Pratibha Industries Ltd Directors Report.

Directors’ Report

To,

The Members

Pratibha Industries Limited

Your Directors have pleasure in presenting the 23rd Annual Report together with the financial statements for the financial year ended 31st March, 2018.

FINANCIAL HIGHLIGHTS

The performance of the Company for the financial year ended 31 st March, 2018, is summarized below:

( Rs. in crores)
Particulars

Standalone

Consolidated

31.03.2018 31.03.2017 31.03.2018 31.03.2017
Total Revenue 1010.45 1102.35 1241.40 1730.02
Total Expenditure 3133.42 2025.14 3380.42 2666.60
Profit/(loss) before Tax (2122.97) (922.79) (2139.02) (936.59)
Less: Provision of Taxation - (99.23) (0.40) (99.46)
Profit/(loss) After Tax (2122.97) (823.55) (2138.62) (837.13)
Add: Share in Profit/(loss) of Joint Ventures/ - - (1.86) (2.27)
Associates (net) & Adjustment for Non-Controlling
interest in Subsidiaries
Net Profit after Tax, Non-Controlling interest (2122.97) (823.55) (2140.48) (839.40)
and share in Profit/(loss) of Joint Ventures
Other Compressive Income (0.15) 0.97 (0.16) 1.04
Total Comprehensive Income (2123.12) (822.59) (2140.64) (838.36)
Earnings Per Share (in Rs. )
Basic (88.98) (61.69) (89.71) (62.87)
Diluted (88.98) (61.69) (89.71) (62.87)

PERFORMANCE REVIEW

During the financial year 2017-18 (‘FY2018’ or ‘year under review’), the Company has achieved a consolidated turnover of Rs. 982.61 Crores as compared to Rs. 1687.15 crores in the financial year 2016-17 (‘FY 2017’ or ‘corresponding previous year’), thereby significant reduction in revenue of approx. 41.75% at consolidated level. The Company has consolidated loss of Rs. 2140.64 Crores during FY 2018 as against Rs. 839.39 crores loss in FY2017, mainly due to increase in finance cost and reduction in turnover.

The Company bagged fresh orders to the tune of Rs. 1170.08 Cr. during the year under review in joint ventures.

The prominent projects bagged were from water segment, institutional buildings and metro station During the year under review. The company bagged 3 projects in total worth Rs. 1170.08 crores approx.. One construction and redevelopment of Panvel depot in PPP mode worth Rs. 330 Cr. Another Water supply scheme for water supply scheme for KRISHNA BHAGYA NIGAM LIMITED amounting to Rs. 523.03 Cr, Third Rehabillation of Distribution Network for NRW reduction for Dhaka city Zones for, Dhaka Water Supply & Sewerage Board, Bangladesh for Rs. 317.05 Cr .

The business of the Company has been discussed in separate section viz. " Management Discussion and Analysis" which forms part of this report.

The lenders due to the severe financial crisis invoked the SDR on the 16.06.2016 with 18 months moratorium for arriving at a satisfactory solution. Though few investors evinced interest the SDR conclusion process could not be achieved and accordingly the account turned NPA with effect from 16.06.2016.

Currently the company is snaring at severe financial crunch coupled with paucity in the working capital requirements, nonpayment of salary to works and staff , nonpayment of statutory dues, etc.

Further bankers and government authorities have attached our various bank accounts for recovering their dues pertaining to the company.

The Bank of Baroda, financial creditor of the company has initiated Insolvency process under IBC Code and has filed petition with NCLT , Mumbai for the same. Company has received copy of the same Company Petition from HAS Advocates , on behalf of its client , Bank of Baroda,

Financial Creditor of the company, under section 7 of the Insolvency and Bankruptcy Code, 2016 along with ancillary documents. The matter was listed on 5/11/2018 for hearing and was adjourned to 2nd January, 2019 for further proceeding.

DIVIDEND

In view of losses, your Directors do not recommend any dividend for the F.Y. 2017-18.

TRANSFER TO GENERAL RESERVE

The Directors do not propose to transfer any amount to the General Reserve.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is annexed as

Annexure -A to this Report.

SUBSIDIARIES/ASSOCIATE COMPANIES/JOINT VENTURES

The names of companies which are subsidiaries, associates and joint ventures of the Company are provided under point III of MGT 9. Pursuant to the provisions of Section 129 and other applicable provisions of the Companies Act, 2013 ("the Act") read with rules framed thereunder, the

Company has prepared consolidated financial statements of the Company and its subsidiaries, associate companies and joint ventures, in accordance with IND AS-27 on Consolidated Financial Statements read with IND AS-31 on interest in Joint Ventures and IND AS-28 on Investments in Joint Ventures, and a separate statement containing the salient features of financial statements of subsidiaries, joint ventures and associates in Form AOC-1 are attached to the said consolidated financial statement forming part of the Annual Report.

The business highlights of subsidiaries have been covered in Management Discussion and Analysis forming part of this Annual Report.

FIXED DEPOSITS

The Company has not invited, accepted and renewed fixed deposits from public/members during the year under review.

The Company had accepted public deposits prior to the commencement of the Act. As per Section 74(1)(b) of the Act, the entire amount was to be repaid by 31st March, 2015. Hon’ble Company Law Board has vide its order dated 19th May, 2015 has allowed the Company to repay the deposit on the respective date of maturity of fixed deposits along with interest due thereon, if any, instead of repayment of entire fixed deposit on or before the 31st March, 2015.

The company has made an application u/s 74(2) of The Companies Act, 2013 to NCLT , MUMBAI Bench in August, 2017 for seeking an extension for further period of three years for repayment of outstanding deposits which was already matured. However the same matter has not been listed for hearing.

As on 31st March, 2018, fixed deposits outstanding stood at Rs. 2972.94 lacs including Interest due and Provision for penal Interest.

The Company made payments of matured and claimed deposits to the extent permitted by the liquidity.

DIRECTORS

Mr. Ravi Kulkarni, Dy. Managing Director retired by rotation in the last AGM.

During the Financial year there were various changes in the Board of Directors as follow:

1. Mr. Shrikant T. Gadre, the Independent Director resigned on 22/12/2017.

2. Mr. Awinash M. Arondekar the Independent Director resigned on 20/03/2018.

3. Mr. Sivakumaran Vaidyanathan the Independent Director resigned on 20/03/2018.

4. Dr. Sunder Lal Dhingra the Independent Director resigned on 21/03/2018.

5. Mrs. Sunanda D. Kulkarni was appointed as an additional director of the company with effect from 20/02/2018. Mrs. Sunanda D. Kulkarni holds office only upto the date of the ensuing Annual General Meeting and is eligible for appointment as a Director.

6. Mr. Haresh Adhia , Nominee Director of the company resigned on 12/05/2018.

KEY MANAGERIAL PERSONNEL

During the year under review, Ms. Bhavana Shah was appointed as Company Secretary w.e.f. 20th July, 2017. Mr. K. Sethuraman is CFO of the company.

MEETINGS OF THE BOARD

The details of meetings of Board and its Committees held during FY 2017-18 and other prescribed information are provided in the Corporate Governance Report forming part of this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 (5) of the

Act, your Directors hereby affirm that:

(a) in the preparation of the annual accounts, the applicable IND AS have been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

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

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

STATUTORY AUDITORS

M/s. Ramanand & Associates, Chartered Accountants (ICAI Firm Registration Number 117776W) were appointed as the Statutory Auditors of the Company to hold office for a term of 5 years from the conclusion of the 22nd Annual General Meeting (AGM) held on 29th September, 2017 until the conclusion of the 27th Annual General Meeting (AGM) of the Company to be held in the year 2022.

Pursuant to the Notification issued by the Ministry of Corporate Affairs on 7th May, 2018, amending section 139 of the Companies Act, 2013, the mandatory requirement for ratification of appointment of Auditors by the Members at every AGM has been omitted and hence your Company has not proposed ratification of appointment of M/s. Ramanand & Associates, Chartered Accountants, at the forthcoming AGM.

AUDITORS’ REPORT

The Auditors have made certain qualified observations their Reports. Reply to the qualifications in auditor’s report on stand alone and consolidated financial statements of the period under review is annexed to the Directors’ Report as The statement on impact of audit qualifications as stipulated in Regulation 33(3)(d) of SEBI (LODR) Regulations as Annexure B.

COST AUDITORS

Pursuant to provisions of Section 148 of the Act, the Board of Directors on the recommendation of the Audit Committee, reappointed M/s. Ketki D. Visariya & Co., Cost Accountant, as Cost Auditor of the Company for the financial year 2018-19 at a remuneration of Rs. 200,000/- plus applicable taxes and out of pocket expenses.

A resolution for ratification by shareholders of said remuneration payable to Cost Auditors is included in the AGM notice.

INTERNAL FINANCIAL CONTROLS

During the year under review, the Company appointed Internal auditor as per the requirements of the Companies Act, 2013. However, due to Stressed Financial Conditions leading to irragularities in payment of fees to internal auditor resulting into non Co-operation from auditor. The effectiveness of the internal controls is continuously reviewed by the Audit Committee. The internal control system is supplemented by an extensive programme of internal, external audits and periodic review by the management.

Main objective of Internal Audit is to provide the Audit Committee an independent, objective and reasonable assurance of the adequacy and effective operation of Company’s risk management, internal control and governance processes.

On the basis of its deliberations on the internal control systems and internal audits, the Audit Committee makes recommendations to the Board.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, The Board appointed M/s. Haresh M. Associates, Company Secretaries in Whole Time Practice to conduct Secretarial Audit of the Company for the financial year 2017-18. The report of the Secretarial

Auditor is annexed to this report as Annexure - C.

As far point wise reply to the qualifications of Secretarial Audit Report is as follow:

1. As mentioned earlier in this report, company is facing severe financial crunch since last two years, leading to delay in completion of projects, resulting into non-availability of funds on time and shortage of working capital, company could not comply with statutory compliance under various laws including SEBI(LODR)

Regulations, 2015. Hence company did not file results on time as per SEBI Regulations. The company has, from time to time , apprised both stock exchange, vide various letters about the financial situation of the company. BSE and NSE has levied penalty, which company was not in position to pay and BSE has issued notice to the company for suspension of trading of the company shares w.e.f. 26th November, 2018.

2. The company was in process to identify and appoint woman director on the Board of the company. and company appointed woman director w.e.f. 20/02/2018.

3. The company, due to financial problems could not repay deposits on time. The company got extension from CLB in 2015 for repayment of deposits and after that company sought legal opinion regarding disqualification of director due to default of repayment in deposits on time, which on the basis of extension granted by CLB, gave favourable opinion regarding the qualification of directors, accordingly directors continued as such.

After that company in August, 2017 has made petition to the NCLT,Mumbai Bench for further extension of period of 3 years of time for repayment of deposit, but the matter is not listed for hearing.

Further to inform that in such tight situation, company has made efforts to pay maximum possible and made repayment of around Rs. 12 crores principal and Rs. 2 crores interest. This shows clear intention of the company that default is not intentional but due to prevailing circumstances.

4. As mentioned above , majority Independent Directors have resigned during the year under review either due to health reasons or personal reasons.

5. As regards point no. 5, 6,7 ,8 company could not pay fees to the cost auditor and internal auditor on time, which is pending for nearly last two years. Similarly company did not pay fees of the foreign subsidiary companies and auditor has not submitted the financial statements. Hence cost audit, internal audit was not carried out and also APR relating to foreign subsidiary was not filed.

6. As far point no. 9 , composition of audit committee was not as per SEBI(LODR) Regulations, but to comply with the other requirements, the present members of the committee have to work , till new members are appointed.

7. Delay in listing fees, again due to non-availability of funds on time. The company was looking for company secretary after the resignation of previous company and appointed on 20th July, 2017.

8. As regards confirmation and approval of minutes of subsidiary companies by the Board, there was delay in getting records on time from subsidiary companies and some time not getting financials from auditors

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company does not own any manufacturing facility. The business activities of your Company are not energy intensive. However, your Company is committed to take required measures to reduce energy consumption by the purchase of energy efficient construction equipment, implementation of energy efficient lightings. The specific details as per Rule 8(3) are provided under

Annexure – D. PERSONNEL

Disclosure with respect to the remuneration of Directors and Employees in accordance with the provisions of Section 197 of the Act read with rule 5(1) & (2) the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as Annexure E CORPORATE SOCIAL RESPONSIBILITY

The Company is a socially conscious organisation and assigns tremendous value in serving the society at large. We appreciate our position of responsibility for sharing the benefits with those less fortunate in society and their upliftment.

The Board has constituted a CSR Committee which has recommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company. The Corporate Social Responsibility policy has been devised in accordance with Section 135 of Act. The CSR policy of the Company is available on the website of the Company www. pratibhagroup.com. Since company has incurred losses during the year 2016-17 and 2017-18 and due to liquidity crunch, the Company could not spend money on CSR activities. The annual report on CSR activities is set out as Annexure-F to this report.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

During the financial year 2017-18, your Company has entered into transactions with related parties as defined under Section 2(76) of the Act read with Companies (Specification of Definitions ordinary course of business and at arm’s length basis. Since all the related party transactions are carried out at arm’s length basis in the ordinary course of business, the Company do not have any particulars to report in Form AOC- 2 pursuant to Section 134 (3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014. However, the disclosure of transactions with related party for the year, as per Accounting Standard -18 Related Party Disclosures is given in Note no 40 to the Balance Sheet as on 31st March, 2018.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company’s website at the link: http://www.pratibhagroup.com/pratibha_new/ pages/PDFs/PIL_RPT.pdf.

. PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES UNDER SECTION 186

The details of investment made during the year under review (including previous years) are disclosed under Note no.43 of the standalone financial statements of the Company.

The Company is engaged in providing infrastructural facilities and therefore is exempted under sub-section 11 of Section 186 of the Act from the application of provisions of that Section. As such, the requirement to provide the details of a loan, guarantee or security is not applicable to the Company.

ANNUAL EVALUATION OF BOARD

In terms of provisions of the Act read with Rules issued thereunder and SEBI LODR Regulations, the Nomination and Remuneration Committee formulated the criteria for evaluating the Board of Directors, its Committees and individual Directors. On the basis of criteria so approved, the evaluation of the Board of Directors and its committees was carried out on 30th May, 2017 to assess the effectiveness of the Board and its Committees during F. Y. 2017-18. A separate exercise was also carried out to evaluate the performance of individual Directors on various parameters which, inter alia, included understanding of their roles and responsibilities, business of the Company, level of participation and contribution, independence of judgement, safeguarding the overall interest of shareholders and the Company.

CORPORATE GOVERNANCE

As per the provisions of SEBI LODR Regulations, a Corporate Governance Report is included in the Annual Report as Annexure – G.

PREVENTION OF SEXUAL HARRASSMENT AT WORK PLACE

In line with the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 read with rules made thereunder, your Company has constituted Internal Complaints Committee which is responsible for redressal of complaints related to sexual harassment. During the year under review, there were noDetails) Rules, 2014, in the complaints pertaining to sexual harassment.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism to facilitate reporting of any instances of fraud, unethical conduct and mismanagement, if any vide Whistle Blower Policy which is in compliance with the provisions of Section 177 (10) of the Act and SEBI LODR Regulations.

The policy also provides for adequate safeguards against victimization of persons who use such mechanism and makes provision for direct access to the Chairman of the Audit Committee in all cases. The Whistle Blower Policy of the Company is available on the website of the Company, http://www.pratibhagroup.com/pratibha_new/pages/ PDFs/WHISTLE_BLOWER_POLICY_PIL_.pdf.

EMPLOYEE RELATIONSHIP

The Company due to financial crunch, was not fair enough and could not make payments to the employees on time. However ,staff and other employees , through out the year gave valuable support to the company by giving uninterrupted service to the company. Management is thankful to them for such gesture and wishes to place on record its sincere appreciation of the efforts put in by the Company’s workers, staff and executives for achieving results under demanding circumstances.

OTHER DISCLOSURES

- During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

- No material changes and commitments, affecting the financial position of the Company, have occurred between the end of the financial year and the date of this Report.

- The Company has not issued any shares or options for subscription of shares by its employees under any employee stock option scheme or any other scheme.

- None of the Directors received any remuneration or commission from any of the subsidiaries.

- The Company has not issued any equity shares with differential voting rights.

- During the year under review, no instances of fraud were reported to the Audit Committee/Board of Directors by Statutory Auditors, Secretarial Auditors, Cost Auditors or Internal Auditors.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the Banks, Financial Institutions, Central and State Governments, Various Statutory Authorities, Customers, Suppliers, Employees and Business Associates for their continued co-operation and support to the Company. Your Directors appreciate and value the trust reposed and faith shown by every shareholders of the Company.

For and on behalf of the Board of Directors
Sd/-
Date: 9th Novemebr, 2018 Ajit Kulkarni
Place: Mumbai Chairman & Director