TO THE MEMBERS
Your Directors take pleasure in presenting the 22nd Annual Report on the business andoperations of your Company along with the standalone and consolidated financial statementsfor the year ended on March 31 2017.
Your Company's financial performance for the year under review is summarized below:
| || || |
(Amount in Rs.)
| ||Consolidated ||Standalone |
|PARTICULARS ||Year ended March 31 2017 ||Year ended March 31 2016 ||Year ended March 31 2017 ||Year ended March 31 2016 |
|Revenue from operations ||1154019917 ||1494506937 ||1032126168 ||1337495375 |
|Other Income ||6409789 ||7219039 ||4749896 ||4869560 |
|Total Revenue ||1160429706 ||1501725976 ||1036876064 ||1342364935 |
|Total expenses other than depreciation & finance cost ||1053050443 ||1340363562 ||988543908 ||1270087489 |
|Profit before depreciation finance cost and exceptional items ||107379263 ||161362414 ||48332156 ||72277446 |
|Depreciation ||109880416 ||110325677 ||30518930 ||32969733 |
|Profit before finance cost exceptional items and tax ||(2501152) ||51036737 ||17813226 ||39307713 |
|Finance cost ||186365433 ||197012722 ||24676041 ||16284585 |
|Profit before exceptional items and tax ||(188866585) ||(145975985) ||(6862813) ||23023128 |
|Exceptional items ||121182851 || ||53900000 || |
|Profit / (Loss) before tax for the year ||(67683734) ||(145975985) ||47037187 ||23023128 |
|Tax expenses ||867982 ||5104690 ||15538530 ||6879080 |
|Profit / (Loss) after tax for the year ||(68551716) ||(151080675) ||31498657 ||16144048 |
|Share of Profit/(loss) in associate ||(19606) || || || |
|Profit / (Loss) for the year ||(68571322) ||(151080675) || || |
|Earnings per equity share of Rs. 10 each (Basic & Diluted) ||(1.44) ||(4.35)# ||0.66 ||0.46# |
#On weighted average number of equity shares.
The paid-up Equity Share Capital as at March 31 2017 stood at Rs. 47.50 Crore. Duringthe financial year under review there has been no change in the capital structure of theCompany.
The Company did not transfer any amount to reserves during the year.
Your Directors recommend payment of dividend @ 5% on the paid-up share capital of theCompany i.e. Rs. 0.50/- per equity share of Rs. 10/- each.
STATE OF COMPANY'S AFFAIRS
The Company is primarily engaged in power generation infrastructure development suchas construction of bridges hydro projects including operation and maintenance thereofsupply of materials etc. Financial position of the Company is given in the previousparagraphs. A detailed information on the operation of different business segments of theCompany future expectations and business environment is provided in the ManagementDiscussion and Analysis Report.
MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OFFINANCIAL YEAR AND DATE OF REPORT
The Company's subsidiary namely Ayyappa Hydro Power Limited has successfully achievedC.O.D. (Commercial Operation Date) of its 15 MW Karikkayam Hydel Power Project on May 232017.
2nd stage forest clearances have been received for 6.5 MW Burthing Small Hydro ElectricProject and 5.5 MW Balighat Small Hydro Electric Project executed by the Company'ssubsidiaries namely Eastern Ramganga Valley Hydel Projects Co. Private Limited and SarjuValley Hydel Projects Co. Private Limited respectively.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
The Management Discussion & Analysis Report on the operations of the Company asrequired under the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (hereinafter referred to as the "LODR Regulations") is annexed herewithand marked as Annexure "A".
As required under the LODR Regulations the Report on Corporate Governance Declarationof Whole-Time Director on Code of Conduct CEO / CFO Certification and AuditorsCertificate on compliance of conditions of Corporate Governance are annexed herewith andmarked as Annexure "B" "C" "D" and "E"respectively.
SUBSIDIARIES AND ASSOCIATES
Pursuant to the agreements entered into by the Company with Essel Infraprojects Ltd.("EIL") as on March 31 2017 Smart Hydro Power Limited ("SHPL") asubsidiary of EIL holds
- 76% in the equity share capital of Arunachal Hydro Power Limited ("AHPL")and the Company continues to hold remaining 24%;
- 49% in the equity share capital of Eastern Ramganga Valley Hydel Projects Co. PrivateLimited ("EASTERN") and the Company continues to hold remaining 51%;
- 49% in the equity share capital of Sarju Valley Hydel Projects Co. Private Limited("SARJU") and the Company continues to hold remaining 51%.
Further the Company has pledged 27% equity shares of EASTERN and SARJU in favour ofSHPL.
Therefore as on March 31 2017 the Company has 5 subsidiaries and 1 associate. Therehas been no material change in the nature of business of the subsidiaries.
During the year under review AHPL ceased to be a subsidiary and became an associate.Accordingly the following 12 subsidiaries being subsidiaries of AHPL ceased to be thesubsidiaries of the Company :
1. EDCL Seppa Beyong Hydro Electric Private Limited
2. EDCL Seppa Kawa Power Private Limited
3. EDCL Tawang Lower Tsachu Hydro Electric Private Limited
4. EDCL Tawang Upper Tsachu Hydro Electric Private Limited
5. EDCL Seppa Nire Hydro Electric Private Limited
6. EDCL Seppa Jung Power Private Limited
7. EDCL Tawang Power Private Limited
8. EDCL Seppa Pachuk Power Private Limited
9. EDCL Seppa Dunkho Hydro Electric Private Limited
10. EDCL Seppa Lada Hydro Electric Private Limited
11. EDCL Seppa Riang Power Private Limited
12. EDCL Seppa Marjingla Hydro Electric Private Limited
The Company has also formulated a Policy for Determining Material' Subsidiariesin line with the requirement of LODR Regulations. The said Policy may be accessed at hp://www.edclgroup.com/wp-content/uploads/2017/08/Policy-for-Determining-Material-Subsidiary.pdf.
Pursuant to provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of the financial statements of the Company's subsidiaries andassociate in Form AOC-1 is annexed herewith and marked as
Brief details of the subsidiaries are given below :
i) Ayyappa Hydro Power Limited (Wholly-owned & material non-listed subsidiary)
The Company is operating the 15 MW Karikkayam Hydel Power Project in the Stateof Kerala.
ii) EDCL Power Projects Limited (Wholly-owned & material non-listed subsidiary)
The Company is operating the 7 MW Ullunkal Hydro Electric Project in the State ofKerela.
Entire generation from the units of above mentioned subsidiaries is being sold to theKerala State Electricity Board (KSEB) under Long term Power Purchase Agreements (PPA).
Mr. Vijoy Kumar (DIN: 02970626) an Independent Director of the Company is on the Boardof Directors of above mentioned subsidiaries.
iii) EDCL Arunachal Hydro Project Private Limited (Wholly-owned subsidiary)
The Company was a step-down subsidiary through Arunachal Hydro Power Limited. Duringthe year under review the Company became a direct subsidiary of Energy DevelopmentCompany Limited. It is yet to take up any project.
iv) Eastern Ramganga Valley Hydel Projects Co. Private Limited
The Company is executing 6.5 MW Burthing Small Hydro Electric Project and 5 MWPhuliabagar Small Hydro Electric Project in the State of Uttarakhand. DPR for both theprojects have been approved.
v) Sarju Valley Hydel Projects Co. Private Limited
The Company is executing 5.5 MW Balighat Small Hydro Electric Project in the State ofUttarakhand. DPR for the project has been approved.
CONSLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements (CFS) of the Company prepared in accordance withAccounting Standards as required under Section 133 of the Companies Act 2013 read withthe Rule 7 of the Companies (Accounts) Rules 2014 form part of Annual Report.
Pursuant to the provisions of Section 136 of the Companies Act 2013 the financialstatements of the Company consolidated financial statements along with relevant documentsand separate audited accounts in respect of subsidiaries are available on the website ofthe Company.
BOARD OF DIRECTORS AND BOARD MEETINGS
Board and Committees
The Board of Directors comprises of 7 Non-Executive Directors having experience invaried fields and a Whole-time Executive Director. Out of 7 Non-Executive Directors 4 areIndependent Directors. Detailed information on Directors is provided in the Report onCorporate Governance. The Board met 4 times during the financial year under review. Atpresent there are following 3 Committees:
i) Audit Committee
ii) Nomination and Remuneration Committee
iii) Stakeholders Relationship Committee
The provisions under Section 135 of the Companies Act 2013 read with the Rules madethereunder are not applicable as the Company is not meeting any criteria specifiedtherein. Therefore the Board in its meeting held on February 12 2017 dissolved theCorporate Social Responsibility ("CSR") Committee. The Company has not spent anyamount under CSR during the financial year 2016-17. Accordingly Annual Report on CSRactivities is not required to be a ached.
The Board has accepted all the recommendations of the Audit Committee. The details ofcomposition terms of reference meetings etc. of the Committees are given in the Reporton Corporate Governance.
None of the Independent Directors are due for re-appointment. Mr. Tarun Chaturvedi(DIN: 02309045) and Mr. Chanakya Arvind Dhanda (DIN: 02709047) resigned from the Board ofDirectors of the Company with effect from January 30 2017 and February 08 2017respectively.
Mr. Sanjiv Saraf (DIN: 00506650) Executive Director was appointed for a period of 3years till March 31 2017. Mr. Saraf has given his consent for re-appointment. Asrecommended by the Nomination and Remuneration Committee and approved by the AuditCommittee the Board has re-appointed Mr. Sanjiv Saraf for a further period of 3 yearsfrom April 01 2017 to March 31 2020 subject to approval of members at the ensuing AnnualGeneral Meeting.
Mrs. Pankaja Kumari Singh (DIN: 00199454) and Mr. Sanjay Kumar Gupta (DIN: 01538117)Directors retire by rotation and being eligible offer themselves for re-appointment.
The brief resume and other details relating to Mrs. Pankaja Kumari Singh Mr. SanjivSaraf and Mr. Sanjay Kumar Gupta are provided in the Notice of Annual General Meeting.
Your Board has also received Form DIR-8' pursuant to Section 164(2) of theCompanies Act 2013 read with the Companies (Appointment & Disqualification ofDirectors) Rules 2014 from the aforementioned Directors confirming that they have notincurred any disqualification under Section 164(2) of the Companies Act 2013. Your Boardrecommends their re-appointment.
Nomination and Remuneration Policy
The Nomination and Remuneration Committee works with the Board to determine theappropriate characteristics skills and experience for the Board as a whole and itsindividual members with the objective of having a Board with diverse backgrounds andexperience in business government education and public service. The Company follows theNomination and Remuneration Policy for Directors Key Managerial Personnel and SeniorManagement Personnel of the Company as approved by the Board of Directors. The Nominationand Remuneration Policy is annexed herewith and marked as Annexure "G".
Declaration by Independent Directors
The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed both under the Companies Act2013 and the LODR Regulations. The Board is also of the opinion that the IndependentDirectors fulfill all the conditions specified in the Companies Act 2013 and the LODRRegulations.
Familiarisation Programme for Independent Directors
The details of Familiarisation Programme for Independent Directors has been given inthe Corporate Governance Report.
LODR Regulations laying down the key functions of the Board mandates that the Boardshall monitor and review the Board Evaluation Process and also stipulates that theNomination and Remuneration Committee of the Company shall lay down the evaluationcriteria for performance evaluation of Independent Directors. Section 134 of the CompaniesAct 2013 provides that a formal evaluation needs to be made by the Board of its ownperformance and that of its Committees and individual Directors. Further Schedule IV tothe Companies Act 2013 states that performance evaluation of Independent Directors shallbe done by the entire Board of Directors excluding the Director being evaluated.
In accordance with the aforesaid provisions the Board has carried out the annualevaluation of its own performance the Directors individually as well as the evaluation ofthe working of its Committees. The Directors expressed their satisfaction with theevaluation process.
Some of the performance indicators based on which the evaluation takes place areattendance in the meetings and quality of preparation / participation ability to provideleadership work as team player. In addition few criteria for Independent Directorsinclude commitment to protecting / enhancing interests of all shareholders contributionin implementation of best governance practices. Performance criteria for Whole-timeDirector includes contribution to the growth of the Company new ideas / planning andcompliances with all policies of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 withregard to the Directors' Responsibility Statement your Board confirms that :
a) in the preparation of the annual accounts for the financial year ended on March 312017 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
b) 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 a airs of the Company as at March 31 2017 and of the profit /loss of the Company for that period;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively;
f) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and operating effectively.
KEY MANAGERIAL PERSONNEL
The following persons continue to be the Key Managerial Personnel :
Whole-time Director: Mr. Sanjiv Saraf- designated as "ExecutiveDirector".
Chief Financial Officer: Mr. Amit Damani.
Company Secretary: Ms. Vijayshree Binnani.
ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company has adequate internal financial control system commensurate with the sizescale and complexity of its operations. During the year such controls were tested and noreportable material weakness in the design or operation was observed.
The Company has formulated a Risk Management Policy (Risk Management Procedure) inconsultation with Senior Management to identify various kinds of risk in business and itsprocess to minimize the same. For details please refer to Management Discussion andAnalysis Report.
At present the Company has not identified any element of risk which may threaten theexistence of the Company.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
The Company has a Whistle Blower Mechanism and a Policy namely Whistle Blower Policythat lays down the process for raising concern about unethical behavior actual orsuspected fraud or violation of Company's Code of Conduct. The said Policy may be accessedat h p://www.edclgroup.com/wp-content/uploads/2017/08/Whistle-Blower-Policy. pdf.
Your Company hereby affirms that no Director / employee have been denied access to theChairman of the Audit Committee and that no complaints were received during the year.
LOAN GUARANTEES AND INVESTMENTS
Particulars of loans investments and guarantees have been disclosed in the financialstatements which forms an integral part of this Report.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
There were no material contacts or arrangements with related parties referred toSection 188 of the Companies Act 2013 read with the Rules made thereunder. AccordinglyAOC2 is not required to be a ached. All other related party transactions enteredinto during the financial year were on arm's length basis and were in the ordinary courseof business and were placed before the Audit Committee and Board for their approval asrequired. Prior omnibus approval of the Audit Committee was obtained for the transactionswhich are of repetitive nature. The details of transactions with related parties as perAccounting Standards - 18 are disclosed in the notes to accounts. The Company hasdeveloped a Related Party Transactions Policy for purpose of identification and monitoringof such transactions.
AUDITORS AND AUDITORS' REPORT
(i) Statutory Auditors
M/s. Lodha & Co. Chartered Accountants Statutory Auditors of the Company wereappointed in the 19th Annual General to hold Office till the conclusion of 22nd AnnualGeneral Meeting. As per the provisions of Companies Act 2013 read with the Rules madethereunder M/s. Lodha & Co. have completed their term and are not eligible forre-appointment due to mandatory rotation of Statutory Auditors.
Based on the recommendation of Audit Committee and the Board your Company seeksapproval for the appointment of M/s. ALPS & Co. Chartered Accountants (FirmRegistration No. 313132E) as the Statutory Auditors to hold Office from the conclusion of22nd Annual General Meeting upto the conclusion of 27th Annual General Meeting. In thisregard the Company has received a certificate from M/s. ALPS & Co. to the effect thattheir appointment if made would be in accordance with the provisions of Section 141 ofthe Companies Act 2013.
The Auditors' Report to the members on the financial statements of the Company for thefinancial year ended on March 31 2017 does not contain any qualification reservationadverse remark or disclaimer.
(ii) Cost Auditors
The Board of Directors has re-appointed M/s. N. Radhakrishnan & Co. CostAccountants of 11A Dover Lane Flat B1/34 Kolkata 700 029 as the Cost Auditorsof the Company to conduct Cost Audit for the financial year 2017 - 18. In terms of Section148 of the Companies Act 2013 your Board recommends ratification of remuneration of theCost Auditors at the ensuing Annual General Meeting. The Cost Audit Report for thefinancial year 2015-16 has been filed with the Ministry of Corporate A airs within duetime.
(iii) Secretarial Auditor
The Board of Directors has appointed M/s. P. Sarawagi & Associates CompanySecretaries of 27 Brabourne Road Kolkata 700 001 to conduct the secretarialaudit of the Company for the financial year 2016-17.
The Secretarial Audit Report for the financial year ended on March 31 2017 is annexedherewith and marked as Annexure "H" and forms an integral part of thisAnnual Report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark or disclaimer.
ANTI-SEXUAL HARASSMENT POLICY
The Company has adopted Anti-Sexual Harassment Policy covering all the aspects ascontained under the The Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013'.
Up till date the Company has not received any complaint under the Policy.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed herewith and marked as Annexure"I".
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Particulars in respect of conservation of energy and technology absorption foreignexchange earnings and outgo are annexed herewith and marked as Annexure "J".
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) read with Rules made thereunder the extract of the AnnualReturn in Form MGT 9 is annexed herewith and marked as Annexure "K".
The Directors state that no disclosure or reporting is required in respect of thefollowing items during the year under review as :
1. No Deposits covered under Chapter V of the Companies Act 2013 were accepted;
2. No equity shares with differential rights as to dividend voting or otherwise; orshares (including sweat equity shares) to employees of the Company under any scheme wereissued;
3. No remuneration or commission to the Whole-time Director of the Company were paidfrom any of its subsidiaries;
4. No significant and material orders were passed by any regulatory authority or courtor tribunal impacting the going concern status and Company's operation in future;
5. No fraud has been reported by the Statutory Auditors Cost Auditors and SecretarialAuditors to the Audit Committee or the Board.
Your Directors express their sincere appreciation to the Central and State GovernmentsBanks customers vendors and the Company's valued investors for their continuedco-operation and support.
Your Directors also wish to acknowledge the support and valuable contributions made bythe employees at all levels.
| ||For and on behalf of the Board |
| ||For Energy Development Company Limited |
| ||Sd/- |
| ||Amar Singh |
|Place : New Delhi ||(Chairman) |
|Dated : August 11 2017 ||(DIN: 00165567) |