knr constructions ltd share price Directors report


Dear Members,

Your Directors are pleased to present the Twenty Eighth Annual Report and the Companys audited financial statement (Standalone and Consolidated) for the financial year ended March 31,2023.

FINANCIAL RESULTS

The Companys financial performance, for the year ended March 31,2023 is summarised below:

(Rs in Lakhs)

Particulars

Year Ended March 31, 2023

Year Ended March 31, 2022

Standalone Consolidated Standalone Consolidated
Total revenue (including other income) 3,77,588.34 4,09,903.64 3,31,427.44 3,65,069.73
Profit before interest, depreciation, exceptional items and tax 75,380.66 95,317.90 71,941.90 85,501.68
Less: Interest and financial charges 3,926.45 15,307.60 2,744.34 14,811.39
Profit Before depreciation, Exceptional items and tax 71,454.21 80,010.30 69,197.56 70,690.29
Less: Depreciation and amortisation 14,743.35 18,070.09 13,458.97 16,492.06
Profit before exceptional items and tax 56,710.86 61,940.21 55,738.59 54,198.23
Less: Exceptional Items - Expenses/(Income) (13,796.61) (6,184.49) (2,139.95) (2,139.95)
Profit before tax 70,507.47 68,124.70 57,878.54 56,338.18
Provision for tax (including Deferred Tax ) 20,624.15 24,183.76 19,698.90 19,698.90
Profit after tax 49,883.32 43,940.94 38,179.64 36,639.28
Add: Other Comprehensive Income 50.35 50.82 (62.76) (60.12)
Total Comprehensive Income for the period 49,933.67 43,991.76 38,116.88 36,579.16
Attribution to:
Shareholders of the Company 49,933.67 45,801.42 38,116.88 38,184.47
Non-Controlling Interest NA (1,860.48) NA (1,545.19)
Balance of Profit/(Loss) for earlier years 2,06,152.00 2,13,876.47 1,68,675.45 1,77,826.88
Less: Dividend 703.09 703.09 703.09 703.09
Dividend Tax - - - -
Balance carried forward 2,55,332.23 2,58,974.80 2,06,152.00 2,13,876.47

RESULTS OF OPERATIONS AND THE STATE

OFCOMPANYS AFFAIRS

The highlights of the Companys performance are as under:

On Standalone basis

• Revenue from operations for the FY 2022-23 are reported at Rs 3,74,379.62 Lakhs.

• PBDIT (Excluding other income& Exceptional Item) increased by 6.49% to Rs 72,171.94 Lakhs

• Profit before tax increased by 21.82% to Rs 70,507.47 Lakhs

• Net profit increased by 30.65% to Rs 49,883.32 Lakhs

• Net worth increased by 21.96 % to Rs 2,73,427.52 Lakhs

• The order book position as on the date of this report stands at Rs 8,87,210 Lakhs (including 3 new HAM projects)

On consolidated basis

• Revenue from operations for the FY 2022-23 are reported at Rs 4,06,235.97 Lakhs.

• Profit before tax (After exceptional item) increased by 20.92% to Rs 68,124.70 Lakhs

• Net worth increased by 7.37 % to Rs 2,74,782.81 Lakhs Reserves

The Company is not proposing to transfer any amount to the General Reserves of the Company out of the profits made during the year. The total Other Equity (including securities premium Reserves, General Reserves, Surplus in statement of profit and loss and other comprehensive income) as on March 31,2023 is Rs 2,67,802.82 Lakhs as against the Paid-up capital of Rs 5,624.70 Lakhs

Performance of Subsidiaries

Pursuant to the provisions of Section 128 (3) of the Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014, a Report on the Financial performance of the Subsidiaries Companies during the Financial Year ended March 31,2023 in form AOC-1 is annexed herewith as Annexure I.

Dividend

The Board of Directors have recommended a final dividend of Rs 0.25/- per Equity Share for the financial year ended March 31, 2023 amounting to Rs 703.09 Lakhs. The dividend shall be paid to the members whose names appear in the Register of Members as on September 22, 2023. In respect of shares held in the dematerialised form, it shall be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited as beneficial owners as on that date.

Pursuant to the Finance Act, 2020, dividend income is taxable in the hands of the shareholders w.e.f. April 01, 2020 and the Company is required to deduct tax at source (TDS) from dividend paid to the Members at prescribed rates as per the Income-tax Act, 1961.

The dividend payout for the year under review has been formulated in accordance with the Companys policy linked with long term performance, keeping in view the Companys need for capital for its growth plans and the intent to finance such plans through internal accruals to the maximum. The Dividend Distribution Policy of the Company is annexed herewith marked as Annexure II to this Report. The Dividend Distribution Policy is posted on the website of the Company and the web link is http://knrcl.com/images/policies/KNRCL- DIVIDEND-DISTRIBUTION-POLICY.pdf There has been no change in the policy during the year.

CHANGE IN NATURE OF BUSINESS

During the year under review, there is no change in the nature of business in which the Company operates.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY.

During the year under review, till the date of this report, there were no material changes and commitments that may affect the financial position of the Company.

CAPITAL STRUCTURE Authorised Capital:

The authorised share capital of the Company is Rs 60,00,00,000/- (Sixty Crores Only) divided into 30,00,00,000 (Thirty Crores only) Equity shares of Rs 2/- (Rupees Two only) each as on March 31,2023.

During the year under review, there was no change in the authorised capital of the Company.

Paid-up capital:

As on March 31, 2023, the paid-up capital of the Company is Rs 56,24,69,200/- (Rupees Fifty-Six Crores Twenty-Four Lakhs Sixty-Nine Thousand Two Hundred Only) divided into 28,12,34,600 (Twenty-Eight Crores Twelve Lakhs Thirty-Four Thousand Six Hundred only) Equity Shares of Rs 2/- (Rupees Two) Each.

ISSUE OF SHARES:

During the year under review, the Company has not issued any securities (including convertible warrants) by way of Sweat Equity or Employee Stock Options or equity shares with differential voting rights or by any other way of allotment during the year under review.

CREDIT RATING:

As on the date of this report, CRISIL has upgraded outlook on the long term bank facilities from AA-(Positive) to AA/Stable. The short term rating is reaffirmed at A1+.

INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 125 of the Companies Act, 2013, during the year under review the below amounts were transferred to Investor Education and Protection Fund

a) An amount of Rs 23,168 /- being unclaimed dividend for the Financial Year 2014-15

b) An amount of Rs 47,502/- being unclaimed dividend for the financial year 2015-16 (transferred on April 10, 2023)

The Company had transferred

A) 1488 equity shares pertaining to financial year 2014-15

B) 2959 equity shares pertaining to financial year 2015-16 as required under the provisions of Section 124(6) of the Companies Act, 2013 to IEPF Authority.

Members are requested to note that dividends not encashed or remaining unclaimed for a period of 7 (seven) years from the date of transfer to the Companys Unpaid Dividend Account, shall be transferred to the Investor Education and Protection Fund ("IEPF") established by the Central Government. Further, pursuant to the provisions of Section 124 of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (IEPF Rules) as amended from time to time, all shares on which dividend has not been paid or claimed for seven consecutive years or more shall be transferred to IEPF Authority as notified by the Ministry of Corporate Affairs.

The Members/Claimants whose shares, unclaimed dividend have been transferred to IEPF may claim the shares or apply for refund by making an application to IEPF Authority in Form IEPF 5 which is available on www.iepf.gov.in along with requisite fee as decided by it from time to time.

Members who have not yet encashed the dividend warrants from the financial year ended March 31, 2017 onwards are requested to forward their claims to the Companys Registrar and Share Transfer Agents without any further delay. It is in Members interest to claim any un-encashed dividends and for future, opt for Electronic Clearing Service, so that dividends paid by the Company are credited to the Members account on time.

It may be noted that once the unclaimed dividend is transferred to IEPF as above, no claim shall rest with the Company in respect of such amount. It may also be noted that the unclaimed dividend amount which were lying with the Company upto the year ended on March 31, 2016, have already been transferred to IEPF. The details of the unclaimed dividends are available on the Companys website at www.knrcl.comand on the website of Ministry of Corporate Affairs at www.mca.gov.in. Members are requested to contact the Companys Registrar and Share Transfer Agent or the Company to claim the unclaimed/unpaid dividends.

Nodal Officer:

Pursuant to the provisions of Rule 7(2B) of Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2019, the Company has appointed Smt. Haritha Varanasi, Company Secretary of the Company as Nodal Officer of the Company.

DIRECTORS:

Non Independent Directors

During the year under review, there are three non-independent Directors in the Board namely Shri K Narsimha Reddy, Managing Director, Shri K Jalandhar Reddy, Executive Director and Smt. K Yashoda, Non-Executive Director.

In accordance with the requirements of the Companies Act, 2013 Shri K Jalandhar Reddy, Executive Director of the Company is liable to retire by rotation at the Annual General Meeting and, being eligible, offer himself for reappointment at the ensuing Annual General Meeting.

Save and except the aforesaid, there was no appointment / reappointment of any Director on the Board of the Company during the year 2022-23.

Brief resume of the Director proposed to be reappointed, nature of their expertise in specific functional areas, names of the companies in which they hold directorships and relationships between directors inter-se, as stipulated under Regulation 36 of SEBI (LODR) Regulations, 2015 and Secretarial Standard on General Meetings issued by the Institute of Company Secretaries of India, is annexed to the notice of the Annual General Meeting.

The Board of Directors has complete access to the information within the Company. Independent Directors have the freedom to interact with the Companys management. Interactions happen during Board / Committee meetings, when MD / ED are asked to make presentations about performance of the Company to the Board. Apart from this, they also have independent interactions with the Statutory Auditors, the Internal Auditors and external advisors appointed from time to time. Further, Independent Directors meet without the presence of any management personnel and their meetings are conducted informally to enable them to discuss matters pertaining to the Companys affairs and put forth their combined views to the Board of Directors of the Company. Independent Directors

During the year under review, there are there independent directors in the Board namely Shri L B Reddy, Shri B V Rama Rao and Smt. G Chandra Rekha. The Company has received declarations from the independent directors of the Company to the effect that they meet the criteria of independence as laid under the provisions of Section 149 (6) of the Companies Act, 2013 and Regulation 16 (1) (b) read with Regulation 25 of SEBI (LODR) Regulations, 2015 in respect of the financial year ended March 31,2023.

The Independent Directors have also confirmed that they are in compliance with the Code of Conduct as stipulated under Schedule IV of the Companies Act, 2013 and also of the Company.

In terms of Regulation 25 (8) of SEBI (LODR) Regulations, 2015 the Independent Directors have also confirmed that they are not aware of any circumstance or situation, which exists

or which may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. During the year under report, the Independent Directors of the Company had no pecuniary relationship or transactions with the Company, except to the extent of sitting fees and reimbursement of expenses incurred by them for the purpose of attending the meetings of the Board and its committees.

Proficiency of Directors:

In compliance with Rule 6 of Companies (Appointment and Qualification of Directors) Rules, 2014, all the Independent Directors of the Company have registered themselves with the Independent Directors Data Bank maintained by IICA. Except Smt. G Chandra Rekha, who has appeared and qualified the proficiency test conducted by IICA, none of the other independent Directors were required to appear for the aforesaid test.

Policy On Directors Appointment and Remuneration and Other Details:

The Nomination and Remuneration Committee has laid down the criteria for Directors appointment and remuneration including criteria for determining qualification, positive attributes and independence of a Director. The following attributes/criteria for selection have been laid by the Board on the recommendation of the Committee:

- The candidate should possess the attributes such as leadership, professional stature, domain expertise or such other attributes which in the opinion of the Committee are in the interest of the Company;

- the candidate should be free from any disqualification as provided under Sections 164 and 167 of the Companies Act, 2013;

- the candidate should meet the conditions of being independent as stipulated under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in case of appointment as an independent director; and

- the candidate should possess appropriate educational qualification, skills, experience and knowledge in one or more fields of finance, law, management, technical operations, infrastructure, or such other areas or disciplines which are relevant for the Companys business.

Key Managerial Personnel:

Pursuant to the provisions of Section 203 of the Companies Act, 2013 the following are the Key Managerial Personnel of the Company:

- Shri K Narsimha Reddy Managing Director
- Shri K Jalandhar Reddy Chief Financial Officer Whole-time Director & - Company Secretary
- Smt. Haritha Varanasi

Remuneration policy

The Company has in place remuneration policy to ensure that the Key Managerial Personnel (KMP) and Senior Managerial Personnel (SMP) shall be competitive in order to ensure that the Company can attract and retain competent talent.

The remuneration policy of the Company shall ensure that:

• The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors/ KMPs and SMPs of the quality required to run the Company successfully.

• Relationship of remuneration to performance is clear and meets appropriate performance benchmarks.

• Remuneration to directors, KMP and SMP involves a balance between fixed and variable pay reflecting short and long term performance objectives and goals set by the Company.

• Remuneration package is linked to the achievement of corporate performance targets and a strong alignment of interest with stakeholders.

The detailed remuneration policy of the Company can be accessed at the website of the Company through the below link:

http://knrcl.com/images/policies/Remuneration-Policy.pdf COMMITEES OF THE BOARD

The Company has duly constituted the following committees as per the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015

a) Audit Committee

b) Stakeholders Relationship Committee

c) Nomination and Remuneration Committee

d) Corporate Social Responsibility Committee

e) Risk Management Committee

Details of the Committees such as Composition, meetings held during the year under report are provided in Corporate Governance Report which forms integral part of the Annual Report.

MEETINGS OF THE BOARD AND COMMITTEES

Five meetings of the Board of Directors were held during the year. The Board of Directors and Committees have duly met during the year under report and the minutes of the meetings are duly recorded. The details of the meetings of the Board and its Committees are provided in the Corporate Governance Report which forms integral part of this report.

RECOMMENDATIONS OF AUDIT COMMITTEE

The Board has taken into consideration, accepted and acted upon all the recommendations of the Audit Committee.

BOARD DIVERSITY

The Company recognises that having a diverse Board enhances the quality of its performance. The Company continues to increase the diversity in the Board as and when required, as the Company believes that it is an essential element in supporting and attainment of its strategic objectives and its sustainable development. The Company has in place policy on Board Diversity and can be accessed at http://knrcl.com/images/ policies/Board-Diversity-Policy.pdf.

BOARD EVALUATION

The Nomination and Remuneration Committee lays down the criteria for performance evaluation of Independent Directors, Board of Directors and Committees of the Board.

The parameters like attendance and participation of Directors in the meetings of the Board and its Committees thereof, contribution to strategic decision making, financial statements and business performance have been the basis criteria for performance evaluation.

The evaluation of Board as a whole and each individual director is performed after seeking all the inputs from the Directors. The performance evaluation of executive Directors, Chairperson of the Board is done by the Independent Directors at their separate meeting.

For the year 2022-23, evaluation of Board as a whole, Nonexecutive and Independent Directors and Executive Directors of the Company has been duly carried out as per the policy laid by the Nomination and Remuneration Committee.

FAMILIARISATION PROGRAM FOR INDEPENEDNT DIRECTORS

All Independent Directors are familiarised with the operations and functioning of the Company. The details of familiarisation program are provided in Corporate Governance Report which forms part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

Managements Discussion and Analysis report for the year under review as stipulated under Regulation 34(2) (e) SEBI (LODR) Regulation, 2015 of the LODR Regulations 2015 is presented in a separate section forming part of the Annual report

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134 (3) (c) of the Companies Act, 2013, with respect to Directors Responsibility Statement, Your Directors hereby confirm that:

(a) in the preparation of the annual accounts for the year ended March 31, 2023, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

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 as at March 31,2023 and of the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the 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;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

IMPLEMENTATION OF CORPORATE ACTIONS, FAILURES IF ANY

During the year under review, no instances of failure to implement corporate actions were reported.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The report on Corporate Governance as stipulated under the SEBI(LODR) Regulations,2015, forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company is committed to enhance value creation in the society and community in which it operates. Through its conduct, services, and CSR initiatives it will strive to promote sustained growth in the surrounding environs.

The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy of the Company is available on the website of the Company (http://knrcl.com/ images/policies/knrcl_CSR.pdf ).

The Company has identified three focus areas of engagement which are as under:

1. Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects

2. Rural development projects

3. Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;

The Company as part of its Corporate Social Responsibility (CSR) initiative, undertook projects like promotion of education in rural areas, infrastructure and maintenance and provide free health care facilities.

The Annual Report on CSR activities carried out by the Company for the 2022-23 is annexed herewith as "Annexure MI" to this report as required under the provisions of the Companies Act, 2013 and applicable rules thereunder.

STATUTORY AUDITORS

M/s K P Rao & Co., Chartered Accountants, were re-appointed as Statutory Auditors of the Company at the 27th Annual General Meeting held on September 28, 2022 for a period of 5 years ie., upto conclusion of 32nd AGM to be held in the year 2027.

Further, the Statutory Auditors report does not contain any qualifications, reservations, adverse remarks or disclaimers. The Statutory Auditors attended the AGM held on September 29, 2022.

INTERNAL AUDITOR & CONTROLS

The Board of Directors at their meeting held on May 29, 2023, based on the recommendation of the Audit Committee, has reappointed M/s. K. P Rao Associates, Chartered Accountants, Hyderabad, as the Internal Auditors of your Company. The Internal Auditors are submitting their reports on quarterly basis. Internal Auditors findings are discussed and suitable corrective actions are taken as per the directions of Audit Committee on an on-going basis to improve efficiency in operations.

The Companys internal control systems are well established and commensurate with the nature of its business and the size and complexity of its operations. The Audit Committee reviews adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations. The recommendations/suggestions of the internal auditors are discussed in the Audit Committee meetings periodically.

COST AUDITORS

In accordance with Section 148(3) and other applicable provisions, if any, of the Companies Act, 2013 and The Companies (Audit and Auditors) Rules, 2014 the Board of Directors, upon the recommendation of Audit Committee, at their meeting held on May 29, 2023 has appointed M/s Dendukuri & Co., Cost Accountants, Hyderabad, being eligible and having sought appointment, as Cost Auditors of the Company, to carry out the cost audit of the Company for the financial year 2023-24, at a remuneration of Rs 3 Lakhs p.a.

SECRETARIAL AUDITOR

In accordance with Section 204 of the Companies Act, 2013 the Board has re-appointed M/s. VCSR & Associates, Company Secretaries, to conduct Secretarial Audit for the Financial year 2023-24. The Secretarial Audit Report for the financial year ended March 31, 2023 is annexed herewith and marked as Annexure IV to this Report.

SECRETARIAL STANDARDS

During the year under report, the Company has duly complied with all the applicable secretarial standards as issued by the Institute of Company Secretaries of India from time to time.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

A separate statement containing the salient features of the Financial statements of the subsidiaries and joint ventures of the Company is prepared in Form AOC-1 which forms part of the Consolidated financial statements.

The Company has three new companies (SPVs) as wholly- owned subsidiaries namely KNR Ramatheertham Infra Private Limited, KNR Kaveri Infra Private Limited and KNR Sriranganatha Infra Private which were incorporated during the financial year.

The Policy for determining material subsidiaries as approved by the Board may be accessed on the Companys website: http://knrcl.com/images/policies/Policy_on_MATERIAL_ SUBSIDIARIES.pdf

MATERIAL SUBSIDIARIES

During the year 2022-23, the Company has no material subsidiaries as defined under the provisions of SEBI (LODR) Regulations, 2015. However, as on the date of report, the Company has two material wholly owned subsidiaries namely KNR Guruvayur Infra Private Limited and KNR Ramanattukara Infra Private Limited (based on financial statements as on March 31,2023).

Sale of stake in the subsidiary companies:

The Board at its meeting held on August 30, 2021 has accorded its approval for sale of 100% stake held by the Company in the following companies including transfer of control, in one or more tranches to Cube Highways and Infrastructures III Pte Limited.

• KNR Shankarampet Projects Private Limited,

• KNR Srirangam Infra Private Limited and

• KNR Tirumala Infra Private Limited

Accordingly, the Company had sought approval from the members of the Company for the sale of stake at its 26th Annual General Meeting held on September 29, 2021 as required under the provisions of Regulation 24(5) of SEBI (LODR) Regulations, 2015.

The Company had transferred 49% of its stake held in KNR Tirumala Infra Private Limited and KNR Shankarampet Projects

Private Limited on December 30, 2021 to Cube Highways and Infrastructure III Pte Limited.

Further, during the year under review the Company has transferred balance 51% of its stake held in KNR Tirumala Infra Private Limited and KNR Shankarampet Projects Private Limited on October 20, 2022 and 100% of its stake in KNR Srirangam Infra Private Limited on October 14, 2022 respectively. As a result, the aforementioned companies ceased to be subsidiaries/wholly owned subsidiary of the Company.

NAMES OF COMPANIES WHICH HAVE CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

During the year under review, the below three Companies were ceased to be subsidiaries of the Company:

a) KNR Tirumala Infra Private Limited

b) KNR Shankarampet Projects Private Limited

c) KNR Srirangam Infra Private Limited

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013 and other relevant provisions of the Companies Act, 2013.

The Consolidated Financial Statements for the financial year ended March 31,2023 forms part of the Annual Report. Further, we undertake that the Annual Accounts of the subsidiary Companies and the related detailed information will be made available to the Companys shareholders and to the shareholders of the subsidiary companies seeking such information at any point of time. Further, the Annual Accounts of the subsidiary Companies shall also be kept for inspection by any shareholder at the Registered office of the Company and that of the subsidiary Companies.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company at www.knrcl.com

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis.

During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companys website at the link: http://www.knrcl.com/images/policy_on_materiality.pdf

Your Directors draw attention of the members to Notes to the financial statement which sets out related party transactions and disclosures.

The Company has not entered into any contracts/ arrangements with related parties referred to under Section 188(1) of the Companies Act, 2013, not at arms-length basis during the year. The details of the related party transactions are provided herewith as Annexure V in Form AOC-2.

DISCLOSURE UNDER REGULATION 34(3) READ WITH SCHEDULE V OF THE LISTING REGULATIONS RELATED PARTY DISCLOSURE AS PER SCHEDULE V OF THE LISTING REGULATIONS

(Rs in Lakhs)

S In the accounts of No Particulars Amount at the year ended 2022-23 Maximum outstanding amount during the year 2022-23
1. KNR Constructions (i) Loans/Advances to subsidiaries
Limited (Holding KNR Agrotech & Beverages Private Limited., 126.75 192.89
Company) KNR Energy Limited., 147.34 147.34
KNRC Holdings and Investments Private Limited., 268.22 315.37
KNR Muzaffarpur Barauni Tollway Private Limited., 3279.76 3279.76
KNR Infrastructure Projects Private Limited., 11.09 11.09
KNR Muzaffarpur Holdings Private Limited., 14.65 14.65
KNR Srirangam Infra Private Limited., 528.78 5,353.22
KNR Tirumala Infra Private Limited., - 842.88
KNR Shankarampet Project Private Limited., 86.20 1,694.44
KNR Somwarpet Infra Project Private Limited., 1.20 86.03
KNR Palani Infra Private Limited., 455.16 455.16
KNR Guruvayur Infra Private Limited., 93.06 93.06
KNR Ramanattukara Infra Private Limited., 175.02 1189.33
KNR Ramagiri Infra Private Limited., 437.16 437.16
Benedire Infrastructures and Developers LLP 0.10 0.10
Manjeri City Infrastructures and Developers LLP 0.79 0.79
(ii) Loans/advances to associates
a) Patel KNR Heavy Infrastructures Limited 27.48 27.48
b) Patel KNR Infrastructures Limited 0.04 0.04
(iii) Loans/advances to firms/Companies in which Directors are interested Nil Nil
2. KNR Constructions Limited (Holding Company) Investment by the Loan in the shares of parent company/ subsidiary company when the Company has made a loan or advance

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars relating to Conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo as required under section 217 (!) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 are as follows:

a) Conservation of Energy

The Company has taken suitable measures for conservation of energy to the extent possible. However, the core activity of the Company is civil construction which is not an energy intensive sector where energy consumption is at intensive level.

b) Technology absorption, Adoption and Innovation There is no information to be furnished regarding Technology Absorption as your Company has not undertaken any research and development activity in any manufacturing activity nor any specific technology is obtained from any external sources, which needs to be absorbed or adopted.

I nnovation is a culture in the Company to achieve cost efficiency in the construction activity to be more and more competitive in the prevailing environment that cannot be quantified.

The Company has not imported any technology during the last 5 years.

Foreign Exchange Earnings and Outgo

(Rs in Lakhs)

Particulars 2022-23 2021-22
1) Foreign Exchange Inwards Nil Nil
2) Foreign Exchange Outgo - Import of capital goods and Stores and spares 171.07 593.20

DEPOSITS

Your Company has not accepted any deposits covered by the provisions of Section 73 of the Companies Act, 2013 and the Rules framed there under.

VIGIL MECHANISM

The Company has a Vigil mechanism and Whistle blower policy in terms of the SEBI (LODR)Regulations, 2015 and the Companies Act, 2013 under which the employees are free

to report violations of applicable laws and regulations and the Code of Conduct. Protected disclosures can be made by a whistle blower through a dedicated e-mail, or a letter to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Companys website at the link: http://www.knrcl.com/images/ knrcl_whistleblower.pdf

CODE OF CONDUCT FOR THE PREVENTION OF INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulation, 2015 and amended Regulations 2018. The Insider Trading Policy of the Company lays down guidelines and procedures to be followed, and disclosures to be made while dealing with shares of the Company, as well as the consequences of violation. The policy has been formulated to regulate, monitor and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in Company securities.

The Insider Trading Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for the prevention of insider trading, is available on our website (http:// knrcl.com/images/policies/knrcl_8insider.pdf )

CODE OF CONDUCT

A declaration regarding compliance with the code of conduct signed by the Companys Managing Director is published in the Corporate Governance Report which forms part of the annual report.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

Particulars of Loans, Guarantees and Investments made during the Financial Year ended March 31,2023, covered under the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014, form part of the Standalone Financial Statements.

ANNUAL RETURN

As required under the provisions of Section 92 of the Companies Act, 2013, copy of Annual Return of the Company for the year ended March 31, 2023 is made available on the website of the Company and the same can be accessed through the following link.

http://knrcl.com/images/annual_reports/Draft-MGT-7-2022-23.pdf

Risk Management

Your Company has constituted a Risk Management Committee and formulated a policy on Risk Management in accordance with the Companies Act, 2013 and Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to frame, implement and monitor the risk management plan for your Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The Risk Management Policy of your Company is posted on the website of your Company which may be accessed at http://knrcl.com/images/policies/Risk- Management-Policy.pdf

MATERIAL ORDERS PASSED BY COURTS/REGULATORS/ TRIBUNALS

There were no material or significant orders passed by the regulators/courts/tribunals that would impact

the going concern status of the Company and its future operations.

CORPORATE INSOLVENCY RESOLUTION PROCESS INITIATED UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016.

No corporate insolvency resolution processes were initiated against the Company under the Insolvency and Bankruptcy Code, 2016, during the year under review.

DETAILS OF DIFFERENCE BETWEEN THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH REASONS THEREOF

Not applicable as there were no instances of one-time settlement with the Banks or financial institutions.

INSURANCE

All the movable properties and assets of the Company are adequately insured for the year under report.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is as follows:

S. Name of Director/KMP No. and Designation Remuneration of Director/KMP for financial year 2022-23 (Rs in Lakhs) Remuneration of Director/KMP for financial year 2021-22 (Rs in Lakhs) % increase in Remuneration in the Financial Year 2022-23 Ratio of remuneration of each Director/ to median remuneration of employees Comparison of the Remuneration of the KMP against the performance of the Company
1 Shri. K Narsimha Reddy Managing Director 1,710.00 780.00 119.23% 595 Profit before Tax and exceptional
2 Shri. K Jalandhar Reddy Executive Director and CFO 1,202.40 572.40 110.06% 418 items increased by 1.74% and Profit after Tax and
3. Smt. Haritha Varanasi Company Secretary 11.40 12.35 (7.69%) 4 Comprehensive Income Increased by 31.00% in 2022-23

Note: The total remuneration drawn by Shri K Narsimha Reddy and Shri K Jalandhar Reddy during the FY 2022-23 includes the following:

Name Gross Salary Variable Pay for the 2020-21 Variable Pay for the 2021-22
Shri K Narsimha Reddy Rs 7,80,00,000/- Rs 5,40,00,000/- Rs 3,90,00,000/-
Shri K Jalandhar Reddy Rs 5,64,90,000/- Rs 3,60,00,000/- Rs 2,70,00,000/-

The percentage of increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2022-23, ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2022-23 and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under:

Further details of top ten employees in terms of remuneration drawn during the financial year ended March 31, 2023 as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and as amended are:

Sl. no. Name of the Employee & Designation Age (years) Qualification *Gross Remuneration in Experience (years) Date of Commencement of Employment Previous Employment % of holding in the Company
1 Shri K. Narsimha Reddy Managing Director 74 B.A 17,10,00,000 55 Yrs July 11, 1995 - 32.15 %
2 Shri K.Jalandhar Reddy Executive Director & CFO 51 B.E Computers 12,02,40,000 26 Yrs July 11, 1995 - 13.43%
3. Shri K.Shankar Reddy Vice President 51 B.Tech Civil 82,48,000 26 Yrs October 01,1999 Rani Constructions --
4 Shri.V.Narasimha Ramana Sr.Vice President - Technical 59 M.Tech Civil 69,00,000 35 Yrs June 09, 2018 BSCPL
5 Shri V. Venugopal Reddy Director-Projects 45 B.E 69,00,000 22 Yrs August 21,2000 - 0.09%
6 Shri Maj. T.L. Verma Sr.Vice President - Technical 66 B.E. Civil 66,00,000 43 Yrs July 12, 2011 LANCO
7 Shri. T. Bhaskar Rao Sr.Vice President - Technical 55 M.Tech Civil 58,27,200 36 Yrs August 06, 2018 GVR Infra Projects
8 Shri.E.Srinivasa Rao Vice President - Technical 58 B.E Civil 45,60,750 28 Yrs December 02, 2012 Navayuga --
9 Shri. S. Vaikuntanathan Vice President (F&A) 67 FCA 35,47,500 42 Yrs January 07, 2016 Vaibhav Jyothi Power --
10 Shri. K. Venkata Ram Rao - General Manager (F&A) 49 ACA 39,00,000 23 Yrs September 28, 2015 Ramky Infrastructures Limited

• None of the above employees were relative of any Directors except in the case of Sri K Jalandhar Reddy and Sri K Narsimha Reddy, Sri K Jalandhar Reddy is the son of Sri K Narsimha Reddy.

• All appointments are / were contractual in accordance with terms and conditions as per Company rules.

* Gross Remuneration includes perquisites and contribution to Provident fund by the employer.

ii) The median remuneration of employees of the Company during the financial year was Rs 2.87 Lakhs;

iii) In the financial year, there was 1% decrease in the median remuneration of employees;

iv) There were 2,294 employees on the rolls of Company as on March 31,2023

v) Relationship between average increase in remuneration and company performance: -The Profit before tax and exceptional items for the financial year ended March 31, 2023 increased by 1.74% whereas there was no much (1% Decrease) variation in median remuneration.

vi) Comparison of Remuneration of the Key Managerial Personnel(s) against the performance of the Company:

The total remuneration of Key Managerial Personnel was Rs 2959.29 Lakhs whereas the Profit before tax and after exceptional item was Rs 70,507.47 Lakhs in 2022-23.

vii) a) Variations in the market capitalisation of the

Company: The market capitalisation as on March 31, 2023 at NSE was Rs 7,13,492 Lakhs (Rs 7,99,128 Lakhs as on March 31,2022)

b) Price Earnings ratio of the Company at NSE was 16.21 as at March 31, 2023 and 23.76 as at March 31,2022;

viii) Average percentage increase made in the salaries of employees other than the managerial personnel in the financial year 2022-23 was 4.43% whereas the increase in the managerial remuneration for the same financial year was 110.86%

ix) The key parameters for any variable component of remuneration availed by the executive directors: Financial performance of the Company

x) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but received remuneration in excess of the highest paid director during the year -Not Applicable; and

xi) It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of women at Workplace in accordance with The Sexual Harassment of women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and a committee has been set up for redressal of sexual harassment complaints received.

During the year under review, the Company has not received any complaints pertaining to Sexual Harassment.

BUSINESS RESPONSIBILITY AND SUSTAINABLE REPORT (BRSR)

Your Company being among the top 1000 listed entities based on market capitalisation, is required to present the Business Responsibility and Sustainability Report as required under the Regulation 34(2) (f) of SEBI (LODR) Regulations, 2015. The BRSR of the Company for the year ended March 31, 2023 forms part of this report and annexed herewith as Annexure VI.

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

INDUSTRIAL RELATIONS

Your Directors are happy to report that the Industrial Relations have been extremely cordial at all levels throughout the year. Your Directors record their appreciation for sincere efforts, support and co-operation of all employees being extended from time to time to accelerate the growth of the Company.

Appreciation and Acknowledgements

Your Directors wish to place on record their gratitude to the Companys shareholders, customers, vendors and bankers for their continued support to KNRCLs growth initiatives. Your Directors also wish to place on record, their appreciation of the contribution made by employees at all levels, who through their competence, sincerity, hard work, solidarity and dedicated support, have enabled your Company to make rapid strides in its business initiatives. Your Directors also thank the Central and State Governments and their various agencies, particularly, the National Highway Authority of India and other Governmental agencies for extending their support during the year, and look forward to their continued support.

For and on behalf of the Board of Directors
of KNR Constructions Limited
K Narsimha Reddy K Jalandhar Reddy
Managing Director Executive Director& CFO
DIN: 00382412 DIN:00434911
Place: Hyderabad
Date: August 14, 2023