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Updated:23 Sep, 2020, 15:49 PM IST

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Updated:23 Sep, 2020, 16:01 PM IST

BOARDS' REPORT

Dear Members,

Your Directors have pleasure in presenting the 44th Annual Report on the business and operations of your Company along with the audited statement of accounts for the year ended 31st March, 2015.

REVIEW OF OPERATIONS

Financial Highlights

Your company achieved a gross operating turnover of Rs. 4221 Million for the year ended 31st March, 2015 as against Rs. 4113 Million for the previous financial year. This amounts to a 2.63% increase over the previous year. The EBIDTA at Rs. 316 Million increased by 8.96% in comparison to the previous year. The profit after tax in the period under review was Rs. 84 Million as compared to Rs. 69 Million in the previous year, representing an increase of 21.73%.The net worth of your Company, which has been steadily increasing, stands at over Rs. 2178 million as on 31st March 2015.The financial results represent a modest  improvement over the previous years and has been achieved in the face of intensely unfavorable business environment.

CONSOLIDATED ACCOUNTS

The consolidated financial statements of your Company for the financial year 2014–15, are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standards and Listing Agreement as prescribed by the Securities and Exchange Board of India (SEBI). The consolidated financial statements have been prepared on the basis of audited financial statements of the Company and its subsidiary Companies, as approved by their respective Board of Directors.

SUBSIDIARIES

A separate statement containing the salient features of financial statements of all subsidiaries of your Company forms part of consolidated financial statements in compliance with Section 129 and other applicable provisions, if any, of the Companies Act, 2013. The financial statements of the subsidiary companies and related information are available for inspection by the members at the Registered Office of your Company during business hours on all days except Saturdays, Sundays and public holidays upto the date of the Annual General Meeting (AGM) as required under Section 136 of the Companies Act, 2013. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office of your Company. The financial statements including the consolidated financial statements, financial statements of subsidiaries and all other documents required to be attached to this report have been uploaded on the website of your Company (www. technofabengineering.com).

The financial performance of each of the subsidiaries and joint venture companies included in the consolidated financial statements of your Company is set out in the "Annexure [A]" to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis forms an integral part of this Report and is separately given.

A brief overview of the Company's business is given hereunder.

I. Sectoral Overview

Though your Company has capabilities to undertake turnkey EPC Services across diverse sectors and geographies, two sectors have contributed to the vast majority of business and revenue, viz the Water Sector and the Electrical Sector. The other sectors viz the Thermal Power, Nuclear Power, Industrial, Oil & Gas had relatively low contribution.The Electrical Sector was the largest contributor at 46%, followed by the Water Sector at 42%. The Power Sector contributed 7% and the Industrial and Oil & Gas

Sectors contributed 3% and 2% respectively.

Major customers during the year included Ministry of Water, Zimbabwe, West Bengal State Electricity Distribution Company, Ministry of Water, Tanzania and South Bihar Power Distribution Company.

II. Geographical Spread

Your Company has continued to maintain a strong focus on geographical diversity. Apart from Sub Saharan Africa, the other geographies of interest are in Fiji and closer home in South Asia. During the year your Company continued to execute business secured in Ethiopia, Ghana, Kenya, Liberia, Tanzania and Zimbabwe. Over a third of the Company's revenue came from overseas assignments.

Work on the project in Liberia had to be suspended in August 2014 due to outbreak of Ebola. The work is expected to resume very soon.

III. Fresh business Secured

Your company continued to put great emphasis on securing new business from existing as well as new customers and new geographies. Despite the difficult business conditions, your Company could secure fresh business of around Rs. 5570 Million. The largest share of orders were received from the Electrical Sector followed by the Water sector. The traditional Power and Industrial Sectors contributed less than 10% of the fresh business secured and this is a reflection of the severe impairment of the project investment cycle in our country.

At present your Company has outstanding proposals worth over Rs. 40 billion, 60% of which pertain to domestic business and the remaining overseas.

IV. Economic and Business Outlook

For the fourth year in a row, the economic and business outlook in the country, for the sectors we serve, has been gloomy. Many of our customers continue to be financially stressed. Not only is there a delay in receiving payments, the standstill or slowdown on many of our projects means that retention money which is linked to project completion continues to pile up.

Concurrently the project pipeline in the Power, Nuclear and Industrial Sectors continues to be seriously impaired. As a result, the slowdown in enquiries and longer than normal gestation in converting enquiries to orders and orders to revenue, continue unabated.

The Electrical Sector still attracts significant investments funded by various Centrally sponsored schemes and this has enabled your Company to receive a moderate amount of new orders, as a result of which there is revenue visibility beyond the next two years.

Opportunities in the Railway Electrification are soon expected to emerge in a significant way and your Company is looking forward to leveraging its established capabilities of undertaking Electrical Projects to get a firm foothold in this sector.

About a year ago there was an improvement in sentiment. However this improvement in sentiment is now dimming as it is yet to translate into any movement on the ground in terms of resumption of stalled projects or fresh enquiries in the Power and Industrial Sectors.

As far as the overseas market is concerned, your Company continues to maintain a strong focus particularly in sub Saharan Africa. While the Company largely pursues funded projects mainly in the water infrastructure, non funded projects are also pursued though with a degree of caution.

The combination of a significant decrease in bidding opportunities and increase in competition, both domestically, and to a lesser extent, in the overseas markets has had the inevitable impact of adversely affecting margins. The fact that the Company still has a decent order book, is on account of its strategy of diversifying its customer base by targeting newer sectors and geographies, whilst sticking to its domain competence of undertaking turnkey EPC Projects. Hence your Company is expected to be in a healthy shape to take advantage of the upturn which hopefully should begin by end FY 2016 or early FY 2017.

V. Strategic Initiatives

Your Company continues to work on its ongoing strategic initiatives viz:

• Focus on improving efficiency through use of technology and organizational development

• Focus on Quality

• Employee welfare along with Training and development

• Market diversity  Whil e continuing to adhere to its traditional practices, viz:

• the philosophy of "keep it simple".

• to retain a lean, non hierarchical structure with an effective but simple, no frills office culture, and

• maintain an informal, achievement oriented, merit and loyalty rewarding work atmosphere

VI. Quality up gradation

Your Company secured ISO 9001 accredition in 2007. This was a first milestone towards continuous quality enhancement. The Company believes that "Quality is a state of mind" and is committed to a continuous ongoing initiative in this direction. Internal audits are carried out regularly and recently our external auditors have conducted a surveillance and reconfirmed our ISO 9001 accredition.

DIVIDEND

Your Directors have, taking into account the business situation/ outlook and the dip in profits, decided to recommend that there be no dividend this year. The money so preserved would assist in ongoing operations.

MATERIAL CHANGES AND COMMITMENTS

AFFECTING THE FINANCIAL POSITON

No material changes and commitments affecting the financial position of the Company have occurred between March 31, 2015 and the date of the report.

TRANSFER TO RESERVES

It is proposed to transfer Rs. 20 Million which amounts to 24% of the profits after tax, to the General Reserves of the Company.

PUBLIC DEPOSITS

During the financial year 2014–15, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.

CORPORATE GOVERNANCE REPORT

In compliance with the provisions of Clause 49 of the Listing Agreement, a separate report on Corporate Governance along with a certificate from the Auditors on its compliance, forms an integral part of this Report.

I NDUSTRIAL RELATIONS

The Company enjoyed cordial relations with the employees during the year under review and the Management appreciates the efforts and dedication shown by all employees of the Company in offering their support and expects their continued support for achieving higher level of productivity to enable meeting the targets set for the future.

DISCLOSURE RELATING TO REMUNERATION OF  DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES

In accordance with Section 178 and other applicable provisions if any, of the Companies Act, 2013 read with the Rules issued there under and Clause 49 of the Listing Agreement, the Board of Directors has formulated the Nomination and Remuneration Policy of your Company on the recommendations of the Nomination and Remuneration Committee. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on  appointment and remuneration of Directors and other matters have been outlined in the Corporate Governance Report which forms part of this Report.

The Managing Director of your Company does not receive remuneration from any of the subsidiaries of your Company.

The information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of your Company is set out in "Annexure [B]".

D I R E C TO R S AN D KE Y M AN AG E R I AL PERSONNEL

I. Appointments:

In compliance with the provisions of Sections 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, Shri Pawan Chopra, Shri Arun Mitter and Shri VS Mathur were appointed as Independent Directors on the Board of Directors of your Company at the 43rd AGM of your Company held on 25th September, 2014 to hold office up to 5 (five) consecutive years.

At the aforementioned AGM, Shri Avinash C Gupta, Chairman & Managing Director, Sh. Arjun Gupta & Sh. Nakul Gupta Whole Time Directors of your Company were re–appointed for 3 (three) years commencing from 1st April, 2014 to 31st March,2017.

During the financial year 2014–15, the Board of Directors appointed Ms. Anju Banerjee as Additional/Non– Executive Independent Director with effect from 31st March, 2015. Further Ms Anju Banerjee is proposed to be appointed as the Non­Executive Independent Director of your Company at the ensuing AGM. Your Directors recommend her appointment as a Non–Executive Independent Director of your Company.

During the financial year 2014–15, the Board of Directors appointed Mr. Ashish Kapil as Company Secretary with effect from 11th February, 2015.

II. Resignations/Retirements:

Shri VS Mathur, Non–Executive/Independent Director expressed his desire not to continue on the Board of Directors of your Company and resigned from the directorship in the Board Meeting held on 31st

March, 2015.

The Board places on record its appreciation for his valuable contribution during his association with your Company.

Shri Avinash C Gupta, Chairman & Managing Director is liable to retire by rotation at the ensuing AGM pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and being eligible have offered himself for reappointment. Appropriate resolution for his re–appointment is being placed for your approval at the ensuing AGM. The brief resume of the Director and other related information has been detailed in the Notice convening the 44th AGM of your Company. Your Directors recommend his re–appointment as Chairman & Managing Director of your Company.

Shri Avinash C Gupta, Chairman & Managing Director, Shri Arjun Gupta & Shri Nakul Gupta Whole Time Directors, Shri Sandeep Kumar Vij, Chief Financial Officer and Shri Ashish Kapil, Company Secretary are the Key Managerial Personnel of your Company in accordance with the provisions of Sections 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

III. Annual Evaluation of Board's Performance:

In terms of the provisions of the Companies Act, 2013 read with Rules issued thereunder and Clause 49 of the Listing Agreement, the Board of Directors on recommendation of the Nomination and Remuneration Committee, have evaluated the effectiveness of the Board/Director(s) for the  financial year 2014–15.

NUMBER OF MEETINGS OF THE BOARD AND

AUDIT COMMITTEE

The details of the number of Board and Audit Committee meetings of your Company are set out in the Corporate Governance Report which forms part of this Report.

DECLARATION OF INDEPENDENCE

Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Clause 49 of the Listing Agreement.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors confirm that:

a) in the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards and Schedule III of the Companies Act, 2013, have been followed and there are no material departures from the same;

b) 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 your Company as at 31st March, 2015 and of the profit and loss of the Company for the financial year ended 31st March, 2015;

c) 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;

d) the annual accounts have been prepared on a going concern' basis;

e) proper internal financial controls laid down by the Directors were followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f ) 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.

AUDITORS AND AUDITORS' REPORT:

I. Auditors

At the 43rd AGM of your Company, M/s. Rajesh Suresh Jain & Associates, Chartered Accountants (Firm Registration No. 017163N) was appointed as the Auditor to hold office till the conclusion of the 44th AGM of your Company.

M/s. Rajesh Suresh Jain & Associates, Chartered Accountants, who retire at the ensuing AGM of your Company are eligible for re–appointment. Your Company has received written consent and a certificate stating that they satisfy the criteria provided under Section 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 and that the appointment, if made, shall be in accordance with the applicable provisions of the Companies Act, 2013 and rules issued there under. As required under Clause 49 of the Listing Agreement, M/s. Rajesh Suresh Jain & Associates, Chartered Accountants, have also confirmed that they hold a valid certificate issued by the Peer Review Board of ICAI.

The Audit Committee and the Board of Directors recommend the appointment of M/s. Rajesh Suresh Jain & Associates, Chartered Accountants, as the Auditors of your Company for the financial year 2015– 16 till the conclusion of the next AGM. The Auditors' Report for the financial year 2014–15, does not contain any qualification, reservation or adverse remark.

II. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Mr. Naresh Verma, Practicing Company Secretary to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as "Annexure [C]" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. However the Secretarial Auditor observed that Company is yet to spend amount on CSR. In view of the tightness of cash flows and resultant stretched liquidity, Your Board of Directors has decided to temporarily defer the expenditure under CSR.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT– 9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as "Annexure [D]" to this Report.

RELATED PARTY TRANSACTIONS

During the financial year 2014–15, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014, which were in the ordinary course of business and on arms' length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued there under and Clause 49 of the Listing Agreement. During the financial year 2014–15, there were no transactions with related parties which qualify as material transactions under the Listing Agreement.

The details of the related party transactions as required under Accounting Standard–18 are set out in Note 2.26 to the standalone financial statements forming part of this Annual Report.

The Form AOC –2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as "Annexure [E]" to the Board's Report.

LOANS AND INVESTMENTS

Details of Loans, Guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

RISK MANAGEMENT

Your Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. Your Company periodically assesses risks in the internal and external environment, along with the cost of treating risks and incorporates risk treatment plans in its strategy, business and operational plans.

Your Company, through its risk management process, strives to contain impact and likelihood of the risks within the risk appetite as agreed from time to time with the Board of Directors.

During the financial year 2014–15, the Board of Directors have approved the risk management policy and the risk appetite for your Company. There are no risks which in the opinion of the Board threaten the existence of your Company.

VIGIL MECHANISM

Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177 (10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The policy provides for a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them. More details on the vigil mechanism and the Whistle Blower Policy of your Company have been outlined in the Corporate Governance Report which forms part of this report.

CORPORATE SOCIAL RESPONSIBILITY

Your Company has from time to time been spending some money on social purposes on a voluntary basis. However from 01 April 2014 the Companies Act has made it mandatory for the Company to allocate 2% of the net average profits for the last three years on social issues.

For this purpose your Company has constituted a subcommittee of the Board to approve the Corporate CSR policy and to oversee the expenditure. The Board of Directors approved the Corporate Social Responsibility (CSR) Policy for your Company pursuant to the Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, on the recommendations of the CSR Committee, The CSR Policy outlines the CSR vision of your Company and is set out herewith as "Annexure [F]" to this report.

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

Th e information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is set out hereunder:

I. Conservation of energy

Though the operations of your Company do not consume high level of energy, adequate measures have been taken by the management to conserve energy to the extent possible through conservation measures. Your Company is on a constant look out for newer and efficient energy conservation technologies and introduces them appropriately. As the cost of energy consumed by the Company forms a very small portion of the total cost, the impact of change in energy cost on total cost is insignificant.

II. Technology absorption

The company being engaged in the business of providing complete engineering, procurement and construction services for auxiliary / balance of plant systems on a complete turnkey basis, constant efforts are made to develop new products/systems to give trouble free service in its line of activities.

III. Foreign exchange earnings and outgo

Foreign Exchange Earnings – Rs. 1649 Million Foreign Exchange Outgo – Rs. 1190 Million

DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

Your Company has put in place adequate internal financial controls with reference to the financial statements, some of which are outlined below:

Your Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 1956, to the extent applicable. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Auditors.

The Management periodically reviews the financial performance of your Company against the approved plans across various parameters and takes necessary action, wherever necessary.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future.

GENERAL

a) Your Company has not issued equity shares with differential rights as to dividend, voting or otherwise; and

b) Your Company does not have any ESOP scheme for its employees/Directors.

APPRECIATION

Your Directors wish to convey their gratitude and place on record their appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year. Your Directors sincerely convey their appreciation to customers, shareholders, vendors, bankers, business associates, regulatory and government authorities for their continued support.

For and on behalf of Board of Directors

Avinash C Gupta

Chairman & Managing Director

Place : New Delhi

Dated : August 13, 2015

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