KNR Constructions Ltd Directors Report.

Dear Members,

Your Directors are pleased to present the Twenty Third Annual Report and the Companys audited financial statement for the financial year ended March 31, 2018.


The Companys financial performance, for the year ended March 31, 2018 is summarised below:

(different in Lakhs)

Year ended

Year ended


March 31, 2018

March 31, 2017

Total revenue (including other income)



Profit before interest, depreciation and tax



Less: Interest and financial charges



Profit Before depreciation



Less: Depreciation and amortization



Profit before tax



Provision for tax (including Deferred Tax )



Profit after tax



Profit brought forward from previous year



Profit available for appropriation






Dividend tax



Balance carried forward



Paid Up capital



Other Equity




The highlights of the Companys performance are as under:

Revenue from operations different 1,87,563.54 Lakhs

PBDIT(Excluding Other Income) increased by 68.19 % to different 38,612.82 Lakhs Profit before Tax increased by 54.04% to different 26,815.06 Lakhs Cash Profit increased by 83.71% to different 40,623.82 Lakhs Net Profit increased by 71.66% to different 27,082.03 Lakhs The order book position as on 31st March 2018 stands at different 2,32,656.51 Lakhs.


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 31st March 2018 is different 112,970.90 Lakhs as against the Paid-up capital of different 2812.35 Lakhs


The Board of Directors has recommended final dividend of different 0.40 per Equity Share of different 2.00 Each for the financial year ended 31st March 2018, amounting to different 562.47 Lakhs subject to approval of the shareholders. The dividend will be paid to the members whose names appear in the Register of Members as on 22nd September 2018 in respect of shares held in the dematerialized form, it will 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. The dividend recommended by your Directors, if approved at the ensuring Annual General Meeting by the Shareholders would be paid within the stipulated time. 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.

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

Transfer to the Investor Education and Protection Fund

In terms of Section 125 of the Companies Act, 2013, an amount of different 57,016/- being unclaimed dividend for the Financial Year 2009 - 10 was transferred to the Investor Education and Protection fund (IEPF) established by the Central Government during the year under review.

Subsidiaries, Joint Ventures and Associate Companies

During the year under review, no companies have become or ceased to be companys subsidiaries and during the year the no new Joint Ventures were entered by the company as per the provisions of section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the subsidiary Companies and Joint Ventures is prepared in Form AOC-1 and it forms part of the consolidated financial statements and hence not repeated here for the sake of brevity. The Policy for determining material subsidiaries as approved by the Board may be accessed on the Companys website: www.

Consolidated Financial Statements

The consolidated financial statements, in terms of Section 129 of the Companies Act, 2013 and pursuant to Regulation 33 of SEBI(LODR) Regulations 2015 and prepared in accordance with Accounting Standard 21 as specified in the Companies (Accounting Standards) Rules, 2014 forms a part of this annual report. As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its Subsidiaries on its website and copy of separate audited accounts of its Subsidiaries will be provided to the members at their request.

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 confirmed that: a. in the preparation of the annual accounts for the year ended March 31, 2018, 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, 2018 and of the profit of the Company for the year ended on that date; c. the Directors have taken proper and su3 cient 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.

Corporate Governance

The Company is commi3 ed 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 LODR Regulations 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 a3 ached to the report on Corporate Governance.

Corporate Social Responsibility (CSR)

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 may be accessed on the Companys website at the link: h3 p://

Name Designation Category
Shri L. B. Reddy Chairman Non-Executive and Independent Director
Shri B. V. Rama Rao Member Non-Executive and Independent Director
Shri K. Jalandhar Reddy Member Executive and Non- Independent Director

Composition of the CSR Committee

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 centres 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 renovation of old age homes.

The Annual Report on CSR activities is annexed herewith as "Annexure I" to this report and CSR Policy is posted on the website of the Company and the web link is h3 p:// images/knrcl_CSR.pdf


In accordance with the requirements of the Companies Act, 2013 Smt. K . Yashoda, Director of the Company is liable to retire by rotation at the Annual General Meeting and, being eligible, offer themselves for reappointment at the ensuring Annual General Meeting. 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 LODR Regulations entered with the Stock Exchanges in India, are provided in the Report on Corporate Governance.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under the Act and LODR Regulations entered with the Stock Exchanges.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors.

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, they meet without the presence of any management personnel and their meetings are conducted informally to enable the Independent Directors to discuss matters pertaining to the Companys affairs and put forth their combined views to the Board of Directors of the Company.

Statutory Auditors

M/s K P Rao & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company at the 22nd Annual General

Meeting held on September 28, 2017 for a period of 5 years ie., upto conclusion of 27th AGM to be held in the year 2022. Pursuant to Notification issued by the Ministry of Corporate A3 airs on 7th May, 2018 amending section 139 of the Companies Act, 2013 and the Rules framed thereunder, the mandatory requirement for ratification of appointment of Auditors by the Members at every Annual General Meeting ("AGM") has been omi3 ed, and hence the Company is not proposing an item on ratification of appointment of Auditors at this AGM.

Internal Auditor & Controls

The Board of Directors based on the recommendation of the Audit Committee has re-appointed M/s. K. P. Rao Associates, Chartered Accountants, Hyderabad, as the Internal Auditors of your Company. The Internal Auditors are submi3 ing 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 e3 ciency 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 of the Companies Act, 2013 (corresponding Section 233B of the Companies Act, 1956) and the MCA General Circular No. 15/2011 dated April 11, 2011, (as amended vide General Circular No. 36/2012 dated November 6, 2012), the Audit Committee has recommended and the Board of Directors had re-appointed M/s. K.K. Rao & Associates, Cost Accountants, Hyderabad, being eligible and having sought reappointment, as Cost Auditors of the Company, to carry out the cost audit for the Company during the financial year 2018-19.

Secretarial Auditor

In accordance with Section 204 of the Companies Act, 2013 the Board has appointed M/s. VCSR & Associates, Company Secretaries, to conduct Secretarial Audit for the FY 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed herewith marked as Annexure II to this Report.

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: h3 p://www. Your Directors draw a3 ention of the members to Notes to the financial statement which sets out related party transactions and disclosures.

Conservation of energy, technology absorption and foreign exchange earnings and out go:

The particulars relating to Conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo as required under section 217 (1) (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. The core activity of the company is civil construction that is not an energy intensive activity.

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. Innovation is a culture in the Company to achieve cost e3 ciency in the construction activity to be more and more competitive in the prevailing environment that cannot be quantified.

Foreign Exchange Earnings And Outgo Foreign Exchange Inwards - Nil Foreign Exchange outgo towards a) Travel – different 13.30 Lakhs (P.Y different 15.67 Lakhs) b) Import of capital goods and Stores & Spares different 1,938.79 Lakhs (P.Y different 300.71 Lakhs) c) Advance / Loan to Subsidiaries – Nil (P.Y Nil Lakhs) d) Term Loan Repayment and interest – Nil (P.Y Nil Lakhs)

Fixed 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.

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 e3 orts, support and co-operation of all employees being extended from time to time to accelerate the growth of the Company.

Disclosures Audit committee

The Audit Committee comprises majority Independent Directors namely Shri L. B Reddy (Chairman), Shri B V Rama Rao, and Shri K Jalandhar Reddy as other members. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Company has a Vigil mechanism and Whistle blower policy in terms of the LODR Regulations, 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 le3 er 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: h3 p://

Meetings of the Board

Seven meetings of the Board of Directors were held during the year under review. For further details, please refer report on Corporate Governance of this Annual Report.

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 given, investments made, guarantees given and securities provided are provided in the standalone financial statement.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure III to this 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:

The percentage of increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2017-18, ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2017-18 and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under:

Name of Director/KMP and Designation

Remuneration of Director/KMP for financial year 2017- 18 (different in lakhs)

% increase in Remuneration in the Financial Year 2017-18

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 K Narasimha Reddy Managing Director




Profit before Tax and exceptional item increased by 54.04% and Profit A3 er Tax and comprehensive income increased by 71.66% in financial Year 2017-18
2 K Jalandhar Reddy Executive Director and CFO




3 M V Venkata Rao Company Secretary




4 S.Vaikuntanathan, V.P (F&A)




During the period under review, no employee of the Company is employed throughout the financial year and in receipt of different 102.00 lakhs or more, or employed for part of the year and in receipt of different 8.5 lakhs or more a month or was in receipt of remuneration in excess of that drawn by the managing director or whole time director or manager and holds by himself or long with his spouse and dependent children, not less than two percent of the equity shares of the company under Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Further details of top ten employees in terms of remuneration drawn during the financial year ended 31st March, 2018 as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and as amended are :

Name of the Employee & Designation

Age (years)


*Gross Remu- neration in different

Experience (years)

Date of Com- mencement of Employ- ment

Previous Em- ployment

% of holding in the Company

1 Sri K. Narasimha Reddy Managing Director




49 Yrs




2 Sri K.Jalandhar Reddy Executive Director & CFO


B.E Computers


21 Yrs




3 Sri Maj. T.L. Varma Vice President


B.E. Civil


38 Yrs




4 Sri K.Shankar Reddy Vice President


B.Tech Civil


21 Yrs


Rani Constructions


5 Sri V. Venugopal Reddy Director Projects




17 Yrs




6 Shri.E.Srinivasa Rao Chief Project Manager


B.E Civil


23 Yrs




7 Sri. S. Vaikuntanathan Vice President (F&A)




37 Yrs


Vaibhav Jyothi Power


8 Sri. K. Venkata Ram Rao General Manager (F&A)




14 Yrs




9 Sri.B.Phani Kumar Sr.Project Manager


B.Tech Civil


32 Yrs


Balaji Rail Road Systems


10 Sri. K. Venkateshwarlu Sr. Project Manager


M.Tech Civil


23 Yrs




• None of the above employees were relative of any Directors except Shri K Jalandhar Reddy who is son of Shri K Narasimha 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 different 1.54 Lakhs;

iii) In the financial year, there was increase of 2.40% in the median remuneration of employees;

iv) There were 1020 employees on the rolls of Company as on March 31, 2018

v) Relationship between average increase in remuneration and company performance: - The Profit before tax and exceptional items for the financial year ended March 31, 2018 increased by 54.04% whereas the increase in median remuneration was 2.40%

vi) Comparison of Remuneration of the Key Managerial Personnel(s) against the performance of the Company: The total remuneration of Key Managerial Personnel was different 840.82 lakhs whereas the Profit before tax was different 26,815.06 Lakhs in 2017-18

vii) a) Variations in the market capitalisation of the Company: The market capitalisation as on March 31, 2018 at NSE was different 3,99,353.13 Lakhs (different 2,71,039.85 Lakhs as on March 31, 2017)

b) Price Earnings ratio of the Company at NSE was 14.67 as at March 31, 2018 and was 17.24 as at March 31, 2017;

viii) Average percentage increase made in the salaries of employees other than the managerial personnel in the last financial year i.e. 2017-18 was 30.16% whereas the increase in the managerial remuneration for the same financial year was 38.07%

ix) The key parameters for any variable component of remuneration availed by the directors: Not applicable

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;

XI) It is hereby a3 rmed 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. During the year under review, the Company has not received any complaints pertaining to Sexual Harassment.


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. Issue of equity shares with di3 erential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this Report.

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

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

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.

On behalf of the Board of Directors of KNR Constructions Limited

K Jalandhar Reddy

Executive Director & CFO,

K Narasimha Reddy

Managing Director,

Place : Hyderabad Date : August 10, 2018