To the Members of
BGR ENERGY SYSTEMS LIMITED
Your directors have pleasure in presenting their 34th AnnualReport together with the audited financial statements for the year ended March 31 2020.
The highlights of the standalone financial performance of the Companyduring the financial year ended March 31 2020 as compared with the previous financialyear ended March 31 2019 are summarized below:
|Description ||2019-20 ||2018-19 |
|Income from operations ||2692 ||3229 |
|Other income ||41 ||0.71 |
|Total Income ||2733 ||3230 |
|Earnings before Interest Depreciation Tax and Amortization ||207 ||338 |
|Profit before exceptional item and tax ||(64) ||41 |
|Tax Expense ||(78) ||12 |
|Net Profit after tax ||14 ||29 |
|Other Comprehensive income(net) ||-2.37 ||-0.62 |
|Net Worth ||1417 ||1406 |
DETAILS OF MATERIAL CHANGES FROM THE END OF THE FINANCIAL YEAR TILL THEDATE OF THIS REPORT
Significant material changes and commitments have occurred after theclosure of the Financial Year 2019-20 till the date of this Report which would affect thefinancial position of your Company.
The rampant spread of COVID-19 outbreak across borders andgeographies has severely impacted almost the whole world and triggered significantdownside risks to the overall global economic outlook and India is no exception. Due tothe lockdown announced by the Government of India from 25th March 2020 entire operationsof the Company came to a halt. The lockdowns and restrictions imposed on variousactivities due to the pandemic have posed challenges to the businesses of your Company.
The moratorium on debts and interest payments have been a source ofsupport in otherwise severely impacted liquidity and operating cash flows. The Boardbelieves that it is difficult to predict any industry wide scenario for the immediateshort term and the Company expects to resume normal operations soon after lifting oflockdown and movement of men and materials. Although there are uncertainties due to thepandemic the Company is taking several measures to mitigate the adverse impact
by optimizing costs and continuously realigning the cost and operatingstructures so as to sustain viable level.
DIVIDEND AND APPROPRIATION
Your Company has incurred loss during the year and hence Board ofDirectors have not recommended any dividend during the year.
COMPANY'S OPERATING PERFORMANCE AND STATE AFFAIRS
Your Company continues to maintain competitive edge in most of itsbusinesses. However the downturn in Indian power industry coupled with stagnant powerdemand scenario had adversely impacted market potential for EPC and BoP opportunities forthermal power projects. Your Company has timely initiated strategic steps to leverage itsproven design engineering construction and project management capabilities and is poisedto enter other key sectors of economy namely Water Infrastructure Highways and RoadsTransportation and Construction. These strategic measures are expected to yield positivegrowth results in the years to come.Your Company's manufacturing business have shownimprovement and are expected to post robust performance in the light of projectinvestments in India and abroad.
The Company's state of affairs operations review and future outlookhave been discussed and analyzed more in depth in the Management Discussion & Analysisreport (Annexure VII) forming part of this Board's report.
SUBSIDIARIES AND JOINT VENTURES
BGR Boilers Private Limited which supplies 660 MW super critical steamgenerators made an operating income of Rs.49.32 Crores and incurred a loss of Rs.17.33Crores in the year 2019-20. BGR Turbines Company Private Limited which supplies 800MWsuper critical steam turbine generators has made an operating income of Rs.10.20 Croresand made a loss of Rs.5.80 Crore in the year 2019-20. During the year under review yourCompany divested its entire shareholding in its subsidiary viz. Progen Systems andTechnologies Limited. The manufacturing facilities of this subsidiary will continue to beavailable to your Company on lease basis in accordance with mutually agreed terms. Thisdivestment had no significant impact on the financial position of your Company.
A report on the performance and financial position of each of thesubsidiaries and joint venture as per rule 5 of the Companies (Accounts) Rules 2014 isprovided as annexure to the consolidated financial statement and hence not repeated herefor the sake of brevity as required under rule 8(1) of the Companies (Accounts) Rules2014.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with Companies Act 2013 and implementation requirementsof Indian Accounting Standards (Ind AS) Rules on accounting and disclosure requirementsand as prescribed by Regulation 33 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Audited Consolidated Financial Statements are providedin this Annual Report.
As required under Section 129 of the Companies Act 2013 a separatestatement containing the salient features of the financial statements of subsidiaries isattached along with the financial statements.
In terms of Section 136 of the Companies Act 2013 the Company hasplaced on its website the standalone and consolidated financial statements and theseparate audited and unaudited annual financial statements of subsidiary companies as thecase may be and the Company will provide a copy of separate financial statements inrespect of each of its subsidiary to any shareholder of the company who asks for it.
BOARD OF DIRECTORS
In accordance with the provisions of Companies Act 2013 Mr. ArjunGovind Raghupathy Director retires by rotation and being eligible offers himself forreappointment. A brief profile of Mr.Arjun Govind Raghupathy (DIN 02700864) will be givenin the notice convening the 34th annual general meeting of the Company. The Board ofDirectors recommends proposed appointment of Mr. Arjun Govind Raghupathy.
On the recommendation of Nomination and Remuneration Committee (NRC)the Board of Directors on June 30 2020 re-designated Mr.Arjun Govind Raghupathy DeputyManaging Director & COO and appointed him to the office of Managing Director. TheBoard further vested Mr. Arjun Govind Raghupathy the responsibility of Chief ExecutiveOfficer of the Company.
The first term of office of Mr. Gnana Rajasekaran as independentdirector of the Company in terms of the Companies Act 2013 expired on August 14 2019.Pursuant to the recommendation of the Nomination and Remuneration Committee and the Boardof Directors the shareholders re-appointed Mr.Gnana Rajasekaran as independent director ofthe Company for a period of 5 years at the last Annual General Meeting held on August 142019.
Mr.A.Swaminathan Director- (Engineering & Construction Business) ofthe Company had relinquished his office of director on the date of last AGM (August 142019) consequent to the expiry of his term of office of Director on the Board.
Mr.V.R.Mahadevan Joint Managing Director has resigned from the Boardwith effect from June 30 2020. The Board placed on record its appreciation of thevaluable services rendered by Mr. Swaminathan and Mr Mahadevan to the Company during theirlong association with the Company and their contribution in managing the Company duringgrowth and critical phases as Directors on the Board of Directors of the Company.
The Board of Directors of the Company on the basis of recommendation ofNRC and having due regard to the proven knowledge acumen and experience of Mr. R.RameshKumar in the fields of governance legal corporate strategy and compliance has appointedhim as a director in the vacancy arisen due to the resignation of Mr.V.R.Mahadevan anddesignated as Whole Time Director ( Governance & Legal) & Secretary with effectfrom July 012020. The Notice calling for ensuing annual general meeting contains theprofessional profile of Mr. Ramesh Kumar.
All Independent Directors have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Also yourCompany has received annual declarations from all the Independent Directors of the Companyconfirming that they have already registered their names with the data bank maintained bythe Indian Institute of Corporate Affairs [IICA] as prescribed by the Ministryof Corporate Affairs under the relevant rules.
The Board is of the opinion that all independent directors of theCompany hold highest standards of integrity and possess requisite expertise and experiencerequired to fulfill their duties as Independent Directors.
MEETINGS OF BOARD
During the year 6 Board meetings and 5 Audit Committee meetings wereconvened and held. The details of these meetings are given in the Corporate GovernanceReport. The intervening gap between any two meetings was within the period prescribedunder the Companies Act 2013.
ANNUAL EVALUATION OF BOARD
Pursuant to the provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and having due regard to theSEBI's Guidance Note on Board Evaluation dated January 05 2017 the Board has carried outan annual evaluation of its own performance individual directors separately as well asthe evaluation of the working of its Audit Committee Committee of Directors
Stakeholders Relationship Committee and Nomination and RemunerationCommittee. A comprehensive evaluation process formulated by the Nomination andRemuneration Committee covering various aspects of the functioning of the Board wascirculated to all the Directors to evaluate the performance of the Board. The performanceevaluation of the Non-Independent Directors and the Board as a whole was carried out bythe Independent Directors. The performance evaluation of the Chairperson of the Companywas also carried out by the independent directors taking into account the views of theexecutive and non-executive directors. The Directors expressed their satisfaction with theevaluation process.
POLICY ON DIRECTORS' APPOINTMENT REMUNERATION ANDOTHER DETAILS:
The Nomination and Remuneration Committee framed a policy onappointment of Directors including criteria for determining qualification positiveattributes and other matters. The main objectives of the policy are given below:
(i) Enhancement of performance of the Board and facilitate effectiveCorporate Governance.
(ii) Encourage diversity of thoughts expertise and perspectives.
(iii) Usher in independence in the performance of the Board.
(iv) Eliminate gender bias if any in the constitution and functioningof the Board of Directors.
(v) Provide and create an environment for succession planning.
(vi) Identification of senior/key management personnel for appointmentas Executive Directors.
(vii) Provide for appropriate mix of promoter directors professionaldirectors and independent directors.
On the recommendation of the NRC the Board has adopted and framed aRemuneration Policy for the Directors Key Managerial Personnel and other employeespursuant to the provisions of the Companies Act and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
The Company's policy on diversity of Board of Directors is available onthe Company's website at http://www.bgrcorp.com/policy/Policy_Diversity_Board.pdf.
The Audit Committee of the Board comprises of four directors of whichthree members are independent
directors and all the members of Audit Committee are financiallyliterate. More details of the Audit Committee are provided in the Corporate GovernanceReport. All key recommendations and observations of the Audit were accepted and acted uponby the management and compliance thereof are regularly monitored and reviewed by theCommittee.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report for the year ended March 31 2020 asstipulated under Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed hereto and which forms part of this Report.
The paid-up equity share capital of the Company as on March 31 2020was Rs.72.16 Crores. During the year under review the Company has not issued new sharesor shares with differential voting rights nor granted stock options nor sweat equity.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
In compliance with Section 124(5) of the Companies Act 2013 a sum ofRs.1240755/- being the unclaimed dividend declared by the Company for the financial yearended March 31 2012 was transferred to the Investor Education and Protection Fund of theCentral Government in October 2019 after giving sufficient notice to the concernedshareholders.
Dividend which remains unclaimed out of the dividend declared by theCompany for the financial year ended March 31 2013 at the Annual General Meeting held onSeptember 25 2013 will be transferred to the Investor Education and Protection Fund ofthe Central Government in November 2020 pursuant to the provisions of Section 124(5) ofthe Companies Act 2013. Thereafter no claim shall lie on these dividends from theshareholders.
Pursuant to the provisions of Section 124(6) of the Companies Act 2013and the Rules made thereunder the shares pertaining to the unclaimed dividend for the FY2011-12 were transferred to the demat account of Investor Education and ProtectionFund(IEPF).
An overview on the Company's human resources development and efforts toacquire and nurture talent is given in the Management Discussion & Analysis report(Annexure VII) forming part of this Board's report.
For prevention prohibition and redressal of sexual harassment of Womenat workplace the Company has in place an Anti-Sexual Harassment Policy in line with
the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. During the year under review nocomplaint was received by the Internal Complaints Committee (ICC) with allegations ofsexual harassment.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided elsewhere in the AnnualReport.
In terms of the provisions of Section 197(12) of the Act read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said rules areprovided in the annual report. Having regard to the provisions of the first proviso toSection 136(1) of the Act the annual report excluding the aforesaid information is beingsent to the members of the Company. The said information is available for inspection atthe registered office of the Company during working hours and any member interested inobtaining such information may write to the Company Secretary and the same will befurnished on request.
Your Company has not accepted deposit from the public and hence did nothave outstanding deposits any time during the year under review.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorptionstipulated under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 is annexed herewith as Annexure
I. During the FY 2019-20 the Foreign exchange earnings and outgo wereRs.106.30 Crores and Rs.5.44 Crores respectively.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITHREFERENCE TO FINANCIAL STATEMENTS
Your Company has in place adequate internal controls system whichincludes financial control commensurate with the size scale and complexity of company'soperations. The internal audit function evaluates the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective and remedial action
in their respective areas of responsibility and thereby strengthen thecontrols. Significant audit observations and corrective actions thereon are periodicallyreviewed by the Audit Committee. During the year no reportable material weakness orsignificant deficiencies in the design or operation of internal financial controls. TheAudit Committee based on the advise of the internal auditors directed the Company toimprove the internal financial controls in few areas to ensure that the internal financialcontrols are operating more effectively.
CORPORATE SOCIAL RESPONSIBILITY
The Company has Corporate Social Responsibility Committee constitutedby the Board of Directors with Mrs.Sasikala Raghupathy as Chairperson and Mrs.Swarnamugi RKarthik and Mr.Gnana Rajasekaran as members of the Committee. The CSR Policy formulatedand recommended by the Committee is in place. The Policy is in line with Schedule VII ofthe Companies Act 2013 and the Company is focusing on CSR activities pertaining toeducation health skill development and destitute women care and welfare. The informationof CSR Policy and activities are given in the Corporate Governance Report. The AnnualReport on CSR activities is annexed herewith as Annexure II.
The Remuneration Policy formulated under section 178 of the CompaniesAct 2013 by the Nomination and Remuneration Committee is given in Annexure III.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
Your Company has established a vigil mechanism for directors andemployees to report genuine concerns as required by Section 177 of the Companies Act 2013read with the Companies (Meetings of Board and its Powers) Rules 2014 and thepolicy/mechanism has adequate safeguards against victimization of persons who use suchmechanism and provision for direct access to the chairperson of the Audit Committee inappropriate or exceptional cases.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Particulars of loans guarantees or investments covered under theprovisions of Section 186 of the Companies Act 2013 are disclosed in the note No.36 tothe Financial Statements.
RELATED PARTY TRANSACTIONS
The transactions with related parties entered into during the financialyear which were in the ordinary course of business and on an arm's length basis wereplaced before the Audit Committee and approved. The transactions with related partieswhich were not in ordinary course
of business or on arm's length were placed before the Board forapproval based on the recommendation of the Audit Committee. All related partytransactions were made in compliance with Section 188 read with Section 177 of theCompanies Act 2013 and SEBI (LODR). There were no other materially significant relatedparty transactions made by the Company with promoters directors key managerial personnelor other designated persons which may have a potential conflict with the interest of theCompany. The Policy on related party transactions as approved by the Board is uploaded onCompany's website.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS ORCOURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
During the Financial year 2019-20 orders were passed by the High Courtof Madras and awards by two arbitral tribunals against the Company to the extent ofRs.38.07 crores and there are no other significant and material orders passed by theregulators or courts or tribunals impacting the going concern status of the Company.
RISK MANAGEMENT POLICY
The Company as part of Standard Operating System and Procedureinstitutionalized risk management covering risk identification mitigation and managementmeasures. The Risk Charter and Policy have been brought to practice as part of internalcontrol systems and procedures. The Management has applied the risk management policy tobusiness activities and processes and this is reviewed to ensure that executive managementmanages risk through means of a properly defined framework. The Company is taking steps tomake the risk management process more robust and institutionalized.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(3) (c) of the CompaniesAct 2013 with respect to Directors' responsibility statement it is hereby confirmedthat:
a) In the preparation of the annual accounts for the Financial yearended March 31 2020 the applicable accounting standards had been followed along withproper explanation relating to material departures if any ;
b) the Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at March 31 2020and of the profit of the Company for the Financial year ended on that date;
c) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; and
d) the Directors had prepared the annual accounts for the year endedMarch 31 2020 on a going concern basis.
e) the Directors had laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating effectively.
f) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
STATUTORY AUDITORS' AND AUDITOR'S REPORT
N.R.Doraiswami & Co Chartered Accountants Chennai (FirmRegistration No: 000771S) were appointed as the Statutory Auditors of the Company at the31st Annual General Meeting held on September 27 2017 to hold office until the conclusionof the 36th Annual General Meeting to be held in the year 2022. N.R.Doraiswami & Cohave confirmed that they are not disqualified from continuing as Auditors of the Companyfor the FY 2020-21.
COST RECORDS AND COST AUDITORS
The Company is required to maintain cost records as specified by theCentral Government under subsection (1) of Section 148 of the Companies Act 2013 andaccordingly during the year such accounts and records were made and maintained by theCompany.The Board of Directors appointed A N Raman & Associates Cost Accountants asthe Cost Auditor of the Company for the Financial year 2020-21 under Section 148 of theCompanies Act 2013. The Cost Audit Report for the financial year ended March 31 2019issued by A.N.Raman & Associates Cost Accountants was submitted to the CentralGovernment on September 05 2019.
SECRETARIAL STANDARDS AND SECRETARIAL AUDIT
The Board of Directors confirm that your Company has complied with theapplicable Secretarial Standards during the year 2019-20.
Pursuant to the provisions of Section 204 of the Companies Act 2013and The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed Mr. V.Suresh Company Secretary in practice to undertake thesecretarial audit of the Company. The Report of secretarial audit is annexed as AnnexureIV. The audit report is unqualified and without reservation or adverse comment oncompliance.
REPORTING OF FRAUDS BY AUDITORS
During the year under review the Statutory Auditors Cost Auditors andSecretarial Auditor have not reported any instance of fraud committed in the Company byits officers or employees to the Audit Committee under section 143(12) of the CompaniesAct 2013 details of which needs to be reported.
A Report on Management Discussion & Analysis of Performance(Annexure VII) and Compliance of Corporate Governance under SEBI (LODR) and thecertificate from the auditors confirming compliance of the conditions of CorporateGovernance are included in this Annual Report as Annexure V.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in formMGT-9 is annexed herewith as Annexure VI.
ANNEXURES FORMING PART OF BOARD'S REPORT
The annexures referred to in this report and other information whichare required to be disclosed are annexed herewith and form part of this Report ofDirectors.
|Annexure ||Particulars |
|I ||Energy conservation and Technology absorption |
|II ||Annual Report on CSR activities |
|III ||Remuneration Policy |
|IV ||Secretarial Audit Report |
|V ||Corporate Governance Report along with the Certificate of Auditors |
|VI ||Extract of Annual Return in Form MGT-9 |
|VII ||Management Discussion & Analysis Report |
|VIII ||Business Responsibility Report |
Your Directors wish to place on record their appreciation for thevaluable support and co-operation extended by customers vendors collaborators businesspartners/ associates statutory authorities Central and State Governments during the yearunder review.
Your Directors also record their appreciation to the bankers for theirfinancial support and trust reposed in the Company. The Board further wish to acknowledgethe commitment and contribution made by the employees at all levels during current toughtimes. Your Board conveys its gratitude to the shareholders for their continued patronageand cooperation.
| ||For and on behalf of the Board |
|Place : Chennai ||Sasikala Raghupathy |
|Date : June 30 2020 ||Chairperson |