To the Members
Your Directors are pleased to present the 43rd Annual Report with thestatement of the audited accounts for the financial year ended 31st March2018.
1. Financial Performance
The standalone and consolidated audited financial results for the year ended 31stMarch 2019 are as follows:
[Rupees in lacs]
|Particulars || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Sales and Other Income ||2061 ||2123 ||8810 ||7904 |
|Earnings before interest Depreciation and Tax (EBIDTA) ||(716) ||(1467) ||1526 ||362 |
|Depreciation ||447 ||475 ||1885 ||1682 |
|Interest ||638 ||204 ||675 ||240 |
|Profit / (Loss) before tax & Exceptional Items ||(1801) ||(2146) ||(1034) ||(1560) |
|Exceptional Items ||- ||- ||- ||- |
|Profit / (Loss) before Tax ||(1801) ||(2146) ||(1034) ||(1560) |
|Provision for Taxation ||- ||- ||2 ||- |
|Net Profit / (Loss) ||(1801) ||(2146) ||(1036) ||(1560) |
|Other Comprehensive Income Net of Income Tax ||11 ||2145 ||513 ||2145 |
|Total Comprehensive Income for the year ||(1790) ||(1.33) ||(523) ||585 |
2. Company's Performance:
Your Company has been facing losses for the last five years which is mainly due to itsoperating cycle getting affected. However the Company is mainly focusing on productsbusiness and taking necessary steps to improve the productivity and profitability inforthcoming years.
3. Share Capital
The paid up equity share capital of the Company as at 31st March 2019 stood atRs.615.88 lakhs comprising of 30794141 equity shares of Rs.2 each. The Company hasneither issued any shares with differential rights as to dividend voting or otherwise norissued any sweat equity shares during the year under review.
Your Directors do not recommend payment of dividend for the year under review on equityshares in view of the loss incurred.
5. Management Discussions and Analysis:
a. Industry Overview and Developments.
The year 2018-19 continued to be quite difficult like the preceding three to four yearsdue to low investment slow execution of project and poor cash flow. Owing to the economicslowdown in the past years' the ratio of bad loans or NPAs in Indian market has increasedexponentially forcing RBI to tighten the liquidity and funding norms of banks limitingtheir exposure to industry and infrastructure projects.
While the financial year 2018-19 witnessed a slowdown in growth in the power sectornow the Government is moving forward and taken several steps to reform and strengthen thepower sector as a whole including power generation transmission and distribution. Thesealso include not only achievements in capacity addition but also important reforms beingundertaken on increasing energy efficiency and increasing accountability and transparencyby launching application like PRAAPTI (Payment Ratification and Analysis in Powerprocurement for bringing Transparency in Invoicing of generators) Ash Track etc.
The focus is now shifted to new and renewable energy systems at the grid level fromConventional Power by Ministry of Power and Central Electricity Authority slack-up theconventional power generation market. The expansion of old power generation plants andtheir upgrades have encouraged new opportunities in the transmission sector.
b. Opportunities and threats Segment wise or Product wise performance
Government of India has now set a stage to achieve overall economic growth and has anambition of $5 trillion economy within the next ten years. Therefore the demand forelectricity is likely to grow steadily at a rate of 6.5% CAGR to 1630 Billion Units till2023. It opens extensive opportunities in the transmission and distribution sector.
Under Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) Government scheme 100 per centvillage electrification has been achieved. This will accelerate demand for T&DProducts and Systems in the coming years.
State Electricity Board DISCOMs are still facing financial problems which willindirectly affect the business environment.
c. Risks and Concerns
The economic environment pricing competition and foreign exchange fluctuationsnegatively impact the business growth and operating results.
d. Internal control systems and their adequacy.
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit (IA) functionis defined in the Internal Audit Charter. To maintain its objectivity and independencethe Internal Audit function reports to the Audit Committee.
The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company and its subsidiaries. Based on thereport of internal audit function process owners undertake corrective action in theirrespective areas and thereby strengthen the controls. Significant audit observations andcorrective actions thereon are presented to the Audit Committee of the Board.
The Company has in place adequate internal financial controls with reference tofinancial statements and other matters.
e. Discussion on financial performance with respect to operational performance.
On a standalone basis the Company achieved revenue from operations of Rs.2061 lacsand EBIDTA of (Rs.716) as against (Rs.2123 Lacs) and (Rs.1467 Lacs) respectively in theprevious year. Net loss before other Comprehensive Income for the year is (Rs.1801 lacs)as compared to net loss of (Rs.2146 Lacs) in the previous year.
Company is unable to meet out its target due to slow collection from the Governmentsector undertakings the working capital cycle got affected due to the lack of workingcapital the existing orders got backlog and delayed in executions.
On consolidated basis the Group achieved revenue from operations of Rs.8810 lakhs andEBIDTA of Rs.1526 lakhs as against Rs.7904 lakhs and Rs.362 lakhs respectively in theprevious year. Net loss before other comprehensive income for the year is (Rs.1036 lakhs)as compared to net loss of (Rs.1560 lacs) in the previous year.
f. Material developments in Human Resources / Industrial Relations front includingnumber of people employed.
There is no increase in number of people except replacement of any resignation/retirements. During the year no strikes or lock-outs and the industrial relations iscordial.
6. Human Resource Development
During the year employee relations at all the Units remained cordial. This has helpedyour Company to build robust and motivated workforce in spite of adversities. The Companyis continuously striving to improve employees skill sets through adequate training anddevelopment programs.
7. Material changes and commitments affecting the financial position of the Companywhich have occurred between 31st March 2019 and 26th October 2019 (date of the Report).
There were no material changes and commitments affecting the financial position of theCompany between the end of financial year (31st March 2019) and the date of the Report(26th October 2019).
8. Internal Control Systems and their Adequacy
The Company has an Internal Control Framework which is commensurate with the sizescale and complexity of its operations. This framework ensures adequate safeguards andprocesses to address the evolving business requirements. Key controls have been identifiedalong with risks and mitigation processes covering major areas. The details in respect ofinternal financial control and their adequacy are included in the Management Discussion& Analysis which forms part of this report.
9. Subsidiary Companies and Consolidated Financial Statements
The Company has 8 subsidiaries which includes 6 step-down subsidiaries as on 31stMarch 2019. There are no associate companies within the meaning of Section 2(6) of theCompanies Act 2013 ("Act"). There has been no material change in the nature ofthe business of the subsidiaries.
In accordance with the provisions of the Companies Act 2013 (the Act')Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(the Regulations') and applicable Accounting Standards the audited consolidatedfinancial statements of the Company for the financial year 2018-19 together with AuditorsReport thereon forms part of the Annual Report.
Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014 the statement containing salient features of the financialstatements of the Company's Subsidiaries (in Form AOC-1) is attached to the financialstatements as Annexure - D.
Pursuant to the provisions of section 136 of the Act the financial statements of theCompany consolidated financial statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of the Company.
10. Deposits from public
The Company did not invite or accept any fixed deposit pursuant to provisions ofSection 76 of the Companies Act 2013. During the year no amount either on interest orprincipal remained outstanding as on the date of the Balance Sheet.
11. Corporate Governance Report
As has been the ethos of the Company it strives to maintain high standards ofCorporate Governance practices.
Pursuant to regulation 34 (3) read with Schedule V of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 Reports onManagement Discussion and Analysis and Corporate Governance have been included elsewherein this Report as separate sections.
A Certificate from MD and CFO of the Company in terms of Listing Regulations interalia confirming the correctness of the financial statements and cash flow statementsadequacy of the internal control measures and reporting of matters to the Audit Committeeis also annexed.
A certificate from Statutory Auditors regarding compliance of conditions of CorporateGovernance as stipulated in regulation 34 (3) read with Schedule V of SEBI (LODR)Regulations 2015 is attached to the report on Corporate Governance.
The report on corporate governance for the year ended March31 2019 pursuant toRegulation 34 of the SEBI LODR Regulations is annexed hereto as Annexure - A.
12.Statutory Auditors and their Report.
M/s. K.S. Rao & Co. Chartered Accountants (Firm Registration Number 003109S)Chennai Statutory Auditors of the Company hold office till the conclusion of 47th AnnualGeneral Meeting of the Company. Pursuant to amendments to Section 139 of the Act therequirements to place the matter relating to such appointment for ratification by membersat every annual general meeting has been omitted with effect from May 7 2018.
The Auditors Report given by M/s. K S Rao & Co. Chartered Accountants on thefinancial statements of the Company for the year ended March 31 2019 forms part of theAnnual Report.
13. Secretarial Auditor
Pursuant to provisions of Section 204 of the Companies Act 2013 read with Rule 9 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andpursuant to the Regulation 24A of SEBI LODR Regulations 2015 your Company engaged theservices of Mr. S. Viswanathan Company Secretary in Practice Bangalore to conduct theSecretarial Audit of the Company for the financial year ended 31st March 2019. TheSecretarial Audit Report (in Form MR-3) is attached as Annexure - C to this Report.
14. Management reply to the Statutory Auditor's & Secretarial Auditor's Report
The explanations and comments by the Board on Qualifications made by Statutory Auditoris attached as Annexure - G to this Report.
15. Extract of Annual Return
The extract of the Annual Return pursuant to Section 134(3)(a) and Section 92(3) of theAct read with Companies (Management and Administration) Rules 2014 in the prescribed formMGT-9 as on 31st March 2019 is annexed herewith as Annexure - F to this Report. Thecomplete annual return is available on the Company's website under the web link: (URL:www.easunreyrolle.com/investors).
16. Directors and Key Managerial Personnel
(a) As on 1st April 2018 the Board of Directors of the Company comprises of 5Directors. During the year Dr William Stanly Jones (DIN No. 00196064) IndependentDirector stepped down from the Board and its Committees with effect from 29th August 2018due to advancing age. The Board wishes to place on record its appreciation for thevaluable contributions made by him to the Board and the Company.
Subsequent to the resignation of Dr William Stanley Jones the Board comprises of 4Directors of which One Non-Executive Promoter Director Chairman of the Board and OnePromoter Managing Director and two Independent Directors (including a Woman Director).The constitution of the Board of Directors of the Company is in accordance with Section149 of the Companies Act 2013 and Regulation 17 of SEBI (LODR) Regulations 2015 asamended from time to time.
(b) Mr Hariharan Eswaran Director retires by rotation and being eligible and hasoffered himself for re-appointment. A brief background of Mr Hariharan Eswaran Directoris given in the Corporate Governance Report.
(c) Members in their 41st Annual General Meeting held on 30th September 2016 approvedthe Appointment of Mr Raj Hari Eswaran as Managing Director from 1st April 2017 upto 31stMarch 2020 with remuneration. His term of appointment will expire by efflux of time on31st March 2020 and your directors recommended to re-appoint him as Managing Director fora further period of 3 (Three) years with effect from 1st April 2020 to 31st March 2023.The necessary special resolution seeking your approval for appointment of ManagingDirector is included in the notice of the ensuing annual general meeting along with briefdetails about him.
(d) Pursuant to provisions of Section 149 of the Act read with the Companies(Appointment and Qualification of Directors) Rules 2014 and the erstwhile Clause 49 ofthe Listing Agreement entered with the Stock Exchanges and as per SEBI LODR Regulations2015 Mr Rakesh Garg was appointed as Independent Directors on the Board of the Companyfor a period of 5 (five) years w.e.f. 29th September 2014 and Ms Sweta Mandora Prajapatiwas appointed as Independent Director on the Board of the Company for a period of 3 yearsw.e.f. 30th September 2016.
Mr Rakesh Garg and Ms Sweta Mandora Prajapati have submitted a declaration that each ofthem meet the criteria of independence as provided in Section 149(6) of the Act and theRegulations. There has been no change in the circumstances which may affect their statusappointed as Independent Directors during the year. Both had given their consent forre-appointment. Based on the evaluation of the performance of the independent directorsyour directors recommend their re-appointment for another term of 5 consecutive years.
The Company has received notice(s) in writing under Section 160 of the Act proposingthe appointment(s) of Mr Rakesh Garg and Ms Swetha Mandora Prajapati as IndependentDirectors. The necessary special resolution(s) seeking your approval for appointment ofthe above directors as Independent Directors are included in the notice of the ensuingannual general meeting along with brief details about them.
(e) During the year under review Mr P S Srinivasaraghavan has been appointed andCompany Secretary cum Compliance Office and KMP w.e.f. 28th August 2018.
17. Declaration by Independent Directors
All the Independent Directors of your Company have made declaration to the Company thatthey meet all the criteria of independence laid down under section 149(6) of CompaniesAct 2013 and regulation 16(1) (b) of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015.
18. Familarisation Programme for Independent Directors
Your Company during the year under review has taken steps to apprise the IndependentDirectors on macro-economic environment market scenario regulatory updates businessoperations operations financial statements update on statutory and legal compliancesfor Board members etc. The details of the familiarization programme are available on theCompany's website www.easunreyrolle.com
19. Policy on Directors' appointment and remuneration and other details
The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which forms part of the Directors' Report.
A statement containing the details of the Remuneration of Key Management Personnel's asrequired under Section 197(12) of the Companies Act 2013 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is given inthe Corporate Governance report which forms part of the Directors' Report.
20. Number of Meetings of the Board
During the year five (5) meetings of the Board of Directors of the Company wereconvened and held in accordance with the provisions of the Act. The date(s) of the BoardMeeting attendance by the directors are given in the Corporate Governance Report formingan integral part of this report.
21. Board evaluation
The Board of directors has carried out an annual evaluation of its own performanceBoard committees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by SEBI (Listing Obligations andDisclosure Requirements) LODR Regulations 2015 under Regulation No.17(10).
The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of the criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc.
The performance of the committees was evaluated by the Board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.
The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc.
In addition the Chairman was also evaluated on the key aspects of his role. In aseparate meeting of independent Directors performance of non-independent directorsperformance of the board as a whole and performance of the Chairman was evaluated takinginto account the views of executive and non-executive directors.
22. Directors' Responsibility Statement
As required under Section 134(5) of the Companies Act 2013 the Directors of theCompany hereby state and confirm that:
(i) in the preparation of Annual Accounts for the year applicable Accounting Standardshave been followed along with proper explanations relating to material departures;
(ii) the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at the end of thefinancial year and of the profit and loss of the Company for the year under review;
(iii) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; and
(iv) The Directors have prepared the Annual Accounts on a going concern basis.
(v) That proper internal financial control was followed by the Company and that suchinternal financial control are adequate and were operating effectively.
(vi) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
23. Committees of the Board
In compliance with the provisions of Sections 177 178 of the Act the Boardconstituted Audit Committee Nomination and Remuneration Committee and StakeholdersRelationship Committee (Committees). The details of composition of the Committees theirmeeting and attendance of the members are given in the Corporate Governance Report formingan integral part of this report.
24. Particulars of Loans Guarantees and Investments
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
25. Particulars of Employees
There are no employees whose remuneration exceeds the limits specified under Section197(12) of the Companies Act 2013 read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules.
26. Vigil Mechanism / Whistle Blower Policy
Pursuant to Section 177(9) of the Companies Act 2013 read with Rule 7 of the Companies(Meetings of Board and its Powers) Rules 2014 and Regulation 22 of SEBI LODR Regulations2015 the Board of Directors had approved the Policy on Vigil Mechanism / Whistle Blowerand the same was hosted on the website of the Company. This Policy inter-alia provides adirect access to the Chairman of Audit Committee. Your Company hereby affirms that noDirector/ employee has been denied access to the Chairman of Audit Committee and that nocomplaints were received during the year. The policies have been uploaded on the Company'swebsite under the web link: (URL: www.easunreyrolle.com/investors).
27. Related Party Transactions
In terms of Regulation 23 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 your Company has a RelatedParty Transactions Policy on dealing with Related Party Transactions. The policy may beaccessed under the Corporate Governance section of the website (URL:www.easunreyrolle.com/ investors). All related party transactions during the year underreview were on arm's length basis and in the ordinary course of business. There were nomaterially significant transactions with related party which could be considered materialin accordance with Related Party Transactions Policy of the Company.
The details of related party transactions are set out in the notes to the financialstatements as well as Form AOC-2 is attached as Annexure - E to this Report.
28. Risk Management Policy
In compliance with the requirement of the Companies Act 2013 the Company has put inplace Risk Minimization and Assessment Procedures. In order to effectively and efficientlymanage risk and address challenges the Company has formulated Risk Management Policy. TheBoard is responsible for reviewing the risk management plan and ensuring itseffectiveness. The audit committee has additional oversight in the area of financial risksand controls. Major risks identified by the businesses and functions are systematicallyaddressed through mitigating actions on a continuing basis. The development andimplementation of risk management policy has been covered in the management discussion andanalysis which forms part of this report.
29. Environment Health and Safety
The Company follows all the laws on Environment Health Safety (EHS) in all itsoperations. Occupational injury frequency rate remained almost NIL during the year underreview. No severe accident was recorded for your Company employees.
30. Corporate Social Responsibility
Your Company is not under the purview of Section 135 of the Companies Act 2013 asCompany having less Net worth or Turnover or Net profit as specified in the Section.
31. Policy on prevention of Sexual Harassment
The Company has in place a Policy for prevention of sexual harassment at workplace.This inter alia provides a mechanism for the resolution settlement or prosecution of actsor instances of Sexual Harassment at work and ensures that all employees are treated withrespect and dignity. During the year under review there were no complaints received bythe Company.
32. Disclosure requirements
As per Regulation 15(2) of SEBI (LODR) Regulations 2015 Corporate Governance Reportwith auditors' certificate thereon and management discussion and analysis are attachedwhich form part of this report.
Policy on dealing with related party transactions is available on the website of theCompany (URL: www.easunreyrolle.com/investors).
The Company has formulated and published a Whistle Blower Policy to provide VigilMechanism for employees including directors of the Company to report genuine concerns. Theprovisions of this policy are in line with the provisions of Section 177(9) of the Act andRegulation 22 of SEBI LODR Regulations 2015 with stock exchanges (URL::www.easunreyrolle.com/investors).
Due to some unforeseen reasons your Company could not hold the Annual General Meetingwithin the stipulated time. Therefore your Company has obtained approval from ROCMinister of Corporate Affairs Chennai for extension of time to conduct the Annual GeneralMeeting on or before 30th November 2019. Accordingly Company's Annual General Meeting isscheduled to be held on 29th November 2019.
33. Particulars of Research and Development Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings / Outgo:
Information required under Section 134 of the Companies Act 2013 read with Rule
8 (3) of the Companies (Accounts) Rules 2014 is attached as Annexure - B andforms part of this Report.
34. Cautionary Statement
Statements in this report particularly those which relate to Management Discussion& Analysis describing the Company's objectives projections estimates andexpectations may constitute forward looking statements' within the meaning ofapplicable laws and regulations. Actual results may differ materially from those eitherexpressed or implied.
35. Change in nature of Business of the Company
There is no change in nature of Business during the year compared to previous year.
36. Reporting of Frauds
There was no instance of fraud during the year under review which required theAuditors to report to the Audit Committee and / or Board under Section 143(12) of the Actand the rules made there under.
37. Significant and Material Orders passed by Regulators or Courts
There were no significant material orders passed by the Regulators or Courts whichwould impact the going concern status of the Company and its future operations.
38. Compliance of Secretarial Standards
The Company has complied with the Secretarial Standards with respect to Meetings of theBoard of the Directors (SS-1) and General Meetings (SS-2) issued by the Institute ofCompany Secretaries of India and approved by the Central Government.
39. Investor Education And Protection Fund (IEPF)
In terms of Section 124 (5) of the Act an amount of Rs.390947 being unclaimed finaldividend(s) pertaining to the financial year 2010-11 was transferred to IEPF on 25thOctober 2018.
40. Concluding Remarks
The Directors wish to sincerely express their appreciation to all employees of theCompany for their dedicated services during the year amidst tough times. The Directorstake this opportunity to express their gratitude to all Shareholders Bankers Vendors andother Stakeholders who have reposed trust and extended their constant support.
| ||For and on behalf of Board of Directors |
|Place: Chennai ||Hariharan Eswaran |
| ||Chairman |
|Date: 26th October 2019 ||(DIN No. 00196760) |