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Perfect Infraengineers Ltd.

BSE: 0 | NSE: PERFECT | Series: SM | ISIN: INE925S01012 | SECTOR: Construction & Contracting - Civil

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Annual Report

For Year :
2016

Director’s Report

Dear Members

The Directors take pleasure in presenting the 20th Annual Report together with the audited financial statements for the financial year ended 31 March 2016. The Management Discussion and Analysis has also been incorporated into this report.

FINANCIAL RESULTS The highlights of the Standalone and Consolidated Financial Results are as under:

Standalone

Consolidated

Particulars

31st

March,2016

31st

March,2015

31st

March,2016

31st

March,2015

Amount in Rs.

Revenue from operations

172,636,635

254,403,175

177,125,465

254,403,175

Other Income

8,776,988

7,962,606

8,379,138

7,962,606

Total Revenue

181,413,623

262,365,781

185,504,603

262,365,781

Expenses:

Cost of Materials/Services Consumed

90,567,067

157,233,959

90,787,742

157,233,959

Employee benefits expense

38,161,955

44,453,235

40,637,401

44,453,235

Finance costs

15,985,132

13,913,289

16,069,101

13,913,289

Depreciation and amortization expense

6,946,337

6,890,152

6,988,412

6,890,152

Other expenses

20,160,152

23,020,483

20,014,655

23,020,483

Total Expenses

171,820,643

245,511,119

174,497,311

245,511,119

Profit before tax

9,592,980

16,854,662

11,007,292

16,854,662

Current tax

2,200,000

4,225,000

2,570,000

4,225,000

Deferred tax

873,525

444,510

903,387

444,510

Excess Provision of Previous Year

541,242

(2,167.49)

541,242

(2,167.49)

Total Tax Expense

3,614,767

4,667,343

4,014,629

4,667,343

Minority Interest

609

Profit (Loss) for the period

5,978,213

12,187,319

6,992,055

12,187,319

Earnings per equity share (FV Rs10):

Basic and Diluted

0.99

2.39

1.15

2.39

P&L A/c Opening Balance

14,102,036

11,932,647

14,102,036

11,932,647

Add: Net Profit/(Loss) for the Period

59,78,213

12,187,320

5,921,594

12,187,320

Transfer to General Reserve

-

-

-

-

Less: Depreciation Adjustment

-

338,227

-

338,227

Less: Issue of Bonus Shares

8,450,750

8,450,750

Less: Interim Dividend Paid

3,854,704

1,021,082

3,854,704

1,021,082

Less :Dividend Distribution Tax Paid

770,714

207,872

770,714

207,872

P&L A/c Closing Balance

15,454,831

14,102,036

15,398,212

14,102,036

OVERVIEW OF COMPANY''S FINANCIAL PERFORMANCE

During the financial year under review, on a standalone basis, the Company recorded revenue of Rs.18.14 cr as against Rs.26.24 cr in the previous year. Net profit for the year stood at Rs 60 lakh as compared to Rs 122 lakh in the previous year. On a consolidated basis, the company''s revenue was at Rs 18.55 cr as against Rs 26.24 cr in the previous year and net profit amounted to Rs 70 lakh as compared to Rs 122 lakh in the previous year.

The company''s performance was largely affected due to factors beyond the control of the management. As you are aware fiscal 2016 was a very trying period for business and economy across the globe. On account of economic slowdown, many a client faced cash crunch during the year resulting in poor recoveries which forced your company to defer completion of significant number of projects, though the company''s order book position remained healthy. Also, your company consciously avoided real estate projects in view of the slow payment process prevailed in the market. These temporary setbacks dragged the company''s top line considerably.

Whereas the volume of business got shrunk by the external factors, the company''s interest burden increased by 15% as the company augmented inventories in view of large orders in hand. Further, opportunity of bulk imports from foreign suppliers was spotted where the company could get competitive price. However due to slow execution of some projects, inventories could not be utilized thus disproportionately increasing finance costs.

During the year, the company made an investment of Rs 1cr in the wholly owned subsidiary, Perfect Control Panels Private Ltd, from the issue proceeds. The subsidiary has started manufacturing electric control panels that complement the company''s MEP contracting business. The subsidiary plans to market the panels across the country and has already executed a standalone government order for which it has applied for CPRI certification.

DIVIDEND

The Board of Directors recommended an interim dividend of 50 paisa per share (5%) at their meeting held on March 19, 2016. The Board fixed April 4, 2016, as ''Record Date'' for determining the entitlement of the shareholders for the dividend and accordingly the dividend was paid. Even though the IPO investors came into the company''s fold only in November 2015, they have been provided full dividend. The Board of Directors do not recommend any final dividend.

SHARE CAPITAL

During the year under review the company issued 26,04,000 equity shares of Rs.10 each at a premium of Rs.13 per share. This has enlarged the paid up capital of the company from Rs.51, 054,080 to Rs.77, 094,080. The movement of share capital has been annexed as Annexure 1

Pursuant to the provision of Section 149 and Section 161 of the Companies Act 2013 and Companies (Appointment and Qualification of Director) Rules 2014 Mr. Vinay Deshmukh Appointed as Additional Independent Director w.e.f. 10th April, 2015 and his appointment regularized at members meeting at 21st September 2015.

Pursuant to the provision of Section 149 and Section 161 of the Companies Act 2013 and Companies (Appointment and Qualification of Director) Rules 2014 Mr. Vipul Vora Appointed as Additional Independent Director w.e.f. 10th July 2015 and his appointment regularized members meeting at 21st September 2015.

Pursuant to the provision of Section 168 of Companies Act 2013 and Companies (Appointment and Qualification of Director) Rules 2014 Mr. Hiren Mehta (Additional Independent Director) resigned w.e.f 6th July 2015.

Pursuant to the provision of Section 203, 205 and other applicable provision (including any modification or re-enactment thereof), if any, of the Companies Act, 2013 Mrs. Sudha Balaji Company Secretary resigned w.e.f 12thAugust 2015 and Mr. Vijay Mulwani appointed as Company Secretary and he resigned w.e.f 15th April 2016.

Pursuant to the provision of Section 203, 205 and other applicable provision (including any modification or re-enactment thereof), if any, of the Companies Act, 2013 and pursuant to the recommendation of Nomination and Remuneration Committee, the Board of Directors of the Company approved the appointment of Ms. Neeharika Shukla as Company Secretary of the Company with effect from 21st April 2016.

Pursuant to the provisions of Section 152 of Companies Act 2013, Mrs. Sharmila Singh, director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered herself for the re-appointment. The Board recommends her re-appointment.

The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149 (6) of the Companies Act, 2013 and Regulation 16 (1) (b) of Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015.(''SEBI (LODR) Regulations, 2015''). As required under the provisions of SEBI (LODR) Regulations, 2015 and the Companies Act, 2013, brief profile and other details of Directors being appointed /re-appointed are provided in the Notice of Annual General Meeting.

DIRECTORS'' RESPONSIBILITY STATEMENT

In terms of Section 134(3)(c) of the Companies Act, 2013, your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, state that:

1. In the preparation of the annual financial statements for the year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2. Such accounting policies as mentioned in the notes to the Financial Statements for the year ended 31st March, 2016 have been selected and applied consistently and judgments and estimates have been made 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, 2016 and of the profit of the Company for the year ended on that date;

3. Proper and sufficient care has been taken 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;

4. The annual financial statements for the year ended 31st March, 2016 have been prepared on a going concern basis;

5. Internal financial controls to be followed by the Company have been laid down and that the said financial controls were adequate and were operating effectively;

6. Proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and are operating effectively.

NUMBER OF BOARD MEETINGS

During the year under review, 13 Board Meetings were held viz on 10th April, 2015, 23rd May, 2015, 11th June 2015 21st July, 2015 17th August 2015, 22nd September 2015, 7th October 2015, 19th October, 2015 14th November 2015,25th November 2015, 30th January 2016, 5th March 2016 and 19th March 2016, the details of which are given in the annexure to Board Report.

STATUTORY AUDITORS

At the Annual General Meeting of the Company held on 21st September, 2015, M/s. Godbole Bhave and Co., Chartered Accountants, were appointed as Statutory Auditors of the Company for a period of 3 years to hold office subject to ratification by the members at each Annual General Meeting. The Audit Committee and the Board of Directors of the Company have recommended to the members of the Company, ratification of appointment of M/s. Godbole Bhave and Co., Chartered Accountants, as Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of the 21st Annual General Meeting of the Company. The Company has received a letter from M/s. Godbole Bhave and Co., confirming that they are eligible for ratification of their appointment.

AUDITORS'' REPORT

The Auditors'' Report on standalone and consolidated financial statements forms part of the Annual Report. The Auditors'' Report does not contain any qualifications, reservations, adverse remarks, disclaimer or emphasis of matter except calculation of gratuity on arithmetical basis which should be done on actuarial basis but it is not affecting Company''s profit materially. The observation does not have any material impact on Company''s profitability. The Company has thereafter referred to Actuary who commented that the provision done on arithmetical basis was more than what was necessary as per actuarial calculation. Notes to the Financial Statements are self-explanatory and do not call for any further comments. The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Companies Act, 2013 (including any statutory modification(s) or re-enactment for the time being in force).

INTERNAL AUDIT

M/s. Diveyesh Shah & Co., Chartered Accountants are Internal Auditors of the Company for Financial Year 2016-17 to 2018-19.

CONSOLIDATED FINANCIAL STATEMENTS & SUBSIDIARIES

In accordance with the provisions of Companies Act, 2013 (the Act), SEBI (LODR) Regulations, 2015 and Accounting Standard (AS) - 21 on Consolidated Financial Statements, the audited Corporate Overview Management Reports Financial Statements consolidated financial statements form part of the Annual Report. In view of this, the Balance Sheet, Statement of Profit and Loss and other related documents of the subsidiaries are attached in this Annual Report. A copy of Audited Financial Statements of the Subsidiary shall be made available for inspection at the Registered Office of the Company during business hours. Any shareholder interested in obtaining a copy of separate Financial Statements of the subsidiary shall make specific request in writing to the Company Secretary. The Audited Financial Statements of the subsidiaries are also available on the website www.perfectinfra.com of the Company. As on 31st March, 2016, the Company has 1 subsidiary. The Company does not have any Associate Company pursuant to the provisions of the Companies Act, 2013. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 and Rules 5 and 8(1) of the Companies (Accounts) Rules, 2014, the salient features of financial position of subsidiary is given in Form AOC-1 annexed as Annexure 2 to this Report. The Company has framed a policy for determining material transaction with subsidiary.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92 (3) of the Companies Act, 2013, extract of the Annual Return of the Company in Form MGT-9 is annexed as Annexure 3 to this Report. Secretarial Audit Report Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed of Prajakta V.Padhye & Co., Practicing Company Secretary to conduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report issued by him is annexed as Annexure 4 to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Discussion and Analysis Report for the financial year under review, as stipulated under Regulation 34 of SEBI (LODR) Regulations, 2015 is presented in a separate section forming part of the Annual Report. Corporate Governance In terms of Regulation 34 of SEBI (LODR) Regulations, 2015, a report on Corporate Governance along with Statutory Auditors'' Certificate confirming its compliance is provided separately and forms integral part of this Report.

RELATED PARTY TRANSACTIONS

All related party transactions entered during the financial year under review were on an arm''s length basis and in the ordinary course of business. Note No. 28 to the Financial Statements contains details of Related Party Transactions. No related party transaction was in conflict with the interest of the Company. As prescribed by Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014, particulars of contracts/arrangements with Related Parties are given in Form AOC-2, annexed as Annexure 5 to this Report. The policy on Related Party Transactions has been uploaded on the Company''s website.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure 6 forming part of this Report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Pursuant to the provisions of Section 197 (12) of the Companies Act, 2013 (Act) read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, for the year ended 31st March, 2016, none of the employees of the Company draws remuneration in excess of the limits set out in the said rules. The details required as per said rules and the Disclosure pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure 7 to this Report.

SEGMENT

The Company operates in multi-segments i.e. HVAC, Mechanical and MEP (Supply/Testing of Air-conditions and Electrical) and Annual Maintenance Contracts of Air-conditioning and giving Air-conditioners on rent.

CAPACITY EXPANSION

The Company has registered with NSIC in 2016 by which it can benefit under Public Procurement Policy for Micro & Small Enterprises (MSEs) Order 2012 as notified by the Government of India, Ministry of Micro Small & Medium Enterprises. Benefits accruing to NSIC-registered companies are as follows:

- Issue of the Tender Sets free of cost;

- Exemption from payment of Earnest Money Deposit (EMD),

- In tender participation, MSEs quoting price within price band of L1 15 per cent shall also be allowed to supply a portion up to 20% of requirement by bringing down their price to L1 Price where L1 is non-MSEs.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to the provisions of Section 177 (10) of the Companies Act, 2013 and Regulation 22 of SEBI (LODR) Regulations, 2015, the Company has established a vigil mechanism. The details of Vigil Mechanism are provided in the Corporate Governance Report. The Vigil Mechanism / Whistle Blower Policy may be accessed on the Company''s website at www.perfectinfra.com.

COMPANY''S POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS

The Company has been following well laid down policy on appointment and remuneration of Directors, and Key Managerial Personnel (KMP). The appointment of Directors is made by the Board pursuant to the recommendation of Nomination and Remuneration Committee (NRC).

The remuneration of Executive Directors comprises of Basic Salary, Perquisites & Allowances, and Commission. The remuneration is within the limits prescribed under the Companies Act, 2013 and is recommended by Nomination and Remuneration Committee (NRC). Approval of Board, Shareholders and the Central Government, if required, for payment of remuneration to Executive Directors is sought, from time to time.

The remuneration of Non-Executive Directors comprises of sitting fees and commission in accordance with the provisions of Companies Act, 2013. A brief extract of the Remuneration Policy on appointment and remuneration of Directors, and KMP is provided in the Corporate Governance Report.

PERFORMANCE EVALUATION OF DIRECTORS

Criteria of performance evaluation of the Board of Directors including Independent Directors are laid down by Nomination and Remuneration Committee of the Company. Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Board of Directors will carry annual performance evaluation of entire board, committee and all parameters specified in CG Report in current year

OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

In order to prevent sexual harassment of women at workplace, the Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up an Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to look into complaints relating to sexual harassment at workplace of any woman employee. During the year under review, the Company has not received any complaint under the said policy.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The Company has not granted any loan during the year under review. The details of non current investment made are provided in Note No. 13 to the Standalone Financial Statements.

INTERNAL FINANCIAL CONTROLS WITH RESPECT TO THE FINANCIAL STATEMENTS

The Company maintains adequate internal control system and procedures commensurate with its size and nature of operations. The internal control systems are designed to provide a reasonable assurance over reliability in financial reporting, ensure appropriate authorization of transactions, safeguarding the assets of the Company and prevent misuse/ losses and legal compliances The Internal Audit reports are periodically reviewed by the management and necessary improvements are undertaken, if required.

RISK MANAGEMENT

The Company has in place Risk Management System which takes care of risk identification, assessment and mitigation.

DEPOSITS

During the year under review, no deposits were accepted by the Company under Chapter V of the Companies Act, 2013.

UTILISATION OF ISSUE PROCEEDS

The Company had come with IPO FOR 2508,000 shares of a face value of Rs.10 each at premium of Rs. 13. Company has received Rs. 576.84 lacs (Rs. 10 Rs. 13) per share utilization of issue proceed has been annexed in Annexure 8 to this Report.

SIGNIFICANT OR MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS

During the year under review, no significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review or said items are not applicable to the Company:

1. Cost Audit

2. Issue of equity shares with differential rights as to dividend, voting or otherwise or issue of sweat equity share.

There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year 2015-16 and the date of this report.

ACKNOWLEDGEMENTS

Our consistent growth has been made possible due to our culture of professionalism, integrity and continuous evolvement.

Your Directors take this opportunity to thank customers, suppliers, investors, bankers, the Central and State Governments, for their consistent support and co-operation to the Company.

We place on record our appreciation of the contribution made by employees at all levels, without whose whole-hearted efforts, the overall performance would not have been possible. Your Directors look forward to the long term future with confidence.

By Order of the Board of Directors

PERFECT INFRAENGINEERS LIMITED

Mr. Nimesh Mehta

(DIN: 00247264)

CHAIRMAN & MANAGING DIRECTOR

Date: 14th November 2016

Corporate Identification Number (CIN): L29190MH1996PLC099583

Registered Office:

R-637, TTC Industrial Area, MIDC, T. B. Road, Rabale, Navi Mumbai - 400701

Director’s Report