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Surya Chakra Power Corporation Ltd.

BSE: 532874 Sector: Infrastructure
NSE: N.A. ISIN Code: INE274I01016
BSE 15:40 | 23 Jan 1.69 0.03
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VOLUME 232645
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Mkt Cap.(Rs cr) 25
Buy Price 0.00
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OPEN 1.70
CLOSE 1.66
VOLUME 232645
52-Week high 2.75
52-Week low 0.49
P/E
Mkt Cap.(Rs cr) 25
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Surya Chakra Power Corporation Ltd. (SURYACHAKPOW) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting their 22nd Annual Report of theCompany together with the Audited Accounts for the year ended March 31 2017.

FINANCIAL PERFORMANCE:

(Rs. in Million)
Particulars Year ended 31.03.2017 Year ended 31.03.2016
(12 months) (12 months)
Income from sale of power 984.50 1069.66
Other Income --- ---
984.50 1069.66
Profit before interest and depreciation 60.42 45.16
Interest and Finance Charges 00.11 25.31
Depreciation 20.37 31.94
Profit after interest and depreciation but before exceptional items (39.94) (12.10)
Exceptional Items (Net) 1139.49 86.20
Profit/(loss) before Tax (1179.43) (98.30)
Current Tax -- --
Mat Credit entitlement -- --
Profit/(loss) after Tax (1179.43) (98.30)

REVIEW OF OPERATIONS:

The Board observed that the Company achieved a turnover of Rs.984.50 million for 12months (Standalone) as against the previous year's turnover of Rs.1069.66 million(standalone) and there is a decrease in turnover by Rs.85.16 millions which is a decreaseby 7.96% over last year. The net loss for the year 2016-17 is Rs.1179.43 million asagainst the net loss for the previous year 2015-16 of Rs.98.30 million which is due to thereason of shut down of two of the gen sets at the Power Plant and also the production ofpower which was hampered due to the frequent shutting down of another engine for carryingout overhaul in phases.

DIVIDEND:

Your Directors are unable to recommend any dividend on the Equity Capital of theCompany due to continuous losses.

DIRECTORS:

In accordance with the provisions of the Companies Act 2013 and Articles ofAssociation of the Company Mr. P V Subba Rao Independent Director and Mr. B P VijayaRao

Independent Director will retire by rotation at the ensuing Annual General Meeting andbeing eligible offers himself for re-appointment as Directors of the Company.

Further details about the above directors are given in the Corporate Governance Reportas well as in the Notice of the ensuing Annual General Meeting being sent to theshareholders along with the Annual Report.

During the year Dr. R.S. Murthy Director resigned from the Board with effect from 24thJuly 2017.

Evaluation of the Board's Performance

In compliance with the Companies Act 2013 and pursuant to LODR regulations theperformance evaluation of the Board and of its Committees was carried out during the yearunder review. More details on the same are given in the Corporate Governance Report.

Familiarization Program for Independent Directors

The Company has formulated a familiarization program for the Independent Directors toprovide insights into the Company to enable the Independent Directors to understand itsbusiness in depth and contribute significantly to the Company. The details of such programare available in the Company's website www.suryachakra.in

Statement of declaration by Independent Directors

The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed both under Section 149(6) of theCompanies Act 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges.

Nomination & Remuneration Policy

The company follows a policy on remuneration of Directors and Senior ManagementEmployees. The policy is approved by the Nomination & Remuneration Committee and theBoard. More details on the same are given in the Corporate Governance Report.

Report on the performance and financial position of each of the subsidiaries has beenprovided in Form AOC-1 at Annexure - 6.

Note on standalone M/s Suryachakra Power Corporation Limited:

The JERC after going through the written submissions they have issued order dated

13.01.2017 which indicated the company is due of an amount of Rs.9.67 Crores to the A& N Administration. However the company has appealed against the order dated 13.1.2017in APTEL and is since admitted.

The Company is now filing an IA in APTEL for the above. The arguments on our Appeal No.34 of 2017 filed in the APTEL for quashing the impugned JERC order dated 13.01.2017 iscontinuing in APTEL and the APTEL in its hearing and order dated 05.04.2017 the APTEL hasasked the Company to file its written submission within 04 weeks i.e. 04.05.2017 and tothe A&N Administration and JERC within 02 weeks thereafter i.e. 19.05.2017 fixing thenext date of hearing on 06.07.2017. Accordingly the Company has submitted its writtensubmission on 04.05.2017 in APTEL.

It is also to inform that a tripartite meeting was conducted by Commissioner cumSecretary (Power) at Port Blair on 16.05.2017 among the Officials of the Company StateBank of India /IFB/Kolkata and ED / A&N Administration to discuss the presentprecarious financial / operational status of our 20 MW Power Plant and to find out asolution to keep the Plant operational continuously. The meeting went well and in themeeting to our request the A&N Administration has agreed to grant extension of theexisting term of the PPA beyond 31.03.2018. Modalities are being worked out by both theparties for extension of the PPA period.

State Bank of India has agreed to co-operate with the Company if PPA gets extended andalso to consider One Time Settlement as per Banks policy. The matter is in progress.

The company has made a request to bank to assign the debt to an ARC debt so that thecompany will get enough time to repay the debt through ARC out of operational income andbuy out etc..

MAINTENANCE OF THE POWER PLANT:

Your Company has been making arrangements for procurement and supply of the requiredspares and services with MARES Germany and negotiations with them are going on. YourCompany has submitted to the Electricity Department A & N Administration thefollowing Two options.

Option -I to repair the engines and continue the operations till 31.03.2018 up to whichPPA is there.

Option - II for complete overhauling of all the engines if the PPA is extended forfurther 5 more years.

Management Discussion and Analysis Report for the year under review pursuant to theLODR regulations forms part of this Annual Report. The Board reviews the progress of theCompany from time to time and guide the Company towards its corporate goals.

DIRECTOR'S RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act 2013 the Directors confirm that:

a] in the preparation of the annual accounts the applicable Accounting Standards havebeen followed along with proper explanations relating to material departures;

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 at the end of the financial year and ofthe profit or loss of the company for that period;

c] the Directors have ensured that proper and sufficient care is taken in themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act for safeguarding the assets of the company and for preventing and detectingfraud and other irregularities;

d] the Annual Accounts are prepared on a going concern basis.

E] the directors laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating effectively.

F] the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

Disclosures Under The Companies Act 2013

i) Extract of Annual Return:

The details forming part of the extract of the annual return is enclosed in Form MGT.9at Annexure - I.

ii) Number of Board Meetings:

The Board of Directors met 4 times during the year 2016-2017. The details of the boardmeetings and the attendance of the Directors are provided in the Corporate GovernanceReport.

iii) Composition of Audit Committee:

The Board has constituted the Audit Committee which comprises of Sri P V Subba Rao asthe Chairman and Sri B P Vijaya Rao and Sri K Vijay Kumar as the members. More details onthe committee are given in the Corporate Governance Report.

iv) Related Party Transactions:

There are no materially significant related party transactions made by the company withPromoters Directors or Key Managerial Personnel etc. which may have potential conflictwith the interest of the company at large. Thus disclosure in Form AOC-2 is not required.

v) No Loans/Guarantees / Investments under Section 186 of the Companies Act 2013 havebeen made during the year.

CORPORATE GOVERNANCE

As per the revised Clause 49 of the Listing Agreement on Corporate GovernanceManagement Discussion and Analysis Report forms part of the Annual Report (Annexure - 5).The company has complied with the Corporate Governance requirements under the CompaniesAct 2013 and as stipulated under the listing agreement with the stock exchanges. Aseparate section on corporate governance under the Listing Agreement along with acertificate from the Practicing Company Secretary confirming the compliance is annexedand forms part of the Annual Report (Annexure - 2).

Corporate Social Responsibility Policy: As per Companies Act 2013 Your Companydoes not fall under the Corporate Social Responsibility criteria. The Company would ensurethe provisions of the Act as and when the same is applicable.

Risk Management Policy

The Board of Directors has developed and implemented Risk Management Policy for theCompany. It has identified and assessed internal and external risks with potential impactand likelihood that may impact the Company in achieving its strategic objectives or maythreaten its existence.

Whistle Blower Policy

The Company has in place a Whistle Blower policy for vigil mechanism for Directors andemployees to report to the management about unethical behavior fraud violation ofCompany's Code of Conduct. None of the Personnel has been denied access to the auditcommittee.

Declaration about Compliance with the Code of Conduct by Members of the Board and Sr.Management Personnel.

The Company has complied with the requirements about Code of Conduct for Board membersand Sr. Management Personnel.

Disclosure under the sexual harassment of woman at workplace (prevention prohibitionand redraessal) Act 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Woman at Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaints Committee has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary and trained)are covered under the Policy. The following is a summary of sexual harassment complaintsreceived and disposed off during each Calendar year:

a) No. of Complaints received - NIL

b) No. of Complaints disposed off - NIL

Statutory Auditors:

The Statutory Auditors of the Company viz. M/s M. Bhaskara Rao & Co. CharteredAccountants Hyderabad were appointed in the Annual General Meeting on 30.09.2014 for 5years. As per the provisions of section 139 (1) of the Companies Act 2013 theappointment needs to be ratified by the member at the every subsequent Annual GeneralMeeting. The directors recommend ratification of their appointment.

The Auditors' Report to the Shareholders for the year under review contains somequalifications to which explanations are given below.

Statement on Impact of Audit Qualifications (for audit report with modified opinion)submitted along-with Annual Audited Financial Results - (Standalone and Consolidatedseparately)

[See Regulation 33/ 52 of the SEBI (LODR) (Amendment) Regulations 2016]

ANNEXURE I

I. Statement on Impact of Audit Qualifications for the Financial Year ended March312017

Sl. No. Particulars Audited Figures (as reported before adjusting for qualifications) Adjusted Figures (audited figures after adjusting for qualifications)
1. Turnover / Total income
2. Total Expenditure
3. Net Profit/(Loss)
4. Earnings Per Share Not determinable
5. Total Assets
6. Total Liabilities
7. Net Worth
8. Any other financial item(s) (as felt appropriate by the management) Refer Emphasis of Matter Paragraph in Auditor's Report

II Audit Qualification (each audit qualification separately):

1 Qualification - 1

a. Details of Audit Qualification: Qualification 1:

Note 3(a) of the Statement regarding recognition of rejections / withheld amount byAndaman and Nicobar Administration (A&NA) - We are unable to comment on the extent ofultimate recoverability of Rs. 13.95 Lakhs for the quarter ended March 31 2017 and Rs.180.68 Lakhs for year ended March 312017 (Quarter ended 31st Dec 2016 Rs.145.73 LakhsQuarter ended March 2016 Rs. 48.87 Lakhs year ended March 31 2016 Rs. 600.93 Lakhs) andthe total receivables as at March 31 2017 - Rs. 1606.69 Lakhs (as at March 31 2016 -Rs.1426.01 Lakhs) which are subject to confirmation by the A&NA. Further the Companyin earlier years has also recognized interest aggregating to Rs. 1275.74 Lakhs on suchrejections / with held amounts which is also subject to confirmation by the A&NA.

b. Type of Audit Qualification : Qualified Opinion

c. Frequency of qualification: Repetitive - First time reported in 2003-04

d. For Audit Qualification(s) where the impact is quantified by the auditorManagement's Views: Not applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor: Notapplicable

i. Management's estimation on the impact of audit qualification: Not determinable

ii. If management is unable to estimate the impact reasons for the same: Management ispursuing the matter and is confident of recovering the amount. In this regard HonorableSupreme Court of lndia vide its Order dated 10th May 2016 Ordered A & NAdministration to deposit an amount of Rs. 15 Crores with Supreme Court for the purpose ofconsideration of interim relief.

iii. Auditors' Comments on (i) or (ii) above: Nil

2 Qualification - 2

a. Details of Audit Qualification: Qualification 2 Note 3 (d) of the Statementregarding capital advances aggregating to Rs.852.66 Lakhs (Previous Year - Rs. 884.28Lakhs) considered good and fully recoverable for the reasons stated therein. We are unableto comment on the extent of ultimate recoverability.

b. Type of Audit Qualification : Qualified Opinion

c. Frequency of qualification: Repetitive - First time reported in 2014 - 15

d. For Audit Qualification(s) where the impact is quantified by the auditorManagement's Views: Not applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor: Notapplicable

i. Management's estimation on the impact of audit qualification: Not determinable

ii. If management is unable to estimate the impact reasons for the same: The Companyhas advanced for the purpose of refurbishment of DG sets for 20 MW Power Plant situated atBamboo flat in Andaman & Nicobar Islands. The company is making efforts to carry outthe refurbishment of DG sets.

iii. Auditors' Comments on (i) or (ii) above: Nil

3 Qualification - 3

a. Details of Audit Qualification: Qualification 3

Note 3 (e) of the Statement regarding non-accounting of interest expense on borrowingsavailed by the Company. We are unable to comment on the extent of shortfall in interestexpense for the quarter and year ended March 312017 and also regarding cumulativeliability up to March 31 2017

b. Type of Audit Qualification : Qualified Opinion

c. Frequency of qualification: Repetitive - First time reported in 2014 - 15

d. For Audit Qualification(s) where the impact is quantified by the auditorManagement's Views: Not applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor: Notapplicable

i. Management's estimation on the impact of audit qualification: Not determinable

ii. If management is unable to estimate the impact reasons for the same: Themanagement is in touch with Lenders for OTS without interest and they suggested to give aconcrete proposal and the same is under active consideration with the Lenders. Managementis confidant of resolving the issues pertaining to Lenders amicably and hence no provisionof interest has been made.

iii. Auditors' Comments on (i) or (ii) above: Nil

4 Qualification - 4

a. Details of Audit Qualification: Qualification 4

Note 3 (f) of the Statement regarding confirmation of balances from Secured /UnsecuredLoan Lenders; Trade Payables; Creditors for Capital works/goods; Loans and Advances givenby the Company. We are unable to comment on the extent of adverse variances if any.

b. Type of Audit Qualification : Qualified Opinion

c. Frequency of qualification: Repetitive - First time reported in 2014 - 15

d. For Audit Qualification(s) where the impact is quantified by the auditorManagement's Views: Not applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor: Notapplicable

i. Management's estimation on the impact of audit qualification: Not determinable

ii. If management is unable to estimate the impact reasons for the same: TheManagement is confident of convincing all secured creditors trade creditors and to makeOTS and settle their accounts as most of the creditors are known to the management andthey would listen to the versions of the management. Hence no confirmations have beenobtained from all the creditors.

iii. Auditors' Comments on (i) or (ii) above: Nil

Signatories:

• CEO/Managing Director

• CFO

• Audit Committee Chairman

• Statutory Auditor

Place:

Date:

Secretarial Audit:

The Board had appointed M/s L D Reddy & Co Company Secretaries in Whole-timePractice to carry out Secretarial Audit under the provisions of Section 204 of theCompanies Act 2013 for the financial year 2016-17. The report of the Secretarial Auditoris annexed to this report as Annexure - 3.

The Secretarial Auditors' Report to the Shareholders for the year under review containssome qualifications to which explanations are given below.

Secretarial Auditor's Qualification Board's explanation
An Inquiry was initiated under section 7A of the EPF & MP ACT 1956 against the company Due to non receipt of receivables from our customers i.e. Electricity Department of Andaman and Nicobar Administration there are some defaults and efforts are being made to regularise the same
The company has defaulted in payment of Bank Dues Therefore SBI Global Factors Limited has filed a petition before Hon'ble High Court of Andhra Pradesh for winding up of the company Due to non receipt of receivables from our customers i.e. Electricity Department of Andaman and Nicobar Administration there are some defaults and efforts are being made to regularise the same
The company is not regular in paying statutory dues like PF Gratuity TDS Service Tax Sales Tax etc. Due to non receipt of receivables from our customers i.e. Electricity Department of Andaman and Nicobar Administration there are some defaults and efforts are being made to regularise the same
As plant is located in Andaman and Nicobar Island Physical Verification was not done therefore we are unable to report on the compliance of Labour laws at Factory Site. Efforts are being made to comply with the Labour Laws at the Factory site.
Court cases are filed against the company Directors and other guarantors for default of payment of dues to bank and to other unsecured creditors Discussions are on with the Bankers to sort out the issue.
Court Cases are filed by the company to recover debts and to safeguard its business They are to safeguard the business of the Company only.
The coal investment made in SGVL could not be recovered so far from Indonesia. Out of US$ 190.00 lacs the management could recover only US$ 25.91 lacs and the balance is yet to be recovered Efforts are being made to recover the balance amount also.

Cost Auditors:

Pursuant to the provisions of Section 148 of the Companies Act 2013 M/s. kju &Associates Practicing Cost Accountants (Firm Regn. No.000474) have been appointed toconduct audit of cost records of Power (Electricity) for the year 2017-18.

Cost Audit Report will be submitted to the Central Government within the prescribedtime.

Conservation of Energy Technology Absorption & Foreign Exchange Earnings AndOutgo:

The statement giving the particulars with respect to Conservation of Energy Technologyabsorption and Foreign Exchange Earnings and outgoings as required under Section 134 ofthe Companies Act 2013 read with Companies (Accounts) Rules 2014 is annexed hereto atAnnexure - 4 and forms part of the Report.

Fixed deposits:

During the year under review your Company has neither invited nor accepted anydeposits from the public.

Insurance:

The properties of your Company including its buildings plant and machinery and stockshave been adequately insured as required.

Particulars of Employees and related disclosures

The information required under Section 197 (12) of the Companies Act 2013 read withRule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014may be treated as NIL.

Personnel & Industrial Relations:

Relations between employees and the management continued to be cordial during the year.The Human Resource Department is committed in its quest to improve and maintain employeemorale and satisfaction at all levels.

Acknowledgments:

Your Directors would like to express their grateful thanks for the assistance and co-operation received from the Financial Institutions Banks Government AuthoritiesCustomers Vendors and Members during the year under review. Your Directors also wish toplace on record their deep sense of appreciation for the excellent services of theexecutives staff and workers of the company.

For and on behalf of the Board of Directors
Dr. S.M. Manepalli Mr. K. Vijay Kumar
Managing Director Executive Director
Place: Hyderabad.
Date: 14.09.2017.