DIRECTORS' REPORT On behalf of the Board of Directors, it is our pleasure to present the 16th Annual Report on the business and operations of the Company together with the Audited Financial Statement of PNC Infratech Limited ("the Company") for the financial year ended March 31, 2015. FINANCIAL PERFORMANCE On a standalone basis, the Company recorded total revenue of Rs. 1,560 crores, which is 35% higher than the previous year's Rs. 1,152 crores. Correspondingly, EBITDA and PAT went up from Rs. 142 crores and Rs. 70 crores, respectively, to Rs. 217 crores and C100 crores, respectively, marking an increase of 53% in EBITDA and 43% in PAT. While the EBITDA margin improved from 12.3% to 13.9%, PAT margin went up from 6.1% to 6.5%. On a consolidated basis, the Company reported total income from operations at Rs. 1,861 crores in FY 2014-15, up 37% from Rs. 1,360 crores in FY 2013-14. The break-up between EPC and BOT (toll and annuity) income was Rs.1,600 crores and Rs. 261 crores, respectively, in comparison to Rs. 1,210 and Rs. 150 crores in FY 2013-14. Consolidated EBITDA for the year was at Rs. 280 crores, which was 60% higher than Rs. 175 crores in the previous year, while profit after tax (PAT) up by 65%, at Rs. 91 crores compared to Rs. 55 crores in 2013-14. EBITDA margin improved from 12.9% to 15.0%, while PAT margin went up from 4.1% to 4.9%. STATE OF AFFAIRS & FUTURE OUTLOOK: During the year and up to the date of this Report, the Company has bid for and been awarded/become L1 for the following projects: Name and description of the contract Development of Agra to Firozabad (Village Gurha) (Km. - 2.634 to 0.000 to 53.500) Access Controlled Expressway (Green Field) Project in the state of Uttar Pradesh on EPC mode, awarded by Chief Executive Officer, UPEIDA. Company has become L1 (lowest) Bidder for the project of resurfacing/strengthening of runway at Air Force Station, Kanpur for a total contract cost of Rs. 167.25 Crore. Two PNC Infratech Limited-led joint ventures have been declared the L1 (lowest) Bidders for two roads projects of National Highways Authority of India for an aggregate project cost of Rs. 1,506.84 crores. PNC Kanpur Highways Limited, a wholly owned subsidiary of PNC Infratech Limited, has commenced toll operations with effect from 7th May 2015 on the Kanpur-Kabrai section of National Highway - 86. Ghaziabad Aligarh Expressway Pvt. Ltd (GAEPL), an associate company of PNC Infratech Limited, has commenced toll operations with effect from 24th June 2015 on the Ghaziabad-Aligarh section of National Highway - 91. DIVIDEND Keeping in view the continued good performance, future funds requirements of the Company and policy of the Company for rewarding shareholders, your Directors are pleased to recommend a dividend of 15 %, i.e. Rs. 1.50 per equity share on 5,13,07,833 equity shares of Rs.10/- each for the financial year ended 31st March, 2015. The dividend shall be subject to tax on dividend to be paid by your Company but will be tax-free in the hands of the Members. The dividend together with the dividend distribution tax will entail a cash outflow of Rs.926.25 Lacs (previous year Rs.349.30 Lacs). CREDIT RATING The credit rating of the Company is CARE A (low credit risk and adequate degree of safety) for long term and CARE A1 (lowest credit risk and very strong degree of safety) for short term, during the financial year. CONSOLIDATED FINANCIAL STATEMENT In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES During the year under review, none of the Company have become or ceased to be Company's subsidiaries, joint ventures or associate companies. A report on the performance and financial position of each of the subsidiaries, associates and joint venture companies as per the Companies Act, 2013 is provided as an Annexure to the consolidated financial statement and hence not repeated here for the sake of brevity. The Policy for determining material subsidiaries as approved may be accessed on the Company's website at the link: <http://> www.pncinfratech.com/investors LISTING WITH STOCK EXCHANGES The Company has completed its Initial Public Offering (IPO), in May, 2015, pursuant to which 1,29,21,708 number of equity shares of Rs.10 each were allotted at a price of Rs.378 per equity share, consisting of fresh issued 1,15,00,000 equity shares and offer for sale of 14,21,708 equity shares by NYLIM Jacob Ballas India (FVCI)III LLC. The equity shares of the company were listed on National Stock Exchange of India Limited and BSE Limited on 26th May, 2015. As the Company got listed in May 2015, therefore, the provisions of the Companies Act, 2013, as applicable to a listed company and Listing Agreement were not applicable during the financial year 2014-15, however, the Company endeavors to voluntary comply the provisions, to the extent possible during the financial year 2014-15. DIRECTORS' RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134(5) of the Companies Act, 2013, your Directors 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) the directors had 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 had taken proper and sufficient care 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 directors had prepared the annual accounts on a going concern basis, (e) during the financial year ended March 31, 2015, the Company was unlisted, and hence the comments are not required, and (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. CORPORATE GOVERNANCE The compliance with clause 49 of the listing agreement was first time applied to your Company on the listing of its shares on the stock exchanges on May 26, 2015. However, your Company has voluntarily complied with the code of corporate governance in accordance with Clause 49 of listing agreement to a large extent, particularly in respect of Board of Directors and other committees of the Board. From the date of listing, the company is fully compliant with Listing Agreement. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from a Practicing Company Secretary confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance. RISK MANAGEMENT The Company has adopted a Policy on Risk Management, to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the Company's business. In order to achieve the key objective, this Policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues. The Company's management systems, organizational structures, processes, standards, code of conduct, Internal Control and Internal Audit methodologies and processes that governs how the Company conducts the business of the Company and manages associated risks. Pursuance to Clause 49 of the Listing Agreement, the Company is not required to constitute a Business Risk Management Committee. At present the Company has not identified any element of risk which may threaten the existence of the Company. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES In line with the requirements of the Companies Act, 2013 and Equity Listing Agreement, your Company has formulated a Policy on Related Party Transactions which is also available on Company's website accessible at weblink <http://www>. pncinfratech.com/investors. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties. This Policy specifically deals with the review and approval of Material Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All Related Party Transactions are placed before the Audit Committee for review and approval. All Related Party Transactions entered/continued during the year were in Ordinary Course of the Business and on Arm's Length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements were entered during the year by your Company. 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. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company's website at the link: <http://www.pncinfratech.com/investors>. The Annual Report on CSR activities is annexed herewith marked as Annexure-I. INTERNAL FINANCIAL CONTROL During the year the Company, being an un-listed entity, was not required to comply the guiding provisions of Internal Financial Control, as required under Companies Act, 2013 and Listing Agreement. Existing systems and procedures adopted in the Company were sufficient for adequate Internal Financial Control and no reportable material weakness in the design of operation were observed. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr. S K Awasthi resigned as a Director of the Company w.e.f. 02.06.2014 due to personal reasons. During the year, members approved the appointment of Mr. C R Sharma, Mr. A K Gupta, Mr. D V Sharma, Mr. S C Kalia, Mr. R K Gupta and Mrs, Deepika Mittal, as Independent Directors, who are not liable to retire by rotation, for a period of five years. In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Naveen Kumar Jain and Mr. Anil Kumar Rao, Whole Time Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for reappointment. Your Directors recommend their re-appointment at the ensuing Annual General Meeting. During the year under review, Mr. C K Jain, Managing Director was appointed as Chief Financial Officer on Sep 22, 2014 and resigned from the same position on Feb 10, 2015. Further, Mr. Devendra Kumar Agarwal was appointed as Chief Financial Officer of the Company w.e.f. February 10, 2015. DECLARATION BY INDEPENDENT DIRECTORS The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act and Clause 49 of the Listing Agreement with the Stock Exchanges. BOARD EVALUATION AND REMUNERATION POLICY The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual directors. On the basis of Policy approved by the Board of Directors for performance evaluation of Independent Directors, Board, Committees and other individual Directors, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. The details of programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the weblink: <http://www.pncinfratech.com/investors>. The Nomination and Remuneration Policy of the Company is attached herewith marked as Annexure -II. During the period under review, the Company was not listed, hence details as required under Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 regarding ratio of remuneration of Executive directors to the median remuneration of the employees and increase in remuneration of executive Director , Chief financial officer and company Secretary during the financial year, has not been provided. HUMAN RESOURCES 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. Your Company believes in the promotion of talent internally through job rotation and job enlargement. SHARE CAPITAL During the year under review, your Company's authorised share capital was increased from Rs.50.00 crores to Rs.55.00 crores (Rupees Fifty Five Crore only) comprising of 5,50,00,000 equity shares of Rs.10 each. During the year under review, your Company's paid up share capital has remain unchanged at Rs.39,80,78,330 (Rupees Thirty Nine Crores Eighty Lacs Seventy Eight Thousands Three Hundred Thirty only) comprising of 3,98,07,833 (Three Crores Ninety Eight Lacs Seven Thousands Eight Hundred Thirty Three) equity shares of Rs.10 each. However, the Company has raised the issued and paid up capital by issue and allotment of equity shares through Initial Public Offer (IPO) in May, 2015. AUDITORS AND AUDITORS' REPORT Statutory Auditors In the last AGM held on September 11, 2014, M/s. Purushottam Agrawal & Co. and S.S. Kothari Mehta & Co., Chartered Accountants have been appointed Statutory Auditors of the Company upto the conclusion of 17th AGM. Ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing AGM. They have confirmed their eligibility to the effect that their confirmation, if made, would be within the prescribed limits under the Act and that they are not disqualified to be confirmed as Auditors . The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. COST AUDIT The Board had appointed M/s. Rajesh Gupta & Associates, Cost Accountants, as Cost Auditors for conducting the audit of cost records of the Company for the financial year 2014-15 and necessary application for their appointment was filed by the Company with the Ministry of Corporate Affairs. The said Auditors have conducted the audit of Cost records for the year ended 31st March 2015 and have submitted their report, which is self explanatory and do not call for any further comments. Your Company shall submit the Cost Audit Report with the Ministry of Corporate Affairs within the stipulated time period. The Board has also appointed M/s. R K G & Associates, Cost Accountants, as Cost Auditors to conduct Cost Audit for the financial year 2015-16 and their remuneration has also been recommended for the ratification and approval of the Shareholders. SECRETARIAL AUDIT In terms of Section 204 of the Act and Rules made thereunder, M/s. Anuj Ashok & Associates, Practicing Company Secretary were appointed as Secretarial Auditors for the financial year 2014-15. The Secretarial Audit Report for the financial year ended on March 31, 2015 is annexed herewith marked as Annexure-III to this Report. There are no qualifications or adverse remark in their Report. The Board has appointed M/s. DR Associates, Company Secretaries, as Secretarial Auditors to conduct Secretarial Audit for the financial year 2015-16. DISCLOSURES Audit Committee The Audit Committee comprises of Mr. C R Sharma, Independent Director (Chairman), Mr. Sunil Chawla, Nominee Director and Mr. Ashok Kumar Gupta, Independent Director as other members. The scope and terms of reference of Audit Committee is mentioned in the Corporate Governance Report. All the recommendations made by the Audit Committee were accepted by the Board. Vigil Mechanism The Vigil Mechanism of the Company also incorporates a whistle blower policy in terms of the Listing Agreement and under Section 177 of the Companies Act, 2013. Protected disclosures can be made by a whistle blower through an e-mail, or a letter to the Vigilance Officer for this purpose/Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at the weblink: <http://www.pncinfratech.com/investors>. Meetings of the Board Five meetings of the Board of Directors were held during the year. The detail of dates of board meeting and attendance of directors and similar details of Board Committees are given in Corporate Governance Report. Particulars of Loans given, Investments made, Guarantees given and securities Provided Your Company is exempted from the applicability of the provisions of Section 186 of the Companies Act, 2013 (Act) read with Rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Companies (Meetings of Board and its Powers) Amendment Rules, 2015 as your Company is engaged in the business of providing infrastructural facilities. Conservation of Energy, 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 the Act, are provided in Annexure -IV to this Report. Extract of Annual Return Extract of Annual Return of the Company is annexed herewith as Annexure -V to this Report. Particulars of Employees and related disclosures The particulars of employees drawing remuneration in excess of the limits set out in Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this report, as Annexure -VI. Unpaid/Unclaimed Dividend During the year under review no amount which remained unclaimed and unpaid for a period of seven years, is due for transfer to Investor's Education and Protection Fund. General Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Act. 2. Change in the nature of business. 3. Voluntary revision of Financial Statements or Board's Report. 4. Issue of equity shares with differential rights as to dividend, voting or otherwise. 5. Issue of shares (including sweat equity shares) to employees of the Company under any scheme. 6. No director is in receipt of commission from the Company and Neither the Managing Director nor the Whole-time Directors of the Company received any remuneration or commission from any of its subsidiaries Companies. 7. No significant or material orders were passed by the Regulators or Courts or Tribunals which impacts the going concern status and Company's operations in future. 8. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 9. There was no instance of reporting of fraud to the Audit Committee and of Directors. ACKNOWLEDGEMENT Your Directors would like to acknowledge and place on record their sincere appreciation to all stakeholders, banks and financial institutions, clients, vendors, Intermediaries associated with IPO of the Company, for their co-operation and continued support for the growth of the Company. The Directors also wish to acknowledge the assistance received from various regulatory bodies, NHAI, MPRDC, UPSHA, HSRDC, MES, DSIIDC, UPEDA and other Central and State Government agencies and thank them for the same and look forward to their continued support. Your Directors also wish to place on record their sincere thanks to M/s. NYLIM Jacob Ballas India (FVCI) III LLC, our private equity partner, who has reposed trust in your Company. Your Directors take this opportunity to recognise and appreciate the efforts and hard work of all the employees of the Company at all levels and thank them for their competence, sincerity, hard work and commitment. For and on behalf of the Board of Directors Pradeep Kumar Jain (Chairman and Managing Director) DIN:-00086653 Place: Agra Date: August 07, 2015 |