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Energy Development Company Ltd.

BSE: 532219 Sector: Infrastructure
NSE: ENERGYDEV ISIN Code: INE306C01019
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VOLUME 110946
52-Week high 249.20
52-Week low 15.10
P/E
Mkt Cap.(Rs cr) 77
Buy Price 16.25
Buy Qty 4500.00
Sell Price 0.00
Sell Qty 0.00
OPEN 15.85
CLOSE 15.85
VOLUME 110946
52-Week high 249.20
52-Week low 15.10
P/E
Mkt Cap.(Rs cr) 77
Buy Price 16.25
Buy Qty 4500.00
Sell Price 0.00
Sell Qty 0.00

Energy Development Company Ltd. (ENERGYDEV) - Director Report

Company director report

TO

THE MEMBERS

Your Directors take pleasure in presenting the 21st Annual Report on the business andoperations of your Company along with the standalone and consolidated summary financialstatements for the year ended on 31st March 2016.

FINANCIAL RESULTS

Your Company's financial performance for the year under review is summarized below :

(Amount in Rs.)

.

Consolidated

Standalone

PARTICULARS Year ended 31.03.2016 Year ended 31.03.2015 Year ended 31.03.2016 Year ended 31.03.2015
Revenue from operations 1494506937 381587161 1337495375 217627198
Other Income 7219039 78203472 4869560 61820773
Total Revenue 1501725976 459790633 1342364935 279447971
Total expenses other than depreciation & finance cost 1347479569 212492564 1269071507 147926215
Profit before depreciation and finance cost 154246407 247298069 73293428 131521756
Depreciation 110325677 118595505 32969733 40637807
Profit before finance cost and tax 43920730 128702564 40323695 90883949
Finance cost 189896715 262935120 17300567 76981563
Profit before tax (145975985) (134232556) 23023128 13902386
Tax expenses 5104690 5152335 6879080 101545
Net profit for the period (151080675) (139384891) 16144048 13800841
Earnings per equity share of ' 10 each (Basic & Diluted) (4.35)# (6.29) 0.46# 0.50

#On weighted average number of equity shares.

APPROPRIATION

Your Directors recommend appropriation as under:

(Amount in Rs.)

Standalone

PARTICULARS Year ended 31.03.2016 Year ended 31.03.2015
Surplus as at end of previous year 587551401 592627231
Add: Net profit for the year 16144048 13800841
Available for appropriation 603695449 606428072
Less: Proposed dividend 23750000 13750000
Less: Tax on dividend 4834941 2799176
Less: Transfer to General Reserve - -
Less: Adjustment of Depreciation (Net of Deferred Tax) as on 01.04.2015 - 2327495
Total Appropriation 28584941 18876671
Surplus carried forward 575110508 587551401

DIVIDEND

Your Directors recommend payment of dividend @ 5% on the paid up share capital of theCompany i.e. ? 0.50/- per equity share of ' 10/- each.

RESERVES

The Company did not transfer any amount to reserves during the year.

SHARE CAPITAL

During the financial year under review the Company had increased its authorized sharecapital from ' 35 crore to ' 50 crore. Further the Company had issued 20000000 equityshares of Rs. 10/- at a price of Rs. 22/- per share (including premium of Rs. 12/- pershare) to promoters and non-promoters on preferential basis. Consequently the issuedsubscribed and paid up capital of the Company has been increased from Rs. 27.50 crore infinancial year 201415 to Rs. 47.50 crore in financial year 2015-16. The fresh sharesallotted as aforesaid have been duly listed on the Stock Exchanges.

Your Directors state that there has been no deviation or variation in the utilizationof issue proceeds and the entire fund raised from the preferential issue (approved byshareholders in Extra-ordinary General Meeting held on 24.10.2015) has been utilized forthe purposes for which it was raised.

STATE OF COMPANY'S AFFAIRS

The Company is primarily engaged in power generation infrastructure development suchas construction of bridges hydro projects including operation and maintenance thereofsupply of materials etc. Financial position of the Company is given in the previousparagraphs. A detailed information on the operation of different business segments of theCompany future expectations and business environment is provided in the ManagementDiscussion and Analysis Report which is annexed herewith and marked as Annexure"A".

CORPORATE GOVERNANCE

Pursuant to Regulation 34 and Schedule V to the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (hereinafter referred to as LODR Regulations)Management Discussion and Analysis Report the Report on Corporate Governance Declarationof Whole-Time Director on Code of Conduct CEO/CFO Certification and Auditors Certificateon compliance of conditions of Corporate Governance form an integral part of this Reportand are annexed herewith and marked as Annexure "A" "B""C" "D" and "E" respectively.

SUBSIDIARY AND ASSOCIATE COMPANIES

The Company is developing several hydro power projects in the States of ArunachalPradesh Uttarakhand and Kerala through its various subsidiaries.

The Company has total 18 subsidiaries as on 31st March 2016 including 5 wholly ownedsubsidiaries and 13 subsidiaries held through Arunachal Hydro Power Limited a whollyowned subsidiary of the Company. Out of the 18 subsidiaries 3 are material non-listedsubsidiaries namely Ayyappa Hydro Power Limited EDCL Power Projects Limited andArunachal Hydro Power Limited.

Wholly-owned subsidiaries :

i) Eastern Ramganga Valley Hydel Projects Co. Private Limited

The Company is executing 6.5 MW Burthing Small Hydro Electric Project and 5 MWPhuliabagar Small Hydro Electric Project in the State of Uttarakhand. DPR for both theprojects have been approved.

ii) Sarju Valley Hydel Projects Co. Private Limited

The Company is executing 5.5 MW Balighat Small Hydro Electric Project in the State ofUttarakhand. DPR for the project has been approved.

iii) EDCL Power Projects Limited

The Company is operating the 7 MW Ullunkal Hydro Electric Project in the state ofKerela.

Mr. Tarun Chaturvedi (DIN: 02309045) an Independent Director of the Company is on theBoard of Directors of this subsidiary.

iv) Ayyappa Hydro Power Limited

The Company is executing a 15 MW Karikkayam Hydel Power Project in the State ofKerala. The Project is scheduled to be completed in two phases. Entire generation fromthis unit is being sold to the Kerala State Electricity Board (KSEB) under a Long termPower Purchase Agreement (PPA) which was signed on 14.07.2014. The first phase of theproject has become operational and the second phase is likely to be operational in thecurrent financial year.

Two of the Independent Directors of the Company are on the Board of Directors of thisSubsidiary namely Mr. Tarun Chaturvedi (DIN: 02309045) and Mr. Vijoy Kumar (DIN:02970626).

v) Arunachal Hydro Power Limited

The Company is executing 12 hydroelectric projects in the State of Arunachal Pradeshthrough its following subsidiaries having aggregate capacity of 643 MW (approx.) whichmay vary on finalization of Detailed Project Report (DPR) :

1. EDCL-Seppa Beyong Hydro Electric Private Limited

2. EDCL-Seppa Kawa Power Private Limited

3. EDCL-Tawang Lower Tsachu Hydro Electric Private Limited

4. EDCL-Tawang Upper Tsachu Hydro Electric Private Limited

5. EDCL-Seppa Nire Hydro Electric Private Limited

6. EDCL-Seppa Jung Power Private Limited

7. EDCL-Tawang Power Private Limited

8. EDCL-Seppa Pachuk Power Private Limited

9. EDCL-Seppa Dunkho Hydro Electric Private Limited

10. EDCL-Seppa Lada Hydro Electric Private Limited

11. EDCL-Seppa Riang Power Private Limited

12. EDCL-Seppa Marjingla Hydro Electric Private Limited

DPR is at various stages of preparation/approval. The total expenses for these projectsin the State of Arunachal Pradesh as on 31.03.2016 is Rs. 2007420123.60.

Mr. Vipy Kumar (DIN: 02970626) an Independent Director of the Company is on the Boardof Directors of this subsidiary.

Besides these Arunachal Hydro Power Limited is also having one more wholly ownedsubsidiary viz. EDCL-Arunachal Hydro Projects Private Limited which is yet to take up anyproject.

There has been no material change in the nature of the business of the subsidiaries.

The Company has also formulated a Policy for Determining 'Material' Subsidiaries inline with the requirement of LODR Regulations. The said Policy may be accessed athttp://www.edclgroup.com/codes_policies/policy_ determining_subsidiary.pdf.

The Board of Directors in its meeting held on 9th November 2015 had approved andexecuted two agreements with Essel Infraprojects Ltd. ("EIL") wherein EIL wouldinvest in the Hydro power projects held by the Company through various subsidiaries in thestate of Arunachal Pradesh and Uttarakhand having total project capacity of 650 MW(approx.). Upon consummation of the transaction contemplated under these agreements EIL(either itself or through its affiliates) would hold 76% and the Company would continue tohold 24% of the share capital of such project companies. The transaction was subject tocertain conditions precedents to be fulfilled by the Company and all share transfers underthe said agreements were contemplated at cost thereby ensuring that the Company had noloss on the Investments made so far. Further the agreements executed on 9th November2015 which was to be implemented by 31st March 2016 subject to various regulatory andother requisite government approvals has been extended. In connection with this theCompany has sought shareholders' approval by way of Postal Ballot result whereof shall bepublished within 19.08.2016.

The Company does not have any associate company.

The Consolidated Financial Statements (CFS) of the Company and its subsidiariesprepared in accordance with Accounting standards as required under Section 133 of theCompanies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014 form part ofthis Annual Report.

Pursuant to provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of the financial statements of the Company's subsidiaries inForm AOC-1 is annexed herewith and marked as Annexure "F".

Pursuant to the provisions of Section 136 of the Companies Act 2013 the financialstatements of the Company consolidated financial statements along with relevant documentsand separate audited accounts in respect of subsidiaries are available on the website ofthe Company.

DIRECTORS

The Board of Directors comprises of nine Non-Executive Directors having experience invaried fields and a Wholetime Executive Director. Out of nine Non-Executive Directorsfive of them are Independent Directors. Detailed information on Directors is provided inthe Report on Corporate Governance is annexed herewith and marked as Annexure"B".

None of the Independent Directors are due for re-appointment. Mr. Chanakya ArvindDhanda (DIN : 02709047) who was appointed as an Additional Director (Categories beingNon-Executive Professional) on 25th March 2016. In pursuance of Section 161 of theCompanies Act 2013 he shall hold office upto the date of ensuing Annual General Meeting.Notice under section 160 of the Companies Act 2013 has been received from him signifyinghis intention to propose himself as Director of the Company.

Mr. Sanjiv Saraf (DIN : 00506650) Executive Director (liable to retire by rotation)retires by rotation and being eligible offers himself for re-appointment.

The brief resume and other details relating to Mr. Sanjiv Saraf and Mr. Chanakya ArvindDhanda are provided in the Notice of Annual General Meeting.

Your Board has also received Form 'DIR-8' pursuant to Section 164(2) of the CompaniesAct 2013 read with the Companies (Appointment & Disqualification of Directors) Rules2014 from the aforementioned Directors confirming that they have not incurred anydisqualification under Section 164(2) of the Companies Act 2013. Your Board recommendstheir appointment/re-appointment.

Nomination and Remuneration Policy

The Nomination and Remuneration Committee works with the Board to determine theappropriate characteristics skills and experience for the Board as a whole and itsindividual members with the objective of having a Board with diverse backgrounds andexperience in business government education and public service. The Company follows theNomination and Remuneration Policy for Directors Key Managerial Personnel and SeniorManagement Personnel of the Company as approved by the Board of Directors. The Nominationand Remuneration Policy is annexed herewith and marked as Annexure "G".

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theCompanies Act 2013 and the LODR Regulations. The Board is also of the opinion that theIndependent Directors fulfill all the conditions specified in the Companies Act 2013making them eligible to act as Independent Directors.

Familiarisation Programme for Independent Directors

The details of 'Familiarisation Programme for Independent Directors' has been given inthe Corporate Governance Report annexed herewith and marked as Annexure "B".

Performance Evaluation

LODR Regulations laying down the key functions of the Board mandates that the Boardshall monitor and review the Board Evaluation Process and also stipulates that theNomination and Remuneration Committee of the Company shall lay down the evaluationcriteria for performance evaluation of Independent Directors. Section 134 of the CompaniesAct 2013 provides that a formal evaluation needs to be made by the Board of its ownperformance and that of its committees and individual Directors. Further Schedule IV tothe Companies Act 2013 states that performance evaluation of Independent Directors shallbe done by the entire Board of Directors excluding the Director being evaluated.

In accordance with the aforesaid provisions the Board has carried out the annualperformance evaluation of its own performance the Directors individually as well as theevaluation of the working of its Committees. The Directors expressed their satisfactionwith the evaluation process.

Some of the performance indicators based on which the evaluation takes place areattendance in the meetings and quality of preparation/participation ability to provideleadership work as team player. In addition few criteria for Independent Directorsinclude commitment to protecting/enhancing interests of all shareholders contribution inimplementation of best governance practices. Performance criteria for Whole-time Directorincludes contribution to the growth of the Company new ideas/planning and complianceswith all policies of the Company.

BOARD AND COMMITTEES

The Board met nine times during the financial year under review. At present there arefollowing four committees:

i) Audit Committee

ii) Nomination and Remuneration Committee

iii) Stakeholders Relationship Committee

iv) Corporate Social Responsibility Committee

The Board has accepted all the recommendations of Audit Committee. The details ofcomposition terms of reference meetings etc. are given in the Corporate GovernanceReport annexed herewith and marked as Annexure "B".

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act 2013 withregard to the Directors' Responsibility Statement your Board confirms that :

a) in the preparation of the annual accounts for the financial year ended on 31stMarch 2016 the applicable accounting standards have been followed and there are nomaterial departures from the same;

b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2016 and of theprofit/loss of the Company for that period;

c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

e) the Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and operating effectively;and

f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

KEY MANAGERIAL PERSONNEL

The following persons are Key Managerial Personnel :

Whole-time Director : Mr. Sanjiv Saraf- designated as "Executive Director".

Chief Financial Officer : Mr. Amit Damani.

Company Secretary : Ms. Vijayshree Binnani.

ADEQUACY OF INTERNAL FINANCIAL CONTROL

The Company has in place adequate internal financial control System commensurate withthe size scale and complexity of its operations. During the year such controls weretested and no reportable material weakness in the design or operation was observed.

RISK MANAGEMENT

The Company has formulated a Risk Management Policy (Risk Management Procedure) inconsultation with Senior Management to identify various kinds of risk in business of theCompany and its process to minimize the same. The details of various risks and itsmitigation are provided in the Management Discussion and Analysis Report annexed herewithand marked as Annexure "A".

At present the Company has not identified any element of risk which may threaten theexistence of the Company.

ESTABLISHMENT OF VIGIL MECHANISM

The Company has a Whistle Blower Mechanism and a Policy namely Whistle Blower Policythat lays down the process for raising concern about unethical behavior actual orsuspected fraud or violation of Company's Code of Conduct. The said Policy may be accessedat http://www.edclgroup.com/codes_policies/whistle_blower_policy.pdf . Your Company herebyaffirms that no Director/employee have been denied access to the Chairman of the AuditCommittee and that no complaints were received during the year.

CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors has constituted a 'Corporate Social Responsibility Committee'.For composition and other details kindly refer to Corporate Governance Report.

During the current financial year the Company has spent significant amount underCorporate Social Responsibility as required under Section 135 of the Companies Act 2013read with Rules made thereunder. Annual Report on CSR activities is annexed herewith andmarked as Annexure "H".

The Corporate Social Responsibility (CSR) Policy can be accessed at www.edclgroup.comunder the 'Investor Information' section.

LOAN GUARANTEES AND INVESTMENTS

Particulars of loans investments and guarantees have been disclosed in the financialstatements which forms an integral part of this report.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

There were no related Party transactions in terms of Section 188 of the Companies Act2013 read with the Rules made thereunder. Accordingly AOC-2 is not required to beattached. All other related party transactions not covered under section 188 of theCompanies Act 2013 that were entered into during the financial year were on arm's lengthbasis and were in ordinary course of business and were placed before the Audit Committeeand Board for their approval as required. Prior omnibus approval of the Audit Committeewas obtained for the transactions which are of repetitive nature. The details oftransactions with related parties as per Accounting Standards-18 are disclosed in thenotes to accounts. The Company has developed a Related Party Transactions Policy forpurpose of identification and monitoring of such transactions.

AUDITORS AND AUDITORS' REPORT

(i) Statutory Auditors

At the 19th Annual General Meeting held on 18th September 2014 M/s. Lodha & Co.Chartered Accountants were appointed as the Statutory Auditors of the Company to holdoffice till the conclusion of 22nd Annual General meeting to be held in the year 2017subject to ratification of their appointment at the 20th and 21st Annual General Meeting.In this regard the Company has received a certificate from the Auditors to the effectthat if they are re-appointed it would be in accordance with the provisions of Section141 of the Companies Act 2013. Their appointment was ratified at the 20th Annual GeneralMeeting of the Company and they shall retire at the conclusion of the ensuing AnnualGeneral Meeting unless their appointment is ratified. Your Board recommends ratificationof appointment of the Statutory Auditors.

The Auditors' Report to the members on the Accounts of the Company for the financialyear ended on 31st March 2016 does not contain any qualification reservation adverseremark or disclaimer.

(ii) Cost Auditors

The Board of Directors has re-appointed M/s. N. Radhakrishnan & Co. CostAccountant of 11A Dover Lane Flat B1/34 Kolkata-700 029 as the Cost Auditors of theCompany to conduct Cost Audit for the financial year 2016-2017. In terms of Section 148 ofthe Companies Act 2013. Your Board recommends ratification of remuneration of the CostAuditors in the ensuing Annual General Meeting. The Cost Audit Report for the financialyear 2014-15 has been filed with the Ministry of Corporate Affairs within due time.

(iii) Secretarial Auditor

The Board of Directors has appointed Mr. Deepak Kumar Khaitan Practicing CompanySecretary to conduct the secretarial audit of the Company for the financial year 2015-16.

The Secretarial Audit Report for the financial year ended on 31st March 2016 isannexed herewith and marked as Annexure "I" and forms an integral part of thisAnnual Report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark or disclaimer.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended is annexed herewith andmarked as Annexure "J".

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy and technology absorption etc. areannexed herewith and marked as Annexure "K". There were no foreign exchangeearnings during the Financial Year 2015-2016 however foreign exchange have been used forthe purposes of travelling etc. details whereof are also given in the said Annexure"K".

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) read with Rules made thereunder the extract of the AnnualReturn in Form MGT-9 is annexed herewith and marked as Annexure "L".

GENERAL

The Directors state that no disclosure or reporting is required in respect of thefollowing items during the year under review as :

1. No Deposits covered under Chapter V of the Companies Act 2013 were accepted;

2. No equity shares with differential rights as to dividend voting or otherwise; orshares (including sweat equity shares) to employees of the Company under any scheme wereissued;

3. No remuneration or commission to the Whole-time Director of the Company were paidfrom any of its subsidiaries;

4. No significant and material orders passed by any regulatory authority or courts ortribunals impacting the going concern status and Company's operation in future;

5. No fraud has been reported by the Statutory Auditors Cost Auditors and SecretarialAuditors to the Audit Committee or the Board.

ACKNOWLEDGEMENTS

Your Directors express their sincere appreciation to the Central and State GovernmentsBanks customers vendors and the Company's valued investors for their continuedco-operation and support.

Your Directors also wish to acknowledge the support and valuable contributions made bythe employees at all levels.

For and on behalf of the Board
For Energy Development Company Limited
Sd/-
Place : New Delhi Amar Singh
Dated : 14th August 2016 (Chairman)

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION

FOREIGN EXCHANGE EARNING AND OUTGO ETC.

Information on conservation of Energy Technology absorption Foreign Exchange earningsand outgo required to be disclosed under Section 134 of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 are provided hereunder :

(A) Conservation of Energy -

(i) The steps taken or impact on conservation of energy Inside Power House all floodlights are replaced with LED from CFL.
(ii) the steps taken by the Company for utilizing alternate sources of energy N.A.
(iii) the capital investment on energy conservation equipments Insignificant.
(B) Technology Absorption -
(i) the efforts made towards technology absorption
(ii) the benefits derived like product improvement cost reduction product development or import substitution
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - N.A.
(a) the details of technology imported
(b) the year of import
(c) whether the technology been fully absorbed
(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof
(iv) the expenditure incurred on Research and Development
(C) Foreign exchange earnings and Outgo-
The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows Inflow : Nil
Outflow : Rs. 225126/- net of Recovery from Subsidiaries