The Directors are pleased to present the Twenty Eighth Annual Report and the audited accounts of Punj Lloyd Limited (“the Company”) for the financial year ended March 31, 2016:
The financial performance of the Company, for the year ended March 31, 2016 is summarized below:
Earnings before interest (finance costs), tax, depreciation and amortization (EBIDTA)
Less: Finance costs
Profit/ (Loss) before tax, depreciation and amortization
Less: Depreciation and amortization expenses
Profit/ (Loss) before tax (PBT)
Less: Tax expenses (net of deferred tax effect and minimum alternate tax credit entitlement/ written off (net))
Profit/ (Loss) after taxation (PAT)
Add: Surplus brought forward
Less: Adjustment relating to depreciation on fixed asset (Pursuant to enactment of Schedule II to the Companies Act, 2013)
Surplus/(defect) available for appropriation
Net surplus/(defect) carried to balance sheet
To conserve the cash resources, your Directors have not recommended any dividend on the equity shares for the financial year ended March 31, 2016.
The Company continues to operate as an EPC conglomerate, servicing emerging markets in India, South Asia, Middle East, Africa, Central Asia and South East Asia. Market conditions remained difficult in FY 2016. With sharp decline in oil prices, Punj Lloyd''''s principle segment - oil and gas related construction projects - saw a dramatic slowdown in activities. Globally, other infrastructure spends were affected by a general economic slowdown. While conditions were better in India and there were some positive signals of revival in the infrastructure development industry, there continued to be liquidity crunch and legacy issues. In this difficult environment, to its credit, Punj Lloyd was successful in growing the order book from Rs, 21,152 crore as on March 31, 2015 to Rs, 23,836 crore as on March 31, 2016 at consolidated level.
However, execution was adversely affected on account of stressed financial liquidity within the Company, low order backlog in the beginning of the financial year and delay in award or commencement of many of the projects secured. Although the Company had evolved a Corrective Action Plan (CAP) along with its lenders in the previous financial year, delay in securing working capital that was needed to support the CAP further accentuated the situation. This has led to a major reduction in revenues and the scale of operations was not adequate to meet the fixed operating costs of the Company. Revenues decreased by 31% to Rs, 3,348 crore and the Company reported net losses of Rs, 1,650 crore.
The Company continues to focus on internal efficiencies and developing a leaner organization. Efforts are also on to monetize noncore assets and at establishing and encasing legitimate claims from clients that have arisen due to unforeseen issues in past execution.
The Management Discussion and Analysis Section of the Annual Report presents a detailed business review of the Company.
Health, Safety and Environment (HSE)
Across operations and project site, the Company has always laid emphasis on HSE and made efforts to evolve this as a critical brand differentiator for the Company in the market place. A detailed note on the HSE practices and initiatives by the Company is included in Management Discussion and Analysis Section of the Annual Report.
Directors and Key Managerial Personnel
Mr. Atul Punj was re-designated as the Chairman and Managing Director of the Company with effect from May 27, 2016.
Mr. Shiv Punj was appointed as an Additional Director of the Company with effect from March 25, 2016 to hold office upto the AGM. Appropriate resolution seeking your approval for appointment of Mr. Shiv Punj as a Director of the Company, liable to retire by rotation, forms part of the notice calling the ensuing Annual General Meeting (“the AGM”).
Mr. Shiv Punj was also appointed as Whole Time Director by the Board of Directors of the Company for a period of five years with effect from March 25, 2016. Appropriate resolution seeking your approval for the above appointment and payment of remuneration to him forms part of the notice calling the AGM.
Mr. Uday Walia, Mr. Rajat Khare and Mr. Shravan Sampath were appointed as Additional Directors in the capacity of Independent Directors of the Company with effect from September 25, 2015, May 20, 2016 and May 27, 2016, respectively, to hold office upto the AGM. Appropriate resolutions seeking your approval for appointment of Mr. Uday Walia, Mr. Rajat Khare and Mr. Shravan Sampath as Independent Directors for a term of 5 years viz. September 25, 2015 to September 24, 2020; May 20, 2016 to May 19, 2021 and May 27, 2016 to May 26, 2021, respectively, forms part of the Notice calling the AGM.
During the period under review, Mr. Jayarama Prasad Chalasani, Managing Director and Group CEO, Mr. P. N. Krishnan - Director Finance, Mr. M. M. Nambiar and Ms. Ekaterina Sharashidze
- Independent Directors of the Company, resigned from the Directorship of the Company w.e.f March 31, 2016, September 25, 2015, August 14, 2015 and May 19, 2016 respectively. The Board wishes to place on record deep sense of appreciation for the valuable contributions made by them to the Board and the Company during their tenure as Directors
Mr. Nidhi Kumar Narang resigned from the post of Chief Financial Officer of the Company (CFO) with effect from September 30, 2015. Mr. Shamik Roy, who was appointed as CFO with effect from November 06, 2015, resigned on March 25, 2016. Mr. Rahul Maheshwari has been appointed as CFO with effect from May 27, 2016.
In terms of Section 149(7) of the Companies Act, 2013, (“the Act”) Mr. Phiroz A. Vandrevala, Mr. Uday Walia, Mr. Rajat Khare and Mr. Shravan Sampath - Independent Directors of the Company have given declarations to the Company to the effect that they meet the criteria of independence as provided in Section 149(6) of the Act.
Mr. Atul Punj retires by rotation and being eligible has offered himself for reappointment at the AGM. The Board of Directors recommend his appointment.
Brief resume of the Directors seeking appointment/reappointment at the AGM, as required under SEBI (Listing
Obligations & Disclosure Requirements) Regulations 2015 (“SEBI Regulations”) and the Act, forms part of the notice convening the AGM.
Meetings of the Board
During the year, the Board of Directors of the Company met 5 times on May 22, 2015; July 17, 2015; August 14, 2015; November 06, 2015 and February 12, 2016.
Policy on Appointment and Remuneration of Directors, Key Managerial Personnel and Other Employees
The Nomination and Remuneration Committee in its meeting held on May 20, 2014 had recommended to the Board of Directors a Policy on Directors'''' Appointment and Remuneration, including criteria for determining qualifications, positive attributes, independence of a director and relating to remuneration for the Directors, Key Managerial Personnel and Other Employees in terms of sub-section (3) of section 178 of the Act. The Board of directors in its meeting held on May 20, 2014 have approved and adopted the same. The said policy is enclosed as Annexure - I to this Report.
Formal Annual Performance Evaluation of the Board and that of its Committees and Individual Directors
Pursuant to the provisions of the Act and SEBI Regulations, Independent Directors at their separate meeting held on May 27, 2016 without participation of the Non-Independent Directors and Management, have considered and evaluated the Board''''s performance and performance of the Chairman and Non Independent Directors. The Independent Directors in the said meeting have also assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board.
The Board of Directors in their meeting held on May 27, 2016 have evaluated the performance of each of the Independent Directors (without participation of the relevant Director) and also of the Committees of the Board.
The criteria for performance evaluation have been detailed in the Corporate Governance Report which is attached as Annexure - II to this Report.
Directors'''' Responsibility Statement
Pursuant to the requirements of Sub-Sections (3)(c) and (5) of Section 134 of the Act, it is hereby confirmed:
1. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. that the Directors have 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 or loss of the Company for the year under review;
3. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. that the Directors have prepared the annual accounts of the Company on a ‘going concern'''' basis.
5. that 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.
6. that 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.
The Audit Committee comprises of Mr. Phiroz Vandrevala, Independent Director as Chairman, Mr. Rajat Khare and Mr. Atul Punj as Members.
The Board of Directors have accepted all the recommendations of the Audit Committee.
The Company has in place a vigil mechanism in the form of Whistle Blower Policy. It aims at providing avenues for employees to raise complaints and to receive feedback on any action taken and seeks to reassure the employees that they will be protected against victimization and for any whistle blowing conducted by them in good faith. The policy is intended to encourage and enable the employees of the Company to raise serious concerns within the organization rather than overlooking a problem or handling it externally. The Company is committed to the highest possible standard of openness, probity and accountability. It contains safeguards to protect any person who uses the Vigil Mechanism (whistle blower) by raising any concern in good faith. The Company does not tolerate any form of victimization and takes appropriate steps to protect a whistleblower that raises a concern in good faith and treats any retaliation as a serious disciplinary offence that merits disciplinary action. The Company protects the identity of the whistle blower if the whistle blower so desires, however the whistle blower needs to attend any disciplinary hearing or proceedings as may be required for investigation of the complaint. The mechanism provides for a detailed complaint and investigation process. If circumstances so require, the employee can make a complaint directly to the Chairman of the Audit Committee. The Company also provides a platform to its employees for having direct access to the Chairman and Managing Director of the Company for raising any concerns. It is through ATP Connect (email@example.com).
Mr. Dinesh Thairani, Company Secretary is the Compliance Officer. The confidentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice.
Employee Stock Option Scheme
Pursuant to the Resolution passed by Circulation by the Nomination and Remuneration Committee on September 29, 2015 and as approved by the Board of Directors in its meeting held on February 12, 2016, 48,70,000 stock options were issued under Employee Stock Option Plan 2005 (ESOP 2005) and Employee Stock Option Plan 2006 (ESOP 2006) subject to the following changes:
The respective Plan will govern the stock options to be granted there under except as stated below: -
100% Vesting after the expiry of 1 year from the date of grant
At par value ('''' 2 per share)
To be exercised within 5 years from date of Vesting
Action on separation
Upon resignation all vested options to be exercised within 1 year from last working day
ESOP 2005 and ESOP 2006 are in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (the Regulation).
The details as required to be provided in terms of the Regulation as amended from time to time with regards to the ESOP 2005 and ESOP 2006 of the Company as on March 31, 2016 are posted on the website of the Company at the following link www.punjlloyd.com
The Company has never provided any loan to its employees to purchase the shares of the Company.
The Company has not issued any shares with differential voting rights.
The Company has not issued any sweat equity shares.
As stipulated under SEBI Regulations executed with the Stock Exchanges, the Report on Corporate Governance and the requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid regulation is attached as Annexure - II to this Report and forms part of the Annual Report.
Corporate Social Responsibility (CSR) initiatives
The Company has formed a CSR Committee comprising of Mr. Atul Punj as Chairman, Mr. Shiv Punj and Mr. Uday Walia as other members.
The said Committee has developed a Policy on CSR, which has been approved by the Board of Directors in its meeting held on May 20, 2014.
In terms of the provisions of Section 135 the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company was not required to make any expenditure on CSR activities during the Financial Year 2015-16. The CSR Report is attached as Annexure III.
Management Discussion and Analysis
As stipulated under SEBI Regulations, Management Discussion and Analysis Report, for the year under review, is presented in a separate section forming part of the Annual Report.
Auditors and Auditors'''' Report
M/s Walker Chandiok & Co LLP have expressed their unwillingness to continue as Statutory Auditors of the Company for the Financial Year 2016-17. They shall hold office until the conclusion of the ensuing AGM.
It is proposed to appoint M/s BGJC & Associates, Chartered Accountants, New Delhi (Registration No. 003304N) as the Statutory Auditors of the Company for a period of 5 years commencing from ensuing AGM up to 6th consecutive AGM of the Company, subject to ratification of their appointment at each AGM.
The Company has received letter from M/s BGJC & Associates, to the effect that their appointment, if made, would be within the prescribed limits under Section 139 of the Act and that they are not disqualified for appointment.
The observations of the Auditors have been fully explained in Note 35 (a) and (b) to the Financial Statements.
Secretarial Auditors and Secretarial Audit Report
M/s. Suresh Gupta & Associates, Company Secretaries have been appointed as Secretarial Auditors of the Company and their Secretarial Audit Report is attached as Annexure - IV to this Report.
The Board has appointed M/s Bhavna Jaiswal & Associates, (Membership No. 25970), Cost Accountants, Delhi, as Cost Auditors of the Company for conducting the audit of cost records of the Company for the Financial Year 2015-16
The Company has not accepted any fixed deposits from public, shareholders or employees during the year under review.
Particulars of Employees
The details as required in terms of the provisions of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached as Annexure - V to this Report.
The details of employees as required in terms of the provisions of Section 197 of the Act read with Rule 5 (2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached as Annexure - VI to this Report.
The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year 2015-16, no complaints were received.
Consumption of Energy and Foreign Exchange Earnings and Outgo
The details as required under Section 134(3)(m) of the Act read with Rule 8(3) of Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are attached as Annexure - VII to this Report.
Loans, Guarantees and Investment
In accordance with Section 134(3)(g) of the Act, the particulars of loans, guarantees and investments under Section 186 of the Act are given in the Note 39 (a) of standalone Financial Statements read with respective heads to the Financial Statements.
Related Party Transactions
In accordance with Section 134(3)(h) of the Act read with Rule 8(2) of Companies (Accounts) Rules, 2014, the particulars of contracts or arrangements with related parties, referred to in Section 188(1) of the Act, in the prescribed Form AOC.2 are attached as Annexure - VIII to this Report.
Risk Management Policy
The Company has developed and implemented a Risk Management Policy. The details of elements of risk are provided in the Management Discussion and Analysis section of the Annual Report.
Internal Financial Controls
Pursuant to Section 134 of the Act, the Directors, based on the representation received from the operating management, state that:-
- The Board, through the operating management has laid down Internal Financial Controls to be followed by the Company.
- To the best of their knowledge and ability and inputs provided by various assurance providers confirm that such financial controls are adequate and were operating effectively.
Extracts of Annual Return
In terms of Section 134(3)(a) of the Act read with Rule 12(1) of Companies (Management & Administration) Rules, 2014, the extracts of Annual Return of the Company in Form MGT.9 is attached as Annexure - IX to this Report.
Significant and Material Orders
No significant and material orders have been passed by any regulators or courts or tribunals impacting the going concern status and company''''s operations in future.
Consolidated Financial Statements
In accordance with Section 129 of the Act, Consolidated Financial Statements are attached and form part of the Annual Report and the same shall be laid before the ensuing AGM along with the Financial Statements of the Company.
Subsidiaries, Joint Ventures & Associate Companies
As required under the first proviso to sub-section (3) of Section 129 of the Act, a separate statement containing the salient features of the financial statements of the subsidiaries, associates and joint venture companies in Form AOC.1 is annexed to the Financial Statements and forms part of the Annual Report, which covers the performance and financial position of the subsidiaries, associates and joint venture companies.
The annual accounts of the subsidiary companies are available on the website of the Company viz. www.punjlloyd.com and will also be available for inspection by any member or trustee of the holder of any debentures of the Company at the Registered Office and Corporate Office. A copy of the above accounts shall be made available to any member on request.
Your directors would like to place on record its appreciation for the committed services put in by the employees of the Company. Your directors would also like to convey its sincere gratitude to the shareholders, debenture holders, bankers, financial institutions, regulatory bodies, clients and other business constituents for their continued co-operation and support received.
For and on behalf of the Board of Directors
Chairman and Managing Director
Date: May 27, 2016