DIRECTORS' REPORT Your Directors are pleased to present the 24th Annual Report of the Company along with the Audited Financial Statement and the Auditor's Report for the financial year ended 31st March, 2016. Financial results The company`s revenue from operations for the financial year 2015-16 increased by 19% as compared to financial year 2014- 15. The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 133 of the Companies Act, 2013 in terms of Rule 7 of The Companies (Accounts) Rules, 2014) and the relevant provisions of the Companies Act, 2013, as applicable and guidelines issued by the Securities and Exchange Board of India ("SEBI"). Operational performance Your company's performance has improved significantly during the financial year as compared to previous financial years primarily on account of steps taken by the management to increase production, improve efficiency and reduce costs. Our focus, during the financial year, was to improve the production and sales of Targe power transformers. During the financial year, we improved our acceptability in market on account of several short circuit test conducted in the previous financial year. We have successfully delivered multiple quantities of large power transformers during the year. Similarly, for renewable segment we have successfully delivered multiple quantities of skid mounted sub-stations during the year. We continuously receive support from parent company for improving production of large power transformers. Our focus currently is to improve productivity and consolidating operations. Overall, we expect further improvements by implementing our strategic plans for cost optimization and using specially developed software for transformer designs. Momentum gained during previous year has helped us improve margin in the current year. However price pressure is immense and it is impacting the entire industry. We expect margins to improve marginally in the coming year. Directors and Key Managerial Personnel During the financial year Mr. Ricardo Suarez Garza (DIN- 07194157), and Mr P V Krishna (DIN- 02459872), has been inducted into the Board as Directors of the Company. Mr. Luis Carlos (DIN- 05122761), Mr. Arun Kumar Bhalla (DIN- 02073637), Mr. Arun Kumar Srivastava (DIN- 00006985) and Mr. Ajay Kumar Dhagat (DIN- 00250792), has stepped down from their Office of Directorships during the financial year and Company places on record their contribution and support during their tenure. During the financial year, Mr. Shridhar Gokhale has stepped down from his Office of Manager and Mr. Ajay Kumar Sinha appointed as Chief Executive Officer W.e.f 27th May, 2015. Mr. Sanjay Kasture, Company Secretary has resigned from the Company and Mr. Sathyamoorthy A appointed as Company Secretary w.e.f 29th December, 2015. Mr. V Ranganathan (DIN- 07489345) was appointed as an Additional Director with effect from 12th April 2016 on the Board of your company and now it is proposed to appoint him as Director. The Board of Directors of the Company as on date of this report is as follows: Mr. Ricardo Suarez Garza – Chairman Mr. Indraneel Dutt – Non Executive Director Mr. M S Srinivasan – Independent Director Mr. P V Krishna – Independent Director Ms. Tabassum M Wajid – Independent Director Mr. V Ranganathan – Additional Director The Key Managerial Personnel of the Company as on date of this report is as follows: Mr. Ajay Kumar Sinha – Chief Executive Officer Mr. Dhiraj Narula – Chief Financial Officer Mr. Sathyamoorthy A – Company Secretary Number of Meetings of the Board of Directors The Board of Directors met Seven (7) times during the financial year on 27th May 2015, 14th August 2015, 9th September 2015, 4th November 2015, 29th December 2015, 20th January 2016 and 10th February 2016. The provisions of Companies Act, 2013 and listing regulations were adhered to while considering the time gap between two meetings. Board Committees During the year, in accordance with the Companies Act, 2013 the Board re-constituted Audit Committee, Nomination and Remuneration Committee and Stakeholder Relationship Committee at their meeting held on 27th May 2015. Compositions of the Committees are as follows: (i) Audit Committee Mr. M.S Srinivasan, Chairman Mr. Ricardo Suarez Garza, Member Mr. P V Krishna, Member (ii) Nomination and Remuneration Committee Mr. P V Krishna, Chairman Mr. M.S Srinivasan. Member Ms. Tabassum M Wajid, Member (iii) Stakeholders' Relationship Committee Mr. Ricardo Suarez Garza, Chairman Mr. Indraneel Dutt, Member Directors' Responsibility Statement Pursuant to the provisions of Section 134 of the Companies Act, 2013, your Directors confirm that; 1) in the preparation of the annual accounts for the financial year ended 31st March, 2016 the applicable accounting standards had been followed along with proper explanation relating to material departures; 2) the Directors had 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 2015-16 and of the Profit & Loss Account of the Company for the year under review; 3) the Directors had 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 preventing and detecting fraud and other irregularities; 4) the Directors had prepared the accounts for the financial year ended 31st March, 2016 on a 'going concern basis'; 5) the Directors had laid down internal financial controls to be followed by the company and such internal financial controls are adequate and were operating effectively; 6) 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. Board Independence Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of SEBI (Listing Obligations & Disclosure Requirements) Regulations,2015 and Section 149(6) of the Companies Act, 2013 :- 1) Mr. M.S Srinivasan 2) Mr. P V Krishna 3) Mrs. Tabassum M Wajid The company has received a declaration from the Independent Director(s) that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013. Nomination and Remuneration Policy In terms of Section 178 of the Companies Act, 2013 and the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 policy on nomination and remuneration of Directors, Key Managerial Personnel (KMP), Senior Management and other employees of the Company has been formulated by the Nomination and Remuneration Committee of the Company and approved by the Board of Directors. This policy shall act as a guideline for determining, inter-alia, qualifications, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal and evaluation of performance of the Directors, Key Managerial Personnel, Senior Management and other employees. As a policy, the non executive directors are paid sitting fees of Rs. 20,000/- per meeting per person for attending the Board and Audit Committee Meetings. Comments on Auditors" Report / Secretarial Auditors" Report There are no qualifications, reservations or adverse remarks or disclaimers made by BSR & Co. LLP, Statutory Auditors, in their report and by M/s. jDNASSA & Associates, Company Secretaries in Practice, in their secretarial audit report. There is an observation from Statutory Auditors as well as Secretarial Auditors on delay in transferring the unpaid/ unclaimed dividend amount pertaining to the financial year 2008-09 to the Investors Education and Protection Fund (IEPF) of the Central Government. The delay primarily was on account of technical difficulty in MCA-21 website while generating the challan for remitting the amount. However as on date of this report the said amount has been remitted and there is no unpaid/unclaimed amount which is due for remittance. Particulars of Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013 The Company has not provided any loans or made any investments covered under section 186 of the Companies Act, 2013. Particulars of Contracts or Arrangements with Related Parties Reffered to in Section 188(1) of Companies Act, 2013 The particulars of contracts or arrangements with related parties referred to in Section 188(1), as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013, is appended as Annexure "I". Dividend Considering the accumulated losses and the fact of Company's potential sickness, no dividend has been recommended by the Board of Directors of the Company for financial year 2015-16. Material Changes and Commitments There were no Material changes and commitments, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report. Board Evaluation The assessment of performance of Directors is based on their attendance at Board Meetings and Board Committee Meetings, quality of contributions during the meetings, inputs for the strategy and growth of the Company, contributions in giving directions to the management and commitment to the stakeholders. Particulars of Employees and Related Disclosures In terms of the provisions of Section 197(12) of the Act 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 the Annual Report. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report as Annexure IV. Corporate Governance Your Company is committed to good corporate governance aligned with the best corporate practices. A separate Report on Corporate Governance along with Auditor's Certificate on Compliance with the conditions of Corporate Governance is provided as a part of this Annual Report, besides the Management Discussion and Analysis. Auditors Pursuant to Section 139 of the Companies Act, 2013, M/s B S R & Co. LLP, Chartered Accountants, (ICAI Firm Registration No. - 101248W/W-100022), have been appointed as Statutory Auditors for a period of five (5) years commencing from financial year 2014-15, subject to the ratification by the members at each annual general meeting. A resolution proposing ratification of appointment of M/s B S R & Co. LLP, as Statutory Auditors of the Company for financial year 2016-17, pursuant to Section 139 of the Companies Act, 2013 forms part of the Notice. Fixed Deposits / Public Deposits Your Company has not accepted any fixed deposits or Public Deposits covered under chapter V of the Companies Act, 2013 and, as such, no amount of principal or interest was outstanding on the date of the Balance Sheet. Internal Financial Controls The Company has an adequate system of Internal Financial Controls in place with reference to the financial statements. During the year, Internal Financial Controls were tested and no material weaknesses in the design or operating effectiveness were observed. Cost Auditors Pursuant to the notification issued by the Ministry of Corporate Affairs (MCA) and based on the recommendation of the Audit Committee, your Board has approved the appointment of Mr. M J Gopalakrishnan, Cost Accountants, as the Cost Auditor of the Company for the financial year 2016-17. Secretarial Audiors / Secretarial Audit Report Pursuant to section 204 of the Companies Act, 2013 the Secretarial Audit for the financial year 2015-16 was conducted by M/s. JDNASSA & Associates and their secretarial audit report is annexed as Annexure II forming part of this report. The Board of Directors has appointed M/s J B Bhave & Co as Secretarial Auditors for the financial year 2016-17 to conduct the Secretarial Audit of the Company. Vigil Mechanism / Whistle Blower Policy In order to ensure that the activities of the company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour, the company has adopted a vigil mechanism policy. This policy is explained in corporate governance report and also posted on the website of the company. Risk Management Framework The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to the Company. Risks identified and the mitigation plans are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. The Company has also formulated a Risk Management policy. Extract of Annual Return The details forming part of the extract of the Annual Return in form MGT-9 has been given in the annexure III appended hereto and forms part of this report. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo The information as prescribed under Section 134 of the Companies Act, 2013, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is as follows: A. Conservation of Energy Your Company is not a power intensive industry and hence the scope for conservation of energy is limited. However the following energy saving measures have been carried out. a) Your Company has 2 wind mills in Tirunelveli, Tamil Nadu. The Company is adjusting the units generated against consumption at factories. This has reduced per unit energy cost to the company. b) Your Company conducted a study of power consumption of Vapour Phase Drying plant to improve efficiency by reducing vacuum leakages. Subsequent actions have reduced load on vacuum pump thus saving energy. During the year your Company took several measures for reducing the power and fuel cost including DG utilization and was able to reduce the power and fuel cost significantly. B. Technology Absorption Research & Development: Skid Mounted Substation: Skid mounted substations were developed for wind mills in the previous year which were provided with transformer integrated with HV side protection gear complete with breaker and panel. The complete unit comprised of transformer, HV bushings to breaker panel bus-duct, HV breaker & panel, LV side cable box connections. All components were designed to be assembled on single skid and transported to customer premises a single unit. The entire assembly was reinforced at critical points to bear transportation loads. The transformer was sent with radiator/conservator mounted and completely oil filled to avoid any mounting and oil filtration at site. The skid mounted substation resulted in great savings for customer in terms of erection time and the space needed when compared with conventional DP yard substations. The savings in space was estimated to be close to 50% and the erection time crashed by 60%. Sealed Dry Type Transformers: Sealed tank dry type transformers were developed for city distribution in Kolkata. The tanks were sealed from outside and provided with corrugations to dissipate the heat generated and keep the temperature rise in check despite no air circulation. The transformer was designed with varnish impregnated technology with use of nomex insulation on winding conductors for higher thermal withstand capabilities. The transformer was extensively tested for all routine and type tests including short circuit testing. The transformer for short circuit was selected randomly and tested at independent laboratory. C. Foreign Exchange Earnings and outgo During the financial year under review, there the foreign exchange earning of the Company was Rs. 2,81,23,000 and outgo was Rs. 9,23,206. Subsidiary Companies As at 31st March, 2016, there are no subsidiary companies. Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 Your company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Complaints Committee ("ICC") has been set up to redress the complaints received regarding sexual harassment. All employees are covered under this policy. During the financial year 2015-16, there were no cases reported under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Potential Sickness As per the audited financial statements of the Company for the year ended 31st March 2016, the accumulated losses as on that date have resulted in erosion of 50% or more of the peak net worth of the Company in the immediately preceding four financial years and accordingly the Company continues to be a Potentially Sick Industrial Company within the meaning of section 23 of the Sick Industrial Companies (Special Provisions) Act, 1985 and has already intimated to the Board for Industrial Financial Reconstruction (BIFR). Acknowledgements Your Directors express their appreciation of the continued cooperation of Governments and Government agencies, bankers, customers, suppliers and also the valuable assistance and guidance received from Xignux, Prolec GE and all the shareholders. Your Directors also wish to thank all employees for their contribution, support and continued cooperation during the financial year and are deeply grateful to the shareholders of the Company for the confidence and faith. For and on behalf of the Board of Directors Ricardo Garza Suarez Chairman DIN: 07194157 Indraneel Dutt Director DIN: 01942447 Place: Chennai Date : 25 May 2016 |