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RTS Power Corporation Ltd.

BSE: 531215 Sector: Engineering
NSE: N.A. ISIN Code: INE005C01017
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VOLUME 724
52-Week high 38.90
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P/E 13.71
Mkt Cap.(Rs cr) 26
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Sell Price 0.00
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OPEN 34.00
CLOSE 0.00
VOLUME 724
52-Week high 38.90
52-Week low 24.20
P/E 13.71
Mkt Cap.(Rs cr) 26
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

RTS Power Corporation Ltd. (RTSPOWERCORPN) - Director Report

Company director report

Dear Shareholders

Your Directors have the pleasure in presenting their 68th Annual Report on the businessand operations of your Company and the audited Financial Statements of your Company forthe year ended March 31 2016:

FINANCIAL RESULTS

(Rs. In Lacs)

2015-2016

2014-2015

Total Income

14532.63

17217.08

Total Expenditure

14499.75

17073.43

32.88

143.65

Add :
Exceptional Item

236.84

0.00

Less:
Non-recurring Item- adjustment under

0.00

18.82

transitional provisions for Depreciation as
per Schedule II to the Companies Act 2013
Profit /(Loss) Before Tax

269.72

124.83

Less :
Current Tax

68.70

25.00

Deferred Tax

(10.35)

37.12

58.35

62.12

Profit /(Loss) After Tax

211.37

62.71

Add: Profit Brought Forward

999.20

936.49

Balance Carried to Reserves & Surplus

1210.57

999.20

DIVIDEND

The Board of Directors has proposed to retain the meagre amount of operating profit ofRs. 33 lacs in Reserves and Surplus for expansion and further growth of the Companyand therefore has not recommended payment of any Dividend.

STATE OF THE COMPANY’S AFFAIRS OPERATIONAL REVIEW

During the year under review your Company’s revenue has fallen down to Rs. 142.41Crores (17% approx) over last year. Including other income total revenue has fallen downby 15% approx. from Rs. 172.17 Crores in 2014-2015 to Rs. 145.33 Crores in2015-2016. Such shortfall arises mainly due to non-lifting of the Company’s finishedproducts by various customeRs.

This year your Company has earned a Profit Before Tax of Rs. 270 Lacs as againstRs. 125 Lacs of last year. Exceptional income namely profit on sale of land (Rs.150 lacs) profit on sale of other fixed assets (Rs. 19 lacs) and profit onsale of investment in wholly-owned Subsidiary (Rs. 68 lacs) amounted to Rs. 237lacs this year. Your Company’s focus on better Working Capital Management (WCM) hasborne fruit which has reduced inventory by 21% approx. compared to last year and as apart of such WCM the Company is making all out efforts to realise debtors as fast aspossible and has been able to reduce its Debtors from Rs. 92.96 Crores to Rs. 56.79Crores (reduction of 39% approx.) over last year. Your Company has seen a massivereduction in its Creditors from Rs. 78 Crores to Rs. 30 Crores which is areduction of 61% approx. over last year. The Unsecured Loans of your Company have beenreduced from Rs. 17.65 Crores of last year to Rs. 5.37 Crores of this year.A reduction of 70% approx. Total Borrowings of your Company has come down from Rs. 45.06Crores to Rs. 29.65 Crores over last year. A reduction of 34%. Its total outsideliability (TOL) has come down from Rs. 127.31 Crores last year to Rs. 61.80Crores this year a reduction of almost 51% in course of one year which is unprecedentedin your Company’s history. This is a very healthy sign for your Company.

FUTURE OUTLOOK

Your Company’s continued effort in achieving higher exports has yielded fruitfulresult. This year the Company’s export sales has registered a growth of about 155%over last year with its increase from Rs. 440 Lacs in 2014-2015 to Rs. 1121 Lacs in2015-2016. In 2014-2015 the increase in export front was 150% over 2013-2014.Your Companyis putting much thrust on export Sales and expects further increase in export sales incoming yeaRs.

However as in the past mushroom growth and unhealthy competition from variousTransformer manufacturing Units in unorganized sector is posing problems to organizedsector like your Company resulting in under utilization of production capacities andtherefore the selling prices are under pressure so are the margins.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Monitoring and control of consumption of sources of energy like power oil etc.continued to be a priority area of your Company. Energy conservation procedures also forman important part of your Company’s operational practices. No alternative sources ofenergy has so far been utilized. There is no capital investment during the year underreview on energy conservation equipment.

Your Directors have nothing to report in the matter of Technology Absorption since yourCompany has neither hired nor imported any technology from outside sources. Your Companyhas no Research and Development (R&D) Department and has not spent any amount onR&D during the Financial Year. Your Company has achieved increased Export business andconsequently Foreign Exchange earnings (FOB) out of such Export business during this yearwas Rs. 1121.49 Lacs (increase of almost 155% over last year). The Foreign Exchangeoutgo during this year was as follows:

Expenditure in Foreign Currency

Foreign Travelling Rs. 13.97 Lacs
Bank Charges Rs. 1.46 Lacs
Rs. 15.43 Lacs

CONSOLIDATED FINANCIAL STATEMENT

The consolidated Financial Statements of the Company and its Subsidiaries (upto July272015) for the year ended March 312016 prepared in accordance with the provisions ofSub Section 3 of Section 129 of the Companies Act2013 (the Act) and the applicableAccounting Standards and the Listing Regulations and duly audited by M/s A C Bhuteria& Co. Chartered Accountants Auditors of the Company form a part of this AnnualReport. The said consolidated Financial Statements shall be laid before the ensuing AnnualGeneral Meeting of the Company while laying its own Financial Statements under Sub Section(2) of the said Section. A separate Statement containing the salient features of theFinancial Statements of its Subsidiaries (upto July 272015) has been given in Note No 39to the Consolidated Financial Statements pursuant to first proviso to Sub Section (3) ofSection 129 read with Rule 5 of The Companies (Accounts) Rules 2014. The duly auditedAccounts of the Subsidiary Companies as on and upto July 27 2015 are also available onthe Company’s Website.

DIRECTORS

The Board of Directors of your Company consists of a balanced profile of Membersspecializing in different fields that enables it to address the various business needs ofthe Company while placing very strong emphasis on corporate governance.

(a) Independent Directors

Your Company has at present two Independent Directors namely Sri Sardul Singh Jain(DIN 00013758) and Sri Alok Kumar Banthia (DIN 00528159) which meets the requirements ofboth the Companies Act 2013 (the Act) and the Rules made thereunder as well as theprovisions contained in Regulation 17(b) of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referredto as " Listing Regulations"). They are not liable to retire by rotation. YourCompany has received declarations from the above mentioned Independent Directorsconfirming that they meet with the criteria of independence as prescribed both underSub-Section(6) of Section 149 of the Act and under Regulation 16(b) of the ListingRegulations.

(b) Resignation of a Director

Sri Bachhraj Begwani Director of your Company has resigned with effect from January27 2016. The Board of Directors of your Company places on record their due appreciationof the valuable contribution made by him and services rendered by him during his longtenure of office as a Director of your Company.

(c) Retirement of Director by rotation

As per the provisions of the Companies Act 2013 and the Articles of Association of theCompany Sri Rajendra Bhutoria (DIN 00013637) Director of your Company will retire byrotation at the forthcoming Annual General Meeting and being eligible offers himself forre-appointment.

(d) Performance Evaluation

Your Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which also includes criteria forperformance evaluation of the Independent Directors Non-Executive Directors andExecutive Directors the proportional existence of three such categories of Directors inyour Company also meets the requirement as prescribed both under the Act and the ListingRegulations .On the basis of such Policy a process of formal annual evaluation has beenmade by the Board of its own performance and that of its Committees and individualDirectors . Criteria for performance evaluation of Independent Directors and other Non-Executive Directors has been given in the Corporate Governance Report annexed herewith.

The following Policies of the Company are attached herewith marked as Annexure‘C’ and Annexure ‘D’ which have also been placed on theCompany’s Website www.rtspower.com:

(i) Policy for selection of Directors and determining Directors’ independence; and(ii) Remuneration Policy for Directors Key Managerial Personnel and other employees. (e)Meetings of the Board and its Committees The number and dates of Meetings of the Boardand its Committees thereof and the Directors’ present therein have been given in theReport on Corporate Governance attached herewith.

KEY MANAGERIAL PERSONNEL

During the year there was no change in the Key Managerial Personnel of your Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act 2013 (the ‘Act’) and basedupon representations from the Management the Board to the best of its knowledge andbelief confirms that : I. in the preparation of the Annual Accounts for the year endedMarch 31 2016 the applicable Accounting Standards have been followed and there are nomaterial departures from the same; II. the Directors have selected such AccountingPolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at March 31 2016 and of the Profit of the Company for the year ended on thatdate; III. the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;IV. the Directors have prepared the Annual Accounts of the Company on a ‘goingconcern’ basis V. the Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively ; and VI. the Directors have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand operating effectively .

CORPORATE GOVERNANCE

A separate Report on Corporate Governance in format as prescribed in Part C of ScheduleV under Regulation 34(3) of the Listing Regulations forms a part of the Annual Report ofyour Company and is being attached hereto marked as Annexure- "A" alongwith the Auditors’ Certificate on its compliance. A Report on Management Discussionand Analysis as stipulated in the Part B of the said Schedule is also attached herewithmarked as Annexure –‘B’.

DEPOSITS

Your Company has not accepted any Deposit within the meaning of Sections 73 and 76 ofthe Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.

No loan or deposit has been taken or accepted from any Director of your Company.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of the Companies Act relevant dividend amounts whichremained unpaid or unclaimed for a period of seven years have been transferred by theCompany from time to time on due dates to the Investor Education and Protection Fund(IEPF). Pursuant to the provisions of Investor Education and Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with companies) Rules 2012 theCompany has uploaded the details of unpaid and unclaimed amounts lying with the Company ason September 29 2015 (date of its last Annual General Meeting) on the Company’sWebsite (www.rtspower.com) and has also filed Form No 5 INV on February 262016 with theRegistrar of Companies West Bengal . Since the abovesaid last Annual General Meeting the Company has also transferred unpaid and unclaimed Dividend amount in respect ofInterim Dividend and Final Dividend for the Financial Year 2007-2008 to IEPF both onNovember 32015 and filed Form No I INV with the Registrar of Companies West Bengalfollowing such transfeRs.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return as provided in Sub Section 3 of Section 92 of theCompanies Act 2013 and Rule 12(1) of the Companies (Management & Administration)Rules 2014 in Form MGT 9 is enclosed marked as Annexure ‘E’.

AUDITORS AND AUDITORS’ REPORT STATUTORY AUDITORS

M/s A .C. Bhuteria & Co Chartered Accountants (FRN 303105E) statutory Auditors ofthe Company were re-appointed Auditors to hold office from the conclusion of Sixty SixthAnnual General Meeting (AGM) held on September 29 2014 till the conclusion of Sixty NinthAGM to be held in 2017 subject to ratification by the Members at the Sixty Seventh andSixty Eighth AGM of the Company. Accordingly the Notice convening the ensuing SixtyEighth AGM includes a Resolution seeking such ratification by the Members of the saidre-appointment of the AuditoRs. Their said re-appointment however were ratified by theMembers at the Sixty Seventh AGM held on September 292015. The Company has received aletter from the statutory Auditors to the effect that the ratification of theirre-appointment if made at the forthcoming Sixty Eighth AGM would be in accordance withthe limits prescribed under Section 141(3)(g) of the Companies Act 2013 and that they arenot otherwise disqualified.

AUDITORS’ REPORT

The Notes on Financial Statements of the Company referred to in the Auditors’Report are self-explanatory and do not call for any further comments by the Board .TheAuditors’ Report does not contain any qualification reservation or adverse remark

BRANCH AUDITORS

M/S Jain Shrimal & Co. Chartered Accountants (FRN 001704C) Branch Auditors ofthe Company were re-appointed Branch Auditors to hold office from the conclusion of SixtySixth Annual General Meeting (AGM) held on September 29 2014 till the conclusion of theSixty Ninth AGM to be held in 2017 subject to ratification by the Members at the SixtySeventh and Sixty Eighth AGM of the Company. Accordingly the Notice convening the ensuingSixty Eighth AGM includes a Resolution seeking such ratification by the Members of thesaid re-appointment of the Branch AuditoRs. Their said re-appointment however wereratified by the Members at the Sixty Seventh AGM held on September 29 2015. The Companyhas received a letter from the Branch Auditors to the effect that the ratification oftheir re-appointment if made at the forthcoming Sixty Eighth AGM would be in accordancewith the limits prescribed under Section 141(3)(g) of the Companies Act 2013 and thatthey are not otherwise disqualified.

INTERNAL AUDITORS

The Board has re-appointed on the recommendation of the Audit Committee M/s K.S.Bothra & Co Chartered Accountants (FRN 304084E) as Internal Auditors of the Companyto conduct Internal Audit of the functions and activities of the Company for the FinancialYear 2016-2017.

COST AUDITORS

Pursuant to Section 148 of the Companies Act2013 the Companies (Audit andAuditors)Rules 2014 and the Companies (Cost Records and Audit) Amendment Rules 2014 theBoard of Directors of your Company on the recommendation of the Audit Committee hasappointed M/s K.G.Goyal & Associates (FRN 000024) as Cost Auditors of your Companywith due information to the Central Government by way of filing the prescribed Form No CRA2 on June 6 2016 for conducting audit of cost records of your

Company for the Financial Year 2016-2017 subject to ratification of their remunerationas approved by the Board on the recommendation of the Audit Committee by the Members ofthe Company in its ensuing Annual General Meeting .

SECRETARIAL AUDITOR

The Board has appointed Sri Manoj Prasad Shaw Proprietor of M/s Manoj Shaw & Co.Practicing Company Secretary (FCS No 5517 C.P. No 4194) to conduct Secretarial Audit forthe Financial Year 2015-2016.

The Secretarial Audit Report for the Financial Year ended March 31 2016 in theprescribed Form No MR3 is annexed herewith pursuant to Section 204(1) of the CompaniesAct 2013 and Rule 9 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 marked as Annexure ‘F’ to this Report.

The Secretarial Audit Report does not contain any qualification reservation or adverseremark.

PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEE GIVEN AND SECURITIES PROVIDED.

The Company has neither given any Loan and Guarantee nor provided any security in termsof Section 186 of the Companies Act 2013.

The Company has not made any investment during the year under review.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Particulars of all contracts/ arrangements/transactions entered into by the Companyduring the Financial Year with related parties referred to in Sub-Section (1) of Section188 of the Companies Act 2013 are given in Form AOC 2 as prescribed in Rule 8(2) of theCompanies (Accounts) Rules 2014 annexed herewith and marked as Annexure ‘G’.During the year the Company has not entered into any contract/ arrangement/transactionwith any related parties which could be considered material in accordance with the Policyof the Company on materiality of the related party transactions. The Policies onmateriality of related party transactions and dealing with related party transactions asapproved by the Board may be accessed on the Company’s Website at the linkwww.rtspower.com Your Directors draw attention of the Members to Note No 36 to theFinancial Statements which sets out related party disclosures.

A Statement in summary form of transactions with related parties in the ordinary courseof business has been periodically placed before the Audit Committee and the Board ofDirectors for its approval before entering into such transactions or making any amendmentthereto.

SUBSIDIARIES

(i) Blue Nile Projects Limited Hong Kong

As reported in the Company’s last Annual Report 2014-2015 Blue Nile ProjectsLimited Hong Kong has ceased to be a Subsidiary of your Company on July 27 2015.

During the Financial Year 2015-16 this erstwhile Subsidiary Company of your Companybasically being a trading company incorporated for the purpose of establishing Projectsoutside India has incurred a loss of Rs 217600/- (U.S.$ 3400 ) upto July 27 2015 whichhas been taken into account for the purpose of consolidation with Standalone Accounts ofyour Company.

(ii) ABAY Energy Private Limited Company Ethiopia

Similarly as reported in the Company’s last Annual Report 2014-2015 ABAY EnergyPrivate

Limited Company Ethiopia has ceased to be the step-down Subsidiary Company of yourCompany on July 27 2015.

During the Financial Year 2015-16 this erstwhile step-down Subsidiary Company of yourCompany has made a profit of Rs 3723461/- (Birr 1192509 ) upto July 27 2015 which hasbeen taken into account for the purpose of consolidation with Standalone Accounts of yourCompany.

More details about performance and financial position of each of such two Subsidiariesupto July 272015 during the Financial Year 2015-2016 as required under the Companies Act2013 have been given in Note No 39 to the Consolidated Financial Statements and hence notrepeated here for the sake of brevity.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended by the Companies (Appointment andRemuneration of Managerial Personnel) Amendment Rules 2016 (the Rules) are provided in Annexure‘H’.

Further the information as required pursuant to Rule 5(2) and 5(3) of the said Rulesalso forms a part of this Annual Report . However as per the proviso to Section 136(1) ofthe Act this Annual Report is being sent to all the Members of the Company excluding theabovesaid information. The said information is available for inspection by Members at theCompany’s Registered Office during working hours upto the date of the Annual GeneralMeeting. Any Member interested in obtaining such information may also write to the CompanySecretary at the Registered Office of the Company.

AUDIT COMMITTEE

The Audit Committee of the Board of Directors constituted in terms of Regulation18 ofthe Listing Regulations and Section 177 of the Companies Act 2013 read with Rule 6 of theCompanies (Meetings of Board and its Powers) Rules 2014 has been functioning in yourCompany for a long time .

As on the close of business on March 31 2016 the Audit Committee comprises of twoNon-Executive Independent Directors Sri S. S. Jain and Sri Alok Kumar Banthia and oneExecutive Non-Independent Director Sri R. Bhutoria Vice Chairman & Whole-timeDirector of your Company. Sri S.S.Jain is the Chairman of the Committee who also chairedthe Annual General Meeting of your Company held on September 29 2015. All the Members ofthe Committee are financially literate and have accounting or related financial managementexpertise.

The Company’s Accounts personnel and representatives of the statutory Auditors aswell as Internal Auditors are permanent invitees in the Meetings of the Audit Committee.Mr. J. Biswas Company Secretary acts as the Secretary of the Committee.

VIGIL MECHANISM

A Vigil Mechanism which also incorporates a Whistle Blower Policy in terms of theListing Regulations has been established for Directors Employees and Stakeholders toreport their genuine concerns about unethical behaviour actual or suspected fraud orviolation of the Company’s code of conduct or ethics policy or grievances inaccordance with the provisions contained in Section 177 of the Companies Act 2013 readwith Rule 7 of The Companies (Meetings of Board and its Powers) Rules 2014 and Regulation22 of the Listing Regulations. Such Vigil Mechanism provides for adequate safeguardsagainst victimization of Directors Employees and Stakeholders who avail of the VigilMechanism and also provides for the direct access to the Chairman of the Audit Committeein appropriate or exceptional cases.

The Audit Committee as formed above oversees the Vigil Mechanism and should any ofthe Members of the Committee have a conflict of interest in a given case they shouldrecuse themselves and the others on the Audit Committee would deal with the matter onhand.

Details in this regard have been disclosed in the Company’s Website at the link:www.rtspower.com

RISK MANAGEMENT POLICY

Keeping in view of the nature of industry in which your Company is engaged yourCompany has all along been conscious of the risk associated with the nature of itsbusiness. Senior Management personnel carried out risk identification risk assessmentrisk treatment and risk minimization procedures for all functions of the Company whichare periodically reviewed on an ongoing basis and Board Members are informed about allthese from time to time to ensure that executive management controls risk through means ofa properly defined framework. The Board of Directors is overall responsible for framingimplementing and monitoring the Risk Management Policy of the Company.

The Board of Directors also oversees that all the risks that the organization facessuch as strategic financial credit marketing liquidity security property goodwillIT legal regulatory reputational and other risks have been identified and assessed andexecutive management keeps a vigil on such risks so that it can be addressed properly assoon as possibility of occurance of any one of such risks arises.

ADEQUACY OF INTERNAL FINANACIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has in all material respects an adequate internal financial controlsystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2016 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia .

GENERAL

• No significant and material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and the Company’s operations infuture.

• Your Directors state that during the year under review there was no case filedpursuant to The Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013

APPRECIATION

Your Directors take this opportunity to express their whole-hearted appreciation forthe unstinted support and co-operation received from Banks State Electricity BoardsGovernment and Semi Government Authorities Power Utilities other customers vendors andShareholders during the year under review. Your Directors also wish to place on recordtheir deep sense of appreciation for the sincere and devoted services that the ExecutivesStaffs and Workers at all levels have rendered to your Company.

Registered Office : For and on behalf of the Board of Directors
56 Netaji Subhas Road
Kolkata - 700001 S. S. JAIN
Dated : 12th August 2016 Chairman