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Swelect Energy Systems Ltd.

BSE: 532051 Sector: Engineering
NSE: SWELECTES ISIN Code: INE409B01013
BSE LIVE 15:58 | 18 Aug 521.55 -12.15
(-2.28%)
OPEN

530.00

HIGH

530.00

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NSE 15:58 | 18 Aug 521.85 -10.95
(-2.06%)
OPEN

530.00

HIGH

530.00

LOW

516.50

OPEN 530.00
PREVIOUS CLOSE 533.70
VOLUME 5660
52-Week high 633.00
52-Week low 295.00
P/E 16.07
Mkt Cap.(Rs cr) 527
Buy Price 521.55
Buy Qty 1.00
Sell Price 0.00
Sell Qty 0.00
OPEN 530.00
CLOSE 533.70
VOLUME 5660
52-Week high 633.00
52-Week low 295.00
P/E 16.07
Mkt Cap.(Rs cr) 527
Buy Price 521.55
Buy Qty 1.00
Sell Price 0.00
Sell Qty 0.00

Swelect Energy Systems Ltd. (SWELECTES) - Director Report

Company director report

Our Valued Shareholders

We have pleasure in presenting the Twenty First Annual Report and the Audited accountsof the Company for the year ended 31st March 2016.

Financial Highlights

(Rs. In Lakhs)

Standalone Consolidated
S.No. Particulars For the year ended For the year ended For the year ended For the year ended
31/3/2016 31/3/2015 31/3/2016 31/3/2015
1. Sales / Income from operations 6187.57 4887.49 21210.62 22756.04
Less: Taxes and duties 61.34 54.49 575.98 571.45
2. Net Sales/Income from Operations 6126.23 4833.00 20634.64 22184.59
3. Other income 3808.56 2478.58 3514.96 2678.21
Total Income from Operations 9934.79 7311.58 24149.60 24862.80
4. Total Expenditure 4964.47 4881.94 19113.60 21532.70
5. Profit Before Depreciation Interest and Tax 4970.32 2429.64 5036.00 3330.10
6. Finance Cost 891.40 1059.90 1065.46 1205.30
7. Depreciation 1017.78 871.71 1739.70 1693.08
8. Exceptional item 81.67 -203.12 30.00 -203.12
9. Profit Before Tax 3142.81 294.91 2260.84 228.60
10. Tax Expense 917.15 161.98 938.62 254.34
11. Share of Profit / (loss) of associate Company - - - -11.79
12. Net Profit / (Loss) for the year 2225.66 132.93 1322.22 -37.53
13. Transfer to General Reserve 222.57 13.29 222.57 13.29
14. Interim Dividend 303.18 - 303.18 -
15. Proposed Final Dividend 101.06 252.65 101.06 252.65
16. Tax on Dividend 82.29 51.43 82.29 51.43
17. Equity Capital 1010.58 1010.58 1010.58 1010.58
18. Reserves and Surplus 65202.43 63463.30 68143.17 66789.23
19. EPS(Rs.) 22.02 1.32 13.08 -0.37

Major Line of business:

• I - Manufacturing : Solar PV Modules Solar Inverters and Mounting Structures

• II - Solar Power Generation & Systems Integration

• III - Iron & Steel Foundry Products

Your Company with a strong back drop of 30 years of Power electronics and Power Systemsexperience is well positioned in the Renewable Energy space with over 50 MW of SolarPhotovoltaic EPC experience. With a commanding and deep vertically integrated supply linemanagement to cater its customers with business agility and superior technical know-how;is fully geared to tackle the challenges of the industry.

The drop in crude oil prices was posing a momentary delay in adoption of Solar Power.Also the fluctuations in foreign exchange was posing an inflation on the imported rawmaterials cost. Predatory and non-sustainable pricing by late entrants is also posing achallenging market environment. Recently some Government PPA (Power Purchase Agreement)is following reverse bidding mechanism for price discovery on the tariff which hasinstigated adventurous bidding by some industry players without long term sustainablebusiness models. This year the industry did have a bit of market consolidation anddynamics still your Company saw the opportunity to grow and innovate. Based on its provenbusiness acumen and market intelligence your Company was able to record a significantgrowth and a profitable business enterprise.

General review of the Business of the Company:

During the year your Company achieved a growth of 26.76 % over the previous financialyear on (Standalone) total Revenue and income from operations. The Profit After Tax forthe current year is Rs.2225.66 lakhs.

Dividend

The Board of Directors had declared an interim dividend of Rs.3/- per equity share [ie.30% on the paid up equity share capital of Rs.101058400/- (Rupees Ten Crores Ten LakhsFifty Eight Thousand Four Hundred Only)] at its meeting held on 14.03.2016 and the totaldividend amount of Rs. 303.18 lakhs was paid to shareholders on 29.03.2016. The Companyalso paid dividend distribution tax of Rs 61.72 lakhs on the same. The Board of Directorshave recommended a final Dividend of Re. 1/- per equity share [@ 10% on the equity sharecapital of Rs.101058400/- (Rupees Ten Crores Ten Lakhs Fifty Eight Thousand FourHundred Only)] for the year ended 31st March 2016 subject to the approval of theshareholders at the ensuing Annual General Meeting of the Company. The money outflow forthe Company would be Rs.101.06 Lakhs towards final dividend and Rs.20.57 lakhs towardsdividend distribution tax.

Share Capital

During the year under review there was no change in the Company’s issuedsubscribed and paid-up equity share capital. On March 31 2016 it stood atRs.101058400/- divided into 10105840 equity shares of Rs.10/- each.

Transfer to General Reserve

The Company has earned a total profit after tax of Rs.2225.66 lakhs out of which a sumof Rs. 222.57 lakhs has been transferred to General Reserve.

Financial Results of Subsidiary Companies

The financial position of the subsidiary Companies are included in the consolidatedfinancial statements. The List of Subsidiary Companies are also furnished in Annexure - 2.

Scheme of Amalgamations

1. Amalgamation of BS Powertech Solutions Private Limited with Noel Media &Advertising Private Limited. SWELECT Solar Energy Private Limited is a Wholly OwnedSubsidiary of SWELECT Energy Systems Limited. SWELECT Solar Energy Private Limited washolding 100% equity capital in BS Powertech Solutions Private Limited and NOEL Media &Advertising Private Limited. BS Powertech Solutions Private Limited and NOEL Media &Advertising Private Limited are engaged in the business of generation of power from solarenergy. The Board of Directors of both the Companies decided to amalgamate these Companiesin order to ensure better management of the Company as a single unit and filed a petitionbefore the Hon’ble High Court of Judicature at Madras on 2nd September 2015. Thescheme of Amalgamation was sanctioned by the Hon’ble High Court of Madras on 8thJanuary 2016.

2. Amalgamation of Amex Irons Private Limited with Amex Alloys Private Limited.

Amex Irons Private Limited and Amex Alloys Private Limited are the Wholly OwnedSubsidiaries of SWELECT Energy Systems Limited. Amex Irons Private Limited is engaged inthe business of manufacturing and sale of iron castings and Amex Alloys Private Limited isengaged in the business of manufacturing and sale of machine alloys castings andpatterns. The Board of Directors of these Companies decided to amalgamate Amex IronsPrivate Limited with Amex Alloys Private Limited in order to ensure better management ofthe Company as a single unit. Accordingly a petition for the Scheme of Amalgamation wasfiled before the Hon’ble High Court of Judicature at Madras on 12th February 2016.The effective date of the scheme of Amalgamation will be 01.04.2015 and the scheme ofAmalgamation is yet to be sanctioned by the Hon’ble High Court of Madras.

3. Amalgamation of HHV Solar Technologies Limited with SWELECT Energy Systems Limited.

HHV Solar Technologies Limited is a Wholly Owned Subsidiary of SWELECT Energy SystemsLimited. HHV Solar Technologies Limited is engaged in the business of manufacture andsupply of off-grid solar photovoltaic modules based on crystalline silicon technology andrelated solar solutions. In order to ensure better management of the Company as a singleunit it was decided to amalgamate HHV Solar Technologies Limited with SWELECT EnergySystems Limited and filed a petition for the Scheme of Amalgamation before theHon’ble High Court of Judicature at Madras on 26th April 2016.The effective date ofthe scheme of Amalgamation will be 01.04.2015 and the scheme of Amalgamation is yet to besanctioned by the Hon’ble High Court of Madras.

Deposits

The Company did not receive deposits from the public during the year.

Directors

Change in Directors and Key Managerial Personnel

The Board of Directors at their meeting held on 3.10.2015 appointed Mr. A. Balanas the Joint Managing Director of the Company for the period of 5 years from 3rd October2015 to 2nd October 2020 as per the terms and conditions as set out in the resolutionsubject to the approval of the shareholders at the ensuing Annual General Meeting.

Mr. G.S. Samuel was appointed as Additional Director of the Company with effectfrom 3.10.2015 who holds office up to the date of the ensuing Annual General Meeting.

Mr. G.S. Samuel has fulfilled the conditions as specified in Section 149(6) of theCompanies Act 2013 and eligible to appoint him as an independent Director of the Company.The Board accordingly recommends a resolution for the approval of shareholders at theensuing Annual General Meeting.

Mrs. Jayashree Nachiappan Non-Executive Director liable to retire by rotation atthe ensuing Annual General Meeting and being eligible offer herself for re-appointment.

Mrs. Vasantha Balan Director resigned from the Board with effect from 3.10.2015.

The Profile of Mr. A. Balan Mr. G.S. Samuel and Mrs. Jayashree Nachiappan are givenseparately in the notice of AGM.

Company Secretary

Mrs. J. Bhuvaneswari Company Secretary resigned on 31.03.2016 and Mr R. Sathishkumarwas appointed as Company Secretary and Compliance officer of the Company with effect from1.4.2016.

Board and Committee Meetings

The Board met 12 times during the year. The details regarding the Board meetings Auditcommittee meetings Corporate Social Responsibility (CSR) committee meeting Nominationand remuneration committee meeting etc. are given separately in the Corporate Governancereport.

Disclosure on Composition of Audit Committee and its recommendation:

The details of Composition of Audit Committee is given in the Corporate GovernanceReport. The Board has accepted all recommendations of the Audit Committee.

Industrial Relations

During the year under review the Company enjoyed cordial relationship with workers andemployees at all levels.

Code of Conduct

All Directors Key Management Personnel and senior management of the Company haveconfirmed compliance with the code of conduct applicable to the Directors and employees ofthe Company and a declaration in this effect made by the Managing Director is attachedwith this report.

Details of establishment of vigil mechanism for directors and employees

Vigil mechanism has been established in the Company and the policy on the Vigilmechanism is available on the website of the Company www.swelectes.com. The AuditCommittee looks into the complaints if any raised and reports to the Board.

Disclosure under the Sexual Harassment of women at work place (prevention prohibitionand redressal) Act 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementof the Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (Permanent contractualtemporary trainees) are covered under this policy. The following is a summary of sexualharassment complaints received and disposed off during the year 2015-2016.

The members of the Committee are 1. Mrs. S. Indira 2. Mrs. C. Preethy 3. Ms. AarthiBalan and 4. Mr. K. Karthikeyan.

No. of complaints received during the year Nil
No. of complaints disposed off during the year Nil

Prevention of Insider Trading

The Company has adopted a Code of Conduct as per the Guidelines issued by theSecurities and Exchange Board of India for Prevention of Insider Trading with a view toregulate trading in securities by the Directors and designated employees of the Company.The Code prohibits the purchase or sale of Company shares by the Directors and thedesignated employees while in possession of unpublished price sensitive information inrelation to the Company and during the period when the Trading Window is closed.

The Board of Directors and the designated employees have confirmed compliance with theCode.

Statutory Auditors

M/s S.R. Batliboi & Associates LLP Statutory Auditors of the Company retire at theensuing Annual General meeting. The Board of Directors at their meeting held on 27.05.2016recommended their re-appointment for the financial year 2016-2017.

Statutory Auditors Report for the year 2015-2016.

There are no qualifications or observations or remarks made by the Statutory Auditorsin their report.

Secretarial Audit Report

A Secretarial Audit was conducted during the year by the Secretarial Auditor Mr. R.Kannan Practicing Company Secretary in accordance with the provisions of section 204 ofthe Companies Act 2013. The Secretarial Auditor’s Report is also attached as part ofthis Report. There are no qualifications or remarks made by the Secretarial Auditor in hisReport.

Cost Audit

As per the cost audit rules issued by the Ministry of Corporate Affairs Cost Audit isnot applicable to the Company for the year 2015-2016. However for the financial year2016-17 the Cost Audit is applicable for the Company. The Board at its meeting held on27.05.2016 appointed Mr. R. Ravichandran as the Cost Auditor of the Company for thefinancial year 2016-17.

Management Discussion and Analysis

Management Discussion and Analysis for the year as required under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is presented in a separateSection forming part of the Annual Report.

Conservation of energy technology absorption and foreign exchange earnings and outgo

The Conservation of energy technology absorption and foreign exchange earnings andoutgo forms part of the Board’s report and is given in Annexure - 1.

Extract of the Annual Return

The Extract of the annual return in Form No. MGT – 9 is being annexed to thereport in Annexure - 2.

Particulars of loans guarantees or investments under section 186

The Company has provided working capital loan Guarantee securities to the whollyowned subsidiary Companies which is permitted under the Companies Act 2013. The details ofthe loans Guarantee and security provided are given in the financial statements.

The details of the investment made by the Company are given in the notes to thefinancial statement.

Corporate Social Responsibility

The Company undertakes "Corporate Social Responsibility" initiatives directlyto the public in improving the quality of life. During the year 2015-16 the Company hasundertaken many initiatives through a policy framework for expanding some of the presentinitiatives and undertaking newer CSR initiatives in the year to come.

The Annual Report on CSR Activities in the prescribed format is given in the Annexure -4.

Detailed composition of the CSR Committee number of meetings held during the yearunder review and other related details are set out in the Corporate Governance Reportwhich forms a part of this Report.

Particulars of contracts or arrangements with related parties

All transactions entered into with the Related Parties during the financial year underthe review were on arm’s length basis and were in the ordinary course of business.There were no material significant transactions with the Company’s PromotersDirectors Management or their relatives that could have had a potential conflict with theinterests of the Company.

All Related party transactions are placed before the Audit Committee and Board forreview and approval. Prior omnibus approval is obtained from Audit Committee for RelatedParty Transactions on a quarterly basis for transactions which are of repetitive natureand / or entered in the Ordinary Course of Business and are at Arm’s Length.

In line with the requirements of the Companies Act 2013 and Listing Regulation theCompany has formulated a Policy on Related Party Transactions which is also available onCompany’s website at www.swelectes.com/investor. The Policy intends to ensure thatproper reporting approval and disclosure processes are in place for all transactionsbetween the Company and the Related Parties. There are no materially significant relatedparty transactions which exceeds 10% of the consolidated turnover of the Company.

Annual Board Evaluation and Familiarizing programme

The Board carried out an annual evaluation of its own performance the directors andcommittees of the Board based on the guideline formulated by the Nomination &Remuneration Committee. Board composition quality and timely flow of informationfrequency of meetings and level of participation in discussions were some of theparameters considered during the evaluation process.

The Company provides details of webcost being conducted by the Institute of CompanySecretaries of India and Institute of Chartered Accountant of India to the IndependentDirectors to facilitate updation on the various amendments in the Companies Act 2013rules notifications etc. In addition the Company is arranging professional consultancy toupdate and clarify the development / changes in the Acts.

Further during the year the Independent Directors of the Company met on March 14 2016to review the performance of the Non-executive directors Chairman of the Company andperformance of the Board as a whole.

Material Changes and commitments affecting the financial position of the Company whichhave occurred between 31st March 2016 and 27th May 2016 (date of report).

There were no material changes and commitments affecting the financial position of theCompany between the end of the financial year 31st March 2016 and the date of the report27th May 2016.

Disclosure of Accounting Treatment

The Company has followed the Accounting Standards specified under Section 133 of theCompanies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014 to the extentapplicable in the preparation of the financial statements.

Corporate Governance Certificate

A report on Corporate Governance as stipulated under SEBI (Listing obligations andDisclosure Requirements) Regulations 2015 is attached to this Report.

A Compliance Certificate from Mr. R. Kannan Practicing Company Secretary regardingcompliance of conditions of Corporate Governance as stipulated under the aforesaidregulation is annexed to this report.

Directors’ Responsibility Statement

The Directors’ Responsibility Statement referred to in clause (c) of sub-section(3) of Section 134 of the Companies Act 2013 shall state that—

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

(b) the directors had 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 and loss of the company for that year;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

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

Declaration by Independent Directors

Pursuant to sub section (6) of Section 149 of the Companies Act 2013 and Reg. 16(1)(b) of the SEBI (Listing obligations and Disclosure Requirements) Regulations 2015 theIndependent Directors of the Company have given a declaration to the Company that theyqualify the criteria of independence as required under the Act and the regulations.

Policy on Nomination and Remuneration and Performance evaluation of Directors KMP andSenior Management Personnel

The Board based on the recommendation of the Nomination and Remuneration Committee hasformulated a policy on remuneration of Directors Key Managerial Personnel and SeniorManagement of the Company. The policy covers the appointment including criteria fordetermining qualification positive attributes independence and remuneration of itsDirectors Key Managerial Personnel and Senior Management Personnel. The Nomination andRemuneration Policy is annexed as Annexure – 6 to this report.

Particulars of Employees:

The information of required pursuant to Section 197 read with rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is given in Annexure-3 of the Annual report.

Acknowledgement

Your Board places on record its appreciation of the support and co-operation receivedfrom the Government of India State Governments Banks Suppliers Customers and Vendorswhom your company looks upon as its valued partners in the path of progress. YourDirectors also wish to place on record their appreciation for the valuable servicesrendered by Depositories Stock Exchanges and the Registrar and Transfer Agents. YourDirectors thank all our valuable Investors who have been with the Company all these yearsand are also very much pleased to welcome all the new Investors and thank them for theircontinued patronage and confidence reposed in the Management.

For and on behalf of the Board of Directors
Chennai R. CHELLAPPAN A.BALAN
May 27 2016 Managing Director Joint Managing Director