Valecha Engineering Ltd Directors Report.

To The Members,

The Directors present their 42nd Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2019.

Financial Highlights (Standalone) Rs. in Crores
2018-19 2017-18
Revenue from Operations 184.30 207.80
Other Income 17.23 67.69
Total Revenue 201.53 275.49
Profit before Interest, Depreciation, Exceptional Items and Tax 7.62 41.85
Less: Finance Cost 1.28 67.16
Profit before Depreciation, Exceptional Items and Tax 6.34 (25.31)
Less: Depreciation and Amortization Expenses 5.18 10.14
Profit /(Loss) before Exceptional Item and Tax 1.16 (35.45)
Exceptional Item - -
Profit/ (Loss) before Tax 1.16 (35.45)
Provision for Tax (Including earlier Year Taxation) - 1.66
Profit /(Loss) after Tax 1.16 (37.11)
Other comprehensive income/(loss) for the year 1.25 (2.68)
Total comprehensive income for the year 2.41 (39.79)
Retained Earnings- Opening Balance (143.66) (106.55)
Add: Profit/ (Loss) for the Year 1.16 (37.11)
Retained Earnings- Closing Balance (142.50) (143.66)

1. Share Capital:

The paid up Equity Share Capital as on 31st March, 2019 was Rs. 22.53 Crores.

2. Dividend:

In view of the loss incurred during the year under review, the Board regrets its inability to recommend any dividend for the year ended 31st March, 2019.

3. Reserves:

Since the Company has made losses during the year, no amount is being transferred to reserves.

4. Operations/ State of affairs during the year:

Standalone

The Company has achieved a turnover of Rs.184.30 crores as at 31st March, 2019 against Rs 207.80 crores resulting into a decrease by 11.31%. The Company has earned Profit after Tax of Rs 1.16 crores against the Loss after Tax of Rs 37.11 crores in the previous year.

Consolidated

The Company has achieved a consolidated turnover of Rs.209.72 crores as at 31st March, 2019 against Rs 252.64 crores resulting into a decrease by 16.99%. The company has incurred a consolidated Loss after Tax of Rs 150.26 crores against the Loss after Tax of Rs 225.18 crores in the previous year.

5. Fixed Deposits:

As on 31st March, 2019, Fixed Deposits stood at Rs. 28.16 Crores as against Rs. 29.03 Crores in the previous year.

Details relating to deposits covered under The Companies (Acceptance of Deposits) Rules, 2014 for the Financial Year 2018-19 are as follows:

• Targeted Deposit repayment was Rs. 15.41 crores for 3835 FD holders

Despite the financial crunch and difficulties faced by the Company, the Company is making repayment to the Fixed Deposit holders.

National Company Law Tribunal, Mumbai vide Order dated 03.04.2019, has directed Canara Bank to remit the entire Income Tax refund of Rs.15.41 Crores to HDFC Bank, Fort Branch, Mumbai and on receipt of the said refund, to pay to the Fixed Deposits Holders by the Company.

As on the date of this report, the above matter is pending before National Company Law Appellate Tribunal, New Delhi.

National Company Law Tribunal, Mumbai, further vide Order dated 11.06.2019, has advised the Company that on receipt of the sum of Rs.8.99 Crores refund from the Income Tax Department, to pay to the Fixed Deposit Holders,

6. Material changes and commitments:

There have been no material changes and commitments, affecting the financial position of the Company between the end of the financial year of the Company to which the financial statements relate and the date of the report.

7. Changes in the nature of business

There has been no change in the nature of business

8. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future:

Few supplier/vendors had filed winding up petitions before the Bombay High Court and/or for liquidation under IBC. The company has challenged such cases by filing necessary legal action and Bombay High Court has stayed/put in abeyance the relevant cases.

9. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo pursuant to Section 134 of the Companies Act, 2013, and Rules thereunder:

A. Conservation of Energy: At all the sites of the Company the consumption of power is regularly monitored and necessary measures are taken to regulate the consumption.

B. Technology absorption: During the year under review, there is no expenditure on Technology Absorption and on Research and Development.

C. Foreign Exchange Earnings & Outgo:

(Rs. in lakhs)
2018 - 19 2017-18
Foreign Exchange Outgo NIL NIL
Foreign Exchange Earned NIL NIL

10. Details of Subsidiary/Joint Ventures/Associate Companies:

As on 31st March, 2019, the Company has the following 6 subsidiaries namely:-

Valecha Infrastructure Limited Valecha LM Toll Private Limited
Valecha Kachchh Toll Roads Limited Professional Realtors Private Limited
Valecha International FZE Valecha Badwani Sendhwa Tollways Limited

Valecha LM Toll Private Limited (VLMTPL), a step down subsidiary of the Company and subsidiary of Valecha Infrastructure Limited (VIL) has been admitted to National Company Law Tribunal (NCLT) on 29.03.2019 in view of the insolvency petition filed by Axis Bank Limited under section 7 of the Insolvency and Bankruptcy Code, 2016 and consequently Interim Resolution Professional (‘IRP) was appointed by the NCLT.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of Financial Statements of subsidiaries in Form AOC-1 forms part of the Financial Statement and hence not repeated here for the sake of brevity.

11. Consolidated Financial Statements

The audited Consolidated Financial Statements of the Company also form part of the Annual Report.

Pursuant to the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its subsidiaries on its website www.valechaeng.com. The Company will make available the audited annual accounts and associated information of its subsidiaries, upon request by any of its shareholders.

12. Particulars of Loans, Guarantees or Investments under Section 186:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

13. Auditors and their Report:

Statutory Auditor

M/s. Kanu Doshi Associates LLP (FRN: 101248W/W-100022), Chartered Accountants, who were appointed as the Statutory Auditors of the Company for a term of five years, from the conclusion of the 40th Annual General Meeting till the conclusion of the 45th Annual General Meeting, resigned as Statutory Auditors on 30th April, 2019. To fill this casual vacancy, the Board of Directors appointed M/s. Bagaria & Co. LLP (FRN: 113447W/W-100019). Their appointment was confirmed by the members in the Extra Ordinary General Meeting held on 04th June, 2019. M/s. Bagaria & Co. LLP conducted the Statutory Audit for the year 2018-19. The Independent Auditors Report to the members of the Company in respect of the Standalone and Consolidated Financial Statements for the year ended 31st March, 2019 form part of this Annual Report.

Statutory Auditors Remarks

Note No. 40 to 52 of Notes to Standalone Financial Statement provide clarification to the Auditors qualified opinion in point a) to i) of the Audit report (Standalone)

Note No. 45 to 57 of Notes to Consolidated Financial Statement provide clarification to the Auditors qualified opinion in point a) to j) of the Audit report (Consolidated)

Cost Auditor:

Pursuant to Section 148 of the Companies Act, 2013, in terms of the Central Governments directives, the Board of Directors on the recommendation of the Audit Committee had appointed M/s Darshan Vora & Co (M/36481), Cost Accountant, as the Cost Auditor of the Company for the year 2019-20.

M/s Darshan Vora & Co have confirmed that their appointment is within the limits of Section 139 of the Companies Act, 2013 and has certified that they are free from any disqualifications specified under Section 148(5) and all other applicable provisions of the Companies Act, 2013. The said auditors have given their eligibility certificate for appointment as Cost Auditor.

Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed M/s Ragini Chokshi & Co, Practicing Company Secretary (Membership No.2390), a firm of Company Secretaries in practice to undertake the Secretarial Audit for the financial year ended 31st March, 2019. Their Report is annexed as Annexure–A to this report.

14. Adequacy of Internal Financial Control

The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information to Directors

15. Directors:

Cessation of term of Directors:

Mr. Jagdish Valecha who was appointed as Vice Chairman cum Managing Director by the shareholders in their meeting held on 29th September, 2017, ceased to be the Managing Director on 11th March, 2019. However, he continues to hold the position of Vice Chairman & Non-Executive Director from the said date.

Appointment of Directors:

The Board of Directors vide circular resolution dated 28th March, 2019 have appointed Mrs. Lalna B. Takekar (DIN: 08111805) as Additional Director (Woman Director) of the Company. The Board, therefore, recommends her appointment as a director of the Company. A brief resume and other relevant information has been furnished in the notice convening the AGM.

The Board of Directors in its meeting held on 30th July, 2019 have appointed Mr. Tarun Dutta as Chief Executive Officer w.e.f. 30th July, 2019 for a period of 5 years subject to review by the Board of Directors during his tenure as Chief Executive Officer

Retirement by Rotation

In accordance with the requirement of the Companies Act, 2013, Mr. Jadgish K. Valecha (DIN: 00013070) Non-Executive Director, liable to retire by rotation at the ensuing Annual General Meeting, being eligible, offers himself for re-appointment.

Declaration by Independent Directors:

All Independent Directors have given declaration that they meets the criteria of independence as provided in section 149 (6) of the Act, and Regulation 16 and 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

There has been no change in the circumstances, which has affected their status as Independent Director. The Non-Executive Directors of the company had no pecuniary relationship or transactions with the company.

In the opinion of the Board, they fulfill the conditions of independence as specified and are independent of the management.

16. Board Evaluation

The Nomination and Remuneration Committee has laid down criteria for performance evaluation of the Directors, Chairperson, Board Level Committees and the Board as a Whole and also the evaluation process for the same. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board Members and its Committees with the Company.

17. Meetings of the Board of Directors:

The details of the number of meetings of the Board held during the Financial Year 2018-19 forms part of the Corporate Governance Report.

18. Committees of the Board of Directors

The Board of Directors have the following Committees

- Audit Committee

- Nomination and Remuneration Committee

- Stakeholders Relationship Committee

The details of the Committees along with their composition, number of meetings and attendance at the meetings are provided in the Corporate Governance section of this Report.

19. Policies of the Board of Directors

I. Corporate Social Responsibility

During the year under review, in view of the loss incurred, Section 135 (1) of the Companies Act, 2013 is not applicable.

II. Vigil Mechanism/Whistle Blower

In compliance with the provisions of Section 177(9) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the Company has framed a Vigil Mechanism/Whistle Blower Policy with a view to maintain high standards of transparency in Corporate Governance, deal with unethical behavior, actual or suspected fraud or violation of the Companys code of conduct or ethics policy, if any. No communication from any employee of the company under the Whistle Blower Policy was received during the year.

III. Remuneration Policy for Directors, Key Managerial Personnel and other employees

A. Executive Directors

a) The remuneration paid to the Executive Directors of the Company is approved by the Board of Directors on the recommendations of the Nomination and Remuneration Committee.

b) The remuneration to be paid to the Managing Director and Whole Time Directors shall be in accordance with the limits/conditions laid down in Schedule V of the Companies Act, 2013.

c) The Remuneration to the Key Managerial Personnel and other employees will be such as to ensure that the relationship of remuneration to performance is clear and meets appropriate performance benchmarks.

B. Non-Executive Directors

Non-Executive Directors of a Companys Board of Directors add substantial value to the Company through their contribution to the Management of the Company. In addition they also play an appropriate control role.

Sitting Fees

Non-Executive Directors are entitled to sitting fees for attending meetings of the Board, Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee. The sitting fees presently paid to the Non -Executive Directors for the F.Y. 2018-19 is Rs. 5,000/- per meeting of the Board, Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee. However, the same has been revised to Rs. 10,000/- per meeting w.e.f. 01st January, 2019.

IV. Policy on Related Party Transaction

Pursuant to Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the Company has formulated guidelines for identification of related parties and the proper conduct and documentation of all related party transactions.

In light of the above, VEL has framed a policy on related party transaction. This policy has been adopted by the Board of Directors of the Company based on recommendations of Audit Committee.

The policy on Related Party Transactions, as approved by the Board, is available for viewing on the Companys website

Particulars of Contracts or Arrangements with Related Parties:

The Contracts or Arrangements entered into by the Company with Related Parties have been done at arms length and are in the ordinary course of business. Form AOC-2 as required under Section 134 (3)(h) is enclosed as Annexure – B to this report.

20. Compliance with Secretarial Standards

The Company has complied with applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Government of India under Section 118(10) of the Companies Act, 2013.

21. Maintenance of Cost Records

Pursuant to sub-section (1) of Section 148 of the Companies Act, 2013, the Company is required to maintain cost records and accordingly the Company has made and maintained such cost records.

22. Particulars of Employees:

There are no employees drawing salary pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

23. Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 [14 of 2013]:

As required by Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, the Company has formulated and implemented a policy on prevention of sexual harassment at workplace. The Company has also constituted an Internal Complaints Committee with a mechanism of lodging complaints. During the year under review, there were no cases filed pursuant to the aforesaid Act.

24. Extract of the Annual Return:

The details forming part of the extract of the Annual Return in Form MGT – 9 as required under Section 92 of the Companies Act, 2013, is marked as Annexure- C which is annexed hereto and forms part of the Directors Report.

25. Corporate Governance and Management Discussion & Analysis Report:

The Company has complied with the Corporate Governance Code as stipulated under 27(2)(b) of the SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015. A separate section on Corporate Governance along with certificate from Secretarial Auditors confirming the compliance is annexed and forms part of the Annual Report. The Management Discussion and Analysis Report and Corporate Governance Report, appearing elsewhere in this Annual Report forms part of the Boards Report

26. Risk Management:

Details on Risk Management have been mentioned in the Corporate Governance Report annexed to this report.

27. Reporting of Frauds

During the year under review, there have been no instances of fraud reported by the Auditors including the Statutory Auditors of the Company under Section 143(12) of the Companies Act, 2013 and the Rules framed thereunder either to the Company or to the Central Government

28. Directors Responsibility Statement:

As required by Section 134(3)(c) of the Companies Act, 2013 your Directors state that:

(a) In the preparation of the annual accounts for the year ended 31st March, 2019, the applicable accounting standards have been followed with proper explanation relating to material departures, if any;

(b) The accounting policies adopted in the preparation of the annual accounts have been applied consistently. Reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year 2018-19 and of the profit for the year ended 31st March, 2019.

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The annual accounts for the year ended 31st March, 2019 have been prepared on a going concern basis.

(e) That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

(f) That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

29. Acknowledgements:

The Board wishes to place on record its appreciation to all employees of the Company for their continued contribution to the performance of the Company. The Board thanks all the Shareholders, Customers and various Authorities for their continued support during the year. Also, our sincere thanks and gratitude to Bankers/NBFCs who are continuously supporting the Company and its group at all the times for achieving its goal

For and on Behalf of the Board
JAGDISH K. VALECHA TARUN DUTTA KETAN GANDHI
Vice Chairman and Director Chief Executive Officer Director
SONAL V. JITIYA LALNA B. TAKEKAR
Director Director
Place : Mumbai
Date: 30th July, 2019