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IVRCL

BSE: 530773|NSE: IVRCLINFRA|ISIN: INE875A01025|SECTOR: Construction & Contracting - Civil
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Directors Report Year End : Mar '16    Mar 15

To

The Members,

The Directors are pleased to present the 29th Annual Report of IVRCL Limited (Company) with Audited Financial Statements of the Company for the Financial year 2015-16.

1. FINANCIAL HIGHLIGHTS

(Rupees in millions)

Particulars

Standalone

FY 2015-16

FY 2014-15

Total Revenue

23,616.78

31,174.17

Gross Profit before Interest,

(3,775.16)

142.36

Depreciation, Exceptional Item

& Tax

Less: Interest

6,648.15

6,529.24

Depreciation

801.97

903.59

Exceptional Item

(252.97)

(568.15)

Provision for Tax / Reversal

(367.92)

-

of Tax in Current Year

(Loss)/Profit after Tax

(10,604.39)

(6,722.34)

Balance Brought forward from

(9,797.02)

(3,074.68)

the previous year

Balance carried to Balance Sheet

(20,401.42)

(9,797.02)

Paid-up Capital

1,457.37

918.28

Reserves and Surplus

3,046.67

10,444.05

EBIDTA

(3,775.16)

142.36

2. DIVIDEND

Your directors expressed their inability to recommend any dividend for the financial year 2015-16.

3. PERFORMANCE REVIEW

Your company achieved a gross turnover of Rs.23,616.78 million for the financial year 2015-16 as against Rs.31,174.17 million in the previous financial year. Profit/ (Loss) after Tax (PAT) stood at Rs. (10,604.39) million as compared to Rs. (6,722.34) million for the previous financial year.

The Earnings before Interest, Depreciation, Exceptional Item & Taxes (EBIDTA) at Rs. (3,775.16) are -15.99% of the turnover for the period under review as against 0.46% for the previous financial year.

During the year under review, there is no change in nature of business of the company and no material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

4. BUSINESS REVIEW

The Management Discussion and Analysis Section of the Annual Report present a detailed business review of the company.

5. STRATEGIC DEBT RESTRUCTURING.

The Company approached Corporate Debt Restructuring (CDR) Forum on January 20, 2014 for effective restructuring of the debts of the Company. A Restructuring package (CDR Package) was approved by CDR Empowered Group on June 28, 2014. Accordingly the Company executed a Master Restructuring Agreement on June 30, 2014.

As per Master Restructuring Agreement (MRA) dated June 30, 2014 and the CDR package, the Company has to achieve certain milestones, which could not be met by the Company. Further the performance of the Company was deteriorated due to liquidity problems, which had an impact in execution of the projects and operating profits of the Company. As a result the ability of the Company to meet its repayment obligations/liabilities were adversely affected.

The Joint Lenders'' Forum (JLF) of the Company at its meeting held on 26th November 2015 invoked the provisions of Strategic Debt Restructuring (SDR) in terms of the RBI Circular no. DBR.BP.BC.No.101/21.04.132/2014-15 dated June 08, 2015. The Lenders, upon invoking the SDR in terms of the aforesaid RBI Circular, have a right to convert whole or part of their debt into equity share capital of the Company so as to collectively hold 51% or more of the equity share capital of the Company.

Accordingly 21,22,69,654 Equity shares of face value of Rs.2/- were allotted to lenders under SDR and the lenders collectively hold 60.77% of the paid up capital of the company, as on date of this report.

6. CHANGE IN SHARE CAPITAL.

During the year under review, the Company has allotted 8,78,90,477 equity shares of face value of Rs.2/- each at a price of Rs.24.39/- per share, to the lenders pursuant to MRA dated June 30, 2014 and allotted 18,16,54,171 equity shares of face value of Rs.2/- each at a price of Rs.8.765 to the lenders pursuant to invocation of SDR by the JLF. As a result of aforesaid allotment of shares, the issued, subscribed and paid up share capital of the company has been increased from Rs.91.83 cr to Rs.145.74 cr, during the year under review.

7. SUBSIDIARY COMPANIES.

The Company has 30 direct subsidiaries and 2 associate companies within the meaning of Section 2(87) and 2(6) of the Companies Act, 2013 respectively (hereinafter referred as Act). There has been no material change in nature of business of the subsidiaries.

Pursuant to Proviso to Section 129(3) of the Act, a statement containing the silent features, brief details of performance and financials of the Subsidiaries, Associates and Joint Venture Companies, for the financial year ended March 31, 2016 is attached to Financial Statements of the Company.

Pursuant to Section 136 of the Act, the financial statements including consolidated financial statements, other relevant documents and audited accounts of subsidiaries of the company are available at website of the company www.ivrcl.com under Financials section and will be available for inspection by any member of the Company, at the registered office of the Company on all working days during business hours.

During the year under review, Chengapalli Road Infra Pvt Ltd has become subsidiary of the Company. Except as stated above, none of the Companies has become nor ceased to be Subsidiary or Associate or Joint Venture of the Company.

The Board has adopted a policy for determining material subsidiaries of the Company, as per SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015. The said policy is hosted at the Company''s website at the link http://ivrcl.com/downloads/ PolicyonMaterialSubsidiaries_New.pdf

8. CONSOLIDATED FINANSIAL STATEMENTS

In terms of Section 129(3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015, Consolidated Financial Statements of the Company prepared in accordance with Accounting Standards issued by Institute of Chartered Accountants of India, are attached and forms part of the Annual Report.

9. EMPLOYEE STOCK OPTION SCHEME.

The shareholders of the Company at the meeting held on September 26, 2013 approved to grant 1,00,00,000 options to employees of the Company, on such terms and conditions as specified by the Board of Directors of the Company. The Company is yet to grant the said options.

10. FIXED DEPOSITS

During year under review, your company has neither invited nor accepted any Fixed Deposits from the public.

11. CORPORATE GOVERNANCE

Your Company is committed to adhere to the standards of Corporate Governance as set out by the SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 (SEBI LODR Regulations). Detailed Report on Corporate Governance as stipulated under Schedule V of SEBI LODR Regulations is provided under separate section and forms part of this Report.

The requisite certificate from Practicing Company Secretaries, confirming the compliance of the conditions stipulated under SEBI LODR Regulations is attached to the Report on Corporate Governance.

12. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As stipulated under SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 the Report on Management Discussion and Analysis is annexed to this report and forms part of the Annual Report.

13. POLICY ON CODE OF CONDUCT.

The Company has laid down a Code of Conduct for all Board members and Senior Management Personnel. Pursuant to SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015, the Declaration by the Chairman and Managing Director affirming the compliance with the Code of Conduct is attached to the Report on Corporate Governance.

14. DIRECTORS AND KEY MANAGERIAL PERSONNEL.

Pursuant to provisions of Section 152 of the Companies Act, 2013, Mr. R. Balarami Reddy, Director retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

During the year under review, Mr. K. Ashok Reddy was reappointed as Joint Managing Director for a term of five years w.e.f 26.09.2015.

The Board of Directors at the meeting held on May 30, 2016, approved the re-appointment and remuneration of Mr. R. Balarami Reddy, Whole-time Director designated as Joint Managing director for a term of five years w.e.f. June 1, 2016 and remuneration payable to Mr. K. Ashok Reddy, Joint Managing Director w.e.f. June 1, 2016 for a period of three years, more particularly as described at resolution 4 and 5 in the Notice convening 29th AGM, which forms part of the Annual Report. The Board recommends the aforesaid re-appointment and remuneration of Mr. R. Balarami Reddy and remuneration payable to Mr. K. Ashok Reddy.

All the Independent Directors of the company have given declarations to the Company that they meet the criteria of independence as specified under Section 149(6) of the Act and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015.

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transaction with the Company other than sitting fee for attending the Board and Committee meetings.

There was no change in composition of the Board of Directors and Key Managerial Personnel, during the year under review.

The Policy on appointment and remuneration for Directors, Key Managerial Personnel and other employees, as specified under Section 178(3) of the Act, has been disclosed in Corporate Governance Report.

15. MEETINGS OF THE BOARD.

Six meetings of the Board of Directors were held on May 30, 2015, August 14, 2015, November 13, 2015, December 19, 2015, February 10, 2016 and March 9, 2016, during the year under review.

The details of the familiarization programmes for Independent Directors are hosted on Company''s website at the link on http://ivrcl.com/downloads/ familiarisationprogrammeforindependentdirectors.pdf

16. BOARD COMMITTEES

The Board has constituted various committees viz Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Share Allotment committee, Executive Committee and Corporate Social Responsibility Committee etc., to enable better management of the affairs of the Company, with terms of reference in line with provisions of Companies Act, 2013 and SEBI LODR Regulations. The details of composition of the committees are disclosed in Corporate Governance Report, which forms part of this report.

17. BOARD EVALUATION.

Pursuant to provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015, the Nomination and Remuneration Committee laid down the criteria for performance evaluation of the Individual Directors, the Board and its Committees. Accordingly, the Board of Directors has carried out an annual evaluation of its own performance, its committees and individual directors.

The performance of the Board was evaluated through a structured questionnaire which provides a powerful and valuable feedback for improving the board effectiveness, maximizing strengths and highlighting areas for further development.

The performance of the Committees was evaluated by the Board through a structured questionnaire, by considering the effective recommendations made by the Committees, from time to time, to the Board of the Directors of the Company and effectiveness of Committee meetings etc.

The Board evaluated the performance of the individual directors by considering the contribution of the individual directors to the Board and Committee meetings, preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, relationship with fellow board members, willing to devote time and effort to understand the Company and its business etc through a structured questionnaire.

As per Schedule IV of the Act, Independent Directors of the Company at a separate meeting, evaluated the performance of non-independent directors, the Board as a whole and the Chairman of the company taking into account the views of executive and non-executive directors. Independent Directors also reviewed the quality, quantity and timeliness of flow of information between management of the Company and the Board, for the effective performance of the board. Evaluation of performance of Independent Directors was done by the entire board, excluding the independent director being evaluated.

18. AUDITORS AND THEIR REPORTS.

Statutory Auditors

M/s. Chaturvedi & Partners., Chartered Accountants were appointed as Statutory Auditors of the company at the Annual General Meeting held on 26th September 2014, to hold the office from the conclusion of that meeting till the conclusion of the 30th Annual General Meeting to be held in the year 2017, subject to ratification by the members at every AGM. The Board recommends the ratification of appointment of said auditors for the financial year 2016-17.

During the year under review, no fraud has been reported by auditors under sub-section(12) of Section 143 of the Act.

The Comments of the Board for the qualifications in the Auditor''s Report on the financial statements of the Company for financial year 2015-16 are as provided in the Statement on Impact of Audit Qualifications which is annexed and forms part of this Report.

Secretarial Auditor.

As per the provisions of Section 204 of the Act, the Board of Directors of the company appointed M/s.D.Hanumanta Raju & Co, Practicing Company Secretaries as Secretarial Auditor for the purpose of auditing the Secretarial activities of the Company for the financial year 2015-16. The Secretarial audit report issued by the said auditor has been annexed to this report as Annexure A

The Secretarial Audit Report does not contain any adverse remarks or qualifications.

Cost Auditor.

As per the provisions of Section 148 of the Act read with Rules made there under, the Board of Directors of the company appointed M/s. Sagar & Associates, Practicing Cost Accountants as Cost Auditor for the purpose of auditing the Cost accounting records maintained by the company for the financial year 2016-17.

19. PARTICULARS OF LOANS, INVESTMENTS AND GUARANTEES.

The particulars of loans, investments made and guarantees issued under Section 186 of the Act, during year under review, are provided in notes to financial statements, which forms part of this report.

20. RELATED PARTY TRANSACTIONS.

As per the requirement of provisions of the Act and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015, the Company has formulated a policy on Related Party Transactions (RPT) to ensure the transparency in transactions between the company and related parties. The said RPT Policy is also available at Company''s website at the link http://ivrcl.com/ downloads/RelatedPartyTransactionPolicy.pdf.

All Related Party Transactions entered by the Company during the year under review were in ordinary course of business and on Arm''s length basis. There were no materially significant related party transactions entered by the company during year under review.

Since all the related party transactions entered into by the Company, were in ordinary course of business and were on Arm''s length basis, disclosure in form AOC-2 as required under Section 134(3)(h) of the Act is not applicable.

The details of related party transactions pursuant to Accounting Standards are provided at note 35 to financial statements.

21. INTERNAL FINANCIAL CONTROLS.

The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of operations. The details relating to internal financial controls and their adequacy are included in the Management Discussion and Analysis Report, which forms part of this Report.

22. RISK MANAGEMENT.

The company has established Risk Management process to manage risks with the objective of maximizing shareholders value. The details of various risks that are being faced by the Company are provided in Management Discussion and analysis Report, which forms part of this Report.

23. WHISTLE BLOWER POLICY.

The Board has adopted a Whistle Blower Policy as stipulated under Section 177(9) of the Act and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 to report the genuine concerns of the employees and Directors.

The Whistle Blower Policy adopted by the Board is hosted on Company''s website at the link http://ivrcl. com/downloads/WhistleBlowerPolicy.pdf

24. EXTRACT OF ANNUAL RETURN.

Extract of Annual Return of the company as provided under section 92(3) of the Act is annexed as Annexure B to this Report.

25. SIGNIFICANT AND MATERIAL ORDERS.

There are no significant and material orders passed by the regulators or tribunals impacting the going concern status and Company''s operations in future.

26. CASES FILED UNDER SEXUAL HARASSMENT ACT.

No cases were filed pursuant to the Sexual Harassment of Women at work Place (Prevention, Prohibition and Redressal) Act, 2013, during the year under review.

27. PARTICULARS OF EMPLOYEES

The statement containing the information pertaining to employees as required under Section 197(12) of the Act read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, is annexed to this report. Having regard to provisions of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining the said information may write to Company Secretary and the same will be furnished on request.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure C to this Report.

28. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo:

Conservation of Energy, which is an ongoing process in the Company''s activities. The core activity of the company is civil construction which is not an energy intensive activity.

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 to be more and more competitive in the prevailing environment and the effect of the same cannot be quantified.

The particulars of expenditure and earnings in Foreign currency are furnished in item No. 50 to Notes to financial statements.

29. CORPORATE SOCIAL RESPONSIBILITY.

As per the provisions of Section 135 of the Act, the Company has constituted the CSR committee to formulate, implement and monitor the CSR Policy of the Company. However as the Company does not have average net profits for the three immediately preceding financial years, the Company was not required to make any expenditure on CSR activities during financial year 2015-16 as specified under Section 135(5) of the Act. Hence the information on CSR activities as required under Section 135(5) of the Act and Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014, has not been provided by the Company, for the financial year 2015-16.

30. INDUSTRIAL RELATIONS

The Company enjoyed cordial relations with the employees during the year under review and the Management appreciates the employees of all cadres for their dedicated services to the Company, and expects continued support, higher level of productivity for achieving the targets set for the future.

31. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Board of Directors hereby state that:

(a) in preparation of annual accounts, the applicable accounting standards have 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; and

(e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

(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.

32. ACKNOWLEDGEMENTS AND APPRECIATIONS

The Directors wish to express their appreciation of the support and co-operation of the Central and the State Governments, bankers, financial institutions, suppliers, employees, associates and subcontractors, and expects the same in future as well for regaining the growth rates as achieved in the past.

For and on behalf of the Board of Directors

IVRCL Limited

E. Sudhir Reddy

Chairman & Managing Director

Date: 30.05.2016

Regd. Office:

M-22/3RT, Vijayanagar colony,

Hyderabad-500057

CIN:L45201AP1987PLC007959

Tel No: 91 40 30931111

Fax No : 91 40 30931386

Email id: info@ivrinfra.com

www.ivrcl.com

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