The Companys Petition for first Motion has been disposed off by the Honble High Court of Punjab & Haryana at Chandigarh and the Company has filed a Petition for Second Motion and the matter is presently sub-judice with the NCLT/ Honble High Court of Punjab & Haryana at Chandigarh.
During the year under review, the Company has not accepted any deposits within the meaning of Sections 2(31) and 73 of the Companies Act, 2013, and the Rules framed thereunder and any re-enactments thereof, and consequently, there was no amount of principal or interest was outstanding towards the Public deposit as on the date of Financial Statements.
10. Significant and Material Orders passed by the Regulators or Courts or Tribunals
There are no significant material orders passed by the Regulators or Courts or Tribunal which would impact the going concern status of the Company and its future operations.
11. Internal Financial Controls and systems:
Your Company has in place adequate financial control system and framework in place to ensure:
- The orderly and efficient conduct of its business;
- Safeguarding of its assets;
- The prevention and detection of frauds and errors;
- The accuracy and completeness of the accounting records; and
- The timely preparation of reliable financial information.
Significant observations including recommendations for improvement of the business processes are reviewed by the Management before reporting to the Audit Committee. The Audit Committee then reviews the Internal Audit reports and the status of implementation of the agreed action plan. This system of internal control facilitates effective compliance of Section 138 of Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The internal auditor of the company checks and verifies the internal control and monitors them in accordance with policy adopted by the company. The Board regularly reviews the
effectiveness of controls and takes necessary corrective actions where weaknesses are identified as a result of such reviews. This review covers entity level controls, process level controls, fraud risk controls. Based on this evaluation, there is nothing that has come to the attention of the Directors to indicate any material break down in the functioning of these controls, procedures or systems during the year. There have been no significant events during the year that have materially affected, or are reasonably likely to materially affect, our internal financial controls.
12. Secretarial Standards
The Company is in Compliances with the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).
13. Share Capital Authorised Share Capital:
During the year under review, the Authorised Share Capital of the Company is INR 240,00,00,000 (Indian Rupees Two Hundred Forty Crore Only) divided into 24,00,00,000 (Twenty Four Crore) equity shares of INR 10/- (Indian Rupees Ten only) each.
Paid up Share Capital:
The Company has not issued any shares during the year, the paid up share capital of the Company stood INR 176,11,98,580/- (Indian Rupees One Hundred Seventy Six Crore Eleven Lakh Ninety Eight Thousand Five Hundred Eighty Only) divided into 17,61,19,858 (Seventeen Crore Sixty One Lakh Nineteen Thousand Eight Hundred Fifty Eight) Equity Shares of INR 10/- each as at March 31,2019.
14. Subsidiaries, Joint Ventures, and Associate Companies
As on March 31, 2019, the Company had 8 (Eight) direct and step down subsidiary Companies and 22 (Twenty Two) Associate Companies. Further the Company has entered into Joint Venture agreements with unincorporated JVs for bidding of tenders & contracts the details of which is given in the note no. 34 & 35 to the standalone and note no. 35 & 36 to the consolidated financial statements. Also the Company is a member of an association of person (AOP) in which Company is having 60% share in profits.
As per sub-section (3) of Section 129 of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements and performance of the Companys subsidiaries and associate company for the year ended March 31,2019, is included as per the prescribed format in this Annual Report. The Financial Statements of these subsidiaries are uploaded on the website of the Company in compliance with Section 136 of the Companies Act, 2013. The Financial Statements of these subsidiaries and the other related detailed information will be made available to any Member of the Company/its subsidiary(ies) seeking such information at any point of time and are also available for inspection by any Member at the Registered Office of the Company on all working days except Saturday and Sunday during business hours upto the date of the Annual General Meeting.
During FY 2018-19, there has been no major change in the nature of business of your Company and its subsidiaries. During the year under review, the Company has transferred its stake held in A2Z Green Waste Management Ltd. (earlier a subsidiary of the Company), on 12th March, 2019, resulting into change in Management Control and henceforth, A2Z Green has ceased to be a subsidiary of the Company for all purposes. However it continues to be an associate company of the Company.
In terms of the Regulation 46(2)(h) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the policy for determining material subsidiaries is placed on the website of the Company -
http://media.a2zgroup.co.in/pdf/Policv%20on%20 material%20subsidiary 13.02.2019
Report on the performance and financial position of each of the subsidiaries and associates has been provided in Form AOC-1 and forms part of the Annual Report as Annexure A.
Statutory Auditors and Auditors Report
M/s. Walker Chandiok & Co LLP (Firm Registration No. 001076N/N500013), Chartered Accountants, were appointed as auditors of the Company from the conclusion of the Thirteenth Annual General Meeting (AGM) of the Company held on September 27, 2014 to the conclusion of the Eighteenth Annual General Meeting to be held for the Financial Year 2018-19.
On the recommendation of the Audit Committee, Board has recommended the re-appointment of M/s. Walker Chandiok & Co LLP, Chartered Accountants as Statutory Auditor. M/s. Walker Chandiok & Co LLP, if re-appointed by members as Statutory Auditor for the second term shall hold office from the conclusion of the ensuing Annual General Meeting (AGM) of the Company to the conclusion of the Twentieth Annual General Meeting to be held for the Financial Year 2020-2021. Accordingly, this item forms a part of the notice of ensuing Annual General Meeting and the Board of Directors recommend to the Members to pass the resolution, as stated in Item No. 3 of the Notice.
Certificate from the said auditors has been obtained to the said effect that their re-appointment ,if made, would be within limits specified under Section 141 of the Companies Act, 2013 and also to the effect of their eligibility to be appointed as Auditors of the Company.
The auditors report presented by M/s Walker Chandiok & Co LLP, Statutory Auditors on the accounts of the company for the financial year ended March 31, 2019 is selfexplanatory and requires no comments and the Management replies to the audit observations are as under:
Explanation to Para 3 of Auditors report on Standalone Financials of A2Z Infra Engineering Ltd. and Para 3 of Auditors report on Consolidated Financials of A2Z Infra Engineering Ltd., its subsidiaries, joint ventures and associates of A2Z Infra Engineering Ltd.
The loan accounts of the Company have been classified as
Non- Performing Assets by certain banks and some of them have not charged interest on the said accounts and therefore provision for interest has not been made in the books of accounts and to that extent interest costs and loan liabilities have been understated. The extent of exact amount is under determination and reconciliation with the banks and assets reconstruction company, however as per the details available, the amount of unaccrued interest, on approximate basis, on the said loans (other than the borrowings of few banks and assets reconstruction company which are regular) amounts to INR 1,595.92 lakhs for the year ended March 31, 2019. Company is already in discussion with the said banks for settlement of their dues.
Explanation to Para 4 of Auditors report on Standalone Financials of A2Z Infra Engineering Ltd. and Para 4 of Auditors report on Consolidated Financials of A2Z Infra Engineering Ltd., its subsidiaries, joint ventures and associates of A2Z Infra Engineering Ltd.
The Company had entered into Settlement agreement(s) (Agreements) with certain banks/assets reconstruction company (the Lenders) during the years ended March 31, 2018 and March 31, 2019 wherein it had settled the outstanding borrowings by issue of equity shares, upfront payments and deferred installments. As at March 31,2019, the Company has delayed payments in respect of the certain deferred instalments amounting INR 5,096.00 lakhs which were due and payable pursuant to these Agreements out of which INR 1,596.00 lakhs have been paid subsequent to the year end. The obligations towards such lenders is carried under Non-current liabilities - Borrowings and Other current financial liabilities at INR 1,268.59 lakhs and INR 6,049.03 lakhs respectively. So far Banks have not given any such notice(s) or have not shown any such intention and the management is in discussions with the Lenders to condone the aforementioned delays.
Additionally, the Company is in the process of negotiations/ reconciliations of its outstanding obligations carried in these financial results as Non-current liabilities - Borrowings of INR 1,485.05 lakhs, Current financial liabilities- Borrowings of INR 13,183.43 lakhs and Other current financial liabilities INR 12,441.39 lakhs with certain other lenders.
Pursuant to the above discussions with the lenders, management is confident that no material impact will devolve on the Company in respect of aforementioned delays.
Explanation to Para 6 of Auditors report on Standalone Financials of A2Z Infra Engineering Ltd. and Para 6 of Auditors report on Consolidated Financials of A2Z Infra Engineering Ltd., its subsidiaries, joint ventures and associates of A2Z Infra Engineering Ltd.
The Company has accumulated losses amounting INR 43,672.10 lakhs as at March 31,2019 and is presently facing acute liquidity problems on account of delayed realization of trade receivables coupled with delays in commencement of commercial production at its biomass-based power generation plants. The management is evaluating various options and has entered into one-time settlement agreements with various lenders, including interest and other related terms and conditions apart from further negotiating the terms with the remaining lenders for settlement of its existing debt obligations. Management believes that the Company will be able to settle its remaining debts in the due course and in view of the proposed settlement of debt obligations, no adjustments are required in the financial statements and accordingly, these have been prepared on a going concern basis.
Explanation to Para 7 of Auditors report on Standalone Financials of A2Z Infra Engineering Ltd. and Para 7 of Auditors report on Consolidated Financials of A2Z Infra Engineering Ltd., its subsidiaries, joint ventures and associates of A2Z Infra Engineering Ltd.
The Income tax authorities conducted a search and survey at certain premises of the Company under section 132 and 133 of the Income Tax Act, 1961 in April 2012. During the year ended March 31,2015, the Holding Company received the assessment orders for the assessment years 2009-10 to 2013-14 from the Deputy Commissioner of Income Tax (DCIT) demanding additional tax liability of INR 1,992.17 lakhs. During the year ended March 31,2015 the Company had filed appeals with Commissioner of Income Tax (CIT) (Appeals) challenging these orders against which the said authority had granted partial relief to the Company. The Company has further filed appeals with Income Tax Appellate Tribunal (ITAT) challenging the orders for these assessment years in respect of the matters where the CIT(A) has not accepted the Holding Companys contention. Additionally, the DCIT has also filed appeals with the ITAT against the matters where the relief has been given to the Company.
Further, during the year ended March 31, 2018, the Company had received penalty orders for the Assessment year 2009-10 to 2013-14 from DcIT and for the Assessment year 2008-09 from CIT demanding additional tax liability of INR 1,277.64 lakhs against which the CIT (Appeals) had not granted relief to the Company.
During the year ended March 31, 2019, the Company has received orders from CIT (Appeals) squashing the penalty orders aggregating INR 477.71 lakhs out of the aforementioned and upholding the rest. The Company has filed appeals with the ITAT challenging the penalty orders for these assessment years in respect of the matters where the CIT(A) has not accepted the Companys contention
Based on their assessment and upon consideration of advice from the independent legal counsel, the management believes that the Company has reasonable chances of succeeding before the ITAT and does not foresee any material liability. Pending the final decision on the matter, no further adjustment has been made in the standalone financial statements.
In terms of Section 143(8) of the Companies Act, 2013 read with Rule 12 of the Companies (Audit and Auditors) Rules, 2014, the audit of the accounts of the branch offices of the Company located outside India is required to be conducted by the person(s) or firm(s) qualified to act as Branch Auditors in accordance with laws of that country. The Board of Directors seeks approval of the Members to authorize the Board of Directors based on the recommendation of Audit Committee to appoint Auditors for the branch office(s) of the Company and also to fix their remuneration. The Board of Directors recommends to the Members to pass the resolution, as stated in Item No. 7 of the Notice, convening the ensuing Annual General Meeting.
In terms of the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. DR Associates, Company Secretaries as Secretarial Auditors to conduct Secretarial Audit of the Company and M/s Nitin Goyal & Associates, Company Secretaries as Secretarial Auditor to conduct Secretarial Audit of material unlisted subsidiary, namely M/s A2Z Infraservices Ltd., for the Financial Year 2018-19. The Secretarial Audit Report of the Company together with its material unlisted subsidiary is given as Annexure B (Form MR-3) which forms part of this report.
The said Secretarial Audit Report does not contain any qualification, reservation or adverse remark made by the secretarial auditor.
Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the cost records in respect of road and construction activity need to be audited. M/s HAM & Associates were appointed as the Cost Auditors of the Company for the Financial Year ended March 31,2019 but they expressed their inability to conduct the audit and resigned vide their resignation letter dated 8th July, 2019. Hence, it was required to appoint cost auditors for the FY 2018-19 to fill the casual vacancy caused due to resignation of M/s HAM & Associates. Hence the Board of Directors upon the recommendation of the Audit Committee appointed M/s JSN & Co., as the Cost Auditors of the Company for the Financial Year ended March 31, 2019 thereby filling the casual vacancy on July 11,2019.
Further, pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the Board of Directors upon the recommendation of the Audit Committee appointed M/s JSN & Co., as the Cost Auditors of the Company for the Financial Year ending March 31,2020.
In accordance with the above provisions the remuneration payable to the cost auditor for the financial year ended March 31, 2019 and March 31, 2020 should be ratified by the Members. Accordingly, the Board of Directors recommend to the Members to pass the resolution, as stated in Item Nos. 8 & 9 of the Notice convening the forthcoming Annual General Meeting.
16. Corporate Social Responsibility (CSR)
In accordance with the provisions of Section 135 of the Companies Act, 2013 and Rules framed thereunder, the Company has constituted a Corporate Social Responsibility Committee (CSR Committee) of the Board of Directors on August 14, 2014. The CSR Committee comprises of three Directors viz. Mr. Amit Mittal, Mr. Surender Kumar Tuteja and
Ms. Dipali Mittal as members of the committee. The CSR Policy of the Company as recommended by the CSR Committee and approved by the Board is placed on the website of the Company and may be accessed via following link.-http://media.a2zgroup.co.in/pdf/CSR Policy A2Z.pdf
The average net profits calculated as per provisions of Section 198 of the Companies Act, 2013 for of the preceding three (3) financial years being negative, the Company was not under any obligation to spend any amount on CSR.
17. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Appointment & Resignation of Directors/KMPs
1. During the year under review Dr. Ashok Kumar Saini who was re-appointed under the category of Whole Time Director effective from 15th February, 2018 has been re-designated as Non-Executive Non-Independent Director w.e.f 01st December, 2018.
2. After the year under review, Ms. Atima Khanna was appointed as Additional Non-Executive Independent Woman Director of the Company w.e.f 23rd May, 2019, and it is proposed to regularized her as Director of the Company under the category of Non-Executive Independent Woman Director to hold office for a period of five consecutive years from the conclusion of ensuing Annual General Meeting to the conclusion of the Companys Annual General Meeting to be held for the Financial Year 2023-2024. Accordingly, the Board of Directors recommend to the Members to pass the resolution, as stated in Item No. 6 of the Notice convening the ensuing Annual General Meeting
2. Retire by Rotation
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Rajesh Jain, Director, retires by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers himself for re-appointment.
3. Pursuant to the provisions of sub-section (51) of Section 2 and Section 203 of the Companies Act, 2013 read with the Rules framed thereunder, the Key Managerial Personnels (KMPs) of the Company as on 31st March 2019, are:
1. Mr. Amit Mittal, Managing Director
2. Mr. Rajesh Jain, Whole Time Director & CEO
3. Mr. Rajiv Chaturvedi, Chief Financial Officer
4. Mr. Atul Kumar Agarwal, Company Secretary
18. Policy on Directors appointment and Remuneration
As on March 31,2019, the Board consists of six members, two (2) are Executive Directors, one of whom is the Managing Director, two (2) are Non-Executive and Non-Independent Directors, one of whom is a Woman and other two (2) are Non-Executive Independent Directors.
In terms of the provisions of Section 178(3) of the Act and Para A of Part D under Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Nomination & Remuneration Committee is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The Nomination & Remuneration Committee is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, KMP and Senior Management and their remuneration.
The Remuneration Policy of the Company can be accessed via following link.-
http://media.a2zgroup.co.in/pdf/Remuneration%20 Policy 13.02.2019
19. Declaration by Independent Director(s)
The Company has received necessary declaration from each of the Independent Directors under Section 149(7) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 that they meet the criteria of independence as laid down in section 149(6) of the Companies act, 2013 and Regulation 16(1)(b) of the SEBI LODR.
20. Annual evaluation of Board Performance and Performance of its committees and Individual Directors
Annual evaluation of the performance of the Board, its Committees and individual directors has been made pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 and as per the guidance note issued by SEBI dated January 5, 2017 vide its Circular No. SEBI/HO/ CFD/CMD/CIR/P/2017/004.
The performance of the Board was evaluated by the members of the Board on the basis of the guidance note and criteria laid down such as the Board composition and structure, effectiveness of board processes, information and functioning, Board culture and dynamics, quality of relationship between the Board and the Management and efficacy of communication with external stakeholders, competence and experience of Board to conduct its affairs effectively, operations are in line with strategy, integrity of financial information and the robustness of financial and other controls, effectiveness of risk management processes,etc.
The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the guidance note and criteria laid down such as the composition of committees, effectiveness of committee meetings, committees are appropriate with the right mix of knowledge and skills, effectiveness and advantage of the Committee, independence of the Committees,etc.
The Board and the Nomination & Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, willingness to devote time and effort to understand the company and its business by the directors, competency to take the responsibility and having adequate qualification, experience and knowledge, quality and value of their contributions at board meetings, effectiveness of Leadership quality of the Chairman etc.
In a separate meeting of Independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and individual directors were also discussed.
21. Number of meetings of the Board of Directors
During the year seven meetings of the members of Board and one meeting of Independent Directors were held, the details of which are given in Corporate Governance Report. The provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, were adhered to while considering the time gap between two consecutive meetings.
22. Disclosures Related to Committees and Policies
a. Audit Committee
The Audit Committee is duly constituted by the Board of Directors of the Company in accordance with the requirements of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. The Audit Committee as on 31st March 2019, comprises of:
1. Mr. Surender Kumar Tuteja, Chairman
2. Dr. Ashok Kumar, Member
3. Mr. Rajesh Jain, Member
During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Committee.
b. Nomination and Remuneration Committee
The Nomination and Remuneration Committee of Directors is duly constituted by the Board of Directors of the Company in accordance with the requirements of Section 178 of the Companies Act, 2013 & Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Nomination and Remuneration Committee as on 31st March 2019, comprises of the following directors:
1. Dr. Ashok Kumar, Chairman
2. Mr. Surender Kumar Tuteja, Member
3. Ms. Dipali Mittal, Member
c. Stakeholders Relationship Committee
The Stakeholders Relationship Committee of Directors is duly constituted by the Board of Directors of the Company in accordance with the requirements Section
178 of the Companies Act, 2013 and Regulation 20 of SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015. The Stakeholders Relationship Committee as on 31st March 2019, comprising the following Directors:
1. Dr. Ashok Kumar, Chairman
2. Mr. Surender Kumar Tuteja, Member
3. Ms. Dipali Mittal, Member
23. Investor Education and Protection Fund
Pursuant to the provisions of Sections 124 and 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), during the year under review, the dividend declared for the financial year 2010-11 which was remained unclaimed from seven consecutive years was transferred to Investor Education and Protection Fund. Further, shares of the Company, in respect of which dividend has not been claimed from seven consecutive years from the date of transfer to unpaid dividend account, have also been transferred to the demat account of IEPF Authority.
24. Vigil Mechanism / Whistle Blower Policy
The Board has pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, framed "Vigil Mechanism (Whistle Blower) Policy" ("the Policy") to deal with instances of fraud and mismanagement, if any. This Policy has been formulated to provide Vigil Mechanism for employees including directors of the Company to report genuine concerns from time to time. The said policy is placed on the website of the Company and may be accessed at a link:-
http://media.a2zgroup.co.in/pdf/VIGIL%20(WHISTLE %20BLOWER)%20POLICY 13.02.2019
This vigil mechanism of the Company is overseen by the Audit Committee and provides adequate safeguard against victimization of employees and directors who avail the vigil mechanism and also provide direct access to the Chairperson of the Audit Committee in appropriate or exceptional circumstances.
25. Particulars of Loans, Guarantees or Investments under Section 186
Being an infrastructure Company, Section 186 is not applicable on the Company and particulars of loans, guarantees, investments form part of the notes to the Financial Statements provided in this Annual Report. All the loans, guarantees and investments made are in compliance with the provisions of the Companies Act, 2013 and the same are disclosed in the Financial Statements.
26. Related Party Transactions:
Related party transactions that were entered into during the financial year were in the ordinary course of business and on an arms length basis.
The particulars of the contract or arrangements with related
parties during the financial year 2018-19 are disclosed in Form No. AOC -2 which forms part of the Annual Report as an Annexure C. Except as stated in the disclosure, there were no materially significant related party transactions made by the Company with its Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
The Policy on materiality of related party transactions as also dealing with related party transactions as approved by the Board may be accessed on the Companys website at the link: http://media.a2zgroup.co.in/pdf/A2Z-
All Related Party Transactions which were in the ordinary course of business and on arms length basis were placed before the Audit Committee for their approval. Prior omnibus approval of the Audit Committee is obtained on annual basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their ratification on quarterly basis.
27. Employee Stock Option Plan
The Nomination & Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the A2Z Stock Option Plan 2010 (ESOP 2010), A2Z Employees Stock Option Plan 2013 (EsOp 2013), A2Z Employees Stock Option Plan 2014 (ESOP 2014), A2Z Employees Stock Option Plan 2013 (Re-grant-I)(ESOp 2013 Re-grant I) and A2Z Employees Stock Option Plan 2014 (Re-grant-I)(ESOP 2014 Re-grant I), A2Z Employees Stock Option Plan 2018 (ESOP 2018) of the Company in accordance with the applicable SEBI Guidelines.
The applicable disclosures as stipulated under the SEBI Guidelines as on 31st March 2019 with regard to the ESOP 2010, ESOP 2013, ESOP 2014,ESOP 2013 Re-grant I & ESOP 2014 Re-grant I and ESOP 2018 are provided in An nexure D to this Report.
The certificates from the Auditors of the Company stating that the Schemes have been implemented in accordance with the SEBI Guidelines/ SEBI (Share Based Employee Benefits) regulations and the resolution passed by the members would be placed at the Annual General Meeting for inspection by members.
28. Extract of Annual Return
Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return as per Form- MGT-9 for the financial year ended March 31,2019 made under the provisions of Section 92(3) of the Act is attached as Annexure E which forms part of this Report.
29. Prevention of Sexual Harassment at Workplace:
As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 read with rules made thereunder, your Company has constituted Internal Complaints Committee which is responsible for redressal of complaints related to sexual harassment. During the year under review, there were no complaints pertaining to sexual harassment.
30. Particulars of Employees and Related Disclosures
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure F.
31. Conservation of Energy, Technology absorption, Foreign Exchange Earnings and Outgo
Pursuant to provisions of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 the details of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are attached as Annexure G which forms part of this report.
32. Disclosure requirements
a. As per Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, Corporate Governance report with auditors certificate from DR Associates thereon and management discussion and analysis are attached, which form part of this report.
b. Details of the familiarization program of the independent directors are available on the website of the Company (URL: http://a2zgroup.co.in/pdf/Familiarization Programme for Independent Directors).
c. In terms of Regulation 17(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Chief Executive officer and the Chief Financial officer furnished a certificate to the Board of Directors in the prescribed format for the year under review and taken on record by the Board.
The Equity Shares of the Company continue to remain listed on BSE Limited (formerly The Bombay Stock Exchange Limited) and National Stock Exchange of India Limited (NSE). The stipulated listing fees for FY 2019-2020 have been paid to both the Stock Exchanges.
34. Risk Management Policy
Risk management forms an integral part of the business planning and review cycle. The Companys Risk Management Policy is designed to provide reasonable assurance that objectives are met by integrating management control into the daily operations, by ensuring compliance with legal requirements and by safeguarding the integrity of the Companys financial reporting and its related disclosures.
Therefore, in accordance with the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board members were informed about risk assessment and minimization procedures after which the Board formally adopted steps for framing, implementing and monitoring the risk management policy for the company in their meeting held on November 13, 2014.
The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues.
In todays challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks inter alia are: Competition, Business risk, Technology obsolescence, Investments, retention of talent and expansion of facilities. Business risk, inter-alia, further includes financial risk, political risk, fidelity risk, legal risk.
As a matter of policy, these risks are assessed and steps as appropriate are taken to mitigate the same.
35. Directors Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that:
a. In the preparation of the annual accounts for the Financial Year ended 31st March, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b. 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 at March 31, 2019 and of the profit and loss of the company for that period;
c. The directors have 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 have prepared the annual accounts on a going concern basis; and
e. The directors, have 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 have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
36. Fraud Reporting
There was no fraud reported by the Auditors of the Company under Section 143(12) of the Companies Act, 2013, to the Audit Committee or the Board of directors during the year under review.
Your Directors state that no disclosure or reporting is required in respect of the following items (as there were no transactions/instances on the below mentioned items) during the year under review:
1. No profits were transferred to any Reserves.
2. No Voluntary revision of Financial Statements or Boards Report.
3. No director who is in receipt of any commission from the Company and who is a Managing Director or Wholetime Director of the Company has received any remuneration or commission from any Holding Company or Subsidiary Company of the Company.
However, Mr. Amit Mittal, Managing Director of the Company has been appointed as Managing Director in A2Z Infraservices Ltd. ("AISL), a material subsidiary Company on October 24, 2015. He is in receipt of INR 48,00,000/- as remuneration in his capacity as Managing Director of AISL for the financial year 2018-19.
Mr. Rajesh Jain, Whole Time Director cum CEO of the Company has been appointed as Whole Time Director in A2Z Infraservices Ltd. ("AISL"), a material subsidiary
Company on December 01, 2018. He is in receipt of INR 16,00,000/- as remuneration in his capacity as Whole Time Director of AISL during the financial year 2018-19.
Your Directors wish to place on record the support, assistance and guidance provided by the financial institutions, banks, customers, suppliers and other business associates. We would like to thank our Companys employees for their efforts and high degree of commitment and dedication. Your Directors especially appreciate the continued understanding and confidence of the Members. Your Directors also thank and appreciate all the Bankers of the Company for their support extended by them to the Company in difficult times and for accepting the settlement process for settling the debt amount in an amicable manner.
|For and on behalf of Board of Directors|
|(Surender Kumar Tuteja)|
|Date : August 13, 2019||Chairman|
|Place : Gurugram||DIN-00594076|