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