To the Members
The Directors of your Company present the 39th Annual Report with the statement of theaudited accounts for the financial year ended 31st March 2014.
1. Financial Performance
The standalone and consolidated audited financial results for the year ended 31stMarch 2014 are as follows: [Rupees in lacs]
|Particulars ||Standalone ||Consolidated |
| ||2013-14 ||2012-13 ||2013-14 ||2012-13 |
|Sales and Other Income ||18434 ||24467 ||26557 ||31397 |
|Earnings before interest Depreciation ||710 ||3076 ||2988 ||4476 |
|Tax Amortization and Exceptional Items (EBIDTAE) || || || || |
|Depreciation ||802 ||717 ||2623 ||2302 |
|Interest ||2749 ||2159 ||3023 ||2342 |
|Profit / (Loss) before tax & Exceptional Items ||(2841) ||200 ||(2658) ||(168) |
|Exceptional Items ||(369) ||- ||(369) ||- |
|Profit / (Loss) before Tax ||(3210) ||200 ||(3026) ||(168) |
|Provision for Taxation ||- ||187 ||84 ||189 |
|Net Profit / (Loss) ||(3210) ||12 ||(3110) ||(357) |
The Companys cash generation is inadequate to support a reasonable dividend atthis juncture therefore the Directors with regret have to recommend that we do not payany dividend for the financial year 2013-14.
3. Operations Review:
The performance of your Company on a standalone basis and of the various operatingsubsidiaries is as follows:
| ||Easun Reyrolle Limited India ||ERLPhase Power Technologies Ltd. Canada ||ERL Marketing Int. FZE Sharjah ||Switchcraft Europe GmbH Germany ||Electrical Distribution Solutions Pty Limited |
|Particulars ||(Rs. In lacs) ||(000 USD) ||(000 USD) ||(000 Euro) ||(000 USD) |
| ||13-14 ||12-13 ||13-14 ||12-13 ||13-14 ||12-13 ||13-14 ||12-13 ||13-14 ||12-13 |
|Sales ||18218 ||22045 ||8252 ||7508 ||1725 ||1115 ||651 ||349 ||313 ||- |
|EBIDTA ||341 ||3076 ||2034 ||1323 ||6 ||(340) ||955 ||759 ||(87) ||- |
|PBT ||(3210) ||200 ||(281) ||(736) ||(30) ||(372) ||257 ||53 ||(95) ||- |
|PAT ||(3210) ||12 ||(281) ||(736) ||(30) ||(372) ||257 ||51 ||(95) ||- |
Note: Effective from 1st April 2012 considering the reduced business opportunity theCompany suspended operations of Switchcraft Limited Hong Kong.
4. Management Discussions and Analysis:
The operating and financial review is intended to convey the managementsperspective on the financial condition and on the operating performance of the Company asat the end of the Financial Year 2013-14.
This Financial year was yet another challenging year for the Indian economy. TheCompanys growth was affected by many factors like volatility in commodity pricesexchange cost higher interest cost etc. The uncertain macro-economic environment alsoaffected the company especially in the power sector. Even though the order growth wasreasonable revenues declined and the profitability was also impacted due to high projectcost and delay in payments.
Due to the poor financial position of most of the electrical utilities in India thereis an impact in the performance of the electrical industries which has resulted in higherreceivables cost over runs and higher finance cost.
Considering the performance of subsidiary companies all the four subsidiaries haveshown positive and satisfactory turnover. It is important to note that most of thesubsidiaries PBT is showing an improved figure in comparison with the previous years.
In July 2013 your company has invested 82% equity and ownership in ElectricalDistribution Solutions Pty Limited (EDS) Australia. EDS is a Private Limited Companyregistered under the Australian Corporations Act 2001. The Company is a distributor ofelectrical equipment for Australian utilities and is operating in Brisbane QueenslandAustralia for over 5 years. EDS has developed a wide range of products and having wellestablished manufacturing facility at Brisbane. This strategic acquisition would help ERLIndia and its other overseas subsidiaries to establish and hold presence in prosperingAustralian power transmission and distribution market.
During the year your company started supplying of Ring Main Units from GlobalManufacturing facility Plant to the Australian Utility M/s Energex Limited. The Companyis taking all efforts to complete the execution of US$ 84 Million order in 7 years. TheCompany has also made inroads in a number of export markets in conjunction with ERLSwitchcraft Europe GmbH its German Subsidiary.
On May 2014 your company has successfully completed the fund raising exercise (fullysubscribed) and raised paid up capital by way of allotting 9987127 Equity Shares of Rs.2each at a price of Rs.59 aggregating to Rs.5892 Lacs to existing Shareholders on RightsBasis in the Ratio of 12:25. The Company has realised Rs.2912 Lacs from Public &Financial Institutions and Rs. 2980 Lacs by way of adjusting the Promoters loan.
To improve margins in coming years your company is taking all efforts to increase itsefficiency by way of cost reduction selection of orders with good margins and ExportsOrders etc.
5. Subsidiary Companies and Consolidated Financial Statements:
There has been no material change in the nature of the business of the subsidiaries.
In accordance with the Statement of Accounting Standard on Consolidated FinancialStatements (AS21) issued by the Institute of Chartered Accountants of India FinancialStatements of Companys subsidiaries have been considered in the accompanyingConsolidated Financial Statements of the Company. As per guidance given in the circularissued by Ministry of Corporate Affairs the Board of Directors has consented for sendingannual financial accounts of the Company without attaching the Balance Sheets of thesubsidiary companies. Shareholders who wish to have a copy of the full report and accountsof the subsidiary companies will be provided on receipt of a written request from them.The above documents will also be available for inspection by any shareholder at theregistered office of the Company as well as registered office of the subsidiary companyon any working day during the business hours.
6. Human Resource Development
The Companys industrial relations remained peaceful at all factories andestablishments during the financial year. The Company is continuously improving employeesskill sets through training and personality development programs.
Employee strength as on 31st March 2014 was 367 as compared to 385 in theprevious year.
7. Fixed Deposit
The Company did not invite or accept any fixed deposit pursuant to provisions ofSection 58A of the Companies Act 1956. During the year no amount either on interest orprincipal remained outstanding as on the date of the Balance Sheet.
8. Corporate Governance Report
Your Company has been practicing the principle of good Corporate Governance over theyears and ensures to comply with the provisions of Clause 49 of the Listing Agreementswith Stock Exchanges. A detailed report on the Corporate Governance Code and practices ofthe Company along with a certificate from the Auditors of the Company regarding complianceof the conditions of Corporate Governance as stipulated under the Listing Agreements aregiven in a separate section in this Annual Report (Annexure A).
Mr Hari Eswaran Director retire by rotation and being eligible for re-appointmenthave offered himself for re-appointment.
In terms of Sections 149 150 152 and other applicable and related provisions of theCompanies Act 2013 read with Rules made thereunder retirement by rotation shall notapply to Independent Directors. In order to comply with the statutory requirements yourcompany being recommended for appointment of Dr William Stanley Jones Mr Rakesh Garg andMr M Raman as Independent Directors for a term upto five consecutive years effective from29th September 2014 to September 2019 on a non-rotational basis.
Details of the proposals of appointment or re-appointment as applicable are mentionedin the Explanatory Statement under Section 102 of the Companies Act 2013 in the Notice tothe 39th Annual General Meeting. Necessary resolutions are being placed beforethe shareholders for approval.
10. Directors Responsibility Statement
As required under Section 217(2AA) of the Companies Act 1956 the Directors of theCompany hereby state and confirm:
(i) that in the preparation of Annual Accounts for the year applicable AccountingStandards have been followed along with proper explanations relating to materialdepartures;
(ii) that 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 of the Company for the year under review;
(iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; and
(iv) that the Directors have prepared the Annual Accounts on a going concern basis.
M/s Brahmayya & Co. Chartered Accountants and M/s R Subramanian & Co.Chartered Accountants Joint Statutory Auditors of the Company retire at the forth comingAnnual General Meeting and are eligible for re-appointment. The Audit Committee and theBoard of Directors recommended their re-appointment for the year 2014-15. The necessaryresolution is being placed before the shareholders for approval.
12. Cost Auditor
The Company has appointed Mr Rajesh Sai Iyer Chennai as Cost Auditor for conductingAudit of Companys cost records for the financial year 2013-14. The due date forfiling the Cost Audit Report for the financial year ended 31st March 2014 is 30thSeptember 2014.
13. Particulars of Employees
Information required to be furnished under Section 217 (2A) of the Companies Act 1956read with the Companies (Particulars of Employees) Rules 1975 are annexed to this Reportand they form part of this Report. However as provided in Section 219 (1) (b) (iv) of theCompanies Act 1956 the Annual Report and Accounts are being sent to the Members of theCompany excluding statement containing particulars of employees under Section 217(2A) ofthe Act. Any Member interested in obtaining such particulars may write to the Company atthe Registered Office.
14. Particulars of Research and Development Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings/Outgo:
Information required under Section 217(1)(e) of the Companies Act 1956 read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 isattached as Annexure - B and forms part of this Report.
15. Concluding Remarks
The Directors convey their appreciation to all employees of the Company for theirsincere and dedicated services during the year. The Directors take this opportunity toexpress their gratitude to all Shareholders Bankers Vendors and other Stakeholders whohave reposed trust and extended their constant support.
| ||For and on behalf of Board of Directors |
|Place: Chennai ||Hari Eswaran |
|Date: 13th August 2014 ||Chairman |