Directors' Report Dear Members, Your Directors have pleasure in presenting their 21st Annual Report on the business and operations of your company for the financial year ended March 31, 2015. Review of Performance and state of the company's affairs During the year under review, the company's performance was affected due to macro and micro industry concerns such as liquidity issues, delay in hand over of land for road projects, delay in receivables from the clients and other factors prevailing in the industry/sector. The company is making all measures to overcome those constraints by either terminating or foreclosure of the contracts, speeding up the execution of works which are on the verge of completion, making claims and claiming cost escalation or cost overruns whereever the contract agreements permits etc. During the year under review, members will notice that the standalone revenues have declined by 38.48% to Rs. 1079.74 crores from Rs. 1755.09 crores of the previous year 2013-14, while the Loss after tax was at Rs. 445.58 crores from Loss after tax of Rs. 432.11 crores achieved during the previous year 2013-14. During the year under review, members will notice that the consolidated revenues have declined by 31.54% to Rs. 1644.13 crores from Rs. 2401.70 crores of the previous year 2013-14, while the Loss after Tax was at Rs. 482.96 crores from Loss after tax of Rs. 414.85 crores achieved during the previous year 2013-14. Dividend and Transfer to Reserves In view of the losses incurred in the financial year 2014-15, your Board of Directors has not recommended any dividend for the financial year 2014-15 and no amount has been transferred to General Reserve during the financial year 2014-15. Share Capital During the period under review there is no change in the Authorised and paid up capital of the Company. The Authorised share capital is r 70,00,00,000 and paid up share capital is Rs. 57,19,79,910. 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 & its board meetings: Proposed Appointments: The following appointments to the Board are proposed: Approval of the shareholders is being sought for the appointment of Mr. A.Ayodhya Rami Reddy as Director (executive Chairman) 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 re- appointment. Mr. G. Krishna Kumar was inducted as an Additional Director on the Board. As per the provisions of Section 161 of the Companies Act, 2013, he holds office only up to the date of the Annual General Meeting of the Company. Approval of the Shareholders is being sought for his appointment as Director (Non Executive ) in the ensuing Annual General Meeting pursuant to the provisions of the Section 160 of the Companies Act, 2013. Being eligible, the Board recommends his appointment. In terms of Sections 149,152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, the Independent Directors can hold office for a term of up to five (5) consecutive years on the Board of Directors of your Company and are not liable to retire by rotation. Accordingly, Mrs.A.Rama Devi was appointed as Additional and Independent Directors of your Company up to 5 (five) consecutive years. 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. Resignation Mr. Rajiv Maliwal, Mr. VHarish Kumar, Mr. Rajasekhara Reddy and Dr Archana Niranjan Hingorani, Directors of the company submitted their resignation vide letter dated 13 November 2014. The board of directors at their meeting held 13 November 2014 have accepted the same and placed on record its sincere appreciation for the services rendered to the company. Number of meetings of the board : Six Board Meetings were held during the year ended on 31st March 2015. The gap between any two Board Meetings is within the period prescribed by the Companies Act, 2013. 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-a-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 collobaration 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 • l 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. Familiarisation 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 Company's 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 website http://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 madejudgments 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, 2015 and of the profit/loss 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; Corporate Governance In pursuance of Clause 49 of the Listing Agreement 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. 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 business. In accordance with clause 32 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, 2015 is annexed. 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. Statutory Auditors M/s.Chaturvedi & Partners, Chartered Accountants, New Delhi, Statutory Auditors are the auditors appointed under causal vacancy. M/s Chaturvedi & Partners, Chartered Accountants, New Delhi bearing ICAI Registration No. 307068E are proposed to be appointed as Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting till the conclusion of the fourth Annual General Meeting of the Company held thereafter, subject to ratification of the appointment by the members at every AGM. As required under Section 139 of the Companies Act, 2013, the Company has obtained a written consent from M/s Chaturvedi & Partners, to such appointment and also a certificate to the effect that their appointment, if made, would be in accordance with Section 139(1) of the Companies Act, 2013 and the rules made there under. The Board of Directors and the Committee thereof, recommend the appointment. Appropriate resolutions form part of the agenda at the ensuing Annual General Meeting. 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 - B and link to the CSR policy is available at the website http:/ /ra m ky i nf ra struc tu re. 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. Cost Audit Report Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Notifications/Circulars issued by the Ministry of Corporate Affairs from time to time, the Board of Directors at their meeting dated 20 June 2014, appointed M/s. R.Sri nivas Rao, Cost Accountants as the Cost Auditors of the Company for the financial year 2014 - 15. The Cost Audit Report will be filed within the stipulated period of 180 days from the closure of the financial year. 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.Manqj Kumar Koyalkar, Practising company secretary was appointed to issue Secretarial Audit Report for the financial year 2014-15. Secretarial Audit Report issued by Mr.Manqj Kumar Koyalkar, Practising company secretary in Form MR-3 for the financial year 2014-15 forms part to this report as Annexure - C. The said report contains observation as under I further report that as on March 31, 2015, undisputed dues in respect Provident Fund, Employees State Insurance and Gratuity, have not been regularly deposited with the appropriate authorities and there have been delays in number of cases. The company has incurred losses during this financial yearand last financial year. Due to severe liquidity constraints, there have been delays in payment of the Provident Fund, Employees State Insurance dues and gratuity, the company has made provision for payment of statutory dues in the restructure package approved under JLF and the company will be able to address the crisis through restructure arrangement with existing lenders, the restructure package inter-alia includes for funding of such dues whereby we can clear the dues. 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 clause 49 of the listing agreement entered with stock exchanges, 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, 2015, 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. Since all the related party transactions entered into by the company were in the ordinary course of business and were on arm length basis , the requirement of furnishing the requisite particulars in form A0C -2 is not applicable. 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 company's operations in future No significant and material order has been passed by the regulators, courts, tribunals impacting the going concern status and Company's operations in future Public Deposits 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. 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 D to this Report. A statement containing the name of every employee employed throughout the financial year and in receipt of remuneration of Rs 60 lakh or more, or employed for part of the year and in receipt of Rs. 5 lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as Annexure E to 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 F 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 Company's 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. MANAGEMENT REPLIES TO AUDITORS REPORT – Standalone and Consolidated financial reports: With reference to observations made in Auditor's 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, 2015 have been subjected to an audit by the Statutory Auditors of the Company and a qualified report has been issued by them thereon Qualifications matters - Standalone and consolidated financials 1. With respect to the deferred tax assets amounting to Rs. 409.08 Crore : 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. 2. Impact of floods on one of the Company's project in Srinagar, Jammu and Kashmir The Company has lodged an insurance claim in this regard and the management is confident of realising the insurance claim and therefore there will be no consequential material adjustment for loss of project materials and assets will be required. 3. The statutory auditors of the Company have also drawn Emphasis in their review report (Standalone and consolidated financials) with respect to a. Material uncertainties over the realisability of certain construction work in progress, trade receivables and loans and advances aggregating to Rs. 580.78 crores, 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. 4. Other observations - Statutory Compliances: a. Delays caused in remitting the statutory dues towards Provident Fund, Employees State Insurance, Income tax deducted at source, Works contract Tax deducted at source, Sales tax and Service Tax to the concerned authorities is primarily due to non realization of trade receivables, retention and advances from clients and other authorities due to arbitrations/disputes due to which the company is facing severe liquidity crisis. However we are able to address the crisis through restructure arrangement with existing lenders, the restructure package inter-alia includes for funding of such dues whereby we can clear the dues b. Defaulted in repayment of dues to bankers : The default in repayment of dues to the banks have been regularised post restructure arrangement with lenders of the company under JLF . 5. Emphasis matters in consolidated financials a. the uncertainty in connection with the charge sheet filed by Central Beuro of Investigation (CBI) and attachment order of the Enforcement Directorate in respect of certain assets of the company. The Management believes that the project of RPCIL is being carried out in accordance with the provisions of the Concession Agreement executed between RPCIL and Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC) after obtaining the requisite approvals and following the due process of law. b. in respect of the insurance claim filed by the Company, towards loss caused by HUDHUD cyclone in Pharma City. The Company has lodged an insurance claim in this regard and the management is confident of realising the insurance claim and therefore there will be no loss caused by HUDHUD cyclone in Pharma City. c. With respect of contract terminated/foreclosed by certain subsidiaries and no business being carried out by a subsidiary and no business in hand which affect the going concern assumption of those companies- notes of account is self-explanatory and therefore do not call for any further comments d. Revenue and receivables of Rs. 408.96 crores, recognised on the basis of fair value of consideration for construction services and the effective interest rate in the case of financial assets covered under service concession arrangements. As per the Draft Guidance note on Service Concession Arrangements, the company has accounted for service concession arrangements for applicable B0T projects. INDUSTRIAL RELATIONS 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. ACKNOWLEDGEMENTS 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 Managing Director (DIN:00009810) Alia Ayodhya Rami Reddy Executive Chairman(DIN: 00251430) Hyderabad August 13, 2015 |