DIRECTORS' REPORT TO THE MEMBERS, Your Directors are pleased to present the 26th Annual Report and the Company's audited accounts for the financial year ended 31st March, 2015 STATE OF COMPANY AFFAIRS During the financial year 2014-15, the company has on a standalone basis, registered total revenue of Rs. 807.58 Crores as compared to Rs. 1282.49 Crores in the previous year representing a decline of 37%. The decline is due to difficult macroeconomic environment which affect operations of your Company's clients & consequent impact on your Company. Correspondingly total expenditure excluding finance cost was lower by 34% from Rs. 1267.73 Crores in 2013-14 to Rs. 836.22 Crores in 2014-15. Loss before tax, exceptional and extraordinary items was Rs. 66.59 Crores in 2014-15 against Loss of Rs. 131.04 Crores in 2013-14 and Loss after tax was Rs. 52.39 Crores in 2014-15 against Loss of Rs. 86.12 Crores in 2013-14. APPROPRIATIONS: A. DIVIDEND Your Directors have not recommended any dividend for the financial year ended 31st March, 2015 due to losses incurred during the year. B. TRANSFER TO RESERVES During the current year, no amount has been transferred to reserves. OPERATIONAL OVERVIEW Completed Projects During the year under review, the Company has executed contractual projects covering an area of approx. 8.07 million square feet in 20 cities. Ongoing Projects The Company currently has 32 ongoing contractual projects located in 20 cities aggregating to approx. 29.44 million square feet under various stages of construction. The Company has a geographic presence in 20 cities and 14 states across India. CORPORATE DEBT RESTRUCTURING The Construction industry has been facing many constraints in recent times due to lack of efficient and stable regime and policy, which has led to delay in project completion and project stage certification, which affects the payment release - the commonly used deferment strategy by the clients. This delay in payment by clients results in liquidity crisis for the industry / company which has percolated into delayed payments or defaults with suppliers / subcontractors/ banks /statutory authorities / employees. Further the dip in sales was mainly due to delay in project schedule, cancellation of projects and drop in certification and claims. The material cost and subcontractor cost have increased, on account of lower sales and delayed payments to vendors resulting in higher cost of inputs. The delayed certification and release of payments had led to delay in execution, /unabsorbed overheads /cash crunch situation due to lower volumes and higher costs including finance costs. These factors have also led to invocation of some of Bank Guarantees. In such a situation, most construction/infrastructure contractors and service providers in India are not only highly over-leveraged but also are facing severe financial strain. Such as your Company, had decided to re-align its debts through a formally recognized process of debt restructuring in the last fiscal year under the framework of Corporate Debt Restructuring (CDR). The debt restructuring proposal of the Company was referred to the Corporate Debt Restructuring (CDR) Cell by State Bank of India. The restructuring under CDR inter-alia provides for financial restructuring through reduction in interest rates and appropriately designed repayments. The CDR cell approved the package vide its letters dated 31st December 2014 giving certain terms and conditions for the business and financial restructuring including sharing of security among lenders. Please refer to the relevant section in the Management's Discussions and Analysis Report for further details. FUTURE PROSPECTS With the restructuring of its debt and implementation of the package approval by the CDR Cell your Company believes that it will gradually be able to turn its operations towards profitability. Your Company has been extremely fortunate to have full support of its employees, lenders and customers during the financial stressed period and all efforts are being made to keep this support intact. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND Pursuant to the provisions of the Section 205A(5) and 205C of the Companies Act, 1956, relevant amount which remain unpaid or unclaimed for a period of seven years have been transferred by the Company, from time to time on due dates , to the Investor Education and Protection Fund. Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 29th September, 2014 (date of last Annual General Meeting) on the Company's website (www.blkashyap.com), as also on the Ministry of Corporate Affairs' website. CHANGE IN NATURE OF BUSINESS There is no change in the nature of business of the Company. MATERIAL CHANGES AND COMMITMENTS There is no Material changes and commitments in the business operations of the Company from the financial year ended 31st March, 2015 to the date of signing of the Director's Report. FIXED DEPOSITS The Company has not accepted any deposit under Section 73 of the Companies Act, 2013 during the year under review. SUBSIDIARIES We have four subsidiaries and two step down subsidiaries as on 31st March, 2015: NAME STATUS BLK Lifestyle Limited Subsidiary Company Security Information Systems (India) Limited Subsidiary Company BLK Infrastructure Limited Subsidiary Company Soul Space Projects Limited Subsidiary Company Soul Space Realty Limited Step Down Subsidiary Company Soul Space Hospitality Limited Step Down Subsidiary Company There has been no change in the number of subsidiaries/ step down subsidiaries or in the nature of business of subsidiaries, during the year under review. None of the above subsidiaries/ step sown subsidiaries is a material non-listed Indian subsidiary since there turnover or networth (i.e. paid-up capital and free reserves) does not exceed 20% of the consolidated turnover or net worth respectively, of the Company and its subsidiaries in the immediately preceding financial year. As per provisions of the Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rule, 2014 a separate statement containing the salient features of the financial statement of the subsidiary companies/associate companies/joint venture is prepared in the form AOC-1 and same is enclosed to this report as 'Annexure -A'. RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Information on related party transactions pursuant to Section 134 (3)(h) of the Companies Act, 2013 read with rule 8 (2) of the Companies (Accounts) Rule, 2014 are given in form AOC-2 as 'Annexure -B' and the same forms part of this report. The Policy on materiality of related party transactions as approved by the Board may be accessed on the Company's website at the link: <http://www.blkashyap.com/doc/Related_Party_Tranc/Policy.pdf> Your Directors draw attention of the members to Note 3.2.2 to the financial statement which sets out related party disclosures. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, the Board of directors, to the best of their knowledge and ability confirm that: (i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there is no material departures. (ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 loss of the Company for the year under review; (iii) the Directors have taken proper and sufficient care 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; (iv) the Directors have prepared the annual accounts of the Company on a going concern basis. (v) 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. (vi) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. DIRECTORS AND KEY MANAGERIAL PERSONNEL In accordance with the provisions of the Company's Act, 2013 Mr. Vinod Kashyap, Directors of the Company will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment. The Board of Directors, in compliance with the provision of Section 149 of the Companies Act, 2013, Clause 49 of the Listing Agreement and upon recommendation of Nomination and Remuneration committee, appointed Mr. Naresh Lakshman Singh Kothari and Ms. Poonam Sangha as Additional Directors of the Company, to hold office upto to date of forthcoming Annual General Meeting and are eligible to be appointed and Independent Directors of the Company. The Company has received notice in writing from members proposing their candidature as Director. All independent directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement. Your Board recommends their appointment/re-appointment. Mr. P.S. Shenoy, Independent Director of the Company and Mr. Ashok Bansal, CFO of the Company has resigned with effect from 17th June, 2014 and 17th December, 2014 respectively. The Board places on record its appreciation for valuable contribution made by them during their tenure. NUMBER OF MEETINGS OF THE BOARD The Board meets on regular intervals to discuss on Company/business policy, strategy and financial results apart from other business. A tentative calendar of Meetings is prepared and circulated in advance to the Directors to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. During the year Eight Board Meetings were convened and held. The details of which are given in the Corporate Governance Report which forms part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS The Company's policy on directors' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the directors' report. AUDIT COMMITTEE The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report. AUDITORS M/s Sood Brij & Associates, Chartered Accountants, Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. As required under Section 139 of the Companies Act, 2013, the Company has obtained a written consent from M/s Sood Brij & Associates, Chartered Accountants, to such appointment and also a certificate to the effect that their appointment, if made, would be in accordance with Section 139(1) of the Companies Act, 2013 and the rules made there under, as may be applicable. The Board recommends the re-appointment of M/s Sood Brij & Associates, Chartered Accountants as Statutory Auditors. AUDITOR'S REPORT The observation made in the Auditors' Report read together with relevant notes thereon are self-explanatory and hence, do not call for any further comments under Section 134 of the Companies Act, 2013. There was no qualifications, reservations or adverse remarks made by the Auditors in their report. SECRETARIAL AUDIT Pursuant to provisions of section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed Sharma Jain & Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company for the financial year ended on 31st March, 2015. As required under section 204 (1) of the Companies Act, 2013 the Company has obtained a secretarial audit report. There was no qualifications, reservations or adverse remarks made by the Secretarial Auditors in their report. The Secretarial Audit report is annexed herewith as "Annexure-C". PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in the Annual Report. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE In accordance with the provisions of Section 135 of the Companies Act, 2013, the Company constituted a Corporate Social Responsibility Committee (CSR Committee) on 28th May, 2014. The details about the composition of CSR Committee, development and initiatives taken by the Company on CSR is annexed as "Annexure-F". Due to losses in the past financial years no expenditure has been made by the Company, towards CSR activities. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has in place an alert procedure "Vigil Mechanism / Whistle Blower Policy" to deal with instance of fraud and mismanagement, if any. In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility. The procedure in "Vigil Mechanism / Whistle Blower Policy" ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern. The Committee reports to the Audit Committee and the Board. PREVENTION OF INSIDER TRADING The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code. LISTING The Equity Shares of the Company are listed on BSE Limited and National Stock Exchange of India Limited. The requisite annual listing fees have been paid to these Exchanges. CONSOLIDATED FINANCIAL STATEMENTS In accordance with provisions of Section 129 of Companies Act, 2013 read with Companies (Accounts) Rule 2014 and applicable Clauses of Listing Agreements with the Stock Exchanges and Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investment in Associates, the audited consolidated financial statement is provided in the Annual Report. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The provisions of Section 134(m) of the Companies Act, 2013 do not apply to our Company. At every possible level Company is trying to conserve the use of energy i.e. power & fuel. While there was no Foreign Currency earning during the year under review, the Foreign Currency outgo was Rs. 4.14 Lacs. ISO CERTIFICATES Your company is among the few Construction companies to be awarded the globally recognized prestigious ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 Certification, for meeting international standards of Quality, Environmental, Occupational Health and Safety Management Systems. HEALTH AND SAFETY The Company places highest value on ensuring the safety of its employees, labours, third parties and visitors. At each of our project sites, it is ensured that safe work practices are followed and environment is protected. Every possible measure is taken to protect environment and ensure occupational health and safe working places for its employees. Our constant and collective efforts for ensuring accident-free operations, fail proof risk management and a cleaner, safer environment have paid rich dividends over the decades, leading to better growth opportunities and enhanced trust. The Company has been accredited with OHSAS 18001:2007 certification, which reinforces & is benchmark for the quality of safety standard and practices which are regularly been used at project sites. PARTICULARS OF EMPLOYEES The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below: k. The key parameters for any variable component of remuneration availed by the directors: None. 1. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: None. m. Affirmation that the remuneration is as per the remuneration policy of the Company: The Company affirms that remuneration is as per the remuneration policy of the Company. n. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate 'Annexure-D' forming part of this report. CORPORATE GOVERNANCE The Company is committed to maintain the highest standard of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under aforesaid Clause-49 is attached to this Report. Further, the Company regularly submits the quarterly Corporate Governance compliance report to Stock Exchanges and also uploads the same on its website. MANAGEMENT DISCUSSION AND ANALYSIS Management's Discussion and Analysis for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is presented in a separate section forming part of the Annual Report. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure-E". ELECTRONIC FILING The Company is also periodically uploading Annual Reports, Financial Results, Shareholding Pattern, Corporate Governance Reports etc. on its website viz. www.blkashyap.com within the prescribed time limit. ACKNOWLEDGEMENTS Your directors would like to express their gratitude for the assistance and cooperation received from the Financial Institutions, Bankers, and Government Authorities, Regulatory Authorities, Stock Exchanges, Joint Ventures Partners/ Associates. The Board also wishes to place on record its appreciation of the continued support from Client, Vendors and Investors during the year. We place on record our appreciation of the contribution made by employees at all levels. Our efforts at consolidating our position would not have been possible but for their hard work, solidarity cooperation and support. For and on behalf of the Board of Directors of B.L. KASHYAP AND SONS LIMITED Vinod Kashyap Chairman DIN00038854 Vineet Kashyap Managing Director DIN00038897 Place : New Delhi Dated: 14th August, 2015 |