Directors' Report Dear Shareholders, Your Directors present their 34th Annual Report on your Company's operations and performance together with the audited statement of accounts for the year ended March 31, 2015. Performance Review During the year under review, the operating revenue of your company increased by 16.25% to Rs. 1,37,698.01 Lacs as against Rs. 1,18,453.96 Lacs achieved in the previous year. The net profit for the year recoded a growth of 186.14% at Rs. 1,378.45 Lacs as compared to Rs. 481.74 Lacs in the previous year, while the Earnings before interest, depreciation, tax & amortizations (EBIDTA) increased by 24.61% at Rs. 20,250.54 Lacs as compared to Rs. 16,251.39 Lacs in the previous year. The operations of the Company continued in a smooth and uninterrupted manner during the course of the year. Dividend To achieve improved operational efficiency, the operations of company would require deployment of more funds and to keep the liquidity at ease, the directors expressed that the profits of the company be retained and ploughed back in the operations and therefore, do not recommend any dividend for the financial year 2014-15. Transfer to Reserves No amount has been transferred to the General Reserve during the year. The net retained earnings have been kept in the profit and loss account. Deposits The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. State of Company Affairs Your company is a leading public listed Infrastructure Company, which has managed and implemented over 600 projects across India on an EPC (Engineering, Procurement and Construction), PPP (Public Private Partnership) and BOOT (Build-Own- Operate-Transfer) basis. The shares of your company are listed on BSE Limited and National Stock Exchange of India Limited. Your company is engaged in executing the projects of world class infrastructure for water treatment and transmission, waste water handling, treatment & recycling, solid waste management, power transmission & distribution & civil infrastructure development. Your company is a going concern and there is no change in the nature of business being undertaken by the company during the year under review. As a corporate commitment, SPML gives utmost importance to safety compliances in design, execution, installation & operations and closely monitors all activities adequately backed by appropriate Training and client understanding. Consolidated Financial Statements The audited consolidated financial statements of the Company for the FY 2014-15 have been prepared in accordance with the provisions of Companies Act 2013 read with Accounting Standards AS-21 for consolidation of financial statements, AS-23 for accounting of investments in associates and AS - 27 for financial reporting on interest in joint ventures, which forms part of the Annual Report 2014-15. Subsidiaries, Joint Ventures and Associate Companies The Company has 30 subsidiaries (including step down and indirect subsidiaries), 14 joint ventures and 18 associate companies and as on March 31, 2015. There has been no material change in the nature of the business of the subsidiaries. These subsidiaries of the Company are into urban and rural infrastructural development, water treatment and transmission projects, municipal solid waste management, power projects etc. During the year Doon Valley Waste Management Private Limited and Jamshedpur Waste Processing Company Private Limited have converted from associates to subsidiary company while Bhilwara Jaipur Toll Road Private Limited has been converted from subsidiary to associate company. Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements of the Company. In accordance to the provisions of section 136 of the Act, the standalone financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company. The annual accounts of these subsidiaries and the related information will be made available to any member of the Company/its subsidiaries seeking such information and are available for inspection by any member of the Company/its subsidiaries at the registered office of the Company. The annual accounts of the said subsidiaries will also be available for inspection at the corporate offices/ registered offices of the respective subsidiary companies. The Policy for determining Material Subsidiaries, adopted by your Board, in conformity with Clause 49 of the Listing Agreement with Stock Exchanges, can be accessed on the Company's corporate website at www.spml.co.in . Directors and Key Managerial Personnel In accordance with the provisions of the Companies Act 2013 and the Articles of Association of the Company, Mr. Deepak Sethi, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment. On the recommendation of Nomination & Remuneration Committee the Board of Directors at its meeting held on 26th September 2014 has inducted Ms. Archana Capoor as Additional Director in the category of Independent Director pursuant to Sections 161 & 149 of the Companies Act, 2013, for a term of 5 consecutive years with effect from 26th September 2014 till the 38th Annual General Meeting in the Calendar year 2019. According to provisions of Section 161 of the Act, Ms. Archana, Capoor holds the office of director upto the ensuing Annual General Meeting of the Company. The Board recommends the appointment of Ms. Archana Capoor as Independent Director for a term of 5 years w.e.f. 26th September 2014 till the 38th Annual General Meeting in the Calendar year 2019, at the ensuing Annual General Meeting. Further, on recommendation of Nomination & Remuneration Committee the Board of Directors at its meeting held on 14th August 2015 has also appointed Mr. Rishabh Sethi as an Additional Director of the Company to be designated as Executive Director with effect from 17th August 2015 for a period of 5 years, liable to retire by rotation. In terms of the provisions of Section 161 of the Act, Mr Rishabh Sethi holds the office of director upto the ensuing Annual General Meeting of the Company. The Board recommends appointment of Mr Rishabh Sethi as Executive Director for a term of 5 years w.e.f 17th August 2015 till 16th August 2020, at the ensuing Annual General Meeting. In terms of the provisions of Section 149 of the Companies Act, 2013 read with rules made thereunder, the members of the Company, during the year under review, have appointed Mr Sarthak Behuria and Mr Prem Singh Rana as Independent Directors of the Company for a 1st term of 5 years. The Company has received declarations from the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the said Section and Clause 49 of the Listing Agreement with the Stock Exchanges. The members have also re-appointed Mr. Subhash Chand Sethi as Whole Time Director of the Company and Mr. Sushil Kumar Sethi as Managing Director of the Company each for a term of 5 years w.e.f. 1st January 2015, liable to retire by rotation. During the year under review Mr. R L Gaggar and Mr. Amit Kanodia, Independent Directors of the Company and Mr. Ajay Tandon, Non-Executive Director of the Company have resigned from their directorship. The Board of Directors takes this opportunity to places on records its appreciation for the contributions made by them during their respective tenure. The Company has received requisite notices under Section 160 of the Companies Act, 2013 in writing from a member of the Company proposing the appointment of Ms. Archana Capoor as Independent Director and Mr. Rishabh Sethi as Executive Director of the Company. The brief details relating to Ms. Archana Capoor and Mr. Rishabh Sethi are furnished in the explanatory statement to the notice of the ensuing AGM. During the year under review, Mr. Swadesh Mathur, CFO has resigned from the services of the Company with effect from 31st January 2015, consequent to his resignation the Board appointed Mr. Lalit Khetan as the CFO of the Company w.e.f. 29th May 2015. Board Diversity The Company recognizes and embraces the importance of a diverse Board. A truly diverse Board will include and make good use of differences in the skills, regional and industry experience, background and other distinctions between Directors. The diversity at Board enhances the quality of the decisions made by utilizing the different skills, qualification, professional experience, gender, knowledge etc. of the members of the Board, necessary for achieving sustainable and balanced development. The Board of the Company has adopted a policy on Board Diversity framed in accordance with the Clause 49 of Listing Agreement which sets out a framework to promote diversity on Company's Board of Directors (the 'Board'). The policy is available on the website of the company at www.spml.co.in . Director's appointment, Remuneration and Evaluation Considering the requirement of skill set on the Board, professionals having an independent standing in their respective field/ profession and who can effectively contribute to Company's business and Policy decisions are considered by Nomination and Remuneration Committee for appointment as an Independent Director on the Board. The Committee considers ethical standards of integrity, qualification, expertise and experience of the person for appointment as Director and who is not disqualified under Section 164 of the Companies Act, 2013 and rules made thereunder. Remuneration to Whole-Time Director, Managing Director and Executive Director is governed under relevant provisions of the Companies Act, 2013 and rules made thereunder. Independent Directors are paid sitting fees for attending the meetings of the Board/ Committees thereof. The director's remuneration is given in the Corporate Governance Report which forms part of this Annual Report. Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an Annual Performance Evaluation of its own performance, Directors individually and that of its Committees. During the year a Separate Meeting of Independent Directors was held to assess the performance of Non Independent Director and the Chairperson of the Company. Further, Board has also carried out an Annual evaluation of Independent Directors. The Performance Evaluation is based on their contribution to Company's objectives and plans, efficient discharge of their responsibilities, participation in Board/ Committee meetings and other relevant parameters. The board has adopted the Nomination, Remuneration & Performance Evaluation Policy for the directors and key managerial personnel at its meeting held on 12th Feb 2015. The policy is available at Company Website www.spml.co.in . Familiarization Program for Independent Directors In terms of the Clause 49 of the Listing Agreement, the company is required to familiarize the Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the company, etc., through various programs. The detail of such familiarization programs is available on the company's website at www.spml.co.in . Number of Meetings of the Board During the year under review, the board of the directors of the company met 9 times, the details of such meetings have been provided in Corporate Governance Report. Meeting of Independent Directors In term of the requirement of Schedule IV of the Companies Act, 2013 and Clause 49 of the listing Agreement, the Independent Directors of the Company convened their separate meeting on 21st March 2015 to review the matters as provided in the aforesaid Schedule and Clause. Directors Responsibility Statements In terms of the requirement of Section 134(5) of the Companies Act, 2013 the Board of Directors, based on the framework of internal financial control and audit / review conducted by the internal, statutory, cost and secretarial auditors, the Board of Directors with the concurrence of the Audit Committee, is of the opinion that the Company's internal financial controls were adequate and effective and hereby confirm: a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) that we 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 and loss of the Company for that period; c) that 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) that the annual accounts have been prepared on a going concern basis; e) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively; and f) that proper internal financial controls were laid down and that such internal financial controls are adequate and were operating effectively. Corporate Social Responsibility SPML is committed to operate and grow in a socially responsible way with Safety, health and environment protection high on its corporate agenda. SPML is committed to operate and grow its business in a socially responsible way. Our vision is to grow our business whilst reducing the environmental impact of our operations and increasing our positive social impact. Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, Board of Directors of the Company has constituted the Corporate Social Responsibility Committee (CSR Committee) comprising of the following Directors: (a) Mr. Sarthak Behuria, Chairman (b) Mr. P.S. Rana (c) Mr. Deepak Sethi The said committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, monitoring the implementation of the CSR policy and recommending the amount to be spent on CSR activities. The Board has approved the CSR Policy of the Company in its meeting held on 12th February 2015. The CSR Policy of the Company is also available on Company website on www.spml.co.in. As part of its initiatives under "corporate social responsibility" (CSR), the company has contributed funds towards promoting health care through improved sanitation by constructing of public toilets at various places where the Company has its projects. The Annual Report on CSR activities is annexed herewith as Annexure - 1. Auditors and Auditors' Report The statutory auditors Walker Chandiok & Co. LLP, Chartered Accountants, bearing ICAI Registration No. 001076N/N500013 had been appointed as Joint Statutory Auditors of the Company by the member at their last Annual General Meeting (AGM) held on 26.09.2014 for a period of 5 (five) years, from the conclusion of the 33rd AGM till the conclusion of 38th AGM to be held in the calendar year 2019. Further, Sunil Kumar Gupta & Co., Chartered Accountants, bearing ICAI Registration No. 0003645N were also appointed as Joint Statutory Auditors of the Company by the members at their last AGM held on 26.09.2014 for a period of 3 (three) years from the conclusion of the 33rd AGM till the conclusion of 36th AGM to be held in the calendar year 2017. However, pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, the appointment of Walker Chandiok & Co. LLP and Sunil Kumar Gupta & Co is subject to ratification at every subsequent AGM, accordingly requisite resolution seeking the ratification of their appointment forms part of the notice convening AGM. The qualification or observations of the Auditors have been duly explained in note 39, 40 and 42 of the notes forming part of standalone financial statements and therefore do not call for any further comments. Secretarial Auditor and Secretarial Audit Report Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed PTM & Co., Company Secretaries as Secretarial Auditor for conducting the secretarial audit for the financial year 2014-15. The Secretarial Audit Report presented by PTM & Co., Company Secretaries confirms the compliances by the company of all the applicable provisions of Companies Act, 2013, Listing Agreement, SEBI guidelines and all other applicable laws, rules and regulations. The secretarial auditors' report does not contain any qualifications, reservations or adverse remarks. The Secretarial Auditor Report as annexed hereto as Annexure - 2 forms the part of this report. Cost Auditors In terms of the provisions of Section 148 read with the Companies (Cost Accounting Records) the Company is required to get its cost record audited by a cost accountants in whole time practice. In this regard the Board of Directors, on the recommendation of the Audit Committee, had appointed Bikram Jain & Associates, Cost Accountants as the Cost Auditor of the Company for year under review. The Board has also appointed Bikram Jain & Associates, Cost Accountants as Cost Auditor for the financial year 2015-16, the remuneration of whom shall be ratified by the members and hence a requisite resolution is forms part of the notice convening the ensuing AGM. Audit committee The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report. Internal financial control systems and their adequacy The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis Report, which forms part of this report. Vigil Mechanism In terms of the requirements of Section 177(9) of the Companies Act, 2013, read with the Companies (Meeting of the Board and its Powers) Rules 2014 and the Clause 49 (II) F of the Listing Agreement, the Board at its meeting held on 12th February 2015 has approved the Whistle Blower Policy which establishes a vigil mechanism for directors and employees to report their concern about any unethical behavior, actual or suspected fraud or violation of the company's code of conduct or ethics policy. The vigil mechanism shall be overseen by the Audit Committee. The whistle blower policy is available at company's website at www.spml.co.in . Risk Management The Company has inherent system for identifying and mitigates the Risk associated with the nature of Businesses undertaken by the Company which may threaten the existence of the Company. The Board of the Company has framed a Risk Management Policy to be implemented in identifying, assessing and mitigating the risks. For the purpose, the Board has formed a risk management committee to implement and monitor the risk management plan for the Company. Additionally, the audit committee also reviews the area of financial risks while analyzing the adequacy and efficiency of internal controls systems adopted by the Company. Particulars of Investments, Loans, Guarantees given or Securities provided The detail of the Investment and loans made, guarantees given and securities provided are provided in the standalone financial statement under notes 12(a) & 12(b) for investment, 13 for Loans & Advances and 25 - Guarantees given. Related Parties transactions During the year under review there is no materially significant related party transaction between the Company and its directors, Key Managerial Personnel, their relatives, subsidiaries or associate companies except that of increasing the remuneration of one of the relative of director beyond the ceiling limit of monthly remuneration of Rs. 2.50 Lacs, as provided under Rule 15 of the Companies (Meeting of Board and its Power) Rules 2014. The detail of such transaction is provided in Form AOC-2, annexed to this report as Annexure - 3. All the related party transactions are done on Arm's length basis. The Company presents a Statement of all related party transactions before the Audit Committee on a quarterly basis specifying the nature, value and terms and conditions of transaction. Transactions with related parties are conducted in a transparent manner with the interest of the Company as utmost priority. Details of such transactions are given in the accompanying Financial Statements. The Company's policy on Related Party Transactions is available at our website www.spml.co.in . Material Changes and Commitments There have not been any material changes and commitments affecting the financial position of the Company between at the end of the Financial Year of the Company as on March 31, 2015 and the date of this report. Significant and Material Orders Impacting Operations of Company in future No significant or material orders have been passed by any regulators or court or tribunals impacting the going concern status and future operations of your company. Transfer of Unpaid / Unclaimed amounts to IEPF Pursuant to the requirement of the Companies Act, the declared dividends which remained unpaid / unclaimed for a period of 7 years have been transferred by the Company, from time to time on due dates, to the Investor Education and Protection Fund (IEPF) established by the Central Government. Management Discussion and Analysis Management Discussion and Analysis Report on the financial condition and operational performance of the Company for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in separate section forming part of this Annual Report. Corporate Governance Report In pursuance of Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a separate section on Corporate Governance has been incorporated in the Annual Report for the information of the Shareholders. A certificate from the auditors of the company regarding compliance of the condition of Corporate Governance as stipulated under the said Clause 49 also forms part of the Annual Report. Extract of Annual Return As provided under Section 92(3) of the Companies Act, 2013, the extract of annual return in the prescribed form MGT - 9 is attached to this report as Annexure - 4. Employees Relations The relations with the Employees have been cordial throughout the year under review. Your Directors place on record their sincere appreciation in respect of the services rendered by the Employees of the Company at all levels. Particulars of Employees Disclosures pertaining to remuneration and other details as required under 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 annexed to this report as Annexure - 5A. Further, the particulars of employees and related disclosures in terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in this report as Annexure - 5B. Conservation of energy, technology absorption, foreign exchange earnings and outgo Conservation of energy: The Particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rule, 2014 are provided as Annexure - 6 to this report. Acknowledgement Your Directors wish to place on record their sincere appreciation and thanks for the valuable cooperation and support received from the Company's Bankers, Financial Institutions, Central and State Government Authorities, Joint Venture Partners, Clients, Consultants, Suppliers, Shareholders, Employees and other stakeholders of the Company and look forward for the same in greater measure in the coming years. On behalf of the Board Subhash Chand Sethi Chairman Place : Gurgaon Date : 14th August, 2015 |