The Directors have pleasure in presenting the Annual Report and Audited Accounts ofCESC Limited for the year ended 31 March 2019.
| || ||Rs Crores |
|Particulars ||2018-19 ||2017-18 |
|Revenue from operations ||7754 ||7786 |
|Other Income ||165 ||168 |
|Total Income ||7919 ||7954 |
|Profit from continuing operations before regulatory Income and Tax ||624 ||893 |
|Regulatory Income ||570 ||209 |
|Profit before tax from continuing operations ||1194 ||1102 |
|Taxation ||(257) ||(238) |
|Profit for the year from continuing operations ||937 ||864 |
|Loss for the year from discontinued operations ||- ||(3) |
|Profit for the year ||937 ||861 |
|Other comprehensive income ||(34) ||(8) |
|Total comprehensive income ||903 ||853 |
During the year under review the Company's revenue from operations and total income(including other income) was at the level of Rs 7754 Crores (previous year Rs 7786 Crores)and Rs 7919 Crores (previous Year Rs 7954 Crores) respectively. Profit before tax fromcontinuing operations increased by 8.35% to Rs 1194 Crores during the year. Profit aftertax (PAT) for 2018-19 stands at Rs 937 Crores which reflects an increase of 8.83% overRs861 Crores for the previous year. Total comprehensive income increased by 5.86%. Retainedearnings at the end of the year under report stood at Rs 9365 Crores (Previous year Rs9063 Crores) after adjustments for dividend unforeseen exigencies and miscellaneousitems.
A detailed review of the operations for the year ended 31 March 2019 is given in theManagement Discussion & Analysis which forms a part of this Report.
The Board of Directors of the Company on 5 February 2019 declared for the year ended 31March 2019 an interim dividend of 175% or Rs 17.50 per equity share highest ever in theCompany's history involving an outgo of Rs 279.66 Crores (Previous year Rs 191.45Crores) inclusive of tax thereon. The interim dividend paid in February 2019 was declaredin terms of the Dividend Distribution Policy approved by the Board of Directors of theCompany at its meeting held on 14 September 2016 and available on the Company's website athttps://www.cesc.co.in/wp-content/ uploads/policies/Dividend_Policy.pdf.
Notice convening the ensuing Forty first Annual General Meeting of the Members of theCompany includes an item for confirmation of the said interim dividend.
As reported in earlier years it had become imperative to reorganize and reorient theCompany for imparting a greater focus on each of its businesses and further enhancing theoperational efficiency. With this objective a Composite Scheme of Arrangement underSections 230 to 232 and other applicable provisions of the Companies Act 2013 ("theScheme") involving the Company some of its erstwhile subsidiaries and theirrespective shareholders was approved by the Hon'ble National Company Law Tribunal KolkataBench ("NCLT") subject to the terms and conditions mentioned in NCLT's Orderdated 28 March 2018.
As the requisite approval from West Bengal Electricity Commission as required by thesaid NCLT Order is awaited the Scheme has been implemented with CESC's non-powerinvestments demerged into two entities-retail and other business ventures-effective 1October 2017 being the Appointed Date.
In terms ofthe Scheme on 14 November 2018 CESC shareholders registered in theCompany's books as on 31 October 2018 had been allotted without any payment additionalequity shares in Spencer's Retail Limited (SRL) the new Retail company and CESC VenturesLimited (CVL) the new Ventures Company in the respective ratios specified in the Scheme.The said equity shares of SRL and CVL have subsequently been listed with National StockExchange of India Limited (NSE) BSE Limited (BSE) and The Calcutta Stock Exchange Limited(CSE).
The Board believes that the above restructuring will unlock value for the investorsgive a focused management attention to the verticals to pursue respective growth plan andallow the two new entities to take advantage of the market value for FMCG Retail and ITbusinesses.
As on 31 March 2019 CESC had seventeen subsidiaries. During the year under reviewJharkhand Electric Company Limited and Jarong Hydro-Electric Power Company Limited becamesubsidiaries of the Company. Broad details of operations of the subsidiaries of theCompany are given in the section 'Business Performance' in the Management Discussion &Analysis which forms a part of this report.
In accordance with the Companies Act 2013 ('the Act') consolidated financialstatements of the Company and of all its subsidiaries for the year 2018-19 have beenprepared in the form and manner as that of its own and duly audited by M/s. S. R. Batliboi& Co. LLP the auditors in compliance with the applicable accounting standards andthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ('SEBIRegulations'). These consolidated statements form a part of the annual report and accountsand shall be laid before the Annual General Meeting of the Company while laying itsfinancial statements as required under the Act. A separate statement containing thesalient features of the financial statements of its subsidiaries is attached.
Directors and Key Managerial Personnel
In terms of the provisions of Section 152 of the Act and Article 102 of the Articles ofAssociation of the Company
Mr. Pradip Kumar Khaitan retires as a Director of the Company at the forthcoming AnnualGeneral Meeting and being eligible offers himself for reappointment as a Director.During the year the Board agreed to Mr. Khaitan's request to treat him as a nonindependent director of the Company.
It is also proposed to seek shareholders' approval by means of a Special Resolution forcontinuation of the appointment of Mr. Khaitan as a non-executive non independent directorof the Company in accordance with the requirement of Sub-Regulation 17(1A) ofSEBIRegulations.
The current five year term of appointment of Mr. Pratip Chaudhuri will expire on 30September 2019 and it is proposed to reappoint him as an Independent Director not liableto retire by rotation for a fresh term of five years in accordance with the applicableprovisions of the Act.
Notice for the forthcoming Annual General Meeting of the Company includes appropriateResolutions seeking shareholders' approval in respect of all the above matters.
As approved at the Fortieth Annual General Meeting of the Company held on 21 December2018 Mr. C. K. Dhanuka was reappointed as an Independent Director of the Company notliable to retire by rotation for a further period of five years with effect from 1April 2019.
As further approved at the said Meeting Ms. Rekha Sethi and Mr. K. Jairaj will bere-appointed as Independent Directors for a fresh term of five years each with effect from30 May 2019 and 1 August 2019 respectively.
The requisite disclosures regarding the above re-appointments/ appointments have beenmade in the Corporate Governance section which forms a part of this Report.
The Independent Directors of the Company have confirmed that they meet the criteria ofindependence as prescribed under the Act and SEBI Regulations.
The details on Directors' appointments and remuneration including criteria fordetermining qualifications positive attributes independence of Director and alsoremuneration of Key Managerial Personnel and other employees form part of CorporateGovernance Report of this Annual Report. During the year performance evaluation ofindependent directors and other board members as well as the committees of the board weredone in terms of the Act and SEBI Regulations.
Six meetings of the Board of Directors were held during the year on 23 May 2018 26July 2018 12 October 2018 14 November 2018 21 December 2018 and 5 February 2019. TheCompany has complied with the Secretarial Standards issued by the Institute of CompanySecretaries of India on Board Meeting and Annual General Meeting.
The equity shares of the Company continue to be listed at BSE NSE and CSE. The Companyhas paid the requisite listing fee to the Stock Exchanges up to the financial year2019-20.
Directors' Responsibility Statement
Pursuant to Section 134 of the Act your Directors hereby state and confirm that:
i) in the preparation of the accounts for the financial year ended 31 March 2019 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any;
ii) 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 of the Company for that period;
iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
iv) the Directors have prepared the annual accounts on a going concern basis;
v) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
vi) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
A report on Management Discussion and Analysis is attached herewith (Annexure 'A'). Aseparate Report on Corporate Governance (Annexure 'B') along with Additional ShareholderInformation (Annexure 'C') as prescribed under the SEBI Regulations are annexed as a partof this Report along with the Auditor's Certificate thereon.
Corporate Social Responsibility
In accordance with Section 135 of the Act and the rules made thereunder the Companyhas formulated a Corporate Social Responsibility Policy a brief outline of which alongwith the required disclosures are annexed as a part of this Report. A detailed section onthe activities in this behalf during the year is disclosed in (Annexure 'D') which formspart of this report.
Business Responsibility Report
A separate Business Responsibility Report as required under SEBI Regulations is annexedand forms a part of this report (Annexure 'E').
Whistle Blower Policy
Pursuant to Section 177 of the Act the rules made thereunder and the SEBI Regulationsthe Company has a Whistle Blower Policy (Vigil Mechanism) in place for reporting genuineconcerns over happening of instances of any irregularity unethical practice and/ormisconduct for directors employees and stakeholders. The details of the said policy hasbeen disclosed in the Company's website www.cesc.co.in
Related Party Transactions
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There was no materiallysignificant related party transaction that had a potential conflict with the interests ofthe Company. Transactions with related parties entered into in the normal course ofbusiness are periodically placed before the Audit Committee of the Board for its approval.
Particulars of Loans Guarantees or Investments
In terms of the provisions of the Section 186 (11) of the Act the provisions ofSection 186(4) requiring disclosure in the financial statements of the full particulars ofthe loan given investment made or guarantee given or security provided and the purposefor which the loan or guarantee or security is proposed to be utilised by the recipient ofthe loan or guarantee or security are not applicable to the Company.
The Company during the year has not accepted any deposits and as such no amount ofprincipal or interest was outstanding as on the date of the Balance Sheet.
The Company has a Risk Management Policy for identification assessment and mitigationof various risks faced by the Company. Management Discussion and Analysis (Annexure 'A')and Report on Corporate Governance (Annexure 'B') contain detailed discussion on riskmanagement by the Company.
At the Thirty-ninth Annual General Meeting of the Company the members had appointedMessrs. S R Batliboi & Co. LLP Chartered Accountants (Firm RegistrationNo.301003E/E300005) as statutory auditors for a term of five consecutive years holdingoffice until the conclusion ofthe Forty-fourth Annual General Meeting.
The Auditors' Report annexed to the financial statements for the year under review doesnot contain any qualification. The Auditor have not reported any instance of fraudreferred to in Section 134(3)(ca) of the Act.
Messrs. Shome & Banerjee Cost Accountants were re-appointed to conduct the auditofthe cost accounting records ofthe Company for the year under review.
The Company is required to maintain cost records as specified by the Central Governmentunder Section 148(1) of the Act and accordingly such accounts and records are made andmaintained.
Secretarial audit of secretarial and related records of the Company was conductedduring the year by S.M. Gupta & Co. Company Secretaries and a copy of the secretarialaudit report is annexed which forms a part of this report (Annexure 'F').
Conservation of Energy Research & Development Technology Absorption ForeignExchange Earnings and Outgo
The information relating to conservation of energy research & developmenttechnology absorption and foreign exchange earnings and outgo as required under Section134 of Act read with the Companies (Accounts) Rules 2014 is given in Annexure forming apart of this Report (Annexure 'G').
An extract of the Annual Return as required to be attached is annexed and form a partof this report (Annexure 'H'). The annual return of the Company as required under the Actwill be available on the website of the Company at www.cesc.co.in .
Particulars of Employees
The information required under Section 197(12) of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is attachedas Annexure - I. Details of employee remuneration as required under the provisions ofSection 197 of the Act and Rule 5(2) and 5(3) of the aforesaid Rules is provided in theAnnexure forming part of this Report. However the Report and Accounts are being sent tothe Members excluding the aforesaid Annexure. Any member interested in obtaining the samemay write to the Company Secretary at the Registered Office ofthe Company.
The Company has in place a Remuneration Policy for Directors Key Managerial Personneland other employees duly recommended by the Nomination & Remuneration Committee andapproved by the Board. Other details relating to remuneration paid during the year todirectors and Key Managerial Personnel are furnished in the Report on Corporate Governancewhich forms a part of this report.
Industrial relations in the Company during the year continued to be cordial. Adetailed section on the Company's Human Resource initiatives is a part of the ManagementDiscussion & Analysis forming a part of this Report.
The Board wishes to place on record its sincere appreciation for the continuedassistance and support extended to your Company by its consumers banks vendorsGovernment authorities and employees. Your Directors are also grateful for your continuedencouragement and support.
On behalf of the Board of Directors
Sanjiv Goenka Chairman
Kolkata 17 May 2019