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Swelect Energy Systems Ltd.

BSE: 532051 Sector: Engineering
NSE: SWELECTES ISIN Code: INE409B01013
BSE 00:00 | 05 Mar 208.55 9.50
(4.77%)
OPEN

212.90

HIGH

218.95

LOW

207.00

NSE 00:00 | 05 Mar 208.80 9.95
(5.00%)
OPEN

218.60

HIGH

218.70

LOW

206.35

OPEN 212.90
PREVIOUS CLOSE 199.05
VOLUME 14105
52-Week high 233.90
52-Week low 56.30
P/E 11.72
Mkt Cap.(Rs cr) 316
Buy Price 206.50
Buy Qty 5.00
Sell Price 214.00
Sell Qty 70.00
OPEN 212.90
CLOSE 199.05
VOLUME 14105
52-Week high 233.90
52-Week low 56.30
P/E 11.72
Mkt Cap.(Rs cr) 316
Buy Price 206.50
Buy Qty 5.00
Sell Price 214.00
Sell Qty 70.00

Swelect Energy Systems Ltd. (SWELECTES) - Director Report

Company director report

Our Valued Shareholders

Your Directors have pleasure in presenting the Twenty Fifth AnnualReport on the business and operations of the Company together with the Audited FinancialStatements for the year ended 31st March 2020.

FINANCIAL HIGHLIGHTS (Rs. in Lakhs)

Standalone

Consolidated

S.No. Particulars For the year ended 31/03/2020 For the year ended 31/03/2019 For the year ended 31/03/2020 For the year ended 31/03/2019
1 Revenue from operations 14204.04 11984.43 25221.82 22764.94
2 Finance and Other income 3170.98 3494.58 2759.30 2625.50
3 Total Income 17375.02 15479.01 27981.12 25390.44
4 Total Expenditure (Excluding Finance cost Depreciation and Amortisation) 13679.08 11808.89 22449.58 20243.04
5 Profit Before Finance cost Depreciation and Amortisation and Tax 3695.94 3670.12 5531.54 5147.40
6 Finance Costs 981.15 744.63 1725.90 1532.89
7 Depreciation and Amortisation expense 1659.43 1415.41 2985.25 2599.25
8 Profit Before Exceptional Item and Tax 1055.36 1510.08 820.39 1015.26
9 Add: Exceptional items # -2471.99 30.00 -1522.61 30.00
10 Profit (+) / Loss (-) Before Tax -1416.63 1540.08 -702.22 1045.26
11 Income Tax Expense 256.53 434.73 314.66 362.40
12 Net Profit (+) / Loss(-) after Tax # -1673.16 1105.35 -1016.88 682.86
13 Other Comprehensive income for the year net of tax 45.29 12.37 911.63 3.89
14 Total comprehensive income / Loss(-) for the year net of tax -1627.87 1117.72 -105.25 686.75
15 Interim Dividend paid on Equity Shares 189.48 - 189.48 -
16 Dividend Distribution Tax (Interim) 38.95 - 38.95 -
17 Final Dividend Proposed (31.3.2020) / Paid on Equity Shares 113.69 252.65 113.69 252.65
18 Dividend Distribution Tax Paid - 51.93 - 51.93
19 Equity Share Capital 1515.87 1010.58 1515.87 1010.58
20 Other equity (Reserves & Surplus) 64263.05 66940.32 70432.75 71593.34
21 EPS (Rs.) -11.04 7.29 -6.71 4.50

# The Company has revisited the projections made in the previous yearon the recoverability of its investments on an annual basis taking into account theprobable beneficial results arising from various initiatives being undertaken with regardto restructure of the customer contracts submission and pursuing with appropriateauthorities (by legal right with TANGEDCO for release of NOC) on relevant claims. This hasresulted in the Company considering an additional diminution in the value of itsinvestments in subsidiary (SWELECT Green Energy Solutions Private Limited) during thefinancial year ended March 31 2020. The same has been considered as an exceptional lossin the standalone financial results of the Company. Detailed explanations are given inpage no.4 of this report under the General review of the business of the company.

STATE OF THE COMPANY'S AFFAIRS MAJOR LINE OF BUSINESS

I - Manufacturing: Solar PV Modules Solar Inverters and Mountingstructures

II - Solar Power Systems Integration & Turnkey EPC contracts

III - Solar Power Generation (IPP and under RESCO)

IV - Solar Energy Storage Solutions (new vertical)

V - Solar water pumping (new vertical)

VI - Servo stabilizers (new vertical)

SWELECT is one of the most reputed National leaders in SolarPhotovoltaic industry has been able to demonstrate its high level of commitment to ensureinternational Quality standards and technical superiority. With a strong brand recalloffering the highest plant up time SWELECT has earned the respect and trust of itsvaluable customers.

The Company has always strived to be an investor friendly companyensuring business continuity and upholding the stakeholders' value with highestimportance.

GENERAL REVIEW OF THE BUSINESS OF THE COMPANY:

During the year the Company registered a turnover (Standalone) ofRs.14204.04 Lakhs against the previous year turnover of Rs.11984.43 Lakhs registered agrowth of 18.52% compared to previous year revenue. The company recorded an EBIDTA of Rs.3695.94 Lakhs compared to the corresponding figure last year of Rs. 3670.12 Lakhs.However the Company had to account for "Exceptional items" amounting to Rs.2471.99 Lakhs resulting in a Loss for the current year of Rs.1673.16 Lakhs against theprevious year profit of Rs.1105.35 Lakhs. The reason for the loss is given below.

On 30.3.2016 the Company (Holding Company) had Hived off its 12 MWpSolar Photovoltaic plant located at Vellakoil as a going concern on slump exchange basisto its wholly owned subsidiary (WOS) namely SWELECT Green Energy Solutions PrivateLimited for which the Company had received 6300000 10% Compulsorily ConvertibleUnsecured Debentures of Rs.100/- each as a consideration from the above subsidiary whichare fully convertible into Equity Shares to the Holding Company after 20 years from thedate of issue of debentures.

In the above said 12 MW Plant the plant having capacity of 10 MW isunder Renewable Energy Certificate (REC) Scheme and the solar power being generated issold to TANGEDCO at Pooled Cost of Power Purchase set by Tamil Nadu ElectricityRegulatory Commission (TNERC) which is varying from time to time.

The above slump exchange was executed taking into consideration theeconomic benefits available from Group Captive Power Purchase (GCPP) Model. Thereafter theregulatory norms were changed and it was found that the subsidiary company could notmigrate from PPA with TANGEDCO to Group Captive Power Purchase Model due to the StateGovernment policy. However the company (subsidiary) may exit from the existing PPA withTANGEDCO and enter into a Third-Party Power Purchase Model by continuing under the RECScheme after obtaining the No Objection (NOC) received from TANGEDCO. The company(subsidiary) had received offers from many Corporate Houses that come under RenewablePower Obligation (RPO) with cost of energy at market rates that are comparably better interms of IRR and loan and interest repayment capability. Accordingly the identificationof Consumers under Third Party Power Purchase Model has been in the process.

Since there was a delay in obtaining NOC from TANGEDCO for enteringinto a Third Party Power Purchase Model during the financial year 2018-19 the subsidiarycompany converted the Debentures allotted for the above said slump exchange into EquityShares as the Debentures are carrying the interest rate which lead to increase theliability of the subsidiary company on account of reduction in the revenue of thesubsidiary company due to frequent variation in the rate charged by TANGEDCO for purchaseof power from the subsidiary company.

As per Accounting Standard the Company has to carry out the valuationon its investments periodically. Accordingly the Company assesses the recoverability ofits investments on an annual basis duly considering the significant estimates andjudgements which inter-alia includes the discounted cash flows determined based on therevenue projections probable recovery of claims and discount rates calculated based onthe cost of equity for the applicable investment adjusted for the proposed restructuring.All of these estimates and judgements have inherent uncertainties and the actual resultsmay differ from that estimated as at the date of the Balance sheet. The Company hasrevisited the projections made in the previous year taking into account the probablebeneficial results arising from various initiatives being undertaken with regard torestructure of the customer contracts submission and pursuing with appropriateauthorities on relevant claims. This has resulted in the Company considering an additionaldiminution in the value of its investment in its subsidiary company namely SWELECT GreenEnergy Solutions Private Limited during the financial year ended March 31 2020.

Consequent to the above diminution in the value of investment made inthe subsidiary the Holding Company is required to treat this as an exceptional itemthough it is notional and has therefore incurred a loss for the financial year endedMarch 31 2020.

The same has been considered as an exceptional item in the standalonefinancial results of the Company.

Meantime the Company has taken the appropriate action to claim thevariation rate charged by TANGEDCO for purchase of power and also to obtain the NOC forentering into a Third-Party Power Purchase Model. After obtaining the NOC the Companywould execute the agreement under Third Party Power Purchase Model with suitableindustrial consumers which leads to improve the revenue of the Company. As a result theCompany is expected that it may improve the value of investment made in the abovesubsidiary and nullify the above loss in the years to come.

DIVIDEND

The Board of Directors had declared an interim dividend of Rs.1.25 perequity share [i.e. 12.5% on the paid up equity share capital of Rs.151587600/- (RupeesFifteen Crore Fifteen Lakhs Eighty Seven Thousand Six Hundred Only)] at their meeting heldon 15.02.2020 and the total dividend amount of Rs.189.48 lakhs was paid to theshareholders on 04.03.2020. The Company also paid the dividend distribution tax of Rs.38.95 lakhs on the same.

The Board of Directors have recommended a final Dividend of Rs.0.75 perequity share [@ 7.5% on the equity share capital of Rs.151587600/-] for the year ended31st March 2020 subject to the approval of the shareholders at the ensuing Annual GeneralMeeting of the Company. The outflow for the Company would be Rs. 113.69 Lakhs towardsfinal dividend.

As per the Finance Act 2020 the dividend declared on or after 1stApril 2020 is taxable in the hands of shareholders if the dividend value exceeds Rs.5000/- in a financial year and accordingly the payment of dividend is subject to thededuction of income tax as applicable.

SHARE CAPITAL

During the year under review there was a change in the Company'sissued subscribed and paid-up equity share capital. On 26.08.2019 the Company afterobtaining the shareholders' approval at the 24th Annual General Meeting held on 9.8.2019had allotted 5052920 Bonus Shares at the proportion of 1 (One) Equity Share for every 2(Two) existing Equity Shares of Rs.10/- each held by the Shareholders as on the RecordDate 23.08.2019 fixed by the Board of Directors. Therefore the Equity Share Capital onMarch 312020 stood at Rs.151587600/- divided into 15158760 equity shares of Rs.10/-each.

TREATMENT OF FRACTION SHARES ARISING OUT OF THE ABOVE BONUS ISSUE

At the Board Meeting held on 12.8.2019 it was decided that any memberbecomes entitled to a fraction of new equity share to be allotted as bonus share theCompany shall not issue any certificate or coupon in respect of such fractional share butthe total number of such new equity shares representing such fractions shall be allottedby the Board to Mr. A. Balan Joint Managing Director a nominee appointed by the Boardwho would hold them as trustee for the equity shareholders. The nominee will as soon aspossible sell such equity shares allotted to him at the prevailing market price and thenet sale proceeds of such shares after adjusting the cost and expenses in respect thereofbe distributed among such members who are entitled to such fractions in the proportion oftheir respective holding and allotment of fractions thereof.

Accordingly 3960 Shareholders were entitled for fraction sharesarising out of the Bonus allotment for which the Board of Directors had allotted 1980equity shares representing such fractions in favour of Mr. A. Balan who is the Trustee forthe equity shareholders those who are entitled to receive such fraction amount.

Subsequently the above fraction equity shares were sold at the marketat the prevailing price and sale consideration was credited to an Escrow Account opened bythe Company. Thereafter the amount was distributed (@ Rs.57.17 per share) to theshareholders those who were entitled to receive such amount. If any shareholders who areentitled to receive any amount on such fraction share and has not claimed / received suchfraction amount may approach the Company to claim the same.

TRANSFER TO GENERAL RESERVE

Since the Company has incurred a loss for the financial year ended31.3.2020 transfer of amounts to the general reserve of the Company does not arise.

SUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES

The Company has 6 Wholly Owned subsidiaries and 3 step downsubsidiaries as on the date of this report. The Board of Directors at their meeting heldon 8th July 2020 approved the consolidated accounts of subsidiaries. Pursuant to theprovisions of section 129(3) of the Act read with Rule 5 of the Companies (Accounts)Rules 2014 (as amended) a statement containing salient features of the financialstatements of the Company's subsidiaries in Form AOC-1 is attached to the financialstatements of the Company. The Company does not have Associates or direct Joint Venturesas on the date of this report.

DEPOSITS

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

CHANGE IN DIRECTORS OR KEY MANAGERIAL PERSONNEL Directors

• Mrs. Jayashree Nachiappan (DIN:03173327) Non-ExecutiveDirector is liable to retire by rotation at the ensuing Annual General Meeting and beingeligible offers herself for re-appointment.

• At the Annual General Meeting held on 28th July 2016 theshareholders of the Company had appointed Mr. A. Balan (DIN:00017091) as a Whole TimeDirector (Joint Managing Director ) of the Company for a period of 5 years with effectfrom 3rd October 2015. The term of office of Mr. A. Balan will expire on 2nd October2020. The Board at its meeting held on 8.7.2020 re-appointed Mr. A. Balan as a Whole TimeDirector (Joint Managing Director) of the Company for a period of 5 years from 3rdOctober 2020 to 2nd October 2025 as per the terms and conditions as set out in theNotice of AGM subject to approval of the Shareholders' at their ensuing Annual GeneralMeeting.

The Profiles of Mrs. Jayashree Nachiappan and Mr. A.Balan are givenseparately in the notice of AGM.

The Board recommends necessary resolutions for the approval ofShareholders at the ensuing Annual General Meeting for the above appointments.

Key Managerial Personnel

The Board at its meeting held on 8th July 2020 accepted theresignation of Chief Financial Officer of the Company Mr. P Jagan and requested him tocomplete the service period up to 10th August 2020. The Board also placed on record itsappreciation for his valuable contribution to the Company.

STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITYEXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORSAPPOINTED DURING THE YEAR

The Board at its meeting held on 9.2.2019 had appointed Mr. S. Krishnanand Dr. S. Iniyan as Independent Directors of the Company with effect from 1.4.2019 aftertaking into consideration the following integrity expertise and experience. The aboveappointments have also been approved by the Shareholders of the Company on 28.3.2019through postal ballot process and 09.08.2019 at the Annual General Meeting respectively.

Pursuant to the provisions of the section 150 of the Companies Act2013 and other applicable provisions of the Rules made thereunder the following Directorshave been registered with the portal of Indian Institute of Corporate Affairs for updatingtheir details and to write an online test as required by the said rule. As per the ruleonline test shall be cleared by the independent directors within one year from the date ofregistration. All Independent Directors including the following Directors as provided inthe Rules have to complete the above test within the stipulated period.

Mr. S Krishnan is a Fellow Member of the Institute of CharteredAccountants of India and completed the exam conducted by the Institute of CompanySecretaries of India. He is graduated from Vivekananda College Chennai.

He is having 30 years of professional experience and has been carryingout Audit of Public Limited Companies

Dr. S.Iniyan is currently a Professor and former Director in theInstitute for Energy Studies Department of Mechanical Engineering College of EngineeringGuindy Anna University Chennai.

He has done his undergraduate in Mechanical Engineering and postgraduate in Internal Combustion Engineering at College of Engineering Guindy AnnaUniversity Chennai. He received his Ph.D. degree in Energy Modelling from AnnaUniversity Chennai. He has also done his Post Doctoral Research in Hong Kong UniversityHong Kong.

His areas of research include energy planning solar energy and windenergy systems and he has published 250 research papers in the reputed InternationalJournals and Conference proceedings.

He has also handled International collaborative projects with CroatiaAustralia Italy Israel and UK. He had developed energy planning models with Croatian andItalian partners. With Australian partners he developed a solar photovoltaic linearconcentrators for electricity generation and water heating. He did research project withIsraeli Professor at Tel Aviv University Israel on solar power with steam injection gasturbine cycle. He has also completed a project with UK partner at Aston University in thearea of solar desalination.

NUMBER OF BOARD MEETINGS

During the Financial Year 2019-20 seven meetings of the Board ofDirectors of the Company were held. The details are provided in the Corporate GovernanceReport that forms part of this Annual Report.

DISCLOSURE ON COMPOSITION OF AUDIT COMMITTEE AND ITS RECOMMENDATION

The details of Composition of Audit Committee along with its terms ofreference are given in the Corporate Governance Report. All recommendations of the AuditCommittee were accepted by the Board.

DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

The Company has adopted the Vigil mechanism and the details are givenin the Corporate Governance Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013.

The Company has in place an Anti-Sexual Harassment Policy in line withthe requirement of the Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013 and complied with the provisions relating to the constitutionof an Internal Complaints Committee (ICC) as required under the act to redress thecomplaints received regarding sexual harassment. All employees (Permanent contractualtemporary 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 (Salem):

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. HarshithaK.S. and 5. Ms. S.Preema

The following is a summary of sexual harassment complaints received anddisposed off during the year 2019-2020 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 Guidelinesissued by the Securities and Exchange Board of India for Prevention of Insider Tradingwith a view to regulate trading in securities by the Directors and designated employees ofthe Company. The Code prohibits trading in securities of the Company by the Directors andthe designated 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 Personnelof the Company have confirmed compliance with the code of conduct applicable to them and adeclaration to this effect made by the Managing Director is attached to this report. Codeof conduct of Board of Directors and Senior Management Personnel are available inCompany's website www.swelectes. com under investors' page.

Mr. K N Rishii Nandhan who is falling under the category of"Promoters Group" has acquired 355 equity shares of the Company during theTrading Window Closure period and it was informed by him that the acquisition of shareswas made inadvertently. Therefore the Board directed him to remit the gain of Rs.1500/-made towards such acquisition to SEBI IPEF.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 (1) of the Companies Act2013 M/s.Deloitte Haskins & Sells LLP Chartered Accountants Chennai (FirmRegistration No.117366W/W - 100018) were appointed as the Statutory Auditors of theCompany by the Shareholders at the 22nd Annual General Meeting (AGM) held on 11.8.2017 fora term of five consecutive years from the conclusion of the 22nd AGM up to 27th AGM of theCompany.

STATUTORY AUDITORS REPORT

There were no qualifications or observations or remarks made by theStatutory Auditors in their report for the financial year 2019-2020. The same is beingattached to the financial statements of the Company.

SECRETARIAL AUDIT REPORT

A Secretarial Audit was conducted during the year by the SecretarialAuditor Mr. R. Kannan Practicing Company Secretary in accordance with the provisions ofSection 204 of the Companies Act 2013. The Secretarial Auditor's Report is also attachedas part of this Report as Annexure -1. There were no qualifications or remarks made by theSecretarial Auditor in his Report.

COST AUDIT

Pursuant to the provisions of the Companies (Cost Records and Audit)Rules 2014 the Company has completed filing of the Cost Audit Report with the Ministryof Corporate Affairs for the financial year 2018-19 in XBRL format. The Board appointedM/s. Ravichandran Bhagyalakshmi & Associates as Cost Auditors for the financial year2019-2020 and they will submit their report within the time limit applicable under theCompanies (Cost Records and Audit) Rules 2014.

The Board on the recommendation of the Audit Committee has appointedM/s. Ravichandran Bhagyalakshmi & Associates Cost Accountants as the Cost Auditorsof the Company for the financial year 2020 - 2021. The Board also considered and approvedthe remuneration of Rs.132000/- as recommended by the Audit Committee. In terms of theprovisions of section 148 (3) of the Companies Act 2013 read with Rule 14 (a) (ii) of theCompanies (Audit and Auditors) Rules 2014 the remuneration of the Cost Auditor has to beratified by the members of the Company. Accordingly the Board recommends necessaryresolution at the ensuing AGM for ratification.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis for the year as required under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is presented in aseparate section forming part of the Annual Report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO

The Conservation of energy technology absorption and foreign exchangeearnings and outgo 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 Year2019-20 is given in Annexure - 3 and also available on the Company's websitewww.swelectes.com under investors page.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

The details of Loans Guarantees and Investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the notes to theFinancial Statements.

STATEMENT INDICATING DEVELOPMENT AND IMPLEMENTATION OF A RISKMANAGEMENT POLICY

The details of development and implementation of risk management systemare provided in the Corporate Governance Report which forms a part of this report.

CORPORATE SOCIAL RESPONSIBILITY

The Company undertakes "Corporate Social Responsibility"(CSR) initiatives directly / through agency to the public in improving the quality oflife. During the year 2019-20 the Company has undertaken many initiatives through apolicy framework for expanding some of the present initiatives and undertaking newer CSRinitiatives in the year to come.

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

Details of composition of the CSR Committee number of meetings heldduring the year 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 into by the Companyduring the financial year with Related Parties were in the ordinary course of business andon an arm's length basis. 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 CompaniesAct 2013 in form AOC-2 is not applicable to the Company.

The Policy on materiality of Related Party Transactions and dealingwith related party transaction as approved by the Board may be accessed on the Company'swebsite www.swelectes.com under investors page. Members may refer to the notes to thefinancial statements which set out related party disclosures for the current and previousfinancial year.

SIGNIFICANT AND MATERIAL ORDERS

During the year there were no significant and material orders passed bythe Regulators or Courts or Tribunals impacting the going concern status and company'soperations in future.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The details in respect of internal financial control and their adequacyare included in the Management Discussion and Analysis which forms a part of this report.

ANNUAL BOARD EVALUATION AND FAMILIARIZING PROGRAMME

The Board carried out an annual evaluation of its own performance thedirectors and committees of the Board based on the guideline formulated by the Nomination& Remuneration Committee. Board composition quality and timely flow of 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 meton February 15 2020 to review the performance of nonindependent directors Chairman ofthe Board and the board of directors as a whole. The Independent Directors had conveyedtheir satisfactory opinion with regard to review and access of certain details as statedabove.

The Independent Directors of the Company are being familiarized by themanagement and outside professional experts at frequent intervals with regard to nature ofthe business business model their roles rights and responsibilities and other relevantinformation to the Company. The details of the programs attended by the IndependentDirectors are available on the website of the Company.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OFTHE COMPANY

There were no material changes and commitments affecting the financialposition of the Company between the end of the financial year 31st March 2020 and the dateof the report 8th July 2020 except the impact of COVID-19 which hit the overall economy ofthe world as the same is explained in the Report of Management and Discussion analysis andCorporate Governance.

DISCLOSURE OF ACCOUNTING TREATMENT

The Company has followed the Accounting Standards specified under Rule3 and 4 of the Companies (Indian Accounting Standards) Rules 2015 (as amended) to theextent applicable in the preparation of the financial statements.

CORPORATE GOVERNANCE CERTIFICATE

A report on Corporate Governance as stipulated under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is attached to this Report.

A Compliance Certificate from Mr. R. Kannan Practicing CompanySecretary regarding compliance of conditions of Corporate Governance as stipulated underthe aforesaid regulation is also annexed to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of section 134(5) of the CompaniesAct 2013 your directors confirm that:

(a) in the preparation of the annual accounts the applicableaccounting standards had been followed;

(b) the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the company at the end of thefinancial year and of the loss of the company for that year;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;

(d) the Directors had prepared the annual accounts on a going concernbasis;

(e) the Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; 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.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION(12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

The Statutory Auditors have stated that no fraud by the Company or nomaterial fraud on the Company by its officers and employees had been noticed or reportedduring the year.

DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to Section149 (7) of the Companies Act 2013 the IndependentDirectors of the Company have given a declaration to the Company that they qualify thecriteria of independence as required under Section 149(6) of the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations2015.

POLICY ON NOMINATION AND REMUNERATION AND PERFORMANCE EVALUATION OFDIRECTORS KMP AND SENIOR MANAGEMENT PERSONNEL

The Board based on the recommendation of the Nomination andRemuneration Committee has formulated a policy on remuneration of Directors KeyManagerial Personnel and Senior Management Personnel of the Company. The policy covers theappointment including criteria for determining qualification positive attributesindependence and remuneration of its Directors Key Managerial Personnel and SeniorManagement Personnel. The Nomination and Remuneration Policy is given in Annexure -5.

PARTICULARS OF EMPLOYEES

Pursuant to Section 197 read with rule 5 of the Companies (Appointmentand Remuneration of Managerial Personnel) Amendment Rules 2016 the required details aregiven in Annexure - 6.

SECRETARIAL STANDARDS

The Company has complied with all applicable Secretarial Standardsissued by the Institute of Company Secretaries of India during the year.

ACKNOWLEDGEMENT

Your Board places on record its appreciation of the support andco-operation received from the Government of India State Governments Banks SuppliersEmployees Customers and Vendors whom your company looks upon as its valued partners inthe path of progress. Your Directors also wish to place on record their appreciation forthe valuable services rendered by Depositories Stock Exchanges and the Registrar andTransfer Agent. Your Directors thank all valuable Investors who have been with the Companyall these years and are also very much pleased to welcome all the new Investors and thankthem for their continued patronage and confidence reposed in the Management.

For and on behalf of the Board of Directors
Sd/- Sd/-
R. CHELLAPPAN A.BALAN
Managing Director Joint Managing Director
Place: Coimbatore Place: Salem
Date: 8th July 2020 Date: 8th July 2020

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