Today's Top Gainer
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Your Directors have the pleasure in presenting the Eleventh Annual Report, together with the Audited Accounts of your Company, for the Financial Year ended on 31st March, 2018. The summarized financial performance of your Company is as under:
FINANCIAL RESULTS AND OPERATIONS:
(Rs. in Lakhs )
|Year ended March 31, 2018||Year ended March 31, 2017||Year ended March 31, 2018||Year ended March 31, 2017|
|Profit/(Loss) from operation before Share of Profit/(Loss) of Associates (revenue)||4,051.66||273.94||9,739.88||(325.92)|
|Share of Profit / (Loss) of Associates||-||-||(6,267.84)||(5,846.98)|
|Profit / (Loss) before tax||4,051.66||273.94||3,472.04||(6,172.90)|
|Profit/ (Loss) for the year||2,891.80||220.12||2,314.60||(6,232.24)|
|Other comprehensive income Items that will not be reclassified to profit or loss (Net of Taxes)||(5.27)||(32.42)||(4.67)||(31.81)|
|Total Comprehensive Income for the year||2,886.53||187.70||2,309.93||(6,264.05)|
|Profit for the year attributable to:|
|Owners of the Company||-||-||2,330.76||(6,230.77)|
|Other Comprehensive Income for the year attributable to:|
|Owners of the Company||-||-||(4.67)||(31.82)|
|Total Comprehensive Income for the year attributable to:|
|Owners of the Company||-||-||2,326.09||(6,262.59)|
|Balance brought forward from the previous year||160.81||(26.89)||(13,055.48)||(6,662.03)|
|Adjustment on Consolidation*||-||-||-||(130.86)|
|Profit available to Owners for appropriation||2,891.80||220.12||2,330.76||(6,230.77)|
|Tax on Dividend||(85.45)||-||(85.45)||-|
|Adjustment of Other Comprehensive Income: Gain (Loss)||(5.27)||(32.42)||(4.67)||(31.82)|
|Balance carried to Balance Sheet||2,541.89||160.81||(11,234.84)||(13,055.48)|
Note: The above figures have been extracted from the Standalone and Consolidated Financial Statements of the Company, for the Financial Year ended on March 31, 2018, prepared as per Indian Accounting Standards (Ind-AS).
*Pursuant to the requirement of section 129(3) of the Companies Act, 2013, the Company had prepared its Consolidated Financial Statement for the first time in the financial year 2014-15. During the financial year 2016-17, the Company had prepared its Consolidated financial statement for the financial year 2013-14 for the purpose of disclosure in offer documents for proposed issue of securities. Consequently, the impact of related party transactions elimination for financial year 2013-14 amounting to Rs. 130.86 lakh has been adjusted with the opening balance of retained earnings during financial year 2016-17.
During the year under review, your Company has earned on a Standalone basis, Net Profit of Rs. 2891.80 Lakhs, as against Net Profit of Rs. 220.12 Lakhs earned in the previous Financial Year. Gross Revenue was Rs. 6417.43 Lakhs as against Rs. 1672.83 Lakhs in the previous Financial Year.
Your Company has, beginning 1st April, 2017, adopted the Indian Accounting Standards for the first time, with a transition date of 1st April, 2016. The Annual Audited Standalone and Consolidated Financial Statements for the year under review, have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS), prescribed under Section 133 of the Companies Act, 2013 and other recognized accounting practices and policies to the extent applicable. Necessary disclosures w.r.t key impact areas and other adjustments upon transition to Ind-AS reporting have been made under the Notes to the Financial Statements.
The Board of Directors at its meeting held on 2nd November, 2017, approved payment of Interim Dividend of Rs. 0.50 (5%) per Equity Share on 8,39,50,000 Equity Shares of the Company of Rs. 10 each, fully paid-up, aggregating to Rs. 4.20 crore (exclusive of Dividend Distribution Tax) out of the profits of the Company for the Financial Year 2017-18. Interim dividend was paid on 27th November, 2017 to such members, whose name appeared in the Register of Members as on the record date, i.e., 17th November, 2017.
In addition to the Interim Dividend, your Directors are pleased to recommend a Final Dividend of Rs. 0.50 (5%) per Equity Share, on 8,39,50,000 Equity Shares of the Company, of Rs. 10 each, fully paid-up, for the Financial Year ended on 31st March, 2018, subject to the approval of the Members at the ensuing Annual General Meeting. The Dividend, will entail a cash outflow of Rs. 4.20 crore (exclusive of Dividend Distribution Tax).
Final dividend, if approved by the Shareholders, taken together with the Interim Dividend, will amount to a total dividend of Rs. 1 (10%) per Equity Share, for the Financial Year 2017-18.
TRANSFER TO RESERVES
No amount has been transferred to any Reserve during the year under review.
PROMOTERS GROUP SHAREHOLDING
As on March 31, 2018, the total shareholding of Promoter Group of your Company is 65.10% in the Paid-up Share Capital of the Company.
As on March 31, 2018, 18.30% of the Promoters Group shareholding is under pledge. Further, in compliance with Regulation 31(2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations, 2015"), the entire shareholding of Promoter(s) and Promoter group is in dematerialized form.
Your Company has not invited or accepted any deposits covered under Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014, during the year under review.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
I. ECONOMY & INDUSTRY
Indian economy is likely to grow at 7.4% in the current fiscal as against 6.7% in FY18 and is expected to accelerate further to 7.8% in FY20, re-emerging as one of the fastest growing major economies leaving China behind which is expected to grow at 6.6% and 6.4% in FY19 and FY20, respectively, as per IMF forecast. Global growth is seen stable at 3.9% over the current and next fiscal, almost unchanged from 3.6% in FY18.
Indian economy is experiencing recovery from the e3 ects of demonetization and implementation of the Goods and Services Tax. The economy growth is likely to be driven by strong consumption story particularly in rural India, improvement in domestic demand and gaining traction in infrastructure spending.
The Infrastructure sector is a key driver of the Indian economy. A higher industrial growth supported by well-connected infrastructure facility is vital to maintain the momentum of higher sustainable economic growth. The Government is committed to invest more on qualitative infrastructure with an aim to make India an advanced, inclusive and a just economy. During last few years, there has been a significant push from the Government, by providing financial support and taking initiatives to expedite implementation to give a boost to the sector.
Among the core infrastructure segments, the Roads and Highways sector has been a key government priority with the sector receiving strong budgetary support over the years. NHAI under Bharatmala Pariyojana plans to spend INR 6.92 tn on 83,677 kilometers of road construction by 2022 to boost economic growth and employment. The Bharatmala Pariyojana has six important components development of economic corridors, development of inter-corridor and feeder routes, improvement of the efficiency of existing National Corridors (Golden Quadrilateral and the North-South & East-West corridors), development of coastal and port connectivity roads, development of border and international connectivity roads and development of Greenfield expressways.
Economic growth, increasing government thrust, preference of road in freight traffic, spurt in private participation and surge in passenger traffic and vehicle density continues to be the key growth drivers for increased investments in the Roads and Highways sector. Growing domestic trade flows have led to a rise in commercial vehicles and freight movement; supported by rise in trend of commercial vehicles from 5,67,000 in 2010 to 5,94,550 in 2018 at a CAGR of 5.87%. Roads traffic share of the total traffic in India has grown from 13.8% to 65% in freight traffic and from 32% to 90% in passenger traffic over 19512017. Simultaneously, there has been also a constant surge in sale of Passenger as well as Commercial vehicle. Domestic sales of passenger vehicles increased at a CAGR of 4.26% during FY12-18 and reached 3.29 million during FY18 from 2.67 million in FY13. Domestic sales of commercial vehicles increased at a CAGR of 1.6% FY12-18 to 856,453 units in FY18.
Government of India has undertaken major initiatives to upgrade and strengthen highways and expressways in the country including enabling policy measures to facilitate private investments in this sector. Some of the key initiatives include Bharatmala and National Highway Development Program. In addition to Highway Development, focus remains on efficient operations & network management for improving logistics efficiency, which shall give rise to new investment opportunities.
Some of the initiatives and market trends that continue to drive the sector are highlighted below:
Increasing pace of road awards: The Goverment of India is planning to expand the National Highway network to over 200,000 km and has given a massive push to infrastructure by allocating about USD 100 bn for infrastructure in the Union
Budget 2018-19. It also plans to invest USD 22.4 bn towards road infrastructure in North-East region during 2018-2020. The market for roads and highways is projected to exhibit a CAGR of 36.16% during 2016-2025, on account of growing government initiatives to improve transportation infrastructure in the country. Almost half of the 1,531 PPP projects awarded in India until March 2018 were related to roads.
Newer modes of project awards: The Government has successfully rolled out more than 60 projects worth more than USD 10 billion based on the Hybrid Annuity Model (HAM). HAM has balanced risk appropriately between private and public partners & boosted PPP activity in the sector. Asset recycling, through the Toll-Operate-Transfer (ToT) Model has been taken up by NHAI. The first bundle of 9 highways with an aggregate length of about 680 km was monetised successfully for an investment of USD 1.45 billion.
Fiscal Incentives: 100% Foreign Direct Investment (FDI) through automatic route allowed subject to applicable laws and regulation. Right of Way (ROW) for project land made available to concessionaires free from all encumbrances. 100% tax exemption for 5 years and 30% relief for next 5 years, which may be availed of in 20 years.
Increasing participation of Private Equity funds: Private Equity has contributed to road projects in the past. Going ahead, Private Equity investment can further pick up, following the recent announcements of 100% exit policy for debt-stressed operators for toll roads.
Operate Maintain Transfer (OMT): Operate, Maintain, Transfer (OMT) models have also been adopted by a few large Indian states, where road development authorities state have invited bids / awarded State Highway stretches to be operated and maintained on OMT basis.
ETC lane: The decision of the Ministry of Roads Transport and Highways to roll out ETC programme in the country under the brand name FASTag has resulted in greater user convenience through automation. Electronic Toll Collection is being encouraged to minimize toll collection time and reduce pilferage in toll collection on NHs. Enabling facilities for ETC is being put proactively to enable seamless movement of vehicles on the National Highways to promote digital transformation and cash less economy.
Over the past few years, the Roads and Highways sector has opened up plethora of opportunities for the companies engaged in Highway construction and development. The Government under Bharatmala Pariyojana plans to build 83,677 km of road by 2022 with a total estimated investment at INR 6.92 tn. The project will be implemented jointly by NHAI, MoRTH, NHIDCL and state PWD for faster execution of the project.
NHAI in FY18 awarded 150 road projects for constructing about 7,400 kilometers of highways worth Rs 1.22 Lakhs crore. During
FY18, National Highways of 9,829 Kms were constructed with a construction record of 28 Km per day. This represents ~20% growth over the last year, when 8,231 km were constructed.
NHAI Road Awards
|Year||Length (Km)||Project Value (Rs Crore)|
Over the next 5 years, the investment in National Highways awards will majorly be under EPC and HAM, a breakaway from past trends. HAM has now gathered momentum and is likely to improve private participation in the sector. The model has been successful in bringing new set of players to the private space.
NHAI is monetizing public funded National Highway (NH) projects which are operational and are generating toll revenues for at least two years after the Commercial Operations Date (COD) through the Toll Operate Transfer (TOT) Model. Around 75 operational NH projects completed under public funding have been preliminarily identified for potential monetization using the TOT Model.
Monetization of public funded NH roads is expected to create a framework for attracting long term institutional investment on the strength of future toll receivables. Market feedback indicates that certain institutional investors from outside the country have a long term investment appetite and are keen to participate in operational highway projects with stable toll revenue outlook. These investors generally hesitate in taking construction risk but are willing to look at de-risked Brownfield road assets.
III. BUSINESS & OPERATIONS
Your Company is a road BOT company in India, focused on development, implementation, operation and maintenance of National and State Highways with existing projects in states of Uttar Pradesh, Kerala, Haryana, Madhya Pradesh, Maharashtra and Odisha. At present, all of your Companys projects are implemented through Special Purpose Vehicles (SPVs), either directly or in partnership with other infrastructure players.
The main business operations of your company can be divided into three categories, i.e.
(i) Project development and implementation;
(ii) Operation and Maintenance of tolling operations and
(iii) Advisory and Project Management Services including Debt Syndication for our projects.
During the year under review, your Company has focused on all these areas to augment resources.
Your Company has a project portfolio consisting of six (6) BOT Projects covering almost 2095 km of Roads and Highways across 6 states in India. Out of the six projects in our portfolio, five (5) projects are operational covering approximately 1,695 lane kms, including major and minor bridges and one (1) Project is under Construction which involves development of approximately 400.24 lane kms, including major and minor bridges. The Operational projects are located in the states of Kerala, Madhya Pradesh, Haryana, Uttar Pradesh and Odisha whereas the Under Construction project is located in the state of Maharashtra.
1. Guruvayoor Infrastructure Private Limited ("GIPL"): Four laning of the existing two lane portion of the Thrissur-Angamali section of NH-47 from km 270.00 to km 316.70 and improvement, operation and maintenance of the Angamali-Edapalli section from km 316.70 to km 342.0 of NH-47 in the state of Kerala on BOT Toll basis.
2. Mahakaleshwar Tollways Private Limited ("MTPL"): Four laning of the Indore-Ujjain portion from Ch. 5/2 to Ch. 53 on State Highway 27 on BOT Toll basis in the state of Madhya Pradesh.
3. Ghaziabad Aligarh Expressway Private Limited ("GAEPL"): Four laning of the Ghaziabad-Aligarh section of NH-91 connecting km 23.60 to km 140.20 of NH-91 and subsequent six laning of the project highway (excluding Aligarh bypass from km 129.60 to km 149.90) before the 12th anniversary of the appointed date on BOT (Toll) basis.
4. Kurukshetra Expressway Private Limited ("KEPL"): Four laning of the Rohtak-Bawal section of NH-71 from km 363.30 to km 450.80 in the state of Haryana on DBFOT Toll basis.
5. Shree Jagannath Expressways Private Limited ("SJEPL"): Six laning of the existing road from km 413.00 to km 418.00 and km 0.00 to km 62.00 on Chandikhole-Jagatpur-Bhubaneswar section of NH-5 in the state of Odisha on DBFOT Toll basis.
Under Construction Projects:
1. Solapur Tollways Private Limited: Four laning of the Solapur-Maharashtra/ Karnataka border section of NH-9 from km 249.00 to km 348.80 in the state of Maharashtra on DBFOT Toll basis.
Project under Foreclosure:
1. Orissa Steel Expressway Private Limited ("OSEPL"): The OSEPL Project for augmenting the existing road on the Rimuli-Roxy-Rajamunda section of NH-215 from km 163.00 to km 269.00 on DBFOT basis was signed on July 6, 2010 with the NHAI. Due to Land non-unavailability and Forest clearance issues, NHAI has agreed to amicably Foreclose the said Agreement without any penalty and agreed to address the claims/ losses of OSEPL through suitable redressal mechanism. Based on same, a joint inspection of the Project site was carried on and thereafter the project has been handed over to NHAI on 02-03-2017 on "as is where is basis". OSEPL further have submitted a claim of Rs.
830.48 crore on NHAI towards cost incurred, finance costs, overheads and loss of profit- up to March 31, 2018. OSEPL has also approached NHAI for immediately settling the claim through Arbitration process. The Arbitration process has commenced in April 2018 and final award is likely to be announced in the near future.
IV. BUSINESS PERFORMANCE
During the year under review, your Company continued its focus on improving operational efficiency through increased automation of services and adopted prudent project delivery mechanism to expedite execution of the existing asset under construction.
Traffic and Revenue Growth
Despite impact of GST implementation in July 2017, which affected the movement of goods substantially and therefore affected the tolling adversely, the Average Daily Revenue (ADR) across all the operational projects increased by 22% to Rs. 163 Lakhs in Financial Year 201718 from Rs. 134 Lakhs in Financial Year 201617. The toll revenue is expected to improve further and stabilize with increased economic activity across the high growth industrial corridors along the project stretch.
o Ghaziabad Aligarh Expressway Private Limited: The project continues to register a impressive toll revenue growth as the Average Daily Revenue increased from Rs. 43 Lakhs in FY 201617 to Rs. 53 Lakhs in FY 201718. Major increase in Revenue was on account of provisional COD of additional 19 km stretch which was obtained on 25th November, 2016 for tolling 123 km of Highway stretch. The tolling on 104 km of Ghaziabad Aligarh Expressway commenced in June 2015 and has since been reporting steady toll revenue growth. The toll revenue is expected to improve further by next financial year due to increased economic activity in the corridor.
o Mahakaleshwar Tollways Private Limited: This year post installation of new upgraded Toll Management System (TMS), the project has shown reasonable growth in expemption control and improved revenue collection. In FY 2017-18, the Average Daily Revenue has grown by 13% to Rs. 7.19 Lacs from Rs. 6.35 Lacs per day in FY 2016-17. However, since the tolling was suspended by Madhya Pradesh Road Development Corporation Limited (MPRDC) twice in FY 2016-17 on account of Ujjain Simhastha & Demonitization, amounting to a toll loss for 83.5 days the impact on total revenue was much higher: 27.19 Cr in FY 2017-18 as against 17.87 Cr in FY 2016-17. Although MPRDC has agreed to compensate the revenue loss by way of increase in concession period by equivalent number of days, the company is aggressively pursuing the claim for this revenue loss in cash compensation.
o Shree Jagannath Expressways Private Limited: The provisional COD for the project obtained on January 12, 2017 resulted in substantial increase in Average Daily Revenue (ADR) from Rs. 28 Lakhs in FY 2016-17 to Rs. 41 Lakhs in FY 2017-18. In the coming years it is expected that revenue shall increase further on account of major boost in economy resulting from expected growth of mining industry in the hinterland.
o Kurukshetra Expressway Private Limited: The project has undergone a transformation following temporary interruptions in services due to external forces. During the year under review, the project displayed remarkable improvement in exemption control after installation of state-of-the-art Toll Management Services (TMS). The exemption control resulted in considerable improvement in Average Daily Revenue to Rs. 26 Lacs from Rs. 23 lacs, increasing by 13%.
o Guruvayoor Infrastructure Private Limited: During the year under review, the Company has shown a robust growth of 9% in Average Daily Revenue to Rs. 37 lacs in FY 2017-18 as against Rs. 34 Lacs in FY 2016-17 due to greater economic activity along the project corridor and strengthening of TMS technology for exemption reduction.
o Solapur Tollways Private Limited: During the year under review, the overall progress of the STPL Project was delayed due to, amongst other reasons, a delay in acquisition of land and shifting of utilities from the Concession Authority. As STPL Project continues to face delays due to reasons which are not attributable to STPL, the Project Authority has been requested for extension of time by 760 days from the Scheduled COD, i.e. upto December 27, 2018. It is expected that the project shall achieve the commercial operation during this financial year.
Technology Up-Gradation: Your Company maintained its focus on strengthening IT system and capabilities to create digital, scalable and sustainable business eco system. The company is committed towards driving efficiency through more advanced and fully proven technologies to minimize human errors resulting from manual intervention and also moving towards more robust system. During the year under review, your Company has embarked on a Digital Transformation initiative for automating operations across Toll Plaza and construction projects keeping an eye on further improvement in toll revenue, better operational efficiency and proactive business planning.
Effective Project Management and Delivery: Your Company intends to focus on improving project monitoring and management capabilities to faster execution of project. Although deterred by lack of ROW, your Company has been successful in streamlining project execution for faster completion of Ghaziabad Aligarh Expressway Private Limited and Shree Jagannath Expressways Private Limited, enabling us to receive the PCODs.
V. FUTURE BUSINESS PLANS
Your Company is a pure play BOT Company focused on development, implementation, operation and maintenance of roads/highways projects. As an infrastructure developer operating on the asset aggregation platform, our business growth strategy is strongly driven by portfolio expansion and improving operational efficiency for value accretion.
o Uniquely positioned to expand through Inorganic growth:
Leveraging on the domain knowledge and a decade long experience in the infrastructure space, your Company is looking at inorganic growth opportunities either through acquisition of projects or consolidation of its stake in existing projects. Your Company through increased activity in the secondary market is continuously evaluating assets which are available at attractive valuation assuming such acquisitions are supported by sound strategic and financial objectives. Your Company has been able to consolidate its stake in one of its assets, Guruvayoor Infrastructure Private Limited in Kerala, where your Company acquired 73.98% stake (acquisition of 26% out of the 51% stake is under progress) from its partner. Your Company has created a platform where it expect to see a lot of consolidation play happening.
o Evaluating opportunities in Primary Market:
The Government is focusing on transforming India through infrastructure creation at gigantic scale with estimated investments of over Rs 6.9 tn towards constructing 83,677 Km of roads under Bharatmala Pariyojana and other road development programs. With such a huge opportunity shaping up the roadmap for growth of the sector, your Company is strongly placed to capitalise on its financial capability and asset management skill set, to make the most of the opportunities and strengthen its asset portfolio. Your Company is assessing commercial viability for bidding for primary market opportunities under Hybrid Annuity Model (HAM) and Toll Operate Transfer (TOT). Your Company will continue to leverage its expertise in managing infrastructure assets under the PPP model to drive long-term growth.
o Optimizing Financial Structure:
Your Company is exploring options for refinancing in various SPVs to lower borrowing costs and improve cash flows. BRNL has been able to do a decent refinancing and re-pricing job for one of its assets, Shree Jagannath Expressways Private Limited and was able to bring the rate of interest down by 1.5% to 2% per annum. The priority for your Company is to continue its e3 ort towards repricing and re-tenure its debt in all its assets. Though your Company sources funding for existing projects primarily through long term loans from banks and other financial institutions, the Company intends to continue to evaluate various funding mechanisms which will enable it to enhance credit rating and in turn reduce borrowing cost and improve liquidity.
o Continue to focus on technology and operational efficiency:
With gaining prominence of IT system and other internal processes in every aspect of business and operations, your Company is constantly strengthening the IT system and capabilities to create an environment friendly sustainable business eco system. Your Company is committed towards driving efficiency through more advanced and fully proven technologies to minimize human error resulting from manual intervention and also moving towards more environment friendly transportation solutions that are sustainable both from energy consumption and an environment perspective.
Your Company is in the process of upgrading the existing IT systems and implementing a fully automated operation management system integrating technology primarily to monitor the flow of vehicular traffic, real time revenue and collection monitoring and improved road safety.
As part of the digital drive, your Company aims to create one single consolidated platform across all organizations for all stakeholders Operations, Finance and Management to help them in enhancing their efficiencies in services like Revenue Reporting, Traffic Growth Analysis, Incidence Management and Administration through mobile and web channels. The emerging technology interventions such Sensor driven/ RFID driven auto capture or Internet of Things (IoT), Artificial Intelligence / Machine Learning driven smart projections or analytics, automated traffic volume reporting on real time basis, Cloud based Data management system and Workflow management are explored for better and informed decision making planning.
o Enhancing in-house integration with an aim to improve performance and enhance returns:
Your Company seeks to continue its focus on enhancing in-house competencies by expanding into various functional aspects of projects, thereby reducing dependency on third parties. The Company intends to focus on strengthening project designing and engineering capabilities, project monitoring and management capabilities. It is believed that developing specialized in-house capabilities would reduce dependency on third parties, thereby avoiding risks and minimizing costs associated with outsourcing.
VI. FUTURE OUTLOOK
India has a massive infrastructure investment requirement to the tune of USD 4.54 trillion by 2040 and infrastructure creation of such a gigantic scale does require a wide range of resources, expertise and skills together with funding either from public and private sources. Considering the limited scope to maneuver public spending of such a massive scale and size, the Public-Private Partnership (PPP) assumes significance, both for attracting investment in infrastructure and leverage on the asset management skill set of the private sector. As PPP model is aimed at leveraging on the private capital for infrastructure development and making the best use of the asset management skill set of the infrastructure companies, we see ourselves as strong enabler for PPP projects while acting as a bridge between the Public Asset and Project Authority. We leverage on our strong asset management skill set, access to capital and rich pool of contractors and our expertise in financial engineering to implement projects.
Over the past few years, there has been a lot of proactive measures being taken up for reviving the infrastructure sector and thankfully Roads and Highways sector has so far been the biggest beneficiary of Governments thrust on infrastructure. Economic growth, preference of road in freight traffic, spurt in private participation and surge in passenger traffic and vehicle density are key growth drivers for infrastructure investments. Greater connectivity between different cities, towns and villages has led to increased road traffic over the years.
The Government has given a massive push to infrastructure by allocating Rs 5.97 Lakhs crore for infrastructure in the Union Budget 2018-19. For the Road sector, the Government provided an outlay of Rs 1.21 Lakhs crore. The rise in investments, reforms and higher budgetary support is expected to drive growth in roads and highways sector in India. The Government of India has succeeded in providing road connectivity to 85% of the 178,184 eligible rural habitations in the country under the scheme. All villages in the country are expected to be connected through a road network by 2019, as against 2022 previously, under the Pradhan Mantri Gram Sadak Yojana (PMGSY). Total length of roads constructed under PMGSY in FY18 was 47,447 km. Under the Union Budget 2018-19, Government of India allocated an investment of Rs 19,000 crore for PMGSY and will spend around Rs 1 Lakhs crore during FY18-20 to build roads in the country under PMGSY.
NHAI has started the tendering process for projects worth ~Rs 1tn. Out of this HAM accounts for ~60% of the tender value with EPC accounting for the rest. Currently BOT projects are not being actively tendered by NHAI.
The Government of India is quite empathetic to the concerns of the industry and has shown intent to resolve the crisis through a series of reform measures, the actual action on the ground needs to be effective enough to tackle the core issues related to land acquisition, time bound resolution of disputes, faster settlement of claims and local administrative support to streamline on-ground execution mechanism.
VII. RISK MANAGEMENT
Risk management forms an integral part of your Companys future growth strategy. The risk management strategy of your Company hinges on a clear understanding of various risks and adherence to well-laid out risk policies and procedures that are benchmarked with industry best practices. Your Company has developed robust systems and embraced sturdy practices for identifying, measuring and mitigating various risks and ensuring that they are maintained within pre-defined risk appetite levels.
Risk and Concern
Growth risk is the inability to effectively manage growth or to successfully implement business plans which depends heavily on the ability to plan and execute the growth strategy. Growth Risk can impact organic as well as inorganic growth vision of the Company in the form of inability to successfully bid for new projects at attractive IRR or acquisition of existing stressed projects at attractive valuation. Your Companys growth risk mitigation strategy is guided by constant review and analysis of market opportunities and trends in both organic and inorganic space for selective bidding for new projects and acquisition for projects falling within our stringent investment criteria.
Business Risk includes risks with respect to competition, capital intensiveness, input cost, traffic growth for BOT projects and labour. Your Company faces risk of competition as the sector is growing and more players get qualified to bid for new projects, also as the nature of business which your company operates is capital intensive by nature, availability of sufficient funds is critical for bidding of projects, particularly in case of fund-based projects such as BOT-toll, HAM and TOT model. Further, availability of the right quality and quantity of resources is critical for the timely completion of infrastructure projects, any unexpected increase in the input costs will have direct impact on overall margins. Moreover undue attrition of manpower could lead to loss of competitive edge as it may lead to project delays.
Your Company has a well-designed mitigation plan to address these business risks. Company adapts its policies and procedures to ensure a sustained business model. We strive to execute maximum number of projects before their scheduled completion and within the budgeted cost. Your company operates its working capital cycle in a highly optimized manner, your company enters into contracts with EPC Partners which has the relevant cost escalation provisions that protect our margins. Further, your companys focus is to build an organisation of highly motivated employees, having the ability to execute ambitious business goals with passion and commitment, thereby exceeding customer aspirations. The working environment of the Company is cordial and employee-friendly. The remunerations are at par with the industry standards.
The business of the company is significantly dependent on various Government entities and could be adversely affected if there are adverse changes in the policies adopted by such Government entities.
Your Company regularly reviews and monitors government policies and likely developments along with an impact assessment of those policies so that necessary actions can be planned and implemented from time to time.
VIII. HUMAN RESOURCE DEVELOPMENT
Your Company has shown commitment in embracing an integrated approach towards the overall development in Human Resource and adopted best Human Resource Practices over the past few years. In terms of its manpower strength till 31st March 2018, the overall headcount of Group including the project entities increased to 1182 which includes 19 employees of Bharat Road Network Limited & 1163 at project SPVs, which consists on-roll employees & o3 -roll resources of 677 & 486 respectively.
The Human Resources department will act as a catalyst to enable all BRNL and its SPV employees to contribute at optimum levels toward the success of the business, focused on the development of workforce in terms of capability, values, attitude and behavior. Your Companys aim is to Promote and recruit the best qualified people, recognizing and encouraging the value of diversity in the workplace. Moving forward, your Company is committed to nurture the existing talent through Training and Development and implementation of the best Talent Management Practices like Succession planning by identifying the critical roles of the organization as these will add value by enabling the Organization to execute its strategy and to do so as efficiently and speedily as possible. Your Company is establishing, administering and effectively communicating sound policies, rules and practices that treat employees with dignity and equality while maintaining company compliance with employment and labour laws, corporate directives and labour agreements. There has been also adequate focus on Employee Engagement activities and employee welfare programs to engage the manpower for their productivity enhancement. Your Company is also committed towards giving back to the society by working towards the welfare of the community by engaging into different CSR activities. Overall the aim is to provide a work atmosphere that is safe, healthy, and secure and conscious of long-term family and community goals.
IX. INTERNAL CONTROL AND AUDIT
Your Board places utmost importance in setting up and regularly enhancing Internal Control Framework in view of complex business environment and increasing regulatory oversight for sustainable growth. Your Company adopts a calibrated and smart framework spanning on pillars of administrative and financial controls. On the administrative control side, your Company has a proper reporting structure, several oversight committees, defined roles and responsibilities at all levels to ensure appropriate checks and balances. On the financial controls side, management with the knowledge and understanding of the business, its organization, operations, and processes has put in place appropriate controls including segregation of duties and reporting mechanism to deter and detect misstatements in financial reporting.
Your Company has an Internal Financial Control (IFC) System, which commensurate with the nature of its business and the size and complexity of its operations. The Companys system of internal control has been designed to provide a reasonable assurance with regard to controls over critical business activities and operations, policies and procedures for ensuring the orderly and efficient conduct of business, critical procurements, prevention and detection of frauds and errors, compliance with regulations and for ensuring timeliness and reliability of financial reporting. Your Companys IFC have been reviewed and actions have been taken wherever needed, to strengthen control and overall risk management procedure. The Internal Audit is carried out by a firm of Chartered Accountants which reports its findings and observations directly to the Audit Committee. The Audit Committee evaluates and reviews the adequacy and effectiveness of the Internal Control Systems and suggests improvements to strengthen them. Based on the report of Internal Auditor and the response thereto, necessary corrective actions are undertaken to strengthen the controls. Overall, the Board and the Audit Committee maintains a proactive approach in ensuring that the control and governance framework is regularly reviewed and timely corrective actions are taken to minimize risk of disruption.
Moving forward, your Company, w.e.f Financial Year 2018-19, has set up an in-house Internal Audit Department to strengthen its control environment.
SUBSIDIARY & ASSOCIATE COMPANIES
During the year under review, in terms of the Securities Purchase Agreement (SPA), executed amongst your Company, Guruvayoor Infrastructure Private Limited (GIPL), KMC Constructions Limited and KMC Infratech Road Holdings Limited (together, "KMC a3 liates"), and subject to necessary approvals, your Company has agreed to acquire additional 51% stake in GIPL from KMC a3 liates, which would make GIPL a Wholly-Owned Subsidiary of the Company. Pursuant to the said SPA, your Company has on 28th March, 2018, acquired 24.98% equity shares in GIPL, thereby increasing its existing shareholding in GIPL from 49% to 73.98%. Consequently, GIPL has become a subsidiary of your Company, w.e.f. 28th March, 2018, pursuant to Section 2(87) of the Companies Act, 2013 and a "Material Subsidiary" pursuant to Regulation 16(c) of SEBI Listing Regulations, 2015 since the total income of GIPL exceeded 20% of the consolidated income of your Company during the immediately preceding Accounting Year.
As on the date of this Report, your Company has 3 (three) Subsidiaries and 4 (four) Associate Companies.
The names of companies which became or ceased to be Subsidiaries or Associate Companies, during the year, are as under:
|Guruvayoor Infrastructure Private Limited||Ceased to be an Associate and became a Subsidiary w.e.f. March 28, 2018.|
PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES & ASSOCIATE COMPANIES
The Statement in Form AOC-1 containing the salient features of the Financial Statements of your Companys Subsidiaries and Associate Companies, pursuant to first proviso to Section 129(3) of the Companies Act, 2013 (Act), read with Rule 5 of the Companies (Accounts) Rules, 2014, forms part of this Annual Report. Further, in line with Section 129(3) of the Act read with the aforesaid Rules, the SEBI Listing Regulations, 2015) and in accordance with the Indian Accounting Standards specified under section 133 of the Act, Consolidated Financial Statements prepared by your Company includes financial information of its Subsidiary and Associate Companies.
Further, in accordance with Section 136 of the Companies Act, 2013, the Audited Financial Statements of each of the Subsidiary , included in the Consolidated Financial Statements prepared by your Company as per Rule 8(1) of the Companies (Accounts) Rules, 2014, are available on the website of your Company, www.brnl.in.
Members interested in obtaining a copy of the Annual Accounts of the Subsidiaries may write to the Company Secretary at your Companys Registered O3 ce. The said Report is not reproduced here for the sake of brevity.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THIS REPORT
There is no such material change and commitment affecting the financial position of your Company, which have occurred from the end of the Financial Year ended on March 31, 2018 and the date of this Report.
INITIAL PUBLIC OFFER (IPO)
Your Company came out with Initial Public offer (IPO) of 2,93,00,000 (Two Crore, Ninety-three Lacs) fresh equity shares of face value Rs. 10/- each, at a price of Rs. 205/- per equity share (including a share premium of Rs. 195/- per share), to applicants under various categories, viz., Qualified Institutional Buyers, Non-Institutional Investors and Retail Individual Investors, in September, 2017. The Equity Shares of the Company were successfully listed at BSE limited (Scrip Code: 540700) and National Stock Exchange of India Limited (Symbol: BRNL) with e3 ect from 18th September, 2017.
Since your Company has achieved the listing status w.e.f. 18th September, 2017, the compliances of various laws with respect to provisions thereof, applicable to a listed Company, have become applicable to your Company from the said date and your Company has been complying with the same regularly.
Your Directors take this opportunity to thank all the investors for their overwhelming response to the IPO and for the confidence reposed by them.
At present, the Authorized Capital of the Company is Rs. 100 Crore (Rupees One Hundred Crore) divided into 10 Crore (Ten Crore) Equity Shares of Rs. 10 each.
Pursuant to the Initial Public offer, the Paid-up Share Capital of your Company increased from Rs. 54.65 Crore, divided into 5,46,50,000 (Five Crore, Forty-six Lacs, Fifty Thousand) Equity Shares of Rs. 10 each, to Rs. 83.95 Crore, divided into 8,39,50,000 (Eight Crore, Thirty-nine Lacs, Fifty Thousand) Equity Shares of Rs. 10/- each.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of Section 152(6) of the Companies Act, 2013 and Rules made thereunder, Mr. Bajrang Kumar Choudhary (DIN: 00441872), Managing Director of your Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. His brief resume/details has been furnished in the Notice of the ensuing AGM. The Board, therefore, recommends the said re-appointment of Mr. Bajrang Kumar Choudhary.
Your Company has received declaration from each of the Independent Directors under Section 149(7) of the Companies Act, 2013 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 SEBI Listing Regulations, 2015.
There was no change in the Directors of your Company during the year under review.
Key Managerial Personnel
During the year under review, Mr. Sanjay Banka, Chief Financial Officer and Company Secretary of the Company resigned from the office of the Company Secretary and Compliance Officer w.e.f. close of Business hours of December 16, 2017. Mr. Sanjay Banka, however, continued as the Chief Financial Officer (CFO) of the Company. The Board of Directors of your Company appointed Mr. Naresh Mathur (FCS: 4796), as Company Secretary and Compliance Officer of the Company, w.e.f. December 17, 2017.
As per the provisions of Section 203 of the Companies Act, 2013, read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following Director / Executives of your Company are the Key Managerial Personnel as on March 31, 2018
|Mr. Bajrang Kumar Choudhary||Managing Director|
|Mr. Sanjay Banka||Chief Financial Officer|
|Mr. Naresh Mathur||Company Secretary|
MEETINGS OF BOARD OF DIRECTORS
The Board meets at regular intervals to discuss and decide on policy and strategy apart from other Business. However, in case of a special and urgent business need, the Boards approval is taken by passing resolutions through circulation, as permitted by law, which are noted at the subsequent Board Meeting.
7 (Seven) Meetings of the Board of Directors of the Company were held during the Financial Year 2017-18 on 26th April, 2017, 21st August, 2017, 14th September, 2017, 5th October, 2017, 2nd November, 2017, 16th December, 2017 and 14th February, 2018. The maximum time gap between any two consecutive meetings did not exceed 120 (One Hundred Twenty) days.
The Audit Committee of your Company has been constituted in line with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI Listing Regulations, 2015.
As on 31st March, 2018, the Audit Committee of your Company comprised of Mr. Brahm Dutt (Independent Director), acting as the Chairman of the Committee, Mr. Atanu Sen (Independent Director) and Mr. Bajrang Kumar Choudhary (Managing Director), acting as the Members of the Committee.
For operational convenience, the Board of Directors of your Company at its Meeting held on 29th May, 2018, has reconstituted the Audit Committee. The Committee, presently, comprises of Mr. Brahm Dutt (Independent Director), acting as the Chairman of the Committee, Mr. Pradeep Singh (Independent Director), Mr. Atanu Sen (Independent Director) and Mr. Bajrang Kumar Choudhary (Managing Director), acting as the Members of the Committee.
Mr. Naresh Mathur, Company Secretary, acts as the Secretary to the Committee.
The scope and functions of the Audit Committee is in accordance with the provisions of the Companies Act, 2013 and the SEBI Listing Regulations, 2015. The brief Terms of Reference of the Audit Committee has been provided in the Corporate Governance Report, forming part of this Annual Report.
4 (four) Meetings of the Audit Committee were held during the Financial Year 2017-18 on 26th April, 2017, 14th September, 2017, 2nd November, 2017 and 14th February, 2018.
During the year under review, there were no such instances wherein the Board had not accepted any recommendation of the Audit Committee.
NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors of your Company has constituted a Nomination and Remuneration Committee (NRC) in accordance with the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of the SEBI Listing Regulations, 2015.
As on 31st March, 2018, the NRC comprised of Mr. Brahm Dutt (Independent Director), acting as the Chairman of the Committee, Mr. Pradeep Singh (Independent Director) and Mr. Atanu Sen (Independent Director) as Members of the Committee.
For operational convenience, the Board of Directors of your Company at its Meeting held on 29th May, 2018, has reconstituted the NRC. The Committee, presently, comprises of Mr. Pradeep Singh (Independent Director), acting as the Chairman of the Committee, Mr. Brahm Dutt (Independent Director) and Dr. (Ms.) Tuk Tuk Ghosh Kumar (Independent Director) as Members of the Committee. Mr. Naresh Mathur, Company Secretary, acts as the Secretary to the Committee.
The scope and function of NRC is in accordance with the provisions of the Companies Act, 2013 and the SEBI Listing Regulations, 2015. The brief Terms of Reference of the Committee has been provided in the Corporate Governance Report, forming part of this Annual Report.
2 (two) meetings of the NRC were held during the Financial Year 2017-18, on 26th April, 2017 and 16th December, 2017.
The Committee has formulated the Nomination and Remuneration Policy (BRNL Nomination and Remuneration Policy) which broadly lays down the various principles of remuneration viz support for strategic objectives, transparency, internal & external equity, flexibility, performance-driven remuneration, a3 ordability and sustainability and covers the procedure for selection, appointment and compensation structure of Board members, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP) of your Company.
The BRNL Nomination and Remuneration Policy has been hosted on the website of the Company, www.brnl.in and a link to the said Policy has been provided elsewhere in this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The total amount required to be spent for CSR, being 2 (two) per cent of the average net profits of your Company made during the three immediately preceding financial years, during the Financial Year 2017-18, aggregated to approximately, Rs. 1.22 Lacs.
Your Company has constituted a CSR Committee, as required in terms of Section 135 of the Companies Act, 2013 and the Rules made thereunder.
The CSR Committee comprises of Dr. (Ms.) Tuk Tuk Ghosh Kumar (Independent Director), acting as the Chairperson of the Committee, Mr. Atanu Sen (Independent Director) and Mr. Bajrang Kumar Choudhary (Managing Director) as Members of the Committee. Mr. Naresh Mathur, Company Secretary, acts as the Secretary to the CSR Committee. The brief Terms of Reference of the Committee has been provided in the Corporate Governance Report, forming part of this Annual Report.
There has been no change in the composition of CSR Committee during the year under review.
The Company has also framed a CSR Policy, in line with the provisions of Section 135 of the Companies Act, 2013, and the same has been hosted on the website of the Company, www.brnl.in and a link to the said Policy has been provided elsewhere in this Annual Report. Your Company strives to contribute towards CSR, as per the line items included in Schedule VII to the Companies Act, 2013. During the year under review, 1(one) CSR Committee Meeting was held on 2nd November, 2017.
Your Company is fully aware of the fact that as a corporate citizen, it is also entrusted with the responsibility to contribute for the betterment of the society at large. For this purpose, even though the amount to be spent on CSR was Rs. 1.22. lacs, your Company voluntarily contributed a sum of Rs. 5 lacs on CSR.
During the year under review, your Company contributed to Srei Foundation, which through IISD Edu World, extended support towards promoting education among underprivileged students by bearing their educational expenses. IISD Edu World is a Company registered under Section 25 of the Companies Act, 1956 (now, Section 8 of the Companies Act, 2013). It manages two (2) schools which, presently, impart education up to standard IX and V, respectively, along with facilities, like, free mid-day meals, books and school dresses at concessional rates. The donations received by the entity helps to sustain the financial and educational activities undertaken by the two schools. Moreover, donation to Srei Foundation qualifies for deduction under Section 804 of the Income Tax Act, 1961. As prescribed under Section 135 of the Companies Act, 2013, read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, an Annual Report on CSR Activities, has been set out as an Annexure to this Directors Report.
The Nomination and Remuneration Committee (NRC) of your Company has formulated and laid down criteria for Performance Evaluation of the Board (including Committees) and every Director (including Independent Directors) pursuant to provisions of Section 134, Section 149, read with the Code for Independent Directors (Schedule IV), and Section 178 of the Companies Act, 2013, covering, inter alia, the following parameters: i) Board Evaluation - degree of fulfilment of key responsibilities; Board culture and dynamics. ii) Board Committee Evaluation - effectiveness of meetings; Committee dynamics. iii) Individual Director Evaluation (including Independent Directors) - contribution at Board Meetings.
During the year under review, the Board carried out annual evaluation of its own performance as well as evaluation of the working of various Board Committees, viz., Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee. This exercise was carried out through a structured questionnaire prepared separately for Individual Board Members (including the Chairman and Managing Director) and Board Committees based on the criteria as formulated by the Nomination and Remuneration Committee and in context of the Guidance note dated January 05, 2017 issued by SEBI.
Based on these criteria, the performance of the Board, various Board Committees and of the Individual Directors (including Independent Directors) was evaluated and found to be effective.
During the year under review, the Independent Directors of your Company reviewed the performance of Non-Independent Directors and Chairperson of your Company, taking into account the views of Executive Director and Non-Executive Directors. They hold an unanimous opinion that the Non-Independent Director, viz Managing Director brings to the Board, abundant knowledge in his respective field and is an expert in his area. Besides, he is insightful, convincing, astute, with a keen sense of observation, mature and have a deep knowledge of your Company.
The Board, as a whole, is an integrated, balanced and cohesive unit, where diverse views are expressed and discussed when required, with each Director bringing professional domain knowledge to the table. All Directors are participative, interactive and communicative. The Chairman has abundant knowledge, experience, skills and understanding of the Boards functioning, possesses a mind for detail, is meticulous to the core and conducts the Meetings with poise and maturity.
Board Committees are adequately composed (in terms of size, skill, expertise, experience, etc) to carry out the responsibilities and addressing the objectives for which it has been set up by the Board. Also, there is clarity between the Board, Management and Committee w.rt. the role played by the committee.
The information flow between your Companys Management and the Board is complete, timely with good quality and sufficient quantity.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Your Company is engaged in infrastructure sector, as stated in the Schedule VI to the Companies Act, 2013. By virtue of the provisions of Section 186(11), the provisions of Section 186, read with the Companies (Meeting of the Board and its Powers) Rules, 2014, as amended from time to time, relating to loan made, guarantee given or security provided, do not apply to your Company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
A Related Party Transactions Policy has been devised by your Company for determining the materiality of transactions with related parties and dealings with them. The said Policy is available on your Companys website, www.brnl.in and a link to the said Policy has been provided elsewhere in this Annual Report.
Related Party Transactions entered into during the Financial Year ended 31st March, 2018, were on an arms length basis and in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 and SEBI Listing Regulations, 2015 and were reviewed and approved by the Audit Committee of the Company.
Further, there are no materially significant related party transactions entered by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, during the year under review, which may have a potential conflict with the interest of the Company at large. Members may refer to the Notes to the Financial Statements for details of related party transactions.
Further, in terms of Regulation 23 of the SEBI Listing Regulations, 2015, the Board of Directors recommend to the Shareholders of your Company to confirm and approve related party transactions, being material in terms of the said Regulations, at the ensuing Annual General Meeting of the Company.
POLICY FOR DETERMINING MATERIAL SUBSIDIARIES
Your Company has formulated a Policy for determining Material Subsidiaries in accordance with the applicable laws. The said Policy is available on your Companys website, www.brnl.in and a link to the said Policy has been provided elsewhere in this Annual Report. As on March 31, 2018, Orissa Steel Expressway Private Limited (OSEPL) and Guruvayoor Infrastructure Private Limited (GIPL) are the Material Subsidiaries of your Company, as per Regulation 16(1)(c) of the SEBI Listing Regulations, 2015.
POLICY AGAINST SEXUAL HARASSMENT AT WORKPLACE
Your Company is committed to provide and promote a safe, healthy and congenial atmosphere irrespective of gender, caste, creed or social class of the employees. Your Company in its endeavour to provide a safe and healthy work environment for all its employees has developed a policy to ensure zero tolerance towards verbal, physical, psychological conduct of a sexual nature by any employee or stakeholder that directly or indirectly harasses, disrupts or interferes with anothers work performance or creates an intimidating, o3 ensive or hostile environment such that each employee can realize his/her maximum potential.
Your Company has put in place a Policy on Prevention of Sexual Harassment as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made thereunder. The Policy is meant to sensitize the employees about their fundamental right to have a safe and healthy environment at workplace. As per the Policy, any employee may report his/ her complaint to the Internal Complaint Committee constituted for this purpose. The said Policy is available on your Companys website, www.brnl.in and a link to the said Policy has been provided elsewhere in this Annual Report.
During the year under review, no cases of Sexual Harassment of Women were reported.
WHISTLE BLOWER POLICY (VIGIL MECHANISM)
Your Company has formulated a Whistle Blower Policy incorporating the provisions relating to Vigil Mechanism in terms of Section 177 of the Companies Act, 2013, and Regulation 22 of SEBI Listing Regulations, 2015 in order to encourage Directors and employees of your Company to escalate to the level of the Audit Committee, any issue of concerns impacting and compromising with the interest of your Company and its stakeholders in any way. Your Company is committed to adhere to highest standards of ethical, moral and legal business conduct and to open communication, and to provide necessary safeguards for protection of employees from reprisals or victimization, for whistle blowing in good faith.
The Company has also designated email@example.com, an e-mail ID for providing access to the employees of the Company to disclose any unethical and improper practice taking place in the Company for appropriate action and reporting. The said Policy is available on your Companys website, www.brnl.in and a link to the said Policy has been provided elsewhere in this Annual Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE
During the Financial Year 2017-18, no significant and material orders have been passed by regulators or courts or tribunals, impacting the going concern status and your Companys operations in future.
At the Tenth Annual General Meeting (AGM) of your Company held on December 16, 2017, Messrs S.S. Kothari Mehta & Co., Chartered Accountants, having Registration No. 000756N, allotted by the Institute of Chartered Accountants of India (ICAI), were appointed as Statutory Auditors of your Company, to hold office for a term of 5 (five) years, from the conclusion of the 10th AGM till the conclusion of the 15th AGM of your Company, in accordance with Section 139 and other applicable provisions of the Companies Act, 2013, read with the Rules framed thereunder.
Further, pursuant to the provisions of the Companies (Amendment) Act, 2017, the requirement for ratification of the aforesaid Appointment of Statutory Auditors of the Company, by its Members, at every AGM, has been removed with e3 ect from 7th May, 2018. Hence, ratification of aforesaid appointment every year till 15th AGM of your Company does not need to be placed before the shareholders.
There are no qualifications, reservations, adverse remarks or disclaimer made by M/s. S.S. Kothari Mehta & Co., Chartered Accountants, the Statutory Auditors of the Company, except Para titled "Emphasis Matter" in the Auditors Report, which are self-explanatory and the same is detailed in Note 27.4 to the Financial Statements.
Further, the Statutory Auditors have not reported any incident of fraud, during the year under review, to the Audit Committee of your Company.
Your Company has appointed M/s. K Arun & Co, Practicing Company Secretary, as the Secretarial Auditor of the Company, for the Financial Year 2017-18, to conduct the Secretarial Audit pursuant to Section 204 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The Secretarial Audit Report for the Financial Year ended March 31, 2018 does not contain any qualification, reservation or adverse remark or disclaimer and has been set out as an Annexure to this Directors Report.
EXTRACT OF THE ANNUAL RETURN
An extract of the Annual Return, as on the Financial Year ended March 31, 2018, in Form MGT-9, as required under Section 92(3) of the Companies Act, 2013, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, has been set out as an Annexure to this Directors Report.
The website of your Company, www.brnl.in, has been successfully running on the responsive technology based platform, known as Drupal, ensuring uniform display across all devices, like, mobile, tab, desktop, etc., and all the operating systems. The website has an inbuilt sophisticated and customized content management system for easy change in content. A simple, improved navigation system enables the users to access the requisite information from different sections of the website with lesser number of clicks. The contemporary and smart look of the new website conforms to your companys brand guideline, while taking a customer and investor centric approach catering to the requirements of prospective customers, investors, employees and other stakeholders.
The site carries a comprehensive database of information of interest to the investors, including the Financial Results of your Company, dividend declared, Shareholding Pattern, any price sensitive information disclosed to the Regulatory Authorities from time to time, investor presentations, corporate profile and business activities, including project details of your Company and the services rendered by your Company.
PARTICULARS OF EMPLOYEES
The prescribed particulars of remuneration of employees pursuant to the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5 the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been set out as an Annexure to this Directors Report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Your Company has no activity relating to Conservation of Energy and Technology Absorption, as stipulated in Rule 8(3) of the Companies (Accounts) Rules, 2014. However, your Company uses information technology extensively in its operations and also continues its endeavour to improve energy conservation and utilization, safety and environment in operation of its Subsidiary and Associate Companies.
Your Companys operations are local and it has not earned and spent any foreign exchange during the year under review (Previous Year Nil).
DIRECTORS RESPONSIBILITY STATEMENT
In terms of provisions of Section 134(3) and 134(5) of the Companies Act, 2013 (Act), read with relevant Rules made thereunder, the Directors hereby confirm that:
(i) in the preparation of the annual accounts for the Financial Year ended 31st March, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) 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 your Company at the end of the Financial Year and of the profit of your Company for that period;
(iii) 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 your Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the Annual Accounts for the Financial Year ended 31st March, 2018 on a going concern basis;
(v) the Directors have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and are operating effectively; and
(vi) 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. Further, your Directors confirm that your Company has adequate internal systems and controls in place to ensure compliance of laws applicable to your Company.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India on the Board/ Committee Meetings and General Meetings.
INSIDER TRADING CODE
The Company has adopted a code of conduct to regulate, monitor and report trading by insiders (the Code) under the SEBI (Prohibition of Insider Trading) Regulations, 2015.
The Code is applicable to all Directors, Designated Employees and Insiders, who are expected to have access to Unpublished Prices Sensitive Information (UPSI). The Company Secretary is the Compliance Officer for monitoring adherence to the applicable Regulations.
Your Company strives to achieve highest standards of Corporate Governance and to take necessary steps at appropriate times for enhancing and meeting stakeholders expectations while complying with the mandatory provisions of Corporate Governance.
As required under Regulation 34(3) of the SEBI Listing Regulations, 2015, read with Schedule V thereto, a separate section on Corporate Governance and a Certificate from M/s. K. Arun & Co, Practicing Company Secretary, Kolkata, confirming compliance with the requirements of Corporate Governance, forms part of this Annual Report.
Bharat Road Network Limited
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions w.r.t these items during the year under review:
Issue of equity shares with differential rights as to dividend, voting or otherwise;
Issue of sweat equity shares;
Your Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees;
There was no revision in the Financial Statements; and
There was no change in the nature of business.
Your Directors would like to express their appreciation for the excellent support and co-operation received from Financial Institutions, Bankers, National Highway Authority of India (NHAI), Ministry of Corporate affairs, Registrar of Companies, EPC Partners and SPV Partners and other stakeholders during the year under review. Your Directors also place on record their deep appreciation for the valuable contribution made by the Companys employees and look forward to their continued cooperation in realization of motto of the Company, "Behtar Raste, Badhta Bharat", in the years to come, as a Key partner of "MAKE IN INDIA" plans.
|On behalf of the Board of Directors|
|For Bharat Road Network Limited|
|Bajrang Kumar Choudhary||Brahm Dutt|
|Place: Kolkata||Managing Director||Chairman|
|Date: 29.05.2018||DIN: 00441872||DIN: 05308908|
CERTIFICATION BY MANAGING DIRECTOR & CHIEF FINANCIAL OFFICER
[Pursuant to Regulation 17(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]
The Board of Directors
Bharat Road Network Limited
5B, North East Block, Vishwakarma Building, 86C, Topsia Road (South), Kolkata 700 046
We, Bajrang Kumar Choudhary, Managing Director (MD) and Sanjay Banka, Chief Financial Officer (CFO) of Bharat Road Network Limited, certify to the Board that we have reviewed the Financial Statements and the Cash Flow Statement of the Company for the Financial Year ended on 31st March, 2018 and to the best of our knowledge and belief, we certify that
1. The Statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; that the Statements together present a true and fair view of the Companys affairs and are in compliance with existing accounting standards, applicable laws and regulations.
2. There are no fraudulent or illegal transactions and transactions violative of the Companys Code of Conduct.
3. For the purposes of financial reporting, we accept the responsibility for establishing and maintaining the internal controls which are monitored by the Companys Internal Audit Team and have evaluated based on feedbacks received from the Companys Internal Audit Team, the effectiveness of the internal control systems of the Company pertaining to financial reporting and have reported to the Auditors and the Audit Committee, the deficiencies, if any, in the operation and design of such internal controls and the steps taken or proposed to be taken to rectify the deficiencies.
4. We have indicated to the Auditors and the Audit Committee: i. significant changes, if any, in the internal controls over financial reporting during the year; ii. significant changes, if any, in accounting policies made during the year and the same have been disclosed in the notes to the financial statements; and iii. that there have been no instances of significant fraud, of which we have become aware and consequently no involvement therein, of the management or an employee having a significant role in the Companys internal control system over financial reporting.
|Bajrang Kumar Choudhary||Sanjay Banka|
|Managing Director (MD)||Chief Financial Officer (CFO)|
|DIN: 00441872||ICAI Membership No.: 056399|
AUDITORS CERTIFICATE REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE
Bharat Road Network Limited
We have examined the compliance of conditions of Corporate Governance by Bharat Road Network Limited (the Company) for the year ended 31st March 2018, as stipulated in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46(2) and paragraphs C, D and E of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was carried out in accordance with the Guidance Note on Certification of Corporate Governance issued by the Institute of Chartered Accountants of India and was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the Regulations 17 to 27 and clauses (b) to (i) of Regulation 46(2) and paragraphs C, D and E of Schedule V of the SEBI Listing Regulations for the year ended on March 31, 2018.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.
|For K. Arun & Co.|
|Arun Kumar Khandelia|
|Date: 29.05.2018||C.P. No.: 2270|