DIRECTORS REPORT TO THE MEMBERS, Your Directors are pleased to present the Ninety-Seventh Annual Report along with Company's Audited Accounts for the financial year ended 31st March, 2015. Review of Operations During the year under review, on standalone basis, revenue from operations increased to Rs. 55816 mns from Rs. 55130 mns in the previous year. Profit before tax increased to Rs. 939 mns from Rs. 856 mns last year. Profit for the period increased to Rs. 624 mns from Rs. 606 mns in previous financial year. On a consolidated basis, the revenue from operations increased to Rs. 62024 mns from Rs. 56154 mns in the previous year. Profit before tax increased to Rs. 873 mns as compared to Rs. 856 mns in the previous year and profit for the period stood at Rs. 573 mns as against Rs. 585 mns in the previous financial year. Business Review The order book of the Company as on March 31, 2015 stood over Rs. 160000 mns. During the year under review, the Company bagged a number of new projects amounting to Rs. 61375 mns in various vertical it operates, which includes among others construction of Township of 21 towers, Chennai, Residential High Rise Tower, Delhi, permanent campus of IIT, Indore, Civil work for 3 x 40 MW Rammam Hydro Electric Project (Stage-III), Sikkim, PSC Viaduct, embankment and stations for extension of Metro Line, Kolkata, Urban water treatment and supply Project, Kolkata, Enhancement in value and scope of work in Petrochemical Complex, Jamnagar. Issue of Secured Redeemable Non-Convertible Debentures on Private Placement Basis During the year under review, the Company raised Rs. 1750 mns (previous year Rs. 1000 mns) by issue of 1750 secured redeemable non-convertible debentures (NCDs) of face value of Rs. 10,00,000/-on private placement basis. Details of NCDs have been stated in the Corporate Governance Report which forms part of this Report. These NCDs are listed on the wholesale debt market (WDM) segment of the Bombay Stock Exchange. These NCDs were issued for the purpose of raising funds for the normal business purposes/activities including augmentation of medium to long term resources of the Company. Material changes and commitments There are no material changes or commitments affecting the financial position of the Company which have occurred between the end of the financial year 2014-15 and the date of this report . Your Directors are pleased to recommend a dividend of Rs. 0.50 per equity share (Previous year Rs. 0.50 per equity share) of face value of Rs. 2/- each for the financial year ended 31st March, 2015, amounting to Rs. 30 mns (including tax on dividend), which if approved at the forthcoming Annual General Meeting will be paid to Members whose names appear in the Register of Members as on 17th September, 2015 and in respect of shares held in dematerialized form, the dividend will be paid to Members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited as beneficial owners as at the close of business hours on Thursday, 17th September, 2015. Reserves The Company proposes to transfer Rs. 63 mns to the general reserve. Extract of the Annual Return An extract of the annual return in Form MGT-9 in accordance with section 92(3) of the Companies Act, 2013 ('the Act') and relevant Rules made thereunder is annexed herewith as Annexure 1. Board Committees The Board of Directors had constituted/renamed various Committees and terms of reference/role in compliance with the provisions of the Companies Act 2013/Listing Agreement viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, CSR Committee, Risk Management Committee. Details of the role and composition of these Committees, including the number of meetings held during the financial year and attendance at meetings, are provided in the Corporate Governance Report which forms part of this Report. Directors' Responsibility Statement Your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, make the following statements in terms of section 134 (3)(c) & 134 (5)of the Companies Act, 2013: a) in the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) that appropriate accounting policies were selected 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; c) that proper and sufficient care has been 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) that the annual financial statements have been prepared on a going concern basis; e) that proper internal financial controls were followed by the company and that such internal financial controls are adequate and were operating effectively; and f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively. Remuneration Policy of the Company The Remuneration Policy recommended by the Nomination and Remuneration Committee is duly approved by the Board of Directors of the Company.The salient aspects covered in the policy have been outlined in the Corporate Governance Report which forms part of this Report. Particulars of Employees and other additional information Particulars of Employees pursuant to Section 134 (3) (q) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached herewith as Annexure-2 and Annexure-3 respectively. Particulars of Loans, Guarantees or Investments The Company is engaged in the business of contract constructing infrastructural facilities as specified in Schedule VI of the Companies Act, 2013. In accordance with the exemption provided by Section 186 (11) to the companies engaged in the business of providing infrastructural facilities, the provisions of Section 186 (2) to (13) of the Act, in respect of providing loan, guarantee or security to any other body corporate/ person do not apply to the Company. Related Party Transactions During the year under review, the Company has entered into transactions with related parties as defined under section 2 (76) of the Act read with Rules made thereunder and Clause 49 of the Listing Agreement, which were in ordinary course of business and on arms' length basis and in accordance with the provision of the Act and Rules made thereunder .There are no materially significant related party transactions made by the Company with promoters, Directors or key managerial personnel etc. which may have potential conflict with the interest of the Company at large. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is not applicable.However, the details of the related party transactions are set out in Note 42 to the standalone financial statements forming part of this Annual Report. All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval for transactions upto Rs. 1 crore has been obtained for Related Party Transactions which are of repetitive nature and / or entered in the Ordinary Course of Business and are at Arm's Length as per Clause 49(VII) of the Listing Agreement. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis. The Related Party Transaction Policy as approved by the Board is uploaded on the Company's website www.simplexinfra.com Risk Management In line with the new regulatory requirements- Section 134(3)(n) of the Act and the Listing Agreement, the Company has a Risk Management Policy and maintains Risk Management Register to identify and assess the key risk areas. The Board monitors and reviews the implementation of various aspects of the Risk management policy through a duly constituted Risk Management Committee which oversees the risk management process of the Company and monitor the same periodically. The Company tries to follow a balanced Risk Management Policy. At present no particular risk whose adverse impact may threaten the existence of the Company is visualized. Corporate Social Responsibility (CSR) As part of CSR initiatives, your Company focuses on promotion of education, preservation of national heritage, art and culture and livelihood enhancement projects. The Company undertakes its CSR activities generally through Shree Charity Trust and Bharti Vidya Mandir, both these organisations are registered Trusts and recognised under IT Act, 1961 and have objects aligned with activities specified in Schedule VII of the Act. Pursuant to Section 135 of the Companies Act, 2013 and the relevant Rules made thereunder, the Board has constituted the CSR Committee under the chairmanship of Mr. A. D. Mundhra, Vice-Chairman & Non-Executive Director . The other members of the Committee are Mr. S. Dutta, Mr. Rajiv Mundhra, Whole-time Directors and Mr. B. Sengupta, Independent Director of the Company. The Board of Directors approved the CSR policy on the recommendation of CSR committee, which is displayed on the Company's website www.simplexinfra.com The annual report on CSR containing particulars specified in Companies (Corporate Social Responsibility Policy) Rules, 2014 , is set out herewith as "Annexure-4". Evaluation of Board and of its Committees and Individual Directors In compliance with the Act and Clause 49 of the Listing Agreement, a formal annual evaluation was made by the Board of the individual members of the Board, its own performance and also of its Committees . Each Director of the Company is provided with performance evaluation sheet entailing a wide range of parameters facilitating proper evaluation of the Board, its Committees and individual Directors. The feedback / comment received from each Director is carefully considered by the Board. The Independent Directors at their meeting without the participation of Non-Independent Directors and Members of Management, considered / evaluated the board's performance, performance of the Vice Chairman and other Non-Independent Directors. Subsidiaries, Associates & Joint Ventures As on 31st March, 2015, your Company has six Subsidiaries namely (i) Simplex Infrastructures LLC, Oman (ii) Simplex (Middle East) Limited, UAE (iii) Simplex Infrastructures Libya Joint Venture Co., Libya (iv) Simplex Infra Development Limited (v) Maa Durga Expressways Private Limited and (vi) Jaintia Highway Private Limited, two Associates namely (i) Shree Jagannath Expressways Private Limited and (ii) Raichur Sholapur Transmission Company Private Limited and sixteen Joint Ventures (unincorporated bodies) The Consolidated financial Statement comprises of the financial statement of the Company and those of its Subsidiaries, Joint Ventures and its Associate Companies. A statement containing the salient features of financial statement of the company's subsidiaries, joint ventures and associate companies in the prescribed form AOC-1 pursuant to first proviso to Section 129 (3) of the Act read with the Companies (Accounts) Rules, 2014 is annexed seperately to the financial statements. Pursuant to Section 136 of the Act which exempts listed companies from attaching the Annual Reports and other particulars of its subsidiary companies along with the Annual Report of the Company, the Balance Sheet, Profit and Loss Account and other documents of the aforementioned Subsidiary Companies are not being attached with the Balance Sheet of the Company. However a statement containing the salient feature of these documents is annexed as aforesaid. The financial statements of the Subsidiary Companies are kept open for inspection by the Shareholders at the Registered Office of the Company. The financial statements including the consolidated financial statements, financial statements of subsidiaries have been uploaded on the website of the Company www.simplexinfra.com Report on performance of Indian Subsidiaries Simplex Infra Developemnt Limited (SIDL) SIDL, which is a subsidiary of the Company holds shares in various Joint Ventures in form of Special Purpose Vehicle, subsidiary and associate companies carrying infrastructure development activities. SIDL has incurred a loss of f51 mns. The two subsidiaries of SIDL, namely, Maa Durga Expressways Private Limited (MDEPL) and Jaintia Highway Private Limited (JHPL), due to circumstances beyond our control, could not perform satisfactorily, details of which are given hereunder. Maa Durga Expressways Private Limited (MDEPL) MDEPL was incorporated as a Special Purpose Vehicle for implementation of four laning of road from Mahulia to Bahragora in the states of Jharkhand and West Bengal for which it entered into Concession Agreement on 29.09.2012 with National Highway Authority of India (NHAI). NHAI failed to procure and provide the required land/ right of way (ROW) and necessary forest clearance for commencing the project. Since, project could not be executed, NHAI and MDEPL both closed the contract by entering into settlement and a close out agreement dated 03.09.2014. The carrying amount of assets in excess of Net realisable value has been charged off in the financial statement of MDEPL resulting in a loss of f 94 mns (P.Y. f1 mn) during the year under review. The Auditors in their report have opined that since the objects of the special purpose vehicle could not be carried out, the Company cannot run on a "going concern basis" any more. Jaintia Highway Private Limited (JHPL) JHPL was incorporated as a special purpose vehicle for implementation of two laning of Jowai-Meghalaya/Assam Border section in the State of Meghalaya for which the Company entered into Concession Agreement (CA) with National Highways Authority of India (NHAI) on 5th June, 2012. NHAI had unilateraly declared the Appointed Date (date of commencement of construction period of the project) without compliance of some of its obligation provided in the CA. Therefore JHPL has disputed such arbitrary and unilateral declaration of the appointed date by NHAI. Subsequently NHAI terminated the CA. JHPL has invoked the Arbitration Clause provided in the CA and the same has been communicated to NHAI for initiating arbitration process. Formation / Cessation of Company's Subsidiary/Associate/Joint Venture Simplex (Middle East) Limited, wholly owned subsidiary of the Company incorporated a new subsidiary in the name of Simplex (Bangladesh ) Pvt. Ltd in Bangladesh for furthering the business of the Company. The new subsidiary was registered with Registrar of Joint Stock Companies & Firms, Bangladesh on 19th May, 2015. Thus, making Simplex (Bangladesh) Pvt. Ltd, a new foreign subsidiary of the Company. Simplex Infrastructures (Thailand) Ltd, the overseas Joint Venture of the Company was liquidated and the same was taken on record by Reserve Bank of India on 17.10.2014. Directors In compliance with the provisions of Sec 149, Schedule IV and other applicable provisions, if any, of the Act read with Companies (Appointment and Qualification of Directors) Rules, 2014, Mr. B. Sengupta (DIN 00015102), Dr. R. Natarajan (DIN 00066359), Mr. N. N. Bhattacharyya (DIN 00014250), Mr. S. K. Damani (DIN 00062780) and Mr. Asutosh Sen (DIN 00165345) were appointed as Independent Directors on the Board of Directors of your Company in its Annual General Meeting held on 4th September, 2014 to hold office upto 5 (five) consecutive years effective from 4th September, 2014. Dr. R. Natarajan, Independent Director of the Company vide his letter dated 31st December, 2014 resigned from the Directorship of the Company effective 2nd January, 2015. The Board places on its record its appreciation of the valuable contribution, and guidance rendered by Dr. Natarajan during his tenure as an Independent Director. Ms. Leena Ghosh (DIN 07099984) was appointed as an Additional Director (Independent) under Section 149 read with Section 161 of the Act w.e.f 24th March, 2015. Ms. Leena Ghosh is a Fellow Member of The Institute of Chartered Accountants in England and Wales and also a Fellow Member of the Institute of Chartered Accountants of India. She has diverse work experience in the field of Accounting and Auditing. As an Additional Director, she will hold office upto the date of the ensuing Annual General Meeting. The Company has received notice from a member together with requisite deposit under section160 of the Act, proposing her candidature as a Director. The Board of Directors recommends her appointment as Independent Director for a period of three consecutive years. Mr. Rajiv Mundhra (DIN 00014237), Director, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Your Company has received the requisite disclosures/ declarations from the Directors as required under the relevant provisions of the Companies Act , 2013. Further, your Company has also received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under the Act and clause 49 of the Listing Agreement with the stock exchanges. Appropriate resolution(s) seeking your approval and brief resume / details for the appointment/ re-appointment of Directors are furnished in the notice of the ensuing Annual General Meeting. Key Managerial Personnels During the year under review, Mr. A. K. Chatterjee ,Whole-time Director, Mr. Sukumar Dutta, Whole-time Director & Chief Financial Officer and Mr. B.L.Bajoria, Sr.Vice-President & Company Secretary were appointed by the Board as Key Managerial Personnels of the Company in compliance with the provisions of Section 203 of the Companies Act, 2013. Remuneration and other details of the said Key Managerial Personnels for the financial year ended March 31, 2015 are mentioned in the extract of the Annual Return (Annexure-1) which is attached to the Board's Report. Public Deposits The Company has not accepted /renewed any fixed deposits during the year. All deposits have matured and have been repaid when claimed by the depositors together with interest accrued upto the date of maturity. All unclaimed deposits and interest accrued upto the date of maturity has been deposited as and when they became due, with the Investor Education and Protection Fund (IEPF). As on 31st March, 2015, there is no unclaimed deposit as all unclaimed deposit has been transferred to IEPF. Significant and material orders passed by Regulators/Courts/Tribunals During the year under review, there were no significant or material orders passed by the Regulators/ Courts/ Tribunals impacting the going concern status of the Company and its operations in future. Internal Control Systems & their adequacy The internal financial control with reference to the Financial Statements are commensurate with the size and nature of business of the Company. A team of independent Chartered Accountants carry out internal audit in various locations and a summary of their reports are placed before the Audit Committee for their comments and observation. The Board has documented a comprehensive internal control system for all the major processes in the form of Internal Control Manual to ensure adequate policy framework for internal control system so that internal auditors can check the implementation of the policy and the system can be properly monitored with respect to financial reporting and compliance with policies, procedures, laws and regulations. The Audit Committee also meets the Company's Statutory Auditors to ascertain their views on the financial statements, financial reporting system, internal control system and compliance to accounting policies & procedures. Vigil Mechanism (Whistle Blower Policy) Pursuant to Section 177 (9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board of Directors had approved the policy on vigil mechanism/Whistle Blower and the same was hosted on the website of the Company www.simplexinfra.com Appropriate steps are taken for redressing the grievances as per the mechanism approved by the Board as and when the complaints are received. Statutory Auditors The Members of the Company had at the 96th Annual General Meeting ("AGM") held on September 4, 2014, approved the appointment of M/s. Price Waterhouse, Chartered Accountants , bearing ICAI Firm Registration No.301112E and M/s. H. S. Bhattacharjee & Co., Chartered Accountants bearing ICAI Firm Registration No.322303E as the Statutory Auditors of the Company for a period of 3 and 5 consecutive years respectively (subject to ratification of the appointment by the Members at every AGM). Appointment of Statutory Auditors covering the period from the conclusion of this ensuing AGM until the conclusion of the next AGM to be held in the FY 201617, are being placed for Members' ratification. As required under Section 139 of the Companies Act, 2013, the Company has obtained written consent from both the Auditors to such continued appointment and also a certificate from them to the effect that their appointment, if ratified, would be in accordance with the conditions prescribed under the Companies Act, 2013 and the Rules made thereunder, as may be applicable. With respect to paragraph no. 8, 9 and 11 (a), (b) & (d) of the Independent Auditors' Report, we would like to inform that the matter pertaining to one of the subsidiaries of the Company, namely, Simplex Infrastructures Libya Joint Venture Co., operating in Libya, has been explained in Note no. 32 forming part of the Financial Statements. The Board is of the opinion that the matter being elucidated in detail at Note no.32 is self-explanatory and do not call for further explanation. Secretarial Audit Secretarial Audit for the FY 2014-15 was conducted by Mr. Deepak Kumar Khaitan, Practising Company Secretary in accordance with the provisions of Section 204 of the Companies Act, 2013. The Secretarial Auditors' Report is annexed herewith as "Annexure 5". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Cost Audit As per the Companies (Cost Record & Audit) Amendment Rules, 2014, Cost Audit is applicable to the Company for the FY 2014-15. In view of the same and in terms of the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Cost Record & Audit) Amendment Rules, 2014 and amendments thereunder, M/s Bandyopadhyaya Bhaumik & Co., Cost Accountants have been appointed as Cost Auditors to conduct the audit of cost records of the Company. The proposed remuneration of the Cost Auditors of Rupees Five Lakhs and out of pocket expenses has to be ratified by the Members. Accordingly, necessary resolution is proposed at the ensuing AGM for ratification of the remuneration and out of pocket expenses payable to the Cost Auditors for FY 2014-15 Consolidated Financial Statement Your Company has prepared Consolidated Financial Statements in accordance with Section 129 (3) of the Act and applicable accounting standards issued by the Institute of Chartered Accountants of India. The Consolidated Statements reflect the results of the Company and that of its Subsidiaries, Joint Ventures and Associates. As required by clause 32 of the Listing Agreement with the Stock Exchanges, the Audited Consolidated Financial Statements together with the Auditors Report thereon are annexed and form part of this Annual Report. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 are provided in the Annexure - 6 to this Report. Management Discussion and Analysis for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange(s) in India is presented in a separate section forming part of the Annual Report. Corporate Governance Report A separate report on 'Corporate Governance' including a certificate from M/s. H. S. Bhattacharjee & Co., Chartered Accountants, Statutory Auditors of the Company confirming compliance of the Clause 49 of the Listing Agreement is annexed hereto and forms a part of the report. Capital Expenditure During the year under review, the Company has made additions of Rs. 1298 mns to its Fixed Assets consisting tangible assets of Rs.1289 mns and intangible assets of Rs. 9 mns. Acknowledgment Your Directors would like to express their sincere appreciation for the co-operation and support received from the Financial Institutions, Banks, Customers, Vendors, Central and State Government Authorities, Regulatory Authorities, Stock Exchanges and the Company's valued stakeholders. Your Directors also take this opportunity to place on record their gratitude for the efforts and continuous hard work of all the employees and their contribution to the progress of the Company. By Order of the Board For Simplex Infrastructures Limited S.Dutta Whole-time Director & CFO A.K.Chatterjee Whole-time Director |