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Lanco Infratech Directors Report, Lanco Infratech Reports by Directors

Lanco Infratech

BSE: 532778  |  NSE: LITL  |  ISIN: INE785C01030  |  Construction & Contracting - Civil

Explore Lanco Infratech connections « Mar 07
Directors Report Year End : Mar '08
The Directors have pleasure in presenting the Fifteenth Annual Report
 on the business and operations of the Company together with the Audited
 Accounts for the year ended 31st March, 2008.
 
 CONSOLIDATED FINANCIAL RESULTS
 
                                                           Rs. Millions
                                     Year ended 31st March,
                                      2008        2007        Change (%)
 
 INCOME
 
 Sales and Operating Income      32,412.57   16,057.69           102
 
 Other Income                       952.93      415.79           129
 
 Total                           33,365.50   16,473.48           103 
 
 EXPENDITURE
 
 Construction, Generation and 
 Operating expenses              23,707.84   11,220.35           111
 
 Administrative and 
 Other Expenses                   1,711.33      639.30           168
 
 Interest and Finance Charges       920.43      828.64            11
 
 Depreciation                       775.74      655.64            18
 
 Total                           27,115.34   13,343.93           103
 
 Profit Before Taxation, before 
 Minority Interest and
 Share of Profits of Associates   6,250.16    3,129.55           100
 
 Provision for Taxation
 
 - Current                        1,314.78      405.52           224
 
 - Relating to Previous Years         0.17        1.15           -85
 
 - Fringe Benefit                     8.19        3.04           169
 
 - Deferred                          81.38       62.11            31
 
 Net Profit after Taxation, before 
 Minority Interest and Share of 
 Profits of Associates            4,845.64    2,657.73            82
 
 Less: Minority Interest          1,228.84      788.22            56
 
 Add: Share of Profits 
 of Associates (net)                  3.77       10.46           -64
 
 Less: Elimination of Profit on 
 Transactions with Associate 
 Companies                           78.86         -               -
 
 Net Profit after Taxation, 
 Minority Interest and Share of 
 Profits of Associates            3,541.71    1,879.97            88
 
 Surplus brought forward          2,348.45      551.90           326
 
 Utilised for the Issue 
 of Bonus Shares                     53.04         -               -
 
 Profit Available for 
 Appropriation                    5,837.12    2,431.87           140
 
 Transfer (from)/to Debenture 
 Redemption Reserve                 (17.99)     (17.99)            -
 
 Transferred to General Reserve     145.00      101.41            43
 
 Balance Carried to 
 Consolidated Balance Sheet       5,710.11    2,348.45           143
 
 
 STAND ALONE FINANCIAL RESULTS
 
                                                         Rs. Millions
                                   Year ended 31st March,
                                      2008        2007     Change (%)
 Income
 
 Operating Income                15,745.45    5,416.67           191
 
 Other Income                       290.80      117.32           148
 
 Total                           16,036.25    5,533.99           190 
 
 Expenditure
 
 Construction and 
 Operating Expenses              11,469.75    3,983.14           188
 
 Administration and 
 Other Expenses                   1,134.80      292.70           288
 
 Interest and Finance charges       344.73      211.73            63
 
 Depreciation                       116.15       36.93           215
 
 Total                           13,065.43    4,524.50           189
 
 Profit Before Taxation           2,970.82    1,009.49           194 
 
 Provision for Taxation
 
 Current
 
 For the year                       883.60      215.20           311
 
 Earlier years                         -          1.15             -
 
 Deferred                            80.24       60.95            32
 
 Fringe Benefit                       5.22        1.58           230
 
 Profit after Taxation            2,001.76      730.61           174
 
 Balance of Profit 
 brought forward                  1,203.38      472.77           155
 
 Balance of profit Carried 
 to Balance Sheet                 3,205.14    1,203.38           166
 
 OPERATIONS REVIEW
 
 On a consolidated basis your company has reported gross revenues of Rs.
 33,365.50 million as against Rs. 16,473.48 million of revenues
 registered in the previous year up by 103%. Total expenditure for the
 year was Rs. 27,115 million as against Rs. 13,343 million in the
 previous year an increase of 103% on the back of increased execution
 activities of various projects. The earnings before interest, tax,
 depreciation and amortization (EBITDA) amounted to Rs. 6,993 millions
 while the same was Rs. 4,198 million for the previous year i.e.  an
 increase of 67%. The Profit before Taxation stood at Rs. 6,250.16
 million, an increase of 100% as compared to Rs. 3,129.55 million the
 last year.
 
 The Net Profit After Tax after adjustment of Minority Interest and
 Share of Profits in Associates was Rs.3,541.71 million as against
 Rs.1,879.97 million for the previous year, up 88% backed by robust
 topline growth.
 
 Gross Interest and Finance charges on consolidated basis before
 capitalization amounted to Rs.1,450.31 millions in comparison to
 Rs.991.92 millions due to increase in loans and working capital
 requirements for project execution.
 
 A detailed discussion on the results of the operations and the
 financial condition is included in the Management Discussion and
 Analysis section placed at Annexure-III to this report.
 
 BUSINESS REVIEW
 
 A detailed business review is being given in the Management Discussion
 and Analysis Section of the Annual Report.
 
 SUBSIDIARY COMPANIES AND JOINT VENTURES
 
 During the Year Lanco Wind Power Private Limited has become a
 subsidiary of the Company.
 
 HEALTH SAFETY AND ENVIRONMENT
 
 The Company is committed to internationally accepted best practices and
 a proactive approach to risk management by practicing systematic
 analysis and risk control techniques to mitigate the risk of Health,
 Safety and Environment (HSE). Conscious attempt to eliminate or
 minimize hazards and also to improve environmental performance are
 undertaken by the Company to promote awareness and encourage
 participation of its employees and contractors to manage HSE risks.
 
 Two of the operating power plants of the company Viz Kondapalli Gas
 Power Plant and Aban Gas Power plant have OHSAS 18001 certification in
 respect of Environment Management Systems in these power plants. The
 Kondapalli Power Plant has been winning recognitions and awards from
 various agencies in respect of its excellent track record in the
 management of Safety, Health and Environment.
 
 DIRECTORS
 
 In accordance with the Provisions of the Companies Act, 1956 and the
 Articles of Association of the Company Mr. L. Madhusudhan Rao, Mr. L.
 Sridhar, Dr.P.Kotaiah and Mr. P. Abraham, Directors, retire by rotation
 and being eligible offer themselves for re-appointment.
 
 DEPOSITS
 
 Your Company has not accepted deposits falling within the provisions of
 Section 58A of the Companies Act, 1956 read with Companies (Acceptance
 of the Deposits) Rules, 1975 during the year under review.
 
 AUDITORS
 
 Price Waterhouse, Chartered Accountants, Auditors of the Company will
 retire at the conclusion of the Annual General Meeting and are eligible
 for re-appointment. They have conveyed their willingness to accept
 re-appointment and confirmed their eligibility under Section 224(1-B)
 of the Companies Act, 1956.
 
 INTERNAL CONTROL SYSTEMS
 
 The Company’s internal control system comprises audit and compliance by
 in-house Internal Audit Division as well as by external audit firms
 employed to undertake Internal Audit work at different offices. The
 internal auditors independently evaluate the adequacy of internal
 controls and concurrently audit the majority of the transactions in
 value terms. Independence of the audit and compliance is ensured by the
 direct reporting of Internal Audit Division to the Vice-Chairman and
 also placing of Internal Audit Reports to Audit Committee of the Board.
 
 The Company has mandated IBM to implement SAP ERP across the
 organization which will have embedded processes for internal controls
 in financial reporting system. The Company has also mandated Deloitte
 Haskins and Sells to undertake a review of the Internal Controls and
 the recommendations of the consultant would be incorporated in the
 processes being incorporated in the SAP ERP being implemented. The
 Company has also set up risk assessment and minimization procedures.
 These procedures shall be periodically reviewed to ensure that the
 executive management controls risk through means of a properly defined
 framework. Clause 49 of the Listing Agreement requires the companies to
 establish and maintain internal controls and evaluate the effectiveness
 of the internal control system. Deficiencies in the design or
 operations of internal controls and the steps taken or proposed to be
 taken to rectify the deficiencies are to be disclosed to auditors and
 Audit Committee.
 
 PARTICULARS REGARDING CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT,
 TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 Information pursuant to Section 217(1)(e) of the Companies Act, 1956,
 read with Companies (Disclosure of particulars in the Report of Board
 of Directors) Rules, 1988, are as follows:
 
 CONSERVATION OF ENERGY
 
 The Company uses electric energy for general lighting, air-
 conditioning, computer terminals and utilities in the office premises
 as well as various construction activities which it undertakes.
 Further, the subsidiaries and associate companies which are engaged in
 various business activities including Power Generation use electric
 energy for their operations. As an ongoing process the Company, its
 subsidiaries and associates undertake measures to conserve and reduce
 usage of energy in all their activities.
 
 RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION
 
 The Company is an integrated infrastructure developer and undertakes
 Engineering, Procurement and Construction activities for various
 infrastructure projects such as Power projects, various types of
 buildings, Roads, Bridges, Irrigation projects, Sea Ports, Airports,
 Railway Transportation systems. The company has an in-house engineering
 team which undertakes the engineering for these projects and also
 decides on the technology which is required for the same.  There is a
 continuous process of research to optimize the engineering for these
 projects with the intention of improving efficiencies and reducing
 costs of the equipments procured for the projects. The Company also
 continually aims to improve efficiencies in its construction activities
 so as to reduce the time taken to construct projects and also reduce
 costs of construction. In this process the Company also intends to
 adopt construction technologies which would contribute towards
 improvement of efficiencies.
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 Foreign Exchange Earnings   :              Rs. 6.86 millions
 
 Foreign Exchange outgo      :              Rs.2,319.5 millions
 
 DISCLOSURE ON COMPANY’S EMPLOYEES STOCK OPTION PLAN 2006
 
 The Employee Stock Option Plan-2006 was approved by a Special
 Resolution passed by the Shareholders in the Extraordinary General
 Meeting held on 7th June, 2006.
 
 The required information relating to the said scheme pursuant to Clause
 12 of the SEBI (ESOS/ESPS) Guidelines, 1999, is enclosed as an
 Annexure-I.
 
 PARTICULARS OF EMPLOYEES
 
 The information required to be published under the provisions of
 Section 217(2A) of the Companies Act, 1956 read with Companies
 (Particulars of Employees) Rules, 1975 as amended is enclosed as
 
 Annexure-II.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 The Management Discussion and Analysis as required under Clause- 49
 (IV)(F) is enclosed as Annexure-III.
 
 CORPORATE GOVERNANCE
 
 The Report on Corporate Governance is given separately in this Annual
 Report. The Auditors’ Certificate on Compliance in this regard is
 annexed to this report.
 
 NOTE ON PARTICULARS REQUIRED AS PER SECTION 212 OF THE COMPANIES ACT,
 1956
 
 As per Section 212 of the Companies Act, 1956, we are required to
 attach the directors’ report, balance sheet, and profit and loss
 account of the subsidiaries. We had applied to the Government of India
 for an exemption from such attachment as we present the audited
 consolidated financial statements in the annual report. We believe that
 the consolidated accounts present a full and fair picture of the state
 of affairs and the financial condition and is accepted globally. The
 Government of India has granted exemption from complying with Section
 212. Accordingly, the annual report does not contain the financial
 statements of these subsidiaries. The Annual Accounts of the Subsidiary
 Companies and the related detailed information will be made available
 to the Holding and Subsidiary Companies’ investors seeking such
 information at any point of time.  The Annual Accounts of the
 Subsidiary Companies will also be kept for inspection by any investor
 at our Registered Office and that of Subsidiary Companies concerned.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 As required under Section 217(2AA) of the Companies Act, 1956, the
 Directors hereby confirm:
 
 (i) that in preparation of annual accounts containing financial
 statements for the year ended 31st March, 2008 the applicable
 accounting standards have been followed except as disclosed in
 note-viii of Schedule-19 of the Consolidated Financial Statements.
 
 (ii) that the accounting policies are consistently followed and your
 Directors have applied them to give a true and fair view of the state
 of affairs of the Company and the profit/loss for that period.
 
 (iii) that the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956, for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities.
 
 (iv) the annual accounts have been prepared on a going concern basis.
 
 INFORMATION ON AUDITORS’ OBSERVATIONS
 
 The Auditors’ Report on the Consolidated Financial Statements dated
 29th May, 2008, contains a qualification at Paragraph-4 and information
 regarding the same is furnished as under:
 
 Since the excess profit of Rs.412.23 Million recognized in the Previous
 Year belonged to that year, having also figured as a qualification in
 the Auditors’ Report of the previous year, it was considered
 appropriate to adjust the same against the balance of profit brought
 forward from the previous year, instead of adjusting against the
 Current Year’s Profit as a Prior Period Adjustment. The Networth or the
 closing balance of the Profit and Loss Account carried as Reserve
 remained un-effected.
 
 ACKNOWLEDGEMENT AND APPRECIATION:
 
 The Directors take this opportunity to thank the Shareholders,
 Financial Institutions, Banks, Customers, Suppliers and Regulatory and
 Governmental Authorities for their continued support to the Company.
 Further, the Directors wish to place on record their appreciation of
 Employees at all levels for their hard work, dedication and commitment.
 
                                       FOR AND ON BEHALF OF THE BOARD
 
                            L. MADHUSUDHAN RAO      G. VENKATESH BABU
                            Executive Chairman      Managing Director
 
 Place: Hyderabad,
 Date : 30.07.2008
Source : Religare Technova

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