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Swelect Energy Systems Ltd.

BSE: 532051 Sector: Engineering
NSE: SWELECTES ISIN Code: INE409B01013
BSE LIVE 15:46 | 17 Nov 456.50 2.55
(0.56%)
OPEN

460.65

HIGH

468.95

LOW

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NSE 15:31 | 17 Nov 457.25 3.20
(0.70%)
OPEN

458.75

HIGH

473.95

LOW

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OPEN 460.65
PREVIOUS CLOSE 453.95
VOLUME 1800
52-Week high 633.00
52-Week low 295.00
P/E 16.06
Mkt Cap.(Rs cr) 462
Buy Price 456.50
Buy Qty 33.00
Sell Price 0.00
Sell Qty 0.00
OPEN 460.65
CLOSE 453.95
VOLUME 1800
52-Week high 633.00
52-Week low 295.00
P/E 16.06
Mkt Cap.(Rs cr) 462
Buy Price 456.50
Buy Qty 33.00
Sell Price 0.00
Sell Qty 0.00

Swelect Energy Systems Ltd. (SWELECTES) - Director Report

Company director report

Our Valued Shareholders

Your directors have pleasure in presenting the Twenty Second Annual Report on thebusiness and operations of the company together with the Audited Statement of Accounts forthe year ended 31st March 2017.

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
31/03/2017 31/03/2016 31/03/2017 31/03/2016
1 Revenue from operations 17006.97 16315.86 24686.17 28194.95
2 Other income 2696.41 2042.90 714.66 313.69
3 Finance income 1919.44 1296.22 2875.73 2832.86
4 Total Income from Operations 21622.82 19654.98 28276.56 31341.50
5 Total Expenditure (Excluding Finance cost 16138.10 15406.43 22283.96 25872.95
Depreciation & Amortization)
6 Profit Before Finance cost Depreciation & 5484.72 4248.55 5992.60 5468.55
Amortization and Tax
7 Finance Cost 529.55 960.96 959.15 1200.28
8 Depreciation and Amortization 1114.44 1251.04 1946.00 1704.13
9 Exceptional item # 0.00 81.67 0.00 30.00
10 Profit Before Tax 3840.73 2118.22 3087.45 2594.14
11 Income Tax Expense 902.88 917.15 924.39 938.62
12 Net Profit / (Loss) for the year 2937.85 1201.07 2163.06 1655.52
13 Other Comprehensive income for the year net of tax - 1.84 (215.32) 523.37
14 Total comprehensive income for the year net of tax 2937.85 1202.91 1947.74 2178.89
15 Transfer to General Reserve 0.00 222.57 0.00 222.57
16 Interim Dividend 0.00 303.18 0.00 303.18
17 Proposed Final Dividend 404.24 101.06 404.24 101.06
18 Tax on proposed Dividend 82.76 20.69 82.76 20.69
19 Equity Share Capital 1010.58 1010.58 1010.58 1010.58
20 Other equity (Reserves & Surplus) 64490.59 61674.49 69012.39 67192.08
21 EPS (Rs.) 29.07 11.88 21.40 16.38

# Refer to Note No.41 of standalone financial statements

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

SWELECT with a strong back drop of 30 years of Power electronics and Power Systemsexperience is well positioned in the Renewable Energy space with over 60 MW of SolarPhotovoltaic EPC experience. With a commanding and deep vertically integrated supply linemanagement to cater to its customers with business agility and with superior technicalknow-how your company is fully geared to tackle the challenges of the industry.

GENERAL REVIEW OF THE BUSINESS OF THE COMPANY:

During the year your Company achieved a growth of 4.23% over the previous financialyear in Revenue from operations (Standalone). The Profit (PAT) for the current year isRs.2937.85 lakhs. AfterTax

DIVIDEND

The Board of Directors have recommended a Dividend of Rs.4/- per equity share [@ 40% onthe equity share capital of

Rs.101058400/- (Rupees Ten Crores Ten Lakhs Fifty Eight Thousand Four HundredOnly)] for the year ended 31st March 2017 subject to the approval of the shareholders atthe ensuing Annual General Meeting of the Company. The money outflow for the Company wouldbe Rs. 404.24 Lakhs towards dividend and Rs.82.76 Lakhs towards dividend distribution tax.

SHARE CAPITAL

During the year under review there was no change in the Company's issued subscribedand paid-up equity share capital. On March 31 2017 it stood at Rs.101058400/- dividedinto 10105840 equity shares of Rs.10/- each. However consequent to the amalgamation ofHHV Solar Technologies Limited with the Company the existing Authorised Share Capital ofthe Company has been altered as Rs.470000000/- comprising 47000000 Equity Shares ofRs.10/- each vide Postal Ballot resolution dated 29 March 2017.

TRANSFER TO GENERAL RESERVE

During the year the Company does not propose to transfer any amount to the generalreserve out of the amount available for appropriation.

HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES

During the year the Board of Directors reviewed the affairs of the subsidiaries. Inaccordance with Section 129(3) of the

Companies Act 2013 we have prepared the consolidated financial statements of theCompany which form part of this Annual Report. Further a statement containing thesalient features of the financial statement of our subsidiaries in the prescribed formatAOC-1 is given in the consolidated financial statements.The statement also provides thedetails of performance and financial position of each of the subsidiaries. The Companydoes not have any investment in associate and joint venture companies during the periodunder report.

DEPOSITS

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

CHANGE IN DIRECTORS OR KEY MANAGERIAL PERSONNEL

Mr. v. C. Raghunath (DIN:00703922) Whole Time Director liable to retire byrotation at the ensuing Annual General Meeting and being eligible offers himself forre-appointment.

At the meeting held on 28.06.2017 the Board on the recommendation of the Nominationand Remuneration Committee appointed

Mrs. v. C. Mirunalini (DIN:07860175) as a Whole Time Director of the Company for aterm of fiveyears from 28th June 2017 to 27th June 2022 subject to the approval ofshareholders at the ensuing Annual General Meeting.

At the meeting held on 28.06.2017 the Board on the recommendation of the Nominationand Remuneration Committee appointed

Mr. S. Annadurai (DIN: 00137561) as an additional director of the Company witheffect from 28.06.2017 who holds office up to the date of ensuing Annual General Meeting.

Mr. S. Annadurai has fulfilled the conditions as specified in Section 149(6) of the beappointed as an Independent Director of the Company for a term of five years from 28thJune 2017 to 27th June 2022 subject to the approval of shareholders at the ensuing AnnualGeneral Meeting.

The Profile of Mr. V.C. Raghunath Mrs. V. C. Mirunalini and Mr. S. Annadurai is givenseparately in the notice of AGM.

The Board accordingly recommends necessary resolutions for the approval of Shareholdersat the ensuing Annual General Meeting.

NUMBER OF BOARD MEETINGS

During the Financial Year 2016-17 Six meetings of the Board of Directors of thecompany were held. The details are provided in the Corporate Governance Report that formspart of this Annual Report.

DISCLOSURE ON COMPOSITION OF AUDIT COMMITTEE AND ITS RECOMMENDATION

The details of Composition of Audit Committee along with its terms of reference aregiven in the Corporate Governance Report. All recommendations of the Audit Committee wereaccepted by the Board.

DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

The Company has adopted the Vigil mechanism and the details are given in the CorporateGovernance Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (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 Workplace (Prevention Prohibition & Redressal)Act 2013 and constituted an Internal Complaints Committee (ICC) to redress the complaintsreceived regarding sexual harassment. All employees (Permanent contractual temporarytrainees) are covered under this policy.

The members of the Committee are

1. Mrs. S. Indira

2. Mrs. C. Preethy

3. Ms. Aarthi Balan and

4. Mr. K. Karthikeyan.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2016-2017

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

CODE OF CONDUCT AND 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 toregulating trading in securities by the Directors and designated employees of the Company.The Code prohibits trading in securities of the Company 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.

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

Code of conduct of Board of Directors and Senior Management Personnel are available inCompany's website http://www.swelectes.com/ investor.html.

STATUTORY AUDITORS

Section 139 of the Companies Act 2013 prescribes the maximum term for which StatutoryAuditors may be appointed. The term of the existing Statutory Auditors M/s S.R. Batliboi& Associates LLP is due to end at the conclusion of the ensuing Annual GeneralMeeting (AGM). Hence in compliance with the provisions of the Companies Act 2013 it isproposed to appoint M/s. Deloitte Haskins & Sells LLP Chartered Accountants Chennai(Firm Registration No.117366W/W - 100018) as the new Statutory Auditors of the Company tohold office for a term of five years from the conclusion of the ensuing AGM.

STATUTORY AUDITORS REPORT

There are no qualifications or observations or remarks made by the StatutoryAuditors intheir report for the year 2016-2017.

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 of thisReport. There are no qualifications or remarks made by the Secretarial Auditor in hisReport and the same is given in Annexure - 1.

COST AUDIT

The Board on the recommendation of the Audit Committee has appointed Mr. R.Ravichandran Cost Accountant as Cost Auditor of the Company for the financial yearending March 31 2018. The Board also considered and approved the remuneration recommendedby the Audit Committee. In terms of the provisions of Section 148(3) of the Companies Act2013 read with Rule 14(a)(ii) of the Companies (Audit and Auditors) Rules 2014 theremuneration of the Cost Auditor has to be ratified by the members. Accordingly necessaryresolution is proposed at the ensuing AGM for ratification.

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 - 2.

EXTRACT OF THE ANNUAL RETURN

The extract of Annual Return in format MGT–9 for the Financial Year 2016-17 isgiven in Annexure –3.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

The details of Loans Guarantees and Investments covered under the provisions ofSection 186 of the Companies Act 2013 are given in the notes to the Financial Statements.

CORPORATE SOCIAL RESPONSIBILITY

The Company undertakes "Corporate Social Responsibility" (CSR) initiativesdirectly to the public in improving the quality of life. During the year 2016-17 theCompany has undertaken many initiatives through a policy framework for expanding some ofthe present initiatives 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 .

Details of composition of the CSR Committee number of meetings held during the yearunder review and other particulars are set out in the Corporate Governance Report whichforms a part of this Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts/arrangements/transactions entered by the Company during the financialyear with Related Parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company has not entered into any contracts/arrangements/transactions with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactions.Accordingly the disclosure required u/s 134(3)(h) of the Act in form AOC-2 is notapplicable to the Company.

The Policy on materiality of Related Party Transactions and dealing with related partytransaction as approved by the Board may be accessed on the Company's websitewww.swelectes.com. Members may refer to the notes to the financial statements which setsout related party disclosures.

SIGNIFICANT AND MATERIALORDERS

During the year there were no significant passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future.

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 webcast being conducted by the Institute of CompanySecretaries of India and Institute of Chartered Accountants of India to the IndependentDirectors to facilitate updation on the various amendments in the Companies Act 2013rules notifications etc. In addition the Company is engaging professional consultants toupdate and clarify the development/changes in the Acts.

Further during the year the Independent Directors of the Company met on March 31 2017to 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 FINANCIALPOSITION OF THE COMPANY

There were no material changes and commitments affecting the financial position of theCompany between the end of the financial year 31st March 2017 and the date of the report28th June 2017.

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 (as amended)to the extent applicable in the preparation of the financial statements.

INDIAN ACCOUNTING STANDARDS (Ind AS)

In compliance with the Ministry of Corporate Affairs (MCA) Notification dated 16thFebruary 2016 announcing the Companies (Indian Accounting Standards) Rules 2015(‘Ind AS') the Company has prepared its standalone and consolidated financialstatements adopting Ind AS with effect from 1st April 2016 (with transition date of 1stApril 2015). The impact of transition has been accounted for in opening reserves and thecomparative figures for the previous year have been restated accordingly.

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

In accordance with the provisions of section 134 of the Companies Act 2013 yourdirectors confirm 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 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;

(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; and

(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.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

The Statutory Auditors have stated that no fraud by the Company or no material fraudon the Company by its officers and employees had been noticed or reported during the year.

DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to Section 149(6) of the Companies Act 2013 and Regulation 16(1) (b) of theSEBI (Listing Obligations and Disclosure

Requirements) Regulations 2015 the Independent Directors of the Company have given adeclaration to the Company that they qualify the criteria of independence as requiredunder 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 Committeehas formulated 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 given in Annexure - 5.

PARTICULARS OF EMPLOYEES

Pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remunerationof Managerial Personnel) Amendment Rules 2016 the details in respect of employees of theCompany are given in Annexure - 6.

ACKNOWLEDGEMENT

Your Board places on record its appreciation of the support and co-operation receivedfrom the Government of India State Governments Banks Suppliers Employees Customersand Vendors whom your company looks upon as its valued partners in the path of progress.Your Directors 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 valuable Investors who have been with the Company all these years andare 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

Sd/- Sd/-
Chennai R. CHELLAPPAN A.BALAN
June 28 2017 Managing Director Joint Managing Director