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Swelect Energy Systems Ltd.

BSE: 532051 Sector: Engineering
NSE: SWELECTES ISIN Code: INE409B01013
BSE 00:00 | 27 Feb 119.00 3.55
(3.07%)
OPEN

120.00

HIGH

125.95

LOW

110.50

NSE 00:00 | 27 Feb 119.40 4.15
(3.60%)
OPEN

119.90

HIGH

129.10

LOW

117.30

OPEN 120.00
PREVIOUS CLOSE 115.45
VOLUME 619
52-Week high 199.67
52-Week low 94.00
P/E 19.35
Mkt Cap.(Rs cr) 180
Buy Price 117.00
Buy Qty 1.00
Sell Price 123.00
Sell Qty 1.00
OPEN 120.00
CLOSE 115.45
VOLUME 619
52-Week high 199.67
52-Week low 94.00
P/E 19.35
Mkt Cap.(Rs cr) 180
Buy Price 117.00
Buy Qty 1.00
Sell Price 123.00
Sell Qty 1.00

Swelect Energy Systems Ltd. (SWELECTES) - Director Report

Company director report

Our Valued Shareholders

Your Directors have pleasure in presenting the Twenty Fourth Annual Report on thebusiness and operations of the Company together with the Audited Statement of Accounts forthe year ended 31st March 2019.

FINANCIAL HIGHLIGHTS (Rs. in Lakhs)
Standalone Consolidated
S.No. Particulars For the year ended For the year ended For the year ended For the year ended
31/03/2019 31/03/2018 31/03/2019 31/03/2018
1 Revenue from operations 11984.43 17382.92 22766.88 29617.25
2 Other income 3494.58 3807.93 2623.56 2734.48
3 Total Income from Operations 15479.01 21190.85 25390.44 32351.73
4 Total Expenditure (Excluding Finance cost Depreciation and Amortisation) 11808.89 16180.38 20243.04 26256.39
5 Profit Before Finance cost Depreciation and Amortisation and Tax 3670.12 5010.47 5147.40 6095.34
6 Finance Costs 744.63 580.58 1532.89 1027.12
7 Depreciation and Amortisation expense 1415.41 1343.04 2599.25 2327.54
8 Profit Before Exceptional Item and Tax 1510.08 3086.85 1015.26 2740.68
9 Add: Exceptional items 30.00 - 30.00 -
10 Profit Before Tax 1540.08 3086.85 1045.26 2740.68
11 Income Tax Expense 434.73 739.92 362.40 1151.72
12 Net Profit after Tax 1105.35 2346.93 682.86 1588.96
13 Other Comprehensive income for the year net of tax 12.37 (41.08) 3.89 (41.08)
14 Total comprehensive income for the year net of tax 1117.72 2305.85 686.75 1547.88
15 Dividend paid on Equity Shares 404.23 404.23 404.23 404.23
16 Dividend Distribution Tax 83.09 82.29 83.09 82.29
17 Equity Share Capital 1010.58 1010.58 1010.58 1010.58
18 Other equity (Reserves & Surplus) 66940.32 66309.92 71593.34 70470.01
19 EPS (Rs.) 10.94 23.22 6.76 15.72

STATE OF THE COMPANY'S AFFAIRS MAJOR LINE OF BUSINESS

I – Manufacturing: Solar PV Modules Solar Inverters and Mounting structures II– Solar Power Systems Integration & Turnkey EPC contracts III – Solar PowerGeneration (IPP and under RESCO) IV – Solar Energy Storage Solutions (new vertical) V– Iron and Steel Foundry Products for Domestic and Export Markets

SWELECT a national leader in Solar Photovoltaic industry has consistently been able todemonstrate its business agility to quickly adapt to the ever evolving Indian and Globalclean tech space. With a commanding brand recall offering the highest plant uptimeSWELECT has earned the respect and trust of its valuable customers. With well demonstratedtechnical superiority and international quality standards your Company is fully geared toface the ever changing Clean Energy market landscape with a unique status of one of thevery few companies in the SPV Industry in India to offer the complete range of Productsand Services. Export of Iron & Steel castings: Your group's Wholly Owned Subsidiary(WOS) Company AMEX Alloys has earned a foreign exchange of over Rs.504.54 Lakhs in Eurosand US Dollars.

GENERAL REvIEW OF THE BUSINESS OF THE COMPANY

During the year your Company registered a turnover (Standalone) of Rs.11984.43 Lakhsagainst the previous year turnover of Rs.17382.92 Lakhs and Profit After Tax (PAT) for thecurrent year is Rs.1105.35 Lakhs against the previous year profit of Rs. 2346.93 Lakhs.

DIvIDEND

The Board of Directors have recommended a Dividend of Rs.2.50 per equity share [@ 25%on the equity share capital of

Rs.101058400/- (Rupees Ten Crore Ten Lakh Fifty Eight Thousand Four Hundred Only)]for the year ended 31st March 2019 subject to the approval of the shareholders at theensuing Annual General Meeting of the Company. The outflow for the Company would beRs.252.65 Lakhs towards dividend and Rs.51.93 Lakhs towards dividend distribution tax.

SHARE CAPITAL

During the year under review there was no change in the Company's issued subscribedand paid-up equity share capital. On March 31 2019 it stood at Rs.101058400/- dividedinto 10105840 equity shares of Rs.10/- each.

TRANSFER TO GENERAL RESERvE

During the year your Company does not propose to transfer amounts to the generalreserve out of the amount available for appropriation.

SUBSIDIARIES JOINT vENTURES OR ASSOCIATE COMPANIES

The Company has 6 Wholly Owned Subsidiaries and 3 step down subsidiary as on the dateof the report. The Board of Directors at their meeting held on 28th May 2019 approved theconsolidated accounts of subsidiaries. Pursuant to the provisions of Section 129(3) of theAct read with Rule 5 of the Companies (Accounts) Rules 2014 a statement containingsalient features of the financial statements of the Company's subsidiaries in Form AOC-1is attached to the financial statements of the Company.

The Company does not have Associates or Joint Ventures as on the date of the report.

During the year our step down subsidiary company namely SWELECT Energy Systems (AsiaPacific) PTE. Limited Singapore made application with the appropriate authorities forclosure of the company and accordingly the company was struck off in the month of February2019.

DEPOSITS

The Company did not receive deposits from the public during the year and no amount ofprincipal or interest was outstanding as of the Balance Sheet date.

CHANGE IN DIRECTORS OR KEY MANAGERIAL PERSONNEL

At the Annual General Meeting held on 29th July 2015 the shareholders of theCompany had appointed Mr. R. Chellappan (DIN: 00016958) as Managing Director ofthe Company for a period of 5 years with effect from 1.5.2015. The term of office of Mr.R. Chellappan will expire on April 30 2020. The Board at its meeting held on 28.05.2019re-appointed

Mr. R. Chellappan as the Managing Director of the Company for a period of 5 years from1st May 2020 to 30th April 2025 subject to approval of the Shareholders at the ensuingAnnual General Meeting.

At the Annual General Meeting held on 28.7.2014 the shareholders of the Companyhad appointed Mr. v. C. Raghunath (DIN: 00703922) as Whole Time Director of theCompany for a period of 5 years with effect from 28th July 2014. The term of officeof Mr.V.C. Raghunath will expire on July 27 2019. The Board at its meeting held on 28.05.2019re-appointed

Mr. V.C. Raghunath as a Whole Time Director of the Company for a period of 5 years from28th July 2019 to 27th July 2024 subject to approval of the Shareholders at the ensuingAnnual General Meeting.

Mrs. v. C. Mirunalini (DIN: 07860175) and Mr. K. v. Nachiappan (DIN:00017182) Whole Time Directors are liable to retire by rotation at the ensuing AnnualGeneral Meeting and being eligible offers themselves for re-appointment.

Dr. S. Iniyan (DIN: 08355447) was appointed as an Additional Director of theCompany with effect from 1.4.2019 and he was also appointed as an Independent Director ofthe Company for a term of five years from 1st April 2019 to 31st March 2024 subject toapproval of the shareholders at the ensuing Annual General Meeting of the Company. Dr. S.Iniyan has fulfilled the conditions as specified in Section 149(6) of the Companies Act2013.

The Profiles of Mr. R. Chellappan Mr. V. C. Raghunath Mrs. V. C. Mirunalini Mr. K.V. Nachiappan and Dr. S. Iniyan are given separately in the notice of AGM.

The Board recommends necessary resolutions for the approval of Shareholders at theensuing Annual General Meeting for the above appointments.

The Board of Directors at its Meeting held on 23.07.2018 appointed Mr. S. Krishnan(DIN: 07163629) as an Independent Director of the Company by filling casual vacancy inplace of Mr. V. M. Sivasubramaniam (DIN: 00017249) who had resigned before his term ofoffice. The term of office of Mr. S. Krishnan was ended on 31.3.2019 and he wasre-appointed as an Independent Director for a period of five years with effect from 1stApril 2019 to 31st March 2024 by the Shareholders through postal ballot on 27.03.2019.

At the Annual General Meeting held on 28.7.2014 the shareholders of the company hadappointed Mr. N. Natarajan (DIN: 00017368) as an Independent Director of theCompany for a period of five years with effect from 1.4.2014. The term of office of Mr. N.Natarajan was ended on 31.3.2019 and the Board expressed its appreciation for hisexcellent contribution to the Company during his tenure.

NUMBER OF BOARD MEETINGS

During the Financial Year 2018-19 eight meetings of the Board of Directors of theCompany were held. The details are provided in the Corporate Governance Report that formspart of this Annual Report.

DISCLOSURE ON COMPOSITION OF AUDIT COMMITTEE AND ITS RECOMMENDATION

The details of Composition of Audit Committee along with its terms of reference aregiven in the Corporate Governance Report. All recommendations of the Audit Committee wereaccepted by the Board.

DETAILS OF ESTABLISHMENT OF vIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

The Company has adopted the Vigil mechanism and the details are given in the CorporateGovernance Report.

DISCLOSURE UNDER THE SExUAL HARASSMENT OF WOMEN AT WORKPLACE (PREvENTION PROHIBITIONAND REDRESSAL) ACT 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementof the Sexual Harassment of Women at Workplace (Prevention Prohibition & Redressal)Act 2013 and complied with provisions relating to the constitution of an InternalComplaints Committee (ICC) as required under the act to redress the complaints receivedregarding sexual harassment. All employees (Permanent contractual temporary trainees)are covered under this policy. The members of the Committee are:

CORPORATE OFFICE:

1. Mrs. C. Shenbagapushpam 2. Mrs. Rebecca Teresa Briggs 3. Mr. M. Madhava and 4. Mr.R. Kalidasan

PLANT(S ALEM):

1. Ms. Malathi 2. Ms. A. Kokilavani 3. Mr. S. Namasivayam and 4. Mr. T.Ramachandramurthy

SOLAR PHOTOvOLTAIC PLANT (BANGALORE)

1. Ms. Deepa ML 2. Ms. Lavanya 3. Ms. Manjula T 4. Ms. Harshitha K.S. and 5. Ms. S.Preema

The following is a summary of sexual harassment complaints received and disposed offduring the year 2018-2019

No. of complaints filed during the financial year Nil
No. of complaints disposed off during the year Nil
No. of complaints pending as on end of the financial year Nil

CODE OF CONDUCT AND PREvENTION OF INSIDER TRADING

The Company has adopted the Code of Conduct as per the Guidelines issued by theSecurities and Exchange Board of India for Prevention of Insider Trading with a view toregulate trading in securities by the Directors and designated employees of the Company.The Code prohibits trading in securities of the Company by the Directors and thedesignated employees while in possession of unpublished price sensitive information inrelation to the Company and during the period when the Trading Window is closed.

All Directors Key Management Personnel and Senior Management Personnel of the Companyhave confirmed compliance with the code of conduct applicable to them and a declaration tothis effect made by the Managing Director is attached to this report. Code of conduct ofBoard of Directors and Senior Management Personnel are available in Company's website www.swelectes.comunder investors page.

STATUTORY AUDITORS

Pursuant to provisions of Section 139(1) of the Companies Act 2013 M/s. DeloitteHaskins & Sells LLP Chartered Accountants

Chennai (Firm Registration No.117366W/W - 100018) were appointed as the StatutoryAuditors of the Company by the

Shareholders at the 22nd Annual General Meeting (AGM) held on 11.8.2017 for a term offive consecutive years from the conclusion of the 22nd AGM up to 27th AGM of the Company.

STATUTORY AUDITORS REPORT

There were no qualifications or observations or remarks made by the Statutory Auditorsin their report for the financial year

2018-2019.

SECRETARIAL AUDIT REPORT

A Secretarial Audit was conducted during the year by the Secretarial Auditor Mr. R.Kannan Practicing Company Secretary in accordance with the provisions of Section 204 ofthe Companies Act 2013. The Secretarial Auditor's Report is also attached as part of thisReport. There were no qualifications or remarks made by the Secretarial Auditor in hisReport and the same is given in Annexure - 1.

COST AUDIT

Pursuant to the Companies (Cost Records and Audit) Rules 2014 the Company filed theCost Audit Report with the Ministry of Corporate Affairs for the financial year 2017-18in XBRL format. For the financial year 2018-19 the Board appointed M/s. RavichandranBhagyalakshmi & Associates as Cost Auditors and they will submit their report withinthe time limit applicable under the Companies (Cost Records and Audit) Rules 2014. TheBoard on the recommendation of the Audit Committee has appointed M/s. RavichandranBhagyalakshmi & Associates

Cost Accountants as the Cost Auditors of the Company for the financial year 2019 -2020. The Board also considered and approved the remuneration of Rs.132000/- asrecommended by the Audit Committee. In terms of the provisions of Section 148(3) of theCompanies Act 2013 read with Rule 14(a)(ii) of the Companies (Audit and Auditors) Rules2014 the remuneration of the Cost Auditor has to be ratified by the members. Accordinglythe Board recommends necessary resolution at the ensuing AGM for ratification.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis for the year as required under SEBI (ListingObligations and Disclosure Requirements)

Regulations 2015 is presented in a separate Section forming part of the AnnualReport.

CONSERvATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN ExCHANGE EARNINGS AND OUTGO

The Conservation of energy technology absorption and foreign exchange earnings andoutgo forms part of the Board's report and is given in Annexure - 2.

ExTRACT OF THE ANNUAL RETURN

The extract of Annual Return in format MGT–9 for the Financial Year 2018-19 isgiven in Annexure – 3 and also available on the Company's website www.swelectes.comunder investors page.

PARTICULARS OF LOANS GUARANTEES OR INvESTMENTS UNDER SECTION 186

The details of Loans Guarantees and Investments covered under the provisions ofSection 186 of the Companies Act 2013 are given in the notes to the Financial Statements.

STATEMENT INDICATING DEvELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY

The details of development and implementation of risk management system are provided inCorporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY

The Company undertakes "Corporate Social Responsibility" (CSR) initiativesdirectly / through agency to the public in improving the quality of life. During the year2018-19 the Company has undertaken many initiatives through a policy framework forexpanding some of the present initiatives and undertaking newer CSR initiatives in theyear to come.

The Annual Report on CSR Activities in the prescribed format is given in the Annexure -4.

Details of composition of the CSR Committee number of meetings held during the yearunder review and other particulars are set out in the Corporate Governance Report whichforms a part of this Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts/arrangements/transactions entered by the Company during the financialyear with Related Parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company has not entered into any contracts/arrangements/transactions with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactions.Accordingly the disclosure required u/s 134(3)(h) of the Act in form AOC-2 is notapplicable to the Company.

The Policy on materiality of Related Party Transactions and dealing with related partytransaction as approved by the Board may be accessed on the Company's websitewww.swelectes.com. Members may refer to the notes to the financial statements which setsout related party disclosures.

SIGNIFICANT AND MATERIAL ORDERS

During the year there were no significant and material orders passed by the Regulatorsor Courts or Tribunals impacting the going concern status and company's operations infuture.

I NTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEqUACY

The details in respect of internal financial control and their adequacy are included inthe Management Discussion and Analysis which is a part of this report.

ANNUAL BOARD EvALUATION AND FAMILIARIzING PROGRAMME

The Board carried out an annual evaluation of its own performance the directors andcommittees of the Board based on the guideline formulated by the Nomination &Remuneration Committee. Board composition quality and timely flowof informationfrequency of meetings and level of participation in discussions were some of theparameters considered during the evaluation process.

Further during the year the Independent Directors of the Company met on February 92019 to review the performance of non-independent directors Chairman of the Board and theboard of directors as a whole.

The Independent Directors of the Company are being familiarized by the management atfrequent intervals with regard to nature of the business business model their rolesrights and responsibilities and other relevant information to the company. The details ofthe programs attended by the Independent Directors are available on the website of theCompany.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There were no material changes and commitments affecting the financial position of theCompany between the end of the financial year 31st March 2019 and the date of the report28th May 2019.

DISCLOSURE OF ACCOUNTING TREATMENT

The Company has followed the Accounting Standards specified under Rule 3 and 4 of theCompanies (Indian Accounting Standards) Rules 2015 (as amended) to the extent applicablein the preparation of the financial statements.

CORPORATE GOvERNANCE CERTIFICATE

A report on Corporate Governance as stipulated under SEBI (Listing Obligations andDisclosure Requirements) Regulations

2015 is attached to this Report.

A Compliance Certificate from Mr. R. Kannan Practicing Company Secretary regardingcompliance of

Governance as stipulated under the aforesaid regulation is also annexed to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of section 134(5) of the Companies Act 2013 yourdirectors confirm that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed;

(b) the Directors had 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 year; (c) the Directors had taken proper andsufficientcare for the maintenance of adequate accounting records in accordance with theprovisions of this Act for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities; (d) the Directors had prepared the annualaccounts on a going concern basis;

(e) the Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and (f) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

DETAILSIN RESPECT OF FRAUDS REPORTED BY AUDITORSUNDER SUB -SECTION (12) OFSECTION 143OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOvERNMENT

The Statutory Auditors have stated that no fraud by the Company or no material fraudon the Company by its officers and employees had been noticed or reported during the year.

DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to Section 149(7) of the Companies Act 2013 the Independent Directors of theCompany have given a declaration to the Company that they qualify the criteria ofindependence as required under Section 149(6) of the Companies Act 2013 and

SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

POLICYONNOMINATIONANDREMUNERATIONANDPERFORMANCEEvALUATIONOFDIRECTORSKEYMANAGERIALPERSONNEL AND SENIOR MANAGEMENT PERSONNEL

The Board based on the recommendation of the Nomination and Remuneration Committeehas formulated a policy on remuneration of Directors Key Managerial Personnel and SeniorManagement Personnel of the Company. The policy covers the appointment including criteriafor determining qualification positive attributes independence and remuneration of its

Directors Key Managerial Personnel and Senior Management Personnel. The Nomination andRemuneration Policy is given in Annexure - 5.

PARTICULARS OF EMPLOYEES

Pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remunerationof Managerial Personnel) Amendment Rules 2016 the details in respect of employees of theCompany are given in Annexure - 6.

SECRETARIAL STANDARDS

The Company has complied with all applicable Secretarial Standards issued by theInstitute of Company Secretaries of India during the year.

ACKNOWLEDGEMENT

Your Board places on record its appreciation of the support and co-operation receivedfrom the Government of India State Governments Banks Suppliers Employees Customersand Vendors whom your company looks upon as its valued partners in the path of progress.Your Directors also wish to place on record their appreciation for the valuable servicesrendered by Depositories Stock Exchanges and the Registrar and Transfer Agent. YourDirectors thank all valuable Investors who have been with the Company all these years andare also very much pleased to welcome all the new Investors and thank them for theircontinued patronage and confidence reposed in the Management.

For and on behalf of the Board of Directors
Sd/- Sd/-
Chennai R. CHELLAPPAN A.BALAN
28th May 2019 Managing Director Joint Managing Director