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ANNUAL REPORT 2017-2018 CONTENTS Corporate Information .......................................... 1 Management Discussion & Analysis ................. 4 Directors’ Report ...................................................... 9 Corporate Governance Report ........................ 34 FINANCIAL STATEMENTS Standalone Independent Auditors’ Report ......................... 48 Balance Sheet ........................................................ 56 Statement of Profit & Loss ................................. 57 Cash Flow Statement .......................................... 58 Summary of Significant Accounting Notes................................................. 61 Consolidated Independent Auditors’ Report ........................108 Consolidated Balance Sheet ........................... 115 Statement of Consolidated Profit & Loss .. 117 Consolidated Cash Flow Statement .......... 119 Summary of Significant Accounting Notes............................................... 123 Summary of Financial Information of Subsidiary Companies ................................. 178 CORPORATE INFORMATION BOARD OF DIRECTORS BANKERS & INSTITUTIONS Mr. B. H. Sharma State Bank of India Executive Chairman Union Bank of India Mr. Vikram Sharma Managing Director Punjab National Bank Mr. Vikas Sharma Bank of India Director Central Bank of India Mr. V. P. Singh Canara Bank Independent Director Syndicate Bank Mr. Vinod Agarwala Independent Director ICICI Bank Ltd. Mr. S.K.Mishra Axis Bank Ltd. Independent Director SREI Infrastructure Finance Ltd. Mrs. Nilima Mansukhani Independent Director Mr. Dakshendra Agarwal Non-Executive Director REGISTERED OFFICE CHIEF FINANCIAL OFFICER Supreme House, Plot No. 94/C Pratap Gad, Mr. Sandeep Khandelwal Opp. I.I.T Main Gate, Powai, Mumbai – 400 076 COMPANY SECRETARY Tel: +91 22 6128 9700 Fax: +91 22 6128 9711 Mr. Vijay Joshi CIN No.: L74999MH1983PLC029752 STATUTORY AUDITORS REGISTRAR AND TRANSFER AGENTS BIG SHARE SERVICES PVT. LTD. Walker Chandiok & Co LLP 1st Floor, Bharat Tin Works Building, Chartered Accountants Opp. Vasant Oasis Apartments, Ramanand & Associates MaroL, Maroshi Road, Andheri East, Chartered Accountants Mumbai 400059 Tel: +91 22 6263 8200 ANNUAL REPORT 2017-18 1 OUR OPERATIONAL BOT ASSETS yyMANOR WADA BHIWANDI, yyKOTKAPURA MUKTSAR, Maharashtra Punjab yy 5,540 Million Project Cost yy` 1,170 Million Project Cost yy49% Supreme Stake yy99% Supreme Stake yy` 4,132 Million Sanctioned Debt yy30 Kms Road Length yy70.9 Kms Road Length yyKOPARGAON AHMEDNAGAR yyKOPARGAON AHMEDNAGAR TOLLWAYS PVT. LTD Phase 1, Maharashtra yy2,340 Million Project Cost yy2,880 Million Project Cost yy51% Supreme Stake yy100% Supreme Stake yy` 1,490 Million Sanctioned Debt yy23 Kms Road Length yy55 Kms Road Length yy42 Kms Road Widening yyPATIALA NABHA MALERKOTLA, yyVASAI BHIWANDI, Maharashtra Punjab yy2,140 Million Project Cost yy 930 Million Project Cost yy100% Supreme Stake yy 100% Supreme Stake yy` 1,890 Million Sanctioned Debt yy` 650 Million Sanctioned Debt yy26 Kms Road length yy55.7 Kms Road Length 2 SUPREME INFRASTRUCTURE INDIA LIMITED Toll operations commenced during the year ANNUAL REPORT 2017-18 3 MANAGEMENT DISCUSSION & ANALYSIS GLOBAL ECONOMY of fastest growing economy from China on 1. Roads & Transportation the back of a rebound in industrial activity, OVERVIEW especially manufacturing and construction, Sector and an expansion in agriculture. Reserve The acceleration in global activity that India has the second largest road network Bank of India has estimated GDP growth in started in 2016 gathered steam in 2017, in the world, constituting over a total of 5.6 reflecting firmer domestic demand growth a range from 7.4% to 7.9% for the Financial million km in length. Over 65% of all goods in advanced economies and improved Year 2019-2020. in the country are transported via roads, performance in other large emerging while 90% of the total passenger traffic uses market economies. Global growth is The biggest challenges for 2018 are as to road network to commute on a day to day expected to sustain for the next couple how the economy can maintain its recovery basis. of years and has also accelerated mainly in the face of increasing inflationary in the emerging markets and developing pressures, coupled with a higher fiscal The government’s ambitious infrastructure economies due to the commodity deficit as well as an increasing debt burden. development plan aims to provide exporters. Global growth is set to be just The key to this conundrum lies in the significant opportunities for investors over 3.5% in this calendar year 2018, the revival of consumer demand and private and market players to help change the fastest for seven years, with improved investment. sector and partner India’s socio-economic outcomes in both advanced economies progress. and the Emerging Market Economies. Fiscal deficit for 2017-18 is revised to INR The US taxation policy has stimulated the 5.95 lakh Cr at 3.5% of the GDP, which is India has surpassed its own capacities growth in the country primarily driven approximately the same as 2016-17 in by extending its capabilities beyond the by increase in investments in USA due to spite of transformation in the economy. In national boundaries via road connectivity. favourable corporate tax rate. Although addition to initiatives like; ‘Make in India’, The transportation sector has been highly the global economy has grown at a seven ‘Housing for All’, ‘Digital India’ government responsible for propelling India’s overall year high in the near term it is expected has also introduced ‘Sagarmala’ and ‘Bharat development. The Government of India that the economy will see a sharp turn over Mala’ initiatives, which is expected to boost the long term horizon and is subjected to the domestic growth of the country. has intensified its focus on this sector by substantial downside risk mainly due to initiating policies that would ensure time- increased protectionist policies, possibility bound creation of world class infrastructure of financial stress and rising geo political INDIA’S INFRASTRUC- in the country at a breakneck pace. tensions. TURE SECTOR OVER- India’s total road length includes National Confidence measures and levels of new Highways (NHs), Expressways, State orders for businesses have remained VIEW Highways (SHs), district roads, PWD roads, strong. This long awaited lift to global and project roads. growth, supported by policy stimulus, is The Government of India has taken being accompanied by solid employment major steps to empower the economic The network can be sub-divided into three gains, a moderate upturn in investment and a pick-up in trade growth. The accreditations of the country and make categories for a total length of 5,600,000 continued expansion depends on robust it one of the powerful economies in the km: global growth and governments’ support world. It is striving to move steadily to • State Highways: They form 3% of the for right trade policies. However, there are reduce structural and political bottlenecks, total roads in India totalling a length of signs that escalating trade tensions may attract higher investment and improve the 176,166 km. already be affecting business confidence overall economic performance. • National Highways: They form and investment decisions, which could merely 2% of the total roads in India compromise the current outlook. Infrastructure is the backbone of our envisaging a total length of 115,530 economy and society at large, ranging from km. the roads, rails to electricity that lights or • District and Rural Roads: They form 95% INDIAN ECONOMY heats our homes to the water we drink by of the total roads in India envisaging a investing in core infrastructure businesses total length of 5,326,166 km. OVERVIEW that deliver essential services throughout Indian economic growth is giving a positive the economic cycle. The Government of Roadways has been the key focus area for signal for the current and future scenario. India is extremely keen on developing the budget allocations over the years. As per It is projected to strengthen to above 7%, infrastructure sector in the country. This is Union Budget 2018-19, the government gradually recovering from the transitory clearly evident through several initiatives provided an outlay of INR 1.21 lakh crore adverse impact of rolling out the Goods announced for this sector as part of the (US$ 18.69 billion) for the road sector. The and Services Tax (GST) and measures to Budget 2018-19. Infrastructure has become graph provided below provides a clear idea choke off the black economy, including the priority segment in the Union Budget. of the trend of outlay for roads under the demonetization. India’s GDP grew 7.2% respective Union Budgets. in the third quarter of FY 2018, surpassing expectations and wresting back the mantle 4 SUPREME INFRASTRUCTURE INDIA LIMITED MANAGEMENT DISCUSSION & ANALYSIS pucca houses with water connections, undertake improvements to existing toilet facilities, and 24x7 electricity. ones. Pradhan Mantri Awaas Yojana (PMAY): The government intends to construct 22mn affordable houses by spending INR 3 trillion by 2022. Under this ambitious plan, 12mn units are proposed to be built in urban entailing a cost of INR 1.86 trillion and 10mn units are proposed to be built in rural entailing a cost of INR 1.27 trillion. There were also several policy proposals made in the Budget Speech by the Finance 3. Rural housing Smart Cities Project Minister which can be seen as follows below: The government plans to spend INR