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Indosolar Ltd.

BSE: 533257 Sector: Engineering
NSE: INDOSOLAR ISIN Code: INE866K01015
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VOLUME 69278
52-Week high 12.05
52-Week low 5.72
P/E
Mkt Cap.(Rs cr) 245
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
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OPEN 6.90
CLOSE 6.58
VOLUME 69278
52-Week high 12.05
52-Week low 5.72
P/E
Mkt Cap.(Rs cr) 245
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Indosolar Ltd. (INDOSOLAR) - Director Report

Company director report

The Board has pleasure in presenting the Eleventh Annual Report on business andoperations of the Company for the year ended 31st March 2016.

1. FINANCIAL HIGHLIGHTS

(Rs. in lakhs)

PARTICULARS YEAR ENDED YEAR ENDED
31-03-2016 31-03-2015
Revenue from operations (A) 25768.11 29597.28
Other Income (B) 215.91 392.16
Operating expenditure (C) 24933.18 24824.68
Earnings before interest tax depreciation and amortisation (EBITDA) [D=A+B-C] 1050.84 5164.76
Finance Cost (E) 12520.96 10283.43
Depreciation and amortization expense (F) 2657.08 2698.34
Profit / ( Loss) before tax [G=D-E-F] (14127.20) (7817.01)
Provision for Taxation (incl. deferred income tax) (H) 0 0
Profit / ( Loss) after tax [I=G-H] (14127.20) (7817.01)

2. PERFORMANCE REVIEW

During the year under review the performance of the Company continues to be severelyimpacted due to significant downturn in the Global Market. However the Company achievedturnover of Rs. 25768.11 lakhs and Earnings before interest tax depreciation andamortisation ("EBITDA") of Rs. 1050.84 lakhs during the year.

Your Directors feel that the Company will be seeing a turnaround in the financial year2016-17 keeping in view the certain measures taken or expected to be taken by theGovernment to support of the domestic manufacturers in India viz. domestic contentrequirement policy viability gap funding policy etc.

3. RESERVES AND SURPLUS

During the year under review the Company has not transferred any amount to reservesdue to losses incurred.

4. DIVIDEND

Due to non availability of Profit the Board does not recommend any dividend for theyear ended 31st March 2016.

5. STATUS OF IMPLEMENTATION OF 250 MW PROJECT

The project is in the last stages of implementation and it is expected that it will getready by end of the financial year 2016-17.

6. NUMBER OF MEETINGS OF THE BOARD

Five meetings of the board were held during the year. For details of the meetings ofthe board please refer to the point no. 2 of the corporate governance report which formspart of this report.

7. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of section 149 of the Act Mr. Gautam Singh Kuthari Mr.Vidyut Manubhai Vora and Ms. Vinati Dev were appointed as independent directors at theannual general meeting of the Company held on September 30 2014. They have submitted adeclaration that each of them meets the criteria of independence as provided in section149(6) of the Act and there has been no change in the circumstances which may affect theirstatus as independent director during the year.

As per Section 152 of the Companies Act 2013 Mr. Hulas Rahul Gupta Managing Directorliable to retire by rotation in 11th AGM and being eligible has offered himselffor the reappointment. The Board of Directors recommended the reappointment for theconsideration for the shareholders in ensuring AGM.

Pursuant to the provision of Companies Act 2013 the key managerial personnel of theCompany are Mr. Hulas Rahul Gupta Managing Director Mr. Anand Kumar Agarwal ChiefFinancial Officer and Mr. Manish Gupta Company Secretary. During the year Mr. SandeepKumar Chopra has resigned from the post of Company Secretary w.e.f. October 01 2015 andMr. Manish Gupta has been appointed as Company Secretary w.e.f. November 10 2015.

8. BOARD EVALUATION

The board of directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations").

The performance of the board was evaluated by the board after seeking inputs from allthe directors on the basis of the criteria such as the board composition and structureeffectiveness of board processes information and functioning etc.

The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.

The board and the nomination and remuneration committee reviewed the performance of theindividual directors on the basis of the criteria such as the contribution of theindividual director to the board and committee meetings like preparedness on the issues tobe discussed meaningful and constructive contribution and inputs in meetings etc In aseparate meeting of independent directors performance of non-independent directorsperformance of the board as a whole and performance of the chairman was evaluated takinginto account the views of executive directors and non-executive directors. The same wasdiscussed in the board meeting that followed the meeting of the independent directors atwhich the performance of the board its committees and individual directors was alsodiscussed. Performance evaluation of independent directors was done by the entire boardexcluding the independent director being evaluated.

9. POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Company strives to maintain an appropriate combination of executive non executiveand independent Directors subject to Min of 3 and Maximum of 12 Directors including atleast one Women Director.

The Nomination and Remuneration Committee of the Company leads the process for BoardAppointment in accordance with the requirements of the Companies Act 2013 SEBI (ListingRegulations and Disclosure Requirements) Regulations 2015 and other applicableregulations or policy guidelines.

During the previous year under review the Company has adopted the Nomination andRemuneration Policy for Directors KMPs and Other Employees. The policy is available onwebsite of the Company i.e. www.indosolar.co.in.

10. EXTRACT OF THE ANNUAL RETURN

The extracts of the annual return in form MGT-9 for the Financial Year 2015-16 underthe Companies Act 2013 is given in Annexure I to this report.

11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH THE RELATED PARTIES REFERRED TO INSECTION 188(1) OF THE COMPANIES ACT 2013

None of the transactions with related parties falls under the scope of section 188(1)of the Companies Act 2013. Information on transactions with related parties pursuant tosection 134(3)(h) of the Companies Act 2013 read with rule 8(2) of the Companies(Accounts) Rules 2014 are given in Annexure II in Form AOC-2 and the same formspart of this report.

12. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

During the financial year 2015-16 the Company has not given loans guarantees/suretyor investment as described under Section 186 of the Companies Act 2013.

13. AUDIT COMMITTEE

The details pertaining to composition of audit committee are included in the point no.3 of the Corporate Governance Report which forms part of this report.

14. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Due to the continued heavy losses incurred by the Company the CSR provisions ofCompanies Act 2013 are not applicable.

15. CHANGES IN CAPITAL STRUCTURE

There was no change in capital structuring during the period 2015-16 except change interms of 9500000 zero coupon non cumulative non-convertible redeemable preference sharesto 9500000 compulsorily convertible preference shares.

16. RISK MANAGEMENT

The Board of Directors is overall responsible for identifying evaluating and managingall the significant risks faced by the Company. The Board has approved the Risk ManagementPolicy which acts as the guideline by which the key risks are managed across theorganization.

In the opinion of the Board none of the risk faced by the Company threaten itsexistence. However the following risks are considered to have the potential bearing on theperformance of the Company:

(i) Low prices of the Chinese Suppliers of the Solar Voltaic Cells (ii) LiquidityCrunch is resulting in the delay of completion of line C.

(iii) Threat from new entrants in the Market.

(iv) Inability of the Company to get the Continuous Orders throughout the year.

The Risk Management Policy is available on the Company’s Websitewww.indosolar.co.in.

17. INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY

The details in respect of internal financial control and their adequacy are included inthe point no. 5 of the management discussion & analysis report which forms part ofthis report.

18. VIGIL MECHANISM

The Company has in place a Whistleblower policy to support the Codes of BusinessEthics. This policy documents the Company’s commitment to maintain an open workenvironment in which employees consultants and contractors are able to report instancesof unethical or undesirable conduct actual or suspected frauds or any violation ofCompany’s Code of Business Ethics at a significantly Senior Level without fear ofintimidation or retaliation. The Company’s Whistle Blower Policy has been posted onthe Company’s website www.indosolar.co.in.

19. AUDITORS

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Company’s Act 2013 and the Rulesframed there under M/s B S R & Co. LLP Chartered Accountants were appointed as theStatutory Auditors of the Company from the conclusion of 9th Annual GeneralMeeting ("AGM") held on 30th Sep 2014 till the conclusion of 13thAGM to be held in the Year 2018 subject to ratification of their appointment by theshareholders of the Company in every AGM. The Board of Directors recommends theirratification by way of an ordinary resolution in the ensuing AGM.

COST AUDITOR

In terms of Section 148 of the Companies Act 2013 read with Companies (Cost Recordsand Audit) Rules 2014 the Company is required to maintain cost accounting records andget them audited for the Financial Year 2016-17. The Board has appointed M/s Kabra &Associates Cost Accountants as the Cost Auditors for the Company for the Financial Year2016-17 for the fees of Rs. 50000/- (Rupees Fifty Thousand Only) plus applicable taxes andout of pocket expenses subject to the ratification of the said fees by the Shareholders atthe ensuing AGM.

SECRETARIAL AUDITOR

Pursuant to the provisions of the Section 204 of the Companies Act 2013 and theCompanies (Appointment and Remuneration) Rules 2014 the Company had appointed M/sChandrasekaran Associates a firm of Company Secretaries in Practice to undertake thesecretarial audit of the company for the Financial Year 2015-16. The report of secretarialaudit is annexed to this report as Annexure III.

The Secretarial Auditor’s Report is self explanatory and does not require furthercomment.

20. STATUTORY AUDITORS’ REPORT

On the Auditors’ qualified opinion with regards to Going Concern Status of theCompany the reply from the management is as under:

1. Due to the adverse market conditions from last four years the Company could notmeet its liabilities of Rs 59444.58 lakhs due on the first CDR and on Account of purchaseof materials and capital goods for Rs. 6452.78 lakhs as mentioned in para 4(a) of theAuditors’ Report.

In view to above the Bankers are considering the transfer of loan liabilities to someARCs and/or to invoke change in the management instead of considering our proposal for 2ndCDR scheme.

2. The Long Disputed cases namely the dispute regarding the Capital Subsidy underSpecial Incentive Package has been decided in the favour of the Company. Refer Delhi HighCourt Order WP(C) No. 3625/2013. However the DIT

("Department") aggrieved with the said order and led writ petition with DelhiHigh Court to challenging the said order. The matter is yet not concluded.

3. The Dispute with MP Urja regarding the turnkey contract is in the final stages ofgetting settled.

4. In view of the numerous uncertainty and accumulated losses Auditor’s showsinability to uncertain of quantum of impairment in respect of carrying value of fixedassets. However the Company feels that in view of future market prospects such provisionis not necessary.

21. DEPOSITS

The Company has not accepted any deposits from public during the financial year underreview.

22. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO

Information relating to conservation of energy technology absorption and foreignexchange earnings and outgo as required to be furnished under the provisions of section134 (3) (m) given as Annexure IV to this report.

23. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 of the Companies Act 2013 the Directorsconfirm that:-

a. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b. they had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the Profitand loss of the Company for the period ended 31st March 2016;

c. they had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d. they had prepared the annual accounts on a going concern basis;

e. they had laid down Internal financial controls to be followed by the Company andsuch internal financial controls are adequate and were operating effectively; and

f. they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

24. PARTICULARS OF EMPLOYEES

The information required under section 197 of the Companies Act 2013 read with Rule 5of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

a) The ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year;

Name of Director Designation Ratio to Median Remuneration
Mr. Hulas Rahul Gupta Managing Director 42:1
Mr. Gautam Singh Kuthari Non-Executive Independent Director 0
Mr. Vidyut Manubhai Vora Non-Executive Independent Director 0
Ms. Vinati Dev Non-Executive Independent Director 0

b) The percentage increase in remuneration of each director Chief Executive OfficerChief Financial Officer Company Secretary or Manager if any in the financial year;

Name of Person Designation % Increase in remuneration
Mr. Hulas Rahul Gupta Managing Director 0
Mr. Gautam Singh Kuthari Non-Executive Independent Director 0
Mr. Vidyut Manubhai Vora Non-Executive Independent Director 0
Ms. Vinati Dev Non-Executive Independent Director 0
Mr. Anand Kumar Agarwal Chief Financial Officer 0
Mr. Manish Gupta Company Secretary 0

(c) The percentage increase in the median remuneration of employees in the financialyear: 11%

(d) The number of permanent employees on the rolls of company as on 31stMarch 2016: 283

(e) The explanation on the relationship between average increase in remuneration andcompany performance:

On an average employees received an increase of 7.60%. The increase in remuneration isin line with the market trends and is necessary to retain the employees.

(f) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the company:

Particulars Rs. (in lakhs)
Remuneration of Key Managerial Personnel (KMP) during financial year 2015- 16 (aggregated) 74.60
Revenue from operations 25768.11
Remuneration of KMPs (as % of revenue) 0.29%
Profit before tax (PBT) (14127.20)
Remuneration (as % of PBT) N.A. as PBT is negative

(g) Variations in the market capitalisation of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the Company in comparisonto the rate at which the Company came out with the last public:

Particulars Unit As at 31st Mar 16 As at 31st Mar 15 Variation
(%)
Closing Rate of Share at NSE Rs. 8.20 14.90 -44.97%
Closing Rate of Share at BSE Rs. 8.18 14.90 -45.10%
Earnings Per Share Rs. -3.94 -2.26 -74.34%
Market Capitalization Rs./lakhs 29366.66 53361.37 -44.97%
Price Earnings ratio Ratio N.A. as EPS is -ive N.A. as EPS is -ive

(h) average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

The average increase in salaries of employees other than managerial personnel in2015-16 was 7.60%. Percentage increase in the managerial remuneration for the year was 0%.The Managerial Remuneration paid to directors recovered as per MCA order.

(i) Comparison of each remuneration of the Key Managerial Personnel against theperformance of the Company:

Particulars Hulas Rahul Gupta Anand Kumar Agarwal Manish Gupta/ Sandeep Chopra
Managing Director Chief Financial Officer Company Secretary
Remuneration in FY 16 (Rs. in lakhs) Nil 72.00 10.22
Revenue (Rs. in lakhs) 25768.11
Remuneration (as % of revenue) Nil 0.28% 0.04%
Profits/ (loss) before tax (PBT) (Rs. in lakhs) (14127.20)
Remuneration (as % of PBT) N.A.as PBT is negative

(j) The key parameters for any variable component of remuneration availed by thedirectors:

There is no variable component approved for the payment to any director.

(k) The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year:

None.

(l) Affirmation that the remuneration is as per the remuneration policy of the Company:The Company affirms remuneration is as per the remuneration policy of the Company.

(m)Information as per Rule 5(2) of Chapter XIII of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014:

During the year following employees received salary in excess of Rs. 60 lakhs p.a. oremployed for the part of year with Average Salary above Rs. 5 Lakhs

S. No. Name & Des- ignation Age Qualifi- cation Expe- rience Date of Commence- ment of Employment Gross Salary per Year Previous Employ- ment Nature of Em- ploy- ment % of Equity Shares held
(in lakh)
1 B K Gupta Chairman & Whole-time Director* 80 BA 51 years 15th Jan 2008 50.59 Phoenix lamps Limited Full Time Employ- ee 15.78%
2 H R Gupta Managing Director* 56 BBA 31 years 15th Jan 2008 134.40 Phoenix lamps Limited Full Time Employ- ee 22.45%
3 A K Agarwal Chief Finance Officer 66 B.Com 41 years 01st July 2008 72.00 Phoenix lamps Limited Full Time Employ- ee 0.11%
4 D N Singh Chief Technical Officer 66 Ph.D Micro- elec- tronics 39 years 12th August 2008 69.18 Semi Conductor Complex Limited Full Time Employ- ee 0.00%

*The remuneration so paid during the year was recovered as per MCA order (please referNote No. 34(c) of the Notes to the Financial Statement.

25. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review in terms ofRegulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 given as Annexure V forming integral part of the Annual Report

26. CORPORATE GOVERNANCE REPORT

Your Company strives to ensure that best Corporate Governance Practices are identifiedadopted and consistently followed.

The Report on the Corporate Governance forms an integral part of this report and is setout as Annexure VI to this report. The Certificate from the practicing Company SecretaryM/s Chandrasekaran Associates Company Secretaries certifying compliance with theconditions of the Corporate Governance as stipulated under Clause 49 of the ListingAgreement with Stock Exchanges up to November 30 2015 and Regulation 15(2) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 effective fromDecember 01 2015 is annexed with the report on Corporate Governance.

27. LISTING OF SHARES

The Equity Shares of the Company are listed on BSE Limited and National Stock Exchangeof India Limited. The listing fees for the financial year 2016-17 has been paid.

28. PREVENTION OF SEXUAL HARASSMENT

The Company is committed to provide a protective environment at workplace for all itswomen employees. To ensure that every woman employee is treated with dignity and respectand as mandate under "The Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013" the Company has in place a formal policy forprevention of sexual harassment of its women employees.

The Company has an Anti Sexual Harassment Policy in line with the requirement of"The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013". Further the Company has constituted Internal Complaints Committee toredress Complaints received regarding sexual harassment during the period. The followingis a summary of sexual harassment complaints received and disposed off during the period:

Number of Complaints received Nil
Number of Complaints disposed off Nil

29. APPRECIATION

Your Directors wish to place on record their sincere appreciation of the efforts anddedicated services of all the employees which have contribute by staying with the Companyin the tough period .

30. ACKNOWLEDGEMENTS

The Board of Directors places on record its appreciation for the support assistanceand co-operation received from Government Regulators and the bankers to the Company i.e.Union Bank of India Andhra Bank Bank of Baroda Corporation Bank and Indian Bank. TheBoard is thankful to the shareholders for their support to the Company.

The Board is also thankful to the employees of the Company for their co-operation andunstinted dedication to duty leading to cordial industrial relations during the year underreview.

On behalf of the Board of Directors For INDOSOLAR LIMITED

H. R. GUPTA GAUTAM SINGH KUTHARI
Managing Director Director
DIN: 00297722 DIN: 00945195
Place : Greater Noida
Date : August 08 2016