DIRECTORS REPORT
DIRECTORS REPORT AND
To the Members,
Your Directors hereby present their Eighteenth Annual Report on the business and
operations of your Company along with audited financial statements for the Financial Year
2012-13.
Operations:
The Company recorded a turnover of Rs 12.3 Crores in 2012-13. Despite weakening growth
rate in the economy, rising inflation costs, tough competition and low margin in the
industry, the Company has completed two projects of Rs 20 Crores secured from M/s Cordon
Bleu Properties & Infrastructure (P) Ltd, Coimbatore for construction of residential
blocks at Coimbatore and finishing works of ETA Star Techcity (P) Ltd.
Efforts are being made to restructure the capital of the Company including the
borrowings of Rs. 60 Crores from State Bank of India. The Company is negotiating to raise
long term funds for repayment of loans and to augment its future growth. Immediate
objective of the Company is to stabilize infrastructure business and then plan for its
growth. However the present slowdown in the financial markets is not enabling the Company
to negotiate a restructuring plan.
Dividend
In view of the loss during the year, your Directors are not recommending any dividend
for the financial year 2012-13.
Management Discussion & Analysis
Global Economy
Financial crises of some kind or the other occur sporadically virtually every decade
and in various locations around the world. Financial meltdowns have occurred in countries
ranging from Sweden to Argentina, from Russia to Korea, from the United Kingdom to
Indonesia, and from Japan to the United States. Each financial crisis is unique, yet each
bears some resemblance to others. In general, crises have been generated by factors such
as overheating of markets, excessive leveraging of debt, credit booms, miscalculations of
risk, rapid outflows of capital from a country, unsustainable macroeconomic policies,
off-balance sheet operations by banks, and regulation without sufficient market monitoring
and oversight.
Weak recovery will likely resume in the major advanced economies, and it is expected
that the activity will remain relatively solid in most emerging and developing economies.
Indian Economy
Indian economy is expected to grow at a slow rate of 5.8% according to the Asian
Development Outlook Supplement. It further said the projected growth at 5.8 per cent in
2013 will be higher than the 5.0 per cent posted in 2012, growth remains constrained by
supply-side bottlenecks, as reflected in the continued slowdown in fixed capital
formation, weakness in the industrial sector, and sluggish progress in pushing through
badly needed structural reforms. The growth rate, it added, is expected to accelerate in
2014 as slower inflation provides some scope for monetary easing that could boost
investment and consumption.
Company s Business Profile, Future Outlook & New Business Opportunities:
At present, the Company is looking to concentrate and focus on its core competence area
infrastructure. SAAG RR is engaged in execution of infrastructure projects in the area of
Civil, Mechanical and Electrical works involved in construction of specialized buildings
(Industrial, Commercial and Residential), IT Parks, Water and Sewer, Oil and Gas pipeline
construction. The Company specializes in executing Civil, Mechanical and Electrical
contracts.
Infrastructure Sector Outlook & Opportunities
From the past scenario and recent global crisis the economy is recovering and it will
yield good results in the future period and in the long run it will fetch good result for
the Engineering industry.The Company is looking forward to take advantage of the
opportunities and efforts are being made is to stabilize infrastructure business and its
growth.
SWOT Analysis of SAAG RR
Strength
• More than eighteen years experience in the execution of varied construction
projects and Pre qualified to execute single projects worth Rs 60 crores in infrastructure
business.
• Good engineering skills supported by functional group of planning, budget,
procurement, finance, monitoring and CRM to complement the client and provide value
addition to the end product.
Weakness
• Financial constraint in funding for growth
• Organization constraint to handle multiple sites located in distant geographical
locations
Opportunities
• Potential need for physical infrastructure in the country, Government s planned
investment and public-private partnership model to develop infrastructure.
Threat
• Construction and infrastructure sector is highly fragmented with high and major
players with their size and varied experience could give stiff competition.
• Government and PSU award contracts to lowest bidding inviting unhealthy
competition and unremunerative pricing. This leads into difficulty of maintaining healthy
margins while committing to its quality and safety standards.
Subsidiaries:
At present, the Company has two subsidiaries, SAAG Energy Ltd, engaged in manpower
consultancy in the oil & gas sector and OGS Asiapac Ltd ( OGS ),
Financial Results: (Amount in Rs.)
| Particulars |
Note |
31-3-2013 |
31-3-2012 |
| Revenue from operations |
|
120,743,320 |
154,054,062 |
| Other income, (net) |
2.18 |
6,286,772 |
13,233,017 |
| Total Revenue (I + II) |
|
127,030,092 |
167,287,079 |
| Expenses: |
|
|
|
| Cost of Revenue |
2.19 |
111,897,717 |
147,447,256 |
| Employee benefit expenses |
2.20 |
7,271,927 |
11,493,246 |
| Finance costs |
2.21 |
68,134,500 |
68,431,437 |
| Depreciation & Impairment |
2.10 |
36,755,393 |
9,119,489 |
| Other expenses |
2.22 |
181,972,055 |
183,751,880 |
| Total expenses |
|
406,031,592 |
420,243,308 |
| Profit / (Loss) before Exceptional Items and tax (III- IV) |
|
(279,001,500) |
(252,956,229) |
| Exceptional Items |
|
- |
- |
| Profit / (Loss) before tax (V- VI) |
|
(279,001,500) |
(252,956,229) |
| Tax expense: |
|
|
|
| (1) Current tax |
2.23 |
- |
98,442 |
| (2) Deferred tax |
2.23 |
- |
4,151 |
| Profit / (Loss) for the year (VII - VIII) |
|
(279,001,500) |
(253,058,822) |
| Less: Transfer to Minority Interest |
|
(102,039) |
(388) |
| Profit / (Loss) for the year after Minority Interest (IX - X) |
|
(278,899,461) |
(253,058,434) |
Internal Control Systems and their Adequacy:
The Company is in the process of setting up an adequate system of internal control to
endure that transactions are properly recorded. The Company aims constant improvement and
strives for better systems and controls The Board assures that it will effectively
implement the internal control system in the forthcoming year.
Human Resources:
The Company continues with its effort in creating an environment of a high performance
work culture. The Company has around 18 employees as on 31.03.13 working at corporate
office and project sites.
Report on Corporate Governance:
As required by the existing clause 49 of the listing agreement entered into with the
stock exchanges a separate report on corporate governance is given as part of the annual
report along with the auditors statement on its compliance.
Directors Responsibility Statement under section 217(2AA) of the Companies Act 1956
As required under Section 217 of the Companies Act, 1956, your Directors confirm that:
• In preparation of the annual accounts, the applicable accounting standards have
been followed and that there were no material departures;
• The Directors have selected appropriate 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 profits of the Company for that period;
• The Directors have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities; and
• The accounts for the financial year ended March 31, 2013 have been made on a
going concern basis.
Auditors and their Report:
M/s. Sundar, Srini& Sridhar, Chartered Accountants, retire as Statutory Auditors at
the ensuing Annual General Meeting and being eligible, are recommended for re-appointment.
A certificate in this regard has been received to the effect that the re-appointment, if
made, would be in accordance with Section 224(1B) of the Companies Act, 1956.
With regard to the observations made by the audit regarding (i) Fixed assets, major
portion of reconciliation of fixed assets is being completed and description of assets and
current location will be incorporated in the asset records upon such reconciliation.(ii)
Adequacy of the internal audit system commensurate with the size of the Company and nature
of its business, the Board is of the Opinion that the present system is adequate for the
present level of business however steps will be taken to improve wherever required. (iii)
Repayment of overdue amounts, the Company is planning to raise long term funds for
settlement of loans and also augment working capital for future growth (iv) Erosion of net
worth and incurring of cash losses, the Company is planning to raise long term funds for
settlement of loans and also augment working capital for future growth. (v) Outstanding
statutory dues, the Company will be making the pending statutory dues on receipts of some
payments from clients in the near future or on receipt of Long Term Funds.
Information as per section 217(1) (e) of the Companies Act, 1956:
Your Company has no activity with regard to conservation of energy, Research &
Development or technology absorption. There were no Foreign Currency earnings or
expenditure during this year.
Risk Management:
The Company has recognized the need for an integrated risk management framework and has
taken appropriate measures to design comprehensive risk identification and mitigation
framework .The internal control policy is reviewed periodically and realigned to meet the
risk mitigation requirements.
Personnel:
Your Directors would like to place on record and acknowledge the commitment and
dedication on the part of the employees of your Company at all levels in continuing to
contribute to your Company during these tough times. The Industrial Relations continues to
be cordial.
No employee of the Company was in receipt of remuneration over and above the sum
specified under section 217(2A) of the Companies Act, 1956.
Public Deposits:
The Company has not accepted any public deposits and as such, no amount on account of
principal or interest on public deposits was outstanding as on the date of the Balance
Sheet.
Particulars under section 212 of the Companies Act, 1956:
As required under the provisions of Section 212 of the Companies Act, 1956, a statement
containing brief financial details of the Companys subsidiaries for the financial year
ended March 31, 2013 is included in the Annual Report.
Pursuant to the provision of Section 212(8) of the Act, the Ministry of Corporate
Affairs vide its circular dated 8th February 2011 has granted general exemption from
attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary
companies with the Balance Sheet of the Company. 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 said subsidiaries will also be available
for inspection, as above, at the head offices/registered offices of the respective
subsidiary companies. The Company shall furnish a copy of details of annual accounts of
subsidiaries to any member on demand.
Acknowledgement
Your Directors would like to place on record their sincere thanks to the Company s
suppliers, contractors, clients, shareholders, auditors and bankers and other
acquaintances for their continued support during the year and look forward to their
continued support in the future.
|
For and on Behalf of the Board |
| Place: Chennai |
|
| Date: 31/05/2013 |
Mr. R. Sriram |
|
Managing Director |
+91-9892691696
