Ramky Infrastructure Ltd Directors Report.
Your Directors have pleasure in presenting their 22nd Annual Report on the business and operations of your company for the financial year ended March 31, 2016.The consolidated performance of the company and its subsidiaries has been referred to wherever required.
The standalone and consolidated financial performance of the Company for the financial year ended March 31, 2016 is summarized below:
|Revenue from operations||1792.85||1079.74||2342.08||1644.13|
|Profit/(Loss) before taxes||16.29||(666.09)||32.50||(712.31)|
|Profit/(Loss) after Tax||12.36||(445.48)||29.42||(482.68)|
|Earnings per equity shares|
|Share of loss from|
Review of Performance and state of the companys affairs
During the year under review, members will notice that the standalone revenues have increased to Rs 1792.85 crores from Rs 1079.74 crores of the previous year 2014-15, and has profit of Rs 12.36 crores as against loss of Rs 445.48 crores in the previous year 2014-15.
During the year under review, members will notice that the consolidated revenues have also increased to Rs 2342.08 from Rs 1644.13 crores of the previous year 2014-15, and has profit of Rs 17.30 crores as against loss of 482.96.
Consolidation of Accounts
The standalone accounts of your Company broadly represents the EPC business plus the investment that have gone into the 13 wholly owned subsidiaries, 6 Subsidiaries, 1 Association of person, 2 Jointly Controlled entities and 2 Associates & 3 step down subsidiaries of the Company, and the consolidated business represents the consolidation of the EPC business and the integrated infrastructure developer businesses.
In accordance with Regulation 34(2) of the listing agreement and in compliance with the provisions of companies act 2013 and the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting standard AS-23 on Accounting for Investments in Associates and Accounting Standard AS-27 on Financial Reporting of Interests in Joint Ventures, your Directors have pleasure in attaching the Consolidated Financial Statements as part of the Annual Report.
A statement containing brief financial details of the subsidiaries for the financial year ended March 31, 2016 is annexed as Annexure -I. The annual accounts of these subsidiaries and the related detailed information will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company/its subsidiaries at the registered office of the Company. The annual accounts of the subsidiaries will also be available for inspection, as above, at registered office of the respective subsidiary companies.
Dividend and Transfer to Reserves
Your Board of Directors has not recommended any dividend for the financial year 2015-16. No amount is transferred to General Reserve during the financial year 2015-16. An amount of Rs 12,35,94,760 is proposed to be retained in the profit and loss account.
During the period under review there is no change in the Authorised and Paid-up Capital of the Company. The Authorised share capital is Rs. 70,00,00,000 and Paid-up Share Capital is Rs 57,19,77,910.
The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.
Directors & Key Managerial personnel
Composition of Board
The Board of directors of your company is duly constituted. The Board consists of Six directors.
Key Managerial Personnel
The Board of directors has at its meeting held on April 05, 2016, appointed Mr. N.Madhu Sudhana Reddy as the Company Secretary and compliance officer and has accepted resignation of Mr. V. PhaniBhushan as Company Secretary and Compliance Officer of the company effective from April 05, 2016
The following appointments to the Board are proposed:
Approval of the shareholders is being sought for the appointment of Mr. Krishna Kumar Gangadharan (DIN 00090715) as Director (Non-Executive) of the Company, who retire by rotation at the ensuing Annual General Meeting of the Company and being eligible offer himself for re-appointment in accordance with the provisions of the Companies Act and pursuant to Articles of Association of the Company. Your Board recommends his reappointment.
Appropriate resolutions for the appointment/ re-appointment of Directors are being placed before you for your approval at the ensuing Annual General Meeting. The brief resume of the aforesaid Directors and other information have been detailed in the Notice. Your Directors recommend their appointment/reappointment as Directors of your Company.
Number of meetings of the board
Five Board Meetings were held on 09.04.2015, 30.05.2015, 13.08.2015, 13.11.2015 and 13.02.2016 during the year ended on 31st March 2016. The gap between any two Board Meetings is within the period prescribed by the Companies Act, 2013 and Listing Agreement.
Declarations by Independent Directors
The Company has received declarations form the Independent Director under Section 149(6) of the Companies Act, 2013 confirming their independence vis--vis the Company.
Board evaluation and assessment
The Company believes formal evaluation of the board and of the individual directors, on an annual basis, is a potentially effective way to respond to the demand for greater board accountability and effectiveness. For the company, evaluation provides an ongoing means for directors to assess their individual and collective performance and effectiveness. In addition to greater board accountability, evaluation of board members helps in-
a. More effective board process
b. Better collaboration and communication c. Greater clarity with regard to members roles and responsibilities d. Improved chairman - managing directors and board relations The evaluation process covers the following aspects
- Self-evaluation of directors
- Evaluation of the performance and effectiveness of the board
- Evaluation of the performance and effectiveness of the committees
- Feedback from the non-executive directors to the chairman
- Feedback on management support to the board.
Familiarization Programme for Independent Directors
The Company shall through its Senior Managerial Personnel familiarise the Independent Directors with the strategy, operations and functions of the Company. The Independent Directors will also be familiarised with their roles, rights and responsibilities and orientation on Statutory Compliances as a Board Member.
On appointment of the Independent Directors, they will be asked to get familiarised about the Companys operations and businesses. An Interaction with the key executives of the Company is also facilitated to make them more familiar with the operations carried by the company. Detailed presentations on the business of the company are also made to the Directors. Direct meetings with the Chairman and the Managing Director are further facilitated for the new appointee to familiarize him/her about the Company/ its businesses and the group practices as the case may be and link is available at the websitehttp://ramkyinfrastructure.com.
Directors Responsibility Statement
Pursuant to the requirement under section 134 (3) and (5) of the Companies Act 2013, with respect to Directors Responsibility Statement, your board of directors to the best of their knowledge and ability confirm that: a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. such accounting policies have been selected and applied consistently and the Directors 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 31st March, 2016 and of the profit of the Company for that year; c. proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. the annual accounts of the Company have been prepared on a going concern basis; e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;
Constitution and Composition of Audit Committee
The Audit Committee of the company is duly constituted as per Section 177 of the Companies Act, 2013. Composition and Scope of Audit Committee is provided under the Corporate Governance report annexed herewith.
In pursuance of Regulation 17 to 27 read with Schedule V of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, entered into with the Stock Exchanges, a separate Report on Corporate Governance along with a certificate from Mr. Manoj Kumar Koyalkar, Practising Company Secretary, regarding its compliance is annexed and forms part of this Report. Your company will continue to adhere in letter and spirit to good corporate governance policies.
Management Discussion & Analysis
The Management Discussion and Analysis Report highlighting the industry structure and developments, opportunities and threats, future outlook, risks and concerns etc. is furnished separately and forms part of this report.
M/s. Chaturvedi & Partners, Chartered Accountants, have signified their willingness to continue as Auditors and have confirmed their eligibility under Section 139(1) of the Companies Act, 2013. The Auditors have also furnished a declaration confirming their independence as well as their arms length relationship with the Company as well as declaring that they have not taken up any prohibited non-audit assignments for the Company.
A proposal for ratifying their appointment from the conclusion of the
22 AGM till the conclusion of the 23 AGM has been included in the Notice of the ensuing AGM.
Reporting of fraud
The Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Companies Act,2013.
Cost Audit Report
Pursuant to the provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, read with Notifications/Circulars issued by the Ministry of Corporate Affairs from time to time, the Board of Directors at their meeting dated 30.05.2016, appointed Mr. R Srinivas Rao, Cost Accountants as the Cost Auditors of the Company for the financial year 2015 - 16. The board approved their appointment for the FY 2016-17. The Cost Audit Report will be filed within the stipulated period of 180 days from the closure of the financial year.
A proposal for ratification of remuneration of the CostAuditor for financial year 2016-17 is placed before theshareholders.
Business Responsibility Report (BRR)
Securities Exchange Board of India (SEBI) vide circular CIR/CFD/DIL/8/ 2012 dated August 13, 2012 has mandated the inclusion of BRR as part of the Annual Report for the top 100 listed entities based on their market capitalization on Bombay Stock Exchange Ltd and National Stock Exchange of India Ltd as at 31 March 2012. In view of the requirements specified, the company is not mandated for the providing the BRR and hence do not form part of this Report.
Corporate Social Responsibility
Ramky Infra has been pursuing CSR activities long before they were made mandatory under the Companies Act, 2013. You are aware that the CSR activities are being carried under Ramky Foundation, a charitable trust which looks after CSR activities. It focuses on 4 thrust areas viz, natural resource management, education, health and women empowerment. It seeks to bring corporate sector with an overall aim to create equitable, sustainable, and accessible developmental opportunities for the communities we serve. A Report on Corporate Social Responsibility (CSR) Policy and Activities as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is appended to this annual report as Annexure - II and link to the CSR policy is available at the websitehttp:/ /ramkyinfrastructure.com.
Particulars of Loans, Guarantees and Investments
Details of loans and guarantees given and investments made under Section 186 of the Act are provided in the Notes to the Financial Statements.
Secretarial Audit Report
Pursuant to the provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, the company is required to obtain Secretarial Audit Report from Practicing Company Secretary. Mr. Manoj Kumar Koyalkar, Practising Company Secretary was appointed to issue Secretarial Audit Report for the financial year 2015-16.
Secretarial Audit Report issued by Mr. Manoj Kumar Koyalkar, Practising company secretary in Form MR-3 for the financial year 2015-16 forms part to this report as Annexure - III.
Management responses to observations in Secretarial Audit Report:
Management shall ensure and take appropriate steps for timely compliance of various laws.
Management responses to observations in Auditors Report
With reference to observations made in Auditors Report, the notes of account is self-explanatory and therefore do not call for any further comments. The results for the year ended March 31, 2016 have been subjected to an audit by the Statutory Auditors of the Company and a qualified report has been issued by them thereon.
|Sl.No. Qualification||Management Response|
|1 With respect to the deferred tax assets amounting to Rs. 39,601.10 Lakhs The Company has recognized deferred tax asset on unabsorbed depreciation, business losses and other timing differences incurred by the Company during the year.||Based on estimated realization of reasonable margin on existing contracts on hand and future contracts, the Management is confident of sufficient future taxable income for realization of deferred tax assets.|
|Emphasis matters in Standalone financials||Management Response|
|1 Material uncertainties over the realisability of certain construction work in progress, trade receivables and loans and advances aggregating to Rs50849.10 lakhs, which are subject matters of arbitration proceedings/ negotiations||The Management of the Company, keeping in view the long term nature of the contracts, terms and condition implicit in these contracts and the ongoing discussion based on which steps to recover are currently in process, is confident of recovering the amount as they are contractually tenable.|
|2 Recognition of claim of Rs. 22,504.00 lakhs during the year and related trade receivable and other current assets aggregating to Rs.22,504.00 lakhs as at March 31st 2016, on account of cost overrun and additional quantities executed in respect of a EPC contract with its subsidiary concessionaire. 3 Insurance claim due to floods on one of the companys project in Srinagar, Jammu and Kashmir, the company has recognised insurance claim revenue aggregating to Rs. 6,294.55 lakhs to the extent measured reliably and accounted/charged off related additional costs incurred towards damage by floods.||The management of the company has received the averment of the cost overrun from the lenders independent engineer and has the authority to make such a claim as concessionaire. The Management is confident that the liabilities no longer required and no material adjustment will be required.|
|4 Write back of the liabilities no longer required outstanding for a long period aggregating to Rs. 16,495.86 lakhs.||The management has written off the liabilities which were not required any longer considering its nature and those liabilities would not recur in future.|
|Emphasis matters in Consolidated financials||Management Response|
|5 N.A.M. Expressway Limited, a Subsidiary Company whereby the Statutory Auditors of the said subsidiary have drawn attention there is cost overrun on the project to the extent of Rs. 22,504 lakhs during the year 6 Ramky Elsamex Hyderabad Ring Road Limited, a Subsidiary Company whereby the Statutory Auditors of the said subsidiary have drawn attention regarding receivables/retentions of which realization is not in line with terms of concession agreement with HMDA. 7 Ramky Herbal and Medicinal Park (Chattisgarh) Limited, a Subsidiary Company whereby the Statutory Auditors of the said subsidiary have drawn attention that the Company is a project specific company which has been terminated mutually by company &Chattisgarh state industrial development corporation which affects the going concern of the company and consequently, impact has already provided in books.||The management of the company has received the averment of the cost overrun from the lenders independent engineer and has the authority to make such a claim as concessionaire. Management believes that these amounts are recoverable in full. Matter is pending before arbitral tribunal. So, consequential financial impact will be known only when the matter is resolved The Management considering the technical and operational issue of non allotment of land required for the project has consciously decided to withdraw from the project and thus terminated these contracts in mutual agreement with respective authorities.|
|8 Jabalpur PatanShahpuraTollways Limited, a Subsidiary Company whereby the Statutory Auditors of the said subsidiary have drawn attention that the Company is a project specific company which has been terminated by Madhya Pardesh Development Corporation Limited which affects the going concern of the company and consequently, impact has already provided in books. 9 Agra EtawahTollways Limited, Ramky Food Park (Chattisgarh) Limited, Naya Raipur Gems||The Management is confident that the liabilities|
|And Jewellery SEZ Limited a Subsidiary Company whereby the Statutory Auditors of the said subsidiary have drawn attention that Company is a project specific company which has been terminated which affects the going concern of the company and consequently, impact has already provided in books.||no longer required and no material adjustment will be required.|
|1 0 In respect of Ramky Pharma City Limited India, a Subsidiary Company whereby the Statutory Auditors of the said subsidiary have drawn attention to the following points: a. there is an uncertainty in connection with charge sheet filed by CBI against by the company & attachment order of the Enforcement Directorate In respect of certain assets. b. an amount of Rs 1,050.95 lakhs was written off for insurance claim towards loss caused by HUD HUD cyclone, as there is no confirmation from the insurance company.||Management believes that is has complied with the provisions of concession agreement while consequential financial impact would be known only when matter is resolved.|
1 1 In respect of Srinagar Banihal Expressway Limited, a Subsidiary Company whereby the Statutory Auditors of the said subsidiary have drawn attention: a. That Company has suffered damages due to floods and recoveries from insurance co are under assessment. However, no material financial impact is expected in the financial statements as these damages are to be borne by the EPC contractor as per EPC agreement b. There is cost overrun on the project to the extent of Rs 9,228 lakhs during the year
Whistle Blower Policy/Vigil Mechanism
Pursuant to the provisions of Section 177 of the Companies Act, 2013 and the rules framed there under and pursuant to the applicable provision of SEBI (LODR) Regulations, 2015, the company has established a mechanism through which all stake holders can report the suspected frauds and genuine grievances to the appropriate authority. The Whistle blower policy which has been approved by the board of directors of the company has been hosted on the website of the company viz., http://ramkyinfrastructure.com.
Risk Management Policy
The Board of Directors has formed a Risk Management Committee to identify, evaluate, mitigate and monitor the risks associated with the business carried by the company. The Committee reviews the risk management plan and ensures its effectiveness. A mechanism has been put in place which will be reviewed on regular intervals.
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 financial year ended 31st March, 2016, the Company has not received any complaints pertaining to Sexual Harassment.
Particulars of Contracts or arrangements with related parties
All the related party transactions that were entered during the financial years were in the ordinary course of business of the company and were on arm length basis. There were no materially significant related party transactions entered by the company during the year with the promoters, directors, key managerial personnel or other persons which may have a potential conflict with the interest of the company.
The policy on related party transactions as approved by the board of directors is hosted on the website of the company viz : http:// ramkyinfrastructure.com.
Particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto shall be disclosed in Form No. AOC-2 as Annexure-IV to this report.
Material changes and commitments, if any, affecting the financial position of the company.
There are no material changes and commitments affecting the financial position of the company which occurred between the end of the financial year to which the financial statements relate and the date of the report.
Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future.
No significant and material order has been passed by the regulators, courts, tribunals impacting the going concern status and Companys operations in future.
Your Company has not accepted any deposits from the public. As such, there was no principal or interest outstanding on the date of the Balance Sheet.
Material Subsidiary Policy
The Company has adopted a policy for determining material subsidiary, in line with the requirements of the Listing Agreement. The Policy on Material Subsidiary is available on the website of the Company at http:// ramkyinfrastructure.com/
The Board has on the recommendation of Nomination and remuneration
Committee approved a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration.
Particulars of Employees
A table containing the particulars in accordance with the provisions of Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure -V to this Report.
In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of the Company.Copies of this statement may be obtained by the members by writing to the Company Secretary at the Registered Office of the Company.
The ratio of the remuneration of each Director to the median employees remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are enclosed in Annexure -and forms part of this Report.
Extract of the Annual Return
In accordance with Section 134 (3) (a) of the Act, an extract of the Annual Return in the prescribed format is appended as Annexure -VI to this Report.
Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
Conservation of Energy which is an ongoing process in the Companys construction activities and the same is not furnished as the relative rule is not applicable to your company.
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 adapted.
Innovation is a culture in the Company to achieve cost efficiency in the construction activity so as to be more competitive in the prevailing environment.
Foreign Exchange Earnings and Outgo
In accordance with the provisions of Section 134 of the Companies Act, 2013, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is provided under Notes to the Balance Sheet and Profit and Loss Account.
Internal Audit & Controls
The Company to engage M/s. Protiviti Consulting Private Limited, as its Internal Auditors for the financial year 2016-17 in place of exiting internal auditors, M/s. J S Sundaram & Co., Internal Auditors, who have expressed their unwillingness to act as internal auditors of the company.During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations.
Internal Financial Control Systems
The Company has adequate Internal Financial Controls consistent with the nature of business and size of the operations, to effectively provide for safety of its assets, reliability of financial transactions with adequate checks and balances, adherence to applicable statues, accounting policies, approval procedures and to ensure optimum use of available resources. These systems are reviewed and improved on a regular basis. It has a comprehensive budgetary control system to monitor revenue and expenditure against approved budget on an ongoing basis.
The company enjoyed cordial relations with its employees during the year under review and the Board appreciates the employees across the cadres for their dedicated service to the Company, and looks forward to their continued support and higher level of productivity for achieving the targets set for the future.
Listing with Stock Exchanges
The Securities Exchange Board of India (SEBI), on September 02nd 2015, has issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with an aim to consolidate and streamline the provisions of Listing agreement for different segments of capital market to ensure better enforceability. The said regulations were effective from December 1st ,2015. Accordingly, all listed entities were required to enter into the Listing Agreement within 6 months from the effective date. The Company entered into Listing agreement with the National Stock Exchange limited and BSE Limited.
The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 to NSE and BSE where the Companys Shares are listed.
Your Company treats its "human resources" as one of its most important assets.
Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement
Your Directors wish to express their appreciation of the support and cooperation of the Central and the State Government, bankers, financial institutions, suppliers, associates and subcontractors and seeks their continued patronage in future as well.
|For and on behalf of the Board of|
|Ramky Infrastructure Limited|
|Mr.Y.R.Nagaraja||Alla Ayodhya Rami Reddy|
|Hyderabad||Managing Director||Executive Chairman|
|September 1, 2016||(DIN:00009810)||(DIN: 00251430)|