DIRECTORS' REPORT Your Directors have pleasure in presenting the Annual Report along with the Audited Accounts for the financial year ended March 31, 2015. DIVIDEND Your Directors have recommended a dividend of 30% (Rs.3.00 per share of Rs. 10/- each) for the FY 2014-15, which includes the interim dividend of 20% 2 /- per share of Rs. 10/- each) paid out in the months of December 2014 and March 2015 and balance to be paid out after approval of the shareholders at the Annual General Meeting of the Company to be held in September 2015. DEBT REPAYMENT The Company has repaid loans amounting to Rs. 50 Mn during the financial year 2014- 2015. An amount of Rs. 224.03 Mn owed to Deep Discount Bond holders will be repaid in accordance with the scheduled repayment terms, during Financial Year 2015-16. OPERATIONS There has been an overall increase in Average Daily Traffic of 1.38% and in revenue by 4.53% during the year 2014- 2015 as compared to the previous year 2013- 2014. The commercial traffic has witnessed a growth of 6% and cars by 2%, while the two-wheeler traffic has declined marginally by 1%. The drop in two wheeler traffic is probably due to the opening of an underpass from Kalindi to Okhla on December 19, 2014. The Annual Average Daily Traffic (AADT) during the year under review was 115,162 vehicles as against 113,591 vehicles in the Previous Year. The Annual Average Revenue/Day has increased to Rs. 2.82 million in Financial Year 2014-15, from Rs. 2.69 million in the Previous Year, indicating an increase of around 5%. The Income from Operations increased from Rs. 1,193.73 million to Rs. 1,229.92 million, exhibiting a 3% increase. The contract for supply, installation and maintenance of the Toll Technology was executed on February 21, 2015. The project is under implementation and will be completed within this financial year. Once implemented, the new technology will enable the Company to reduce waiting time at the toll plaza and provide improved services to users. The Company is entitled to annual CPI linked/formula driven increases in User Fee which have not been permitted at regular intervals since April 2009. A partial User Fee increase was however implemented with effect from December 20, 2014. MANAGEMENT DISCUSSION AND ANALYSIS REPORT A Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement is attached and forms part of this Report. SHARE CAPITAL The Issued and Subscribed Equity Share Capital of the Company on March 31, 2014, was Rs. 1,861,950,020/-. There were no allotments of shares during the year and hence the share capital on March 31, 2015 remains the same. SUBSIDIARY The Company has one subsidiary, ITNL Toll Management Services Limited. The audited accounts of the subsidiary, as well as the Consolidated Financial Statements of the Company along with its subsidiary form part of this Report. A statement containing salient features of the financial statement of subsidiaries/associate companies in the prescribed Form AOC- 1 is annexed to this Report as Annexure 1. MATERIAL CHANGES AND COMMITMENTS DURING THE YEAR The Concession Agreement governing the Noida Toll Bridge project was executed on November 12, 1997 between New Okhla Industrial Development Authority (NOIDA), Infrastructure Leasing & Financial Services Limited and the Company. The Noida Toll Bridge was one of the first green-field private toll bridge and road network project implemented in the country in a Special Purpose Company, formed for this purpose. With very little precedence, the Concession Agreement was drafted on a "Fixed Return, Variable Period" format. The privatisation of the road sector, however, has matured considerably since the execution of the Noida Toll Bridge Concession. The Concession Agreements executed for developing infrastructure projects like roads, bridges, tunnel, etc. by the authorities in the past have a fixed tenure ranging from 18 to 30 years depending on the size, geography, investment and the nature of the projects with no guaranteed returns on project cost. Accordingly, the Board of Directors of the Company at their meeting held on July 9, 2015, considered and approved a proposal which, inter alia, includes modifications to clauses in the Concession Agreement dated November 12, 1997, pertaining to a fixed period concession, bringing an end to the concession period on March 31, 2031. The proposal will be presented to the shareholders for approval. The modifications once approved will have an impact on the amortization policy of the Company. There are no other material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of the report during the year under review, as required under Section 134(3)(l) of the Companies Act, 2013. During the year there was no change in the nature of the business of the Company. DIRECTORS AND KEY MANAGERIAL PERSONNEL In accordance with the provisions of the Companies Act, 2013, Mr. K. Ramchand, Director, is due to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The Board of Directors has, at their Meeting held on January 28, 2015, appointed Ms. Monisha Macedo as a Whole Time Director of the Company with effect from February 23, 2015, subject to shareholder approval being obtained at this Annual General Meeting. None of the Directors of the Company are disqualified from being appointed as Directors as specified under Section 164 of the Companies Act, 2013. In terms of Section 149 (7) of the Companies Act, 2013, every Independent Director is required to submit a declaration that he meets the criteria of Independence as defined under the Companies Act, 2013 and the Listing Agreement signed with the Indian Stock Exchanges. Declarations have been received from all the Independent Directors confirming that they meet the criteria of 'Independence'. In terms of Clause 49 of the Listing Agreement, a familiarization program was conducted for the Board of Directors of the Company on March 13, 2015, briefing them on their roles and responsibilities, amendments made via the Companies Act, 2013 and the revised Listing Agreement, besides a brief overview of the Company's operations. The programme was attended by all the Independent Directors. Pursuant to the provisions of the Companies Act, 2013, and Clause 49 of the Listing Agreement, the Company has devised a Policy for performance evaluation of all the Independent Directors, Board, Committees of Directors and other Directors, both executive and non-executive. A structured questionnaire was prepared, covering various aspects of the Board's functioning, execution and performance of duties, obligations and governance and the evaluation of performance for FY 2014-15 conducted. The Directors have expressed their satisfaction with the performance of each of the Directors, Committees and the Board. Pursuant to the provisions of Section 203 of the Companies Act, 2013, during the year under review, Mr. Harish Mathur, Executive Director & CEO, Ms. Monisha Macedo, Whole Time Director, Mr. Rajiv Jain, CFO and Ms. Pooja Agarwal, Company Secretary have been appointed as Key Managerial Personnel. The following policies of the Company are annexed to this Report: 1. Selection Criteria for Independent Directors of the Company alongwith the Criteria for Independence (Annexure 2) 2. Remuneration Policy for Directors, Key Managerial Personnel and other employees (Annexure 3) NUMBER OF BOARD MEETINGS The Board of Directors of the Company met seven times during the year under review. Details on the Meetings form part of the Corporate Governance Report. AUDIT COMMITTEE As per Section 177 of the Companies Act, 2013, the Audit Committee of Directors comprises 6 Directors out of which 4 are Independent. Independent Directors on the Committee are; Mr. R.K. Bhargava (Chairman), Dr. Sanat Kaul, Mr. Piyush Mankad and Mr. Deepak Premnarayen. The other Members are Mr. Arun Saha, Director and Mr. Harish Mathur, ED & CEO. All the recommendations made by the Audit Committee were accepted by the Board. Detailed composition of the Committee along with information on the meetings held and attended, are given in the Corporate Governance Report. WHISTLE BLOWER POLICY Pursuant to Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has formulated a Whistle Blower / Vigil Mechanism Policy for Directors and Employees. The main objective of the policy is to establish a vigil mechanism for Directors and Employees to report instances of unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct & Business Ethics Policy. The Policy can be accessed on the website of the Company at www.ntbcl.com The Company has not received any complaints under this policy during the year under review. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE (CSR Committee) In terms of Section 135 of the Companies Act, 2013, a Corporate Social Responsibility Committee was constituted by the Board of Directors of the Company on April 28, 2014. As stipulated in the Act, the Committee consists of 5 Directors out of which 2 are independent. The Independent Directors are Mr. R. K. Bhargava, Chairman and Dr. Sanat Kaul, Director. Other Members are Mr. Arun Saha and Mr. K. Ramchand, Directors and Mr. Harish Mathur, ED & CEO. Details of the Committee along with information on the meetings held and attended are given in the Corporate Governance Report. The CSR Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company's website www.ntbcl.com The Report on CSR Activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexure 4 and forms part of this Report. FIXED DEPOSITS The Company has not accepted any Fixed Deposits during the year under review. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 It may be noted that during the year under review, the Company has not made any investments nor given any loans / guarantees / provided security in connection with a loan granted to any person or body corporate in terms of Section 186 of the Companies Act, 2013. Further, being an Infrastructure Company, provisions of Section 186 of the Companies Act, 2013 are not applicable. RELATED PARTY TRANSACTIONS All transactions entered with Related Parties for the year under review were on an arm's length basis and in the ordinary course of business. The Company has not entered into any "material" Related Party Transactions during the year. Accordingly the provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus disclosure in form AOC-2 is not required to be given. There are no materially significant Related Party Transactions entered into by the Company with Promoters, Directors, Key Managerial Personnel, which may have a potential conflict with the interest of the Company at large. The Company has developed a Related Party Transaction framework which was approved by the Audit and Board of Directors of the Company at their meetings held on January 28, 2015. The policy on Related Party Transactions has been uploaded on the Company's website. <http://www.ntbcl.com> All Related Party Transactions regardless of their size are placed before the Audit Committee and in case a Transaction needs approval, as per the Policy, it is recommended to the Board by the Audit Committee. A statement on all Related Party Transactions is placed before the Audit Committee and Board for review on a quarterly basis. Other than remuneration, none of the Directors have any pecuniary relationship or transactions vis-a-vis the Company. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS Assessment / Re-assessment order for AYs 2007-08 and 2008-09 & 2012-13 The Company had received (on April 1, 2014) the Reassessment/Assessment orders for the AYs 2007-08, 2008-09 & 2012-13, along with the Notice of Demand u/s 156 of Income Tax Act, 1961. Statutory appeals against the said orders have been filed before the Commissioner of Income Tax (Appeals). It may be noted that a substantial part of this demand is based on the calculation of returns forming part of outstanding project cost/designated return to be earned by the Company via collection of User Fee, pursuant to the terms of the Concession Agreement. The Department has classified a part of this outstanding Project Cost as "Other Income". The outstanding Project Cost is not a guaranteed return nor is it owed to the Company by any authority, hence the Department's stand is unlikely to withstand argument. There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations. EMPLOYEE STOCK OPTION PLANS The Company has two employee stock option plans viz. ESOP 2004 and ESOP 2005. During the year, the Company has not granted any stock options. All stock options granted in the past have been exercised, allotted or have lapsed. No options have been granted under ESOP 2005 so far and 2,05,000 options remain to be granted under ESOP 2004. Options under ESOP 2004 were granted as per the pricing formula approved by the shareholders. LISTING The Company's Equity Shares of Rs. 10/- each, aggregating to Rs. 1,861,950,020/-, are listed on the Bombay Stock Exchange Ltd. and the National Stock Exchange of India Ltd. 10,815 Secured Deep Discount Bonds are listed on the Bombay Stock Exchange Ltd., the National Stock Exchange of India Ltd. and the Uttar Pradesh Stock Exchange Association Ltd. These Bonds are due for redemption on November 3, 2015. The Uttar Pradesh Stock Exchange Limited is in the process of exiting from the business of Exchanges. The exact date for this exit has not been communicated by SEBI as yet. The Company's Global Depository Receipts (GDR) are listed on the Alternative Investment Market (AIM) segment of the London Stock Exchange. INTERNATIONAL FINANCIAL REPORTING STANDARD (IFRS) Pursuant to listing on the AIM segment of the London Stock Exchange (AIM), the Company is required to prepare and submit annual and semiannual financial statements prepared in accordance with IFRS, to AIM. A reconciliation of Equity and Income statements under Indian GAAP and IFRS as on March 31, 2014 and March 31, 2015, have been included in this Annual Report. The IFRS results as well as annual audited financials prepared under Indian GAAP are available on the Company's web site: www.ntbcl.com CORPORATE GOVERNANCE Pursuant to Clause 49 of the Listing Agreement with the Indian Stock Exchanges, a Report on Corporate Governance along with an Auditors' certificate on compliance with the provisions of Corporate Governance is annexed and forms part of this Report. RISK MANAGEMENT The Company has carried out a detailed exercise at the operational as well as the corporate/strategic level, to identify and categorize risks with business and functional heads. NTBCL, being an operational project, the risks associated with revenue and government support become more significant. Strategic risks viz. Revenue, Financial, Termination, General and Vendor Risks have been identified and evaluated. The mitigation plan in existence has also been recorded. A Risk Management Policy was approved by the Board of Directors of the Company on April 30, 2015 and a Risk Management Committee was constituted to monitor the risk framework. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statements. The Company's internal control system is commensurate with its size, scale and complexity of its operations. The internal audit is entrusted to M/s Patel & Deodhar, Chartered Accountants. The main thrust of internal audit is to review controls and flag areas of concerns, non-compliances, if any. No fraud has been reported so far. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (Prevention, Prohibition and Redressal) ACT, 2013 (SHWWA) 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 (ICC) has been set up to redress complaints received regarding sexual harassment. All employees of the Company and its subsidiary (permanent, contractual, temporary, trainees) are covered under this Policy. During the year under review, no complaints have been received. DIRECTORS' RESPONSIBILITY STATEMENT The provisions of Section 134(5) of the Companies Act, 2013, requires the Board of Directors to provide a statement to the members of the Company in connection with maintenance of books, records and preparation of Annual Accounts in conformity with the accepted accounting standards and past practices followed by the Company. Pursuant to the forgoing and on the basis of representations received from the operating management, and after due enquiry, it is confirmed that: (1) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (2) 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 and loss of the company for that period; (3) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (4) the directors have prepared the annual accounts on a going concern basis; (5) the directors, have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and are operating effectively. (6) the directors, have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively. STATUTORY AUDITORS M/s. Luthra & Luthra, Chartered Accountants, were appointed as the Auditors of the Company to hold office from the conclusion of the Annual General Meeting (AGM) held on September 29, 2014 till the conclusion of the 21st AGM of the Company to be held on 2017, for a period of three years, subject to ratification of their appointment by the Members at every AGM, A certificate confirming their eligibility under Section 141 of the Companies Act, 2013 and Rules framed there under to continue as Auditors for FY 2015-16 has been received from the Auditors. The Members are required to ratify the appointment of Luthra & Luthra as Statutory Auditors of the Company to enable them to continue as the Statutory Auditors of the Company till the conclusion of the AGM to be held in FY 2016-17 and to authorize the Board to determine their remuneration. COST AUDITOR Pursuant to Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules 2014 framed thereunder, the Board of Directors at their Meeting held on September 29, 2014 had appointed. Mr. Dattatray D Chivilkar, Cost Accountants, as the Cost Auditor of the Company for FY 2014-15. Mr. Chivilkar has also confirmed his eligibility for appointment for the FY 2015-16 and that he is free from any disqualifications for being appointed as Cost Auditor under the provisions of the Companies Act, 2013. The Board of Directors has recommended to the Members that the remuneration payable to Mr. Chivilkar, Cost Auditor for FY 2014-15 & FY 2015-16 be approved at the ensuing Annual General Meeting. SECRETARIAL AUDITOR Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made there under, the Company has appointed GSK & Associates (Registration Number P2014UP036000) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure 5 and forms part of the Directors Report. There are no qualifications in the secretarial audit for the year under review. OTHER STATUTORY DISCLOSURES The Company had 8 employees as on March 31, 2015. Only one person was in receipt of remuneration of Rs. 60 lac or more, during the year under review. The information required under Section 197 (12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors' Report for the year ended March 31, 2015 is given as Annexure 6 to this Report. The employee is not a relative of any Director of the Company and does not hold (by herself or along with Dependant/Immediate Relatives) more than 2% of the Equity Shares of the Company. The Business Responsibility Reporting as required by Clause 55 of the Listing Agreement with the Stock Exchanges is not applicable for financial year ending March 31, 2015. EXTRACTS OF THE ANNUAL RETURN Extract of the Annual Return of the Company is annexed to this Report as Annexure 7. ACKNOWLEDGEMENTS The Board of Directors place on record their appreciation for the continued support extended to them by various Government Authorities, Banks, Financial Institutions, Promoter and Shareholders of the Company. The Directors would also like to place on record their appreciation for the hard work and dedication of the employees of the Company at all levels. By order of the Board For Noida Toll Bridge Company Limited R. K. Bhargava Chairman DIN : 00016949 Date: August 4, 2015 |