DIRECTORS REPORT Your directors have pleasure in presenting their 20th annual report on the business and operation of the company the audited statement of accounts for the year ended 31st march 2015. Operation and Performance Review Standalone Results The Company recorded revenues of Rs.263 Crore in the year under review as against Rs.233 Crore in the previous year. The Company took several initiatives during the last financial year, such as strengthening its presence across the present operating verticals, venture in to niche areas, capitalize on new opportunities that helped in achieving and consolidating growth. The growth in revenues was 13% on y-o-y basis. The EBIDTA for the year was Rs.39.28 Crore as compared to Rs.38.02 Crore in the previous year, which showed a growth of 3% whereas the EBIDTA margin decreased from 15.90% in F.Y. 1314 to 14.68% in F.Y. 14-15. The Profit after tax was Rs.17.27 crore after considering exceptional item of (Rs.6.28) Crore as against H0.01 Crore for the previous year. The exceptional item includes Rs.14.92 Crore Reversal of depreciation charge relating to earlier years on account of change in the method of calculating depreciation from WDV to SLM, as also loss on sale of wind electric generator, which is a non-core business. The company's net worth touched Rs.135.28 Crore as on 31st March 2015 from Rs.118.55 Crore as on 31st March 2014. Consolidated Results The consolidated revenues for the year under review were Rs.266 Crore as against Rs.240 Crore in the previous year, recording a growth or around 11%. For F.Y. 2014-15, the consolidated EBIDTA was Rs.45.92 Crore, as against Rs.42.62 Crore in the previous year. The net profit after tax for consolidated company was Rs.16.58 Crore, after considering exceptional Income item of H6.28 Crore. The Company's consolidated net worth increased to Rs.170.11 Crore as on March 31, 2015 from Rs.153.76 Crore as on March 31, 2014. In accordance with the Accounting standard AS21 on Consolidated Financial Statements, the audited Consolidated Financial statements are provided in the Annual report. 2. Company's Affairs and Future Outlook Your Directors are pleased to inform that during the year under report, the company has secured the following major contracts. 1. Providing CWSS to 158 habitation in Gudimangalam and Udumalaipettai union in Tiruppur District for TWAD Board for Rs.50 Crore 2. WSIS to Tindivanam municipality in Vilipuram District for TWAD Board for Rs.48 Crore 3. Road and Drain improvement works in City Municipal Council, Gadag, Karnataka for Rs.33 Crore 4. Construction of Scientific godown of 40K MT capacity at Nagapatinam, TNCSC for H50 Crore 5. Providing CWSS to 212 rural Habitation in Andhanallur, Manikandam and Manapparai Unions in Trichy District for TWAD Board for H38 Core The total balance value of works on hand as on March 31, 2015 is Rs.857.37 Crore. During the calendar year 2014, slowing demand in some of the major developing economies led to the softening in crude and other global commodity prices. Though the price correction created financial stress in oil exporting countries and also resulted in a disinflationary environment in many oil importing economies, it is expected to be a net positive to global economy in the short to medium term especially for oil/ commodity importing economies like India. The Indian economy, supported by lower oil prices, improved FDI inflows and pro-growth economic reforms, saw a moderate improvement in growth momentum during F.Y. 14-15 and some of the macroeconomic indicators also strengthened over the year. Though the Central Government is implementing reforms to spur investments and re-energise the economy, it will need some time to recover and show positive results on ground. In an adverse environment, your company has remained resilient. The Company focused on widening its services by venturing in to niche areas/ new sectors/ segments, expanding market reach, cost optimization and elevating people potential. As a result, your company has been creating a more robust business model. 3. Change in nature of business There was no change in the nature of the business of the Company and its subsidiaries during the year. 4. Dividend & Amounts Transfer to Reserves Your Directors are pleased to recommend a dividend of 5% i.e. Re. 0.50 per Equity Share of face value of H10/- for the Financial Year 2014-2015, subject to the approval of the members of the Company. The dividend on approval of the shareholder will be paid to the eligible members. The equity dividend outgo for the financial year 2014-15 would absorb a sum of Rs.1.13 Crore. The balance profits of Rs.15.95 Crore after provision for dividend and dividend distribution tax is proposed to be retained in the Statement of Profit and Loss. Hence, no amount is proposed to be transferred to reserves. 5. Extract of Annual Return The extract of Annual Return, in form MGT - 9, for the Financial Year 2014-15 has been enclosed with this report as Annexure - 1. 7. Loan, Guarantees and Investments under Section 186 During the financial year 2014-15, the company has not granted any loan or extended any guarantee or provided any security in connection with the loans to other companies or made any investments under Section 186 of the Companies Act 2013 and hence no disclosure is required to be made. Please refer to note no.12 to Notes on accounts for details of all investments earlier made by the company. 8. Contracts or Arrangements with Related Parties The particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 for the Financial Year 2014-15 in the prescribed format, AOC - 2 has been enclosed with this report as Annexure - 2. 9. Material Changes Affecting the Financial Position of the Company There are no material changes affecting the financial position of the Company which have occurred between the end of the financial year of the Company i.e. 31st March 2015, and the date of the Directors' Report. 10. Conservation of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo Information as per the Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2004 relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo has been enclosed with this report as Annexure - 3. 11. Subsidiaries As required under the Companies Act, 2013 and Rules made thereunder and Listing Agreement entered into with the Stock Exchanges, a consolidated financial statement presented by the Company in this report includes the financial results of the Subsidiary company duly audited by the Statutory Auditors. The said statements have been prepared pursuant to Section 129 read with rule 5 of Companies (Accounts) Rules, 2014 in form AOC-1 and in accordance with the relevant accounting standards as prescribed under the Companies Act, 2013. The Form AOC - 1 has been enclosed with this report as Annexure - 4. The Company will provide a copy of separate financial statements in respect of each of its subsidiary to any shareholder of the Company, who asks for it and the said financial statements will also be kept open for inspection at the Registered office of the Company and that of the respective subsidiary companies. As of 31st March 2015, the list of subsidiaries of your company is as follows: 1. R.P.P Infra Projects (Lanka) Limited 2. R.P.P Infra Overseas PLC 3. R.P.P Infra Projects Gabon SA 4. R.P.P Energy Systems Private Limited 5. Sanskar Dealcom Private Limited 6. Greatful Mercantile Private Limited 7. Lunkar Finance Private Limited A detailed overview of the operations and financial performance of the Subsidiary is provided in the Management Discussion and Analysis Report forming part of the Board Report. A copy of the Policy determining 'material' subsidiaries has been hosted on the website of the Company. The Company does not have any Associate or joint venture. 12. Risk Management Policy In today's economic environment, Risk Management is a very important part of business. The main aim of risk management is to identify, monitor and take precautionary measures in respect of the events that may pose risks for the business. The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures. The risks are reviewed for the change in the nature and extent of major risks identified since the last assessment. It also provides control measures for risks and future action plans. The Board is satisfied that there are adequate systems and procedures in place to identify, assess, monitor and manage risks. The Company believes that the overall risk exposure of present and future risks remains within risk capacity. The details about composition of the Risk Management Committee, Policy and its terms of reference have been provided in the Corporate Governance Report. 13. Directors and Key Managerial Personnel Mr. P Muralidasan (DIN 02186774) Director of the Company retires by rotation and being eligible offers himself for re-appointment and same will be for the consideration of members in the Annual General Meeting of the Company. During the year Mr. S Thirunavukkarasu (DIN 02264555) and Mr. A N Vasu Rao (DIN 00706424) have resigned from the Board on 30.06.2014. The Board places on record its sincere appreciation for the valuable services rendered by them. The shareholders of the Company have appointed Mr. K Natarajan (DIN 03638450), Mr. S Swaminathan (DIN 02800432), Mr. A P C Krisshnamoorthy (DIN 02181130) as Independent directors of the Company to hold office for five consecutive years from the conclusion of the 19th Annual General Meeting dated 8th September 2014 of the Company. Mr. P Arulsundaram (DIN 00125403) is Chairman and Managing Director and Mrs. A Nithya (DIN 00125357) is Whole-time Director and Chief Financial Officer of the Company. They have been appointed for a period of three years w.e.f. 1st April, 2014. The Board based on recommendation of the Committee has decided to revise the remuneration payable to them w.e.f. 1st April 2015 for rest of their term subject to approval of member. Mr. R Sathishkumar, Company Secretary appointed on 25th December, 2013 has resigned from services of Company on 14th February, 2015. As per, provisions of Section 203 of the Companies Act, 2013, Mr. K Jayanthar has been appointed as Company Secretary w.e.f. 29th May, 2015. 14. Significant and material orders passed by the regulators courts or tribunalss There are no significant material orders passed by the Regulators / Courts / tribunals which impact the going concern status of the Company and its future operations. 15. Statement in Respect of Adequacy of Internal Financial Control with Reference to the Financial Statements Internal Controls A robust system of internal control, commensurate with the size and nature of its business, forms an integral part of the Company's corporate governance policies. Internal Audit has been conducted by qualified outside Internal Auditors. Findings of the Internal Audit report are reviewed by the Management and by the Audit committee of the Board and proper follow up action are ensured wherever required. The Statutory Auditors have evaluated the system of internal controls of the Company and have reported that the same are adequate and commensurate with the size of the company and nature of its business. Internal Financial Controls As per Section 134(5) (e) of the Companies Act, 2013, the Directors have an overall responsibility for ensuring that the Company has implemented robust systems and framework of internal financial controls. These include those policies and procedures that: i. pertain to the maintenance of records which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles and that receipts and expenditures are being made only in accordance with authorizations of the Management and the Directors of the Company and iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets that can have a material effect on the financial statements. This provides the Directors with reasonable assurance regarding the adequacy and operating effectiveness of controls with regards to reporting, operational and compliance risks. To enable them to meet these responsibilities, the Company has devised appropriate systems and framework including proper delegation of authority, policies and procedures, effective IT systems aligned to business requirements, Internal audit framework, risk management framework and whistle blower mechanism. The Audit committee regularly reviews the internal control system to ensure that it remains effective and aligned with the business requirements. Where weaknesses are identified as a result of the reviews, new procedures are put in place to strengthen controls. These are in turn reviewed at regular intervals. The Company has developed a framework for designing and assessing effectiveness of internal controls over financial reporting and has already laid down entity level policies and process level standard operating procedures. The entity level policies comprise anti-fraud policies (code of conduct including conflict of interest, confidentiality and whistle blower policy) and other policies (organization structure, roles and responsibilities, insider trading policy, related party policy, prevention of sexual harassment policy and risk management policy). The Company has also prepared Standard Operating Practices for each of its processes of revenue to receive, procure to pay, hire to retire, finance and accounts, fixed assets, treasury, inventory, operations and administrative expenses. The Management assessed the effectiveness of the internal financial controls over financial reporting as of March 31, 2015 and the Board believes that the controls are adequate. 16. Deposits The Company has not accepted any deposits from members or public in terms of Section 73 or Section 76 of the Companies Act, 2013. 17. Declaration by Independent Director The Independent Directors have submitted the declaration of Independence, stating that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013. 18. Receipt of any commission by MD / WTD from Company or receipt of commission / remuneration from subsidiary MD/WTD are not in receipt of any commission from Company or any commission/remuneration from subsidiary. 19. Auditors' Remark As regards qualification in para 2(d) of Report on Other Legal and Regulatory requirements in the Auditors Report on non-provision of gratuity as per actuarial valuation, the Company has provided for an adequate amount towards gratuity for all eligible employees who have completed requisite period of service as per the Payment of Gratuity Act, 1972 and as per company rules. The Company will carry out actuarial valuation in the coming year so as to comply with AS15 on Employee benefits. 20. Re-appointment of Independent Auditor The Shareholders of the Company at the Annual General Meeting held on 8th September, 2014 have appointed M/s. Karthikeyan & Jayaram, Chartered Accountants as Statutory Auditors of the Company. The term of M/s. Karthikeyan & Jayaram, Chartered Accountants and Statutory Auditors will expire on the date of 20th Annual General Meeting to be held on 14th September, 2015. It is proposed to re-appoint them as Statutory Auditors in the ensuing Annual General Meeting for a period of one year, i.e. until the conclusion of the next Annual General Meeting of the Company. The members are requested to consider their re-appointment and authorize the Board of Directors to fix their remuneration. M/s. Karthikeyan & Jayaram, Chartered Accountants (ICAI Firm Regn. No.007570S) have confirmed that their appointment, if made, shall be in accordance with the provisions of Section 139 of the Companies Act, 2013. 21. Cost Auditor As per the requirement of Section 148 of the Companies Act, 2013 the Board of Directors, on the recommendation of Audit Committee, has appointed Mr. S Chandrasekaran, Cost Accountant as Cost Auditor to audit the cost accounts of the Company for the financial year 2014-15 at a remuneration of Rs.3,50,000/- (Rupees Three lakh Fifty Thousand) plus service tax applicable and reimbursement of out of pocket expenses. As required under the Companies Act, 2013, a resolution seeking member's approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting. 22. Secretarial Audit Report As per the provisions of Section 204 of the Companies Act, 2013, the Board of Directors have appointed Mr. Gouri Shanker Mishra, Practising Company Secretary (C.P.No: 13581) as Secretarial Auditor to conduct Secretarial Audit of the company for the Financial year ended on 31st March, 2015. Secretarial Audit Report issued by Mr. Gouri Shanker Mishra, Practising Company Secretary in form MR-3 pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014 has been enclosed with this report as Annexure - 5. Apart from the observations, there were no qualifications, reservations or adverse remarks made by the Secretarial Auditorin his Secretarial Audit Report. Those three observations relating to belated filing of few of the e-forms with Registrar of Companies, Non intimation to the stock exchanges of the Resignation of two Directors and Alteration of the Articles of Association, as required under the listing agreement are isolated events and the Company generally ensures timely compliance. 23. Audit Committee As required under Section 177 of Companies Act, 2013 and Listing Agreement, Company has constituted Audit Committee. The details about composition of the Audit Committee and its terms of reference have been provided in the Corporate Governance Report. There were no such incidences where Board has not accepted the recommendation of the Audit Committee during the year. 24. Corporate Social Responsibility (CSR) Policy The Board of Directors of the Company have constituted Corporate Social Responsibility Committee and adopted policy for Corporate Social Responsibility. The Committee defines the parameters and would observe them for effective discharge of the social responsibility of your company. Report on Corporate Social Responsibility including details as Per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is enclosed with this report as Annexure - 6. 25. Nomination & Remuneration Committee The Company strongly believes that human resources which manage the other resources have infinite potential and therefore, their development is the key to organizational effectiveness. We commit ourselves to integrate human resources with Organizational growth and development for mutual benefit. The Nomination and Remuneration Policy has been formulated in compliance with Section 178 and other applicable provisions of the Companies Act 2013 read with the applicable rules thereto and the provisions of the Listing Agreement. The details about composition of the Nomination and Remuneration Committee, Policy and its terms of reference have been provided in the Corporate Governance Report. 26. Performance Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit and Nomination & Remuneration Committees. A structured format was prepared to rate after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. A separate exercise was carried out to evaluate the performance of independent Directors. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors. The mechanism for the evaluation of the Board is given in detail in the Corporate Governance Report. Disclosure on Establishment of a Vigil Mechanism The Board of Directors have adopted Whistle Blower Policy. The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. All permanent employees of the Company are covered under the Whistle Blower Policy. A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairperson of the audit committee in exceptional cases. A copy of the Whistle Blower Policy is also hosted on the website of the Company. 27. Corporate Governance As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, report on Corporate Governance together with a certificate confirming compliance and CEO/CFO certificate by Managing Director and Chief Financial Officer forms an integral part of this Directors' Report. 28. Managerial Remuneration Statistical Disclosures pursuant to Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been enclosed with this report as Annexure - 7. 29. Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 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 and has also created an Internal Complaints Committee headed by Mrs. A Nithya, Whole-time Director of the Company who directly reports to the Chairman & Managing Director. During the financial year ended 31st March, 2015, the Company has not received any complaints pertaining to sexual harassment. A copy of the Policy on Sexual Harassment is also hosted on the website of the Company. 30. Management Discussion and Analysis Report As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Management Discussion and Analysis Report forms an integral part of this Directors' Report. 31. 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 for the financial year ended 31st March, 2015, 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 as at 31st March, 2015 and of the profit /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 the Companies Act 2013 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) 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. f) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. 32. Transfer to Investor Education and Protection Fund Company doesn't have dividend remaining unclaimed by the members of the company for a period exceeding 7 years, hence no amount was transferrable to the Investor Education and Protection Fund. 33. Acknowledgment Your Directors take this opportunity to offer their sincere thanks to the various departments of the Central and State Governments, Government agencies, Banks, Financial Institutions, shareholders, customers and employees who through their continued support and co-operation, have helped in your Company's progress. For and on behalf of the Board of Directors P Arulsundaram Chairman & Managing Director Place: Erode Date: May 29, 2015 |