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XL Energy Ltd.

BSE: 532788 Sector: Telecom
NSE: XLENERGY ISIN Code: INE183H01011
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VOLUME 1084
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VOLUME 1084
52-Week high 1.84
52-Week low 0.65
P/E
Mkt Cap.(Rs cr) 2
Buy Price 0.92
Buy Qty 150.00
Sell Price 1.00
Sell Qty 416.00

XL Energy Ltd. (XLENERGY) - Director Report

Company director report

DIRECTORS’ REPORT

Dear Shareholders

Your Directors have pleasure in presenting the Thirty First Annual Report of theCompany together with the Audited financial Statements for the financial year ended 31stMarch 2018:

1. Financial Results

Particulars ( Rs. Lakhs)
31st March 2018 31st March 2017
Income from Operations 42.84 106.31
Less: Duties and Taxes 0.00
Net Income from Operations 42.84 106.31
Other Income 41.89 7.97
Profit(+)/Loss(-) Before depreciation Interest and Tax (146.95) (170.11)
Interest & Financial Charges 3.51 1.80
Depreciation 6.51 30.80
Exceptional items 2.31 72.95
Profit(+)/Loss(-) Before Tax (158.92) (275.66)
Provision for Income Tax 0.00 0.00
Deferred Tax 0.00 0.00
Prior period adjustments 0.00 0.00
Profit(+)/Loss(-) After Tax (158.92) (275.66)
Dividend (%) 0.00 0.00
Equity Capital (Rs.) 227743970 227743970
Earnings per Share (Rs.) -0.70 -1.21

2. Results of Operations and State of the Company’s Affairs

During the year your Company has achieved Rs. 42.84 lakhs revenues as compared toprevious year revenues of Rs. 106.31 lakhs. The company has incurred a loss of Rs. 158.92lakhs as against a loss of Rs. 275.66 lakhs for the previous year.

3. Dividend

Your Directors express their inability to recommend dividend during the year due tonon-availability of surplus.

Certifications

Your company has automated state-of-the-art manufacturing facilities and sophisticatedequipments to manufacture high quality telecom and energy products. Your company is an ISO9001:2000 certified Company. It has a system driven process for manufacturing of variousproducts and has a set of well defined quality process at every stage of production toensure delivery of high quality products and services.

SPV modules are made as per ISO 9001:2000 international quality standards and arecertified for UL German TV certification and IEC certification.

4. Particulars of Loans Guarantees or Investments

The Company has given loan in the form of advances to its Joint Venture Company i.e.Saptashva Solar Limited. The details of the loan given by the company are given in thenotes to the financial statements. The advances were provided over the year for day to dayfunding of expenses of the Joint Venture company for payments towards its statutoryliabilities and expenses for performing the Annual Maintenance Contracts of the JVcompany.

5. Transfer to Reserves

There is no profit earned or positive generation of cash during the year hence thedirectors have not proposed to transfer any amount to reserves during the financial yearunder review.

6. Internal Financial Control Systems and their adequacy

The Company has does not have adequate system of internal control due to low andnegligible quantum of operations. However the transactions are properly authorizedrecorded and reported to the Management. The Company is following all the applicableAccounting Standards for properly maintaining the books of accounts and reportingfinancial statements.

7. Related Party Transactions

None of the transactions with related parties falls under the scope of Section 188(1)of the Act.

8. Fixed Deposits

Your Company has not accepted any deposits and as such no amount of principal orinterest was outstanding on the date of the Balance Sheet.

9. Change in the nature of business if any

There is no material change in the nature of business affecting the financial positionof the Company for the year ended March 31 2018.

10. Joint Venture

M/s Saptashva Solar Limited engaged in Erection Procurement and Commissioning of SolarPanels is the Joint Venture of your Company where your Company holds 48.97% equity stake.Information on Joint Venture pursuant to Section 129(3) of the Act read with rule 5 of theCompanies (Accounts) Rules 2014 is given in Annexure - 2 in Form AOC-2 and the same formspart of this report.

11. Subsidiary Company

M/s Saptashva Solar SA Spain is the wholly owned subsidiary of your Company.

Information on Subsidiary pursuant to Section 129(3) of the Act read with rule 5 of theCompanies (Accounts) Rules 2014 is given in Annexure - 1 in Form AOC-1 and the same formspart of this report.

12. Directors and Key Managerial Personnel

Mr Aneesh Mittal Director retires by rotation at the ensuing Annual General Meetingand being eligible offers himself for re-appointment.

Mr. Aneesh Mittal Whole time Director shall be re-appointed for a period of one yearwith effect from 26th October 2018. Mr Dinesh Kumar Managing Director of theCompany whose tenure is due for expiry on 31st May 2018 has been reappointedfor a further period of five years w.e.f. 01st June 2018 at the Board Meetingheld on 30th May 2018 by passing an ordinary resolution which shall beratified by the shareholders in the Annual General Meeting.

For the perusal of the shareholders a brief resume of the Directors being appointed/re-appointed along with necessary particulars is given in the explanatory statement to thenotice. The Board of Directors recommend the re-appointment.

13. Statement on declaration given by Independent Directors under Section 149(6) of theCompaniesAct 2013

The Independent Directors have submitted a declaration that each of them meets thecriteria of Independence as provided in Section 149(6) of the Act and there has been nochange in the circumstances which may affect their status as Independent Director duringthe year.

14. 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.

15. Number of Meetings of the Board

Five meetings of the Board were held during the year viz. 05th June 201716th August 2017 14th September 2017 14th December2017 and 14th February 2018.

16. Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board carried out an annual performanceevaluation of its own as well as the evaluation of the working of its Audit Nomination& Remuneration and Stakeholders Relationship Committees.

17. Audit Committee

The details pertaining to the composition of Audit Committee are included in theCorporate Governance Report which forms part of this report.

18. Statement on Compliance of applicable Secretarial Standards

The Company has complied with the applicable Secretarial Standards issued time to timeby the Institute of Company Secretaries of India.

19. Risk Management Policy

Although the company has long been following the principle of risk minimization as isthe norm in every industry it has now become a compulsion.

Therefore in accordance with section 134(3) (n) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015the Board members wereinformed about risk assessment and minimization procedures after which the Board formallyadopted steps for framing implementing and monitoring the risk management plan for thecompany.

The main objective of this policy is to ensure sustainable business growth withstability and to promote a pro-active approach in reporting evaluating and resolvingrisks associated with the business.

20. Details of significant material orders passed by the regulators or courts ortribunals impacting the going concern status and Company’s operations in future.

As explained in Note no. 5 of Notes on Accounts some of the lender banks have assignedtheir secured debt in favour of Asset Reconstruction Companies (ARC’s). There are noorders passed by the DRT or any other regulators/courts which impact the going concernstatus of the Company.

21. Vigil Mechanism

In order to ensure that the activities of the Company and its employees are conductedin a fair and transparent manner by adoption of highest standards of professionalismhonesty integrity and ethical behaviour the company has adopted a vigil mechanism policy.This policy is explained in corporate governance report and also posted on the website ofcompany.

22. Statutory Auditors

In accordance with the provisions of Section 139 and other applicable provisions of thecompanies Act 2013 read with the companies (Audit and Auditors) Rules 2014 and suchother applicable rules if any the company proposes to appoint M/s. VNR AssociatesChartered Accountants (Firm Registration No. 004478S) Hyderabad as Statutory Auditors fora period of five years from the conclusion of the forthcoming Annual General Meeting tillthe conclusion of the 36th Annual General Meeting. M/s. VNR AssociatesChartered Accountants (Firm Registration No. 004478S) Hyderabad as Statutory Auditors ofthe company requires approval of the members and in this regard necessary Resolutions arebeing placed before the members at the forthcoming Annual General Meeting for theirapproval.

23. Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed R & A Associates a firm of Practicing Company Secretaries Hyderabad toundertake the Secretarial Audit of the Company.

24. Directors’ Responsibility Statement

In terms of Section 134 (5) of the Companies Act 2013 your Directors confirm that

(i) in the preparation of the annual accounts for the Financial Year 31stMarch 2018 the applicable accounting standards have been followed and there are nomaterial departures.

(ii) 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 financial year ended on 31stMarch 2018 and of the loss of the Company for that period;

(iii) the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; (iv) the directors had prepared the accounts for the financial year ended31st March 2018 on a ‘going concern’ basis.

(v) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and operating effectivelyin view of the level of operations.

(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.

25. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

Conservation of Energy:

Due to low quantum of operations currently the Company requires a low level of energyconsumption.

Research and Development (R&D):

The Company continues to look at opportunities in the areas of research and developmentin its present range of activities.

Technology Absorption:

The Company continues to use the latest energy devices for improving the quality of itsproducts. The Company has not imported any technology during the year.

Foreign Exchange Earnings and Outgo:

During the year under review there are no foreign exchange earnings and outgo.

26. Particulars of Employees

The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is as follows: The Company has one Managing Director and a Whole timeDirector and due to financial constraints being faced by the company they have forgoneremuneration. The Particulars of the Employees who are covered by the provisions containedin Rule 5(2) and rule 5(3) of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are:

a) Employed throughout the year - Nil

b) Employed for part of the year - Nil

The remuneration paid to all Key management Personnel was in accordance withremuneration policy adopted by the company.

(a) The information required under section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

(I) The ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year Not Applicable.

(II) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year NIL.

(III) The percentage increase in the median remuneration of employees in the financialyear- Not Applicable.

(IV) The number of permanent employees on the rolls of company 02.

(V) Average percentile increase made in the salaries of employees other than themanagerial personnel in the last financial year and its comparisons with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration. - NotApplicable.

(VI) The Company affirms that the remuneration is as per the remuneration policy of theCompany.

27. Current Status of the Company

The Lender Bankers namely the SBI SBH SBM & IDBI who are part of the securedcreditors of the Company have assigned their secured debt in the Company in favour ofInvent Assets Securitisation and Reconstruction Private Limited an Asset ReconstructionCompany (ARC) Federal Bank being one of the lender banks has assigned its debt in favourof JM Financial Asset Reconstruction Company (ARC) during the financial year 2017-18. Thebanks led by Invent ARC has since initiated steps for the realization of the debtassigned to it by way of auction/sale of identified Secured Assets. In such process theCompany’s Cherlapally Unit and Shed No. 30 at Mallapur Unit have been sold away byway of auction by Invent ARC in May 2017.

As informed in the previous financial year that the company is working with an MNC fortakeover of the Fabcity Project which is a Photovoltaic Cell and Module ManufacturingPlant based at Fabcity Hyderabad the negotiations with the MNC have come to a finalstage. This asset is a critical one required for the continuance of Solar power businessand revival of the company. There is a lot of genuine interest shown by the investors topossess and develop solar power manufacturing facility within the country in view of thedrive for Green energy and the fallout of the Global need for controlling global warming.

28. Corporate Governance

Corporate Governance philosophy of the Company is based on the principles of equityfairness transparency spirit of law and honest communication. The Company believes thatsound Corporate

Governance is necessary to retain stakeholder’s trust and ensures efficientworking and proper conduct of the business of the Company with integrity. Development ofCorporate Governance guidelines is a continuous process which evolves over a period oftime to suit the changing needs of the business society and the nation.

Your Company has implemented the conditions of Corporate Governance as contained inSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A separatereport on Corporate Governance and Management Discussion and Analysis along with necessarycertificates is given elsewhere in this report. Also certificate by M/s R & AAssociates Company Secretaries Hyderabad confirming compliance of the conditions ofCorporate Governance as stipulated under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed to this report.

29. Explanations to qualifications in Auditors Report

a) Auditor’s Qualification:

The accompanying financial statements have been prepared assuming that the Company willcontinue as a going concern. As discussed in Note 5 to the Ind AS financial statementsthe Company has suffered recurring losses from operations and has a net capital deficiencythat raise substantial doubt about its ability to continue as a going concern andtherefore it may be unable to realise its assets and discharge its liabilities in thenormal course of business. The Ind AS financial statements (and notes thereto) do notdisclose this fact. Management’s plans in regard to continuing operations arementioned in para 5 of Notes to Accounts.

Management’s Response:

With the adoption of Ind AS the Net Worth of the Company has turned negative. Asexplained in the previous financial year that some of the Lender Bankers namely the SBISBH SBM & IDBI who are part of the secured creditors of the Company have assignedtheir secured debt in the Company in favour of Invent Assets Securitisation andReconstruction Private Limited an Asset Reconstruction Company (ARC) Federal Bank beingone of the lender banks has assigned its debt in favour of JM Financial AssetReconstruction Company (ARC) during the financial year 2017-18. The banks led by InventARC has since initiated steps for the realization of the debt assigned to it by way ofauction/sale of identified Secured Assets. In such process the Company’s CherlapallyUnit and Shed No. 30 at Mallapur Unit have been sold away by way of auction by Invent ARCin May 2017.

As informed in the previous financial year that the company is working with an MNC fortakeover of the Fabcity Project which is a Photovoltaic Cell and Module ManufacturingPlant based at Fabcity Hyderabad the negotiations with the MNC have come to a finalstage. This asset is a critical one required for the continuance of Solar power businessand revival of the company. There is a lot of genuine interest shown by the investors topossess and develop solar power manufacturing facility within the country in view of thedrive for Green energy and the fallout of the Global need for controlling global warming.

In this regard the Company is of the view that it retains its going concern status.

b) Auditor’s Qualification: As reported in note 4 relating to‘Financial assets and liabilities’

Management has informed us that settlement with Banks/ARCs is in an advanced stage ofcompletion. On completion of the same the assets and liabilities including fixed assetsas appearing in the books of account shall be reviewed and consequential effect on writeoff/ write back shall be done.

Management’s Response: As already explained earlier in this Directors’Repott the fixed assets of the Company are under the charge of ARC and the ARC hasinitiated the process of sale of certain assets and settlement of loans. During the yearthe assets of Cherlapally Unit and Shed No. 30 of Mallapur Unit were sold by the ARC andthe management has effected the effect of such sale in the books of accounts. Further asand when such events take place with respect to the balance of assets the consequentialeffect of such transactions shall be effected in the books of accounts.

c) Auditor’s Qualification: Notes to Accounts at Para 7 of the Ind ASfinancial statements which describes the balances appearing under other long-termliabilities short term borrowings trade payables other current liabilities long termloans and advances CWIP advances trade receivables short term loans and advances andother current assets are subject to confirmation and / or reconciliation if any. At thispoint of time the quantification of its effect on the balance sheet is not ascertainedand quantified.

Management’s Response: Some of the payables shown pertaining to outstandingsto banks which are not reconciled since the accounts have become Non-performing Assets(NPA) and the banks have not provided account statements. Interest and charges on thisaccounts were not accounted since the banks have already filed Original Application (OA)with the Debt Recovery Tribunal (DRT) and some of the banks have assigned their debt infavour of ARC’s the management is of the view that there is no need of upward ordownward adjustment of these figures without having the actual figures in hand. Withregard to receivables and other long term payables since the accounts were stagnant andlong overdue the Company was unable to procure confirmations from parties.

30. Replies to observations made in the Secretarial Audit report

a) Auditor’s Observation: The Company has not yet paid listing fee to theStock Exchanges of where the securities of the Company are listed as required underregulation 14 of SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015for the financial year 2017-18.

Management’s Response: The Company could not pay the listing fees to theexchanges during the financial year owing to deficit cash flow. However the Company is inthe process to remit the fees by the end of September 2018.

b) Auditor’s Observation: There was a delay in submitting the financialresults to BSE limited (BSE) and National Stock Exchange of India Ltd (NSE) for thequarter and financial year ended 31st March 2017. The Company has submittedthe financial results on 05th June 2017 as against the due date of 30thMay 2017 prescribed under regulation 33 of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015. The Company has been imposed a penalty of Rs. 30000/- byNSE and the same is yet to be paid.

Management’s Response: The Company has called for a Board meeting on 30thMay 2017 for consideration and approval of Audited financial results for the financialyear ended 31st March 2017. However the meeting could not be convened due tolack of quorum and has been adjourned for want of quorum due to unavoidable situations forthe presence of directors at the meeting. Accordingly the meeting has been called atshorter notice on 05th June 2017 and the same was held and convened toconsider and approve the financial results and the same was disseminated to the exchanges.Since Standard Operating Procedures were issued by SEBI the Company was levied penaltyfor delay in submission beyond the due date and the penalty is yet to be paid.

31. Management Discussion & Analysis

The Management Discussion and Analysis on Company's performance industry trendsfuture outlook and other material changes with respect to the Company and itssubsidiaries wherever applicable are presented in this annual report as stipulated underSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

32. Extract of Annual Return

The Extract of Annual return prepared in Form MGT-9 as per the provisions of Section 92of the Companies Act 2013 read with Rule 12 of the Companies (Management andAdministration) Rules2014 is enclosed as Annexure-1 to this report. The AnnualReturn of the Company is available on the following weblinkhttp://www.xlenergy.co/pdf/Annual%20Return%20-%202017-18.pdf

33. Disclosure pertaining to sexual harassment of women at workplace

The Company has in place a Policy on Prevention of Sexual Harassment in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.

Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

34. Corporate Social Responsibility

The provisions relating to Corporate Social Responsibility under the Companies Act2013 do not apply to the company.

35. Shifting of Registered Office

During the year the Company has shifted its Registered Office from C2 Pooja PlazaVikrampuri Secunderabad 500009 to H.No. 19-66/11/D-4 Laxmipuram Colony Opp: Dr A S RaoNagar ECIL Kapra Medchal Malkajgiri Hyderabad 500062.

36. Consolidation of Accounts of subsidiary and Joint Venture

The financial statements of foreign subsidiary and the Indian Joint Venture Companyhave not been consolidated with the financial statements of the Company for the year ended31st March 2018 since the Net worth of both the subsidiary and joint venturehave become negative and there are no operations carried out.

37. Acknowledgements

Your Directors would like to place on record their gratitude for all the guidance andco-operation received from the Securities and Exchange Board of India the Bombay StockExchange Limited National Stock Exchange of India Limited National Securities DepositoryLimited Central Depository Services (India) Limited and other government and regulatoryagencies.

Your Directors are grateful to the Company’s clients investors bankers and otherbusiness associates for their continued support. Your Directors would also like to takethis opportunity to express their appreciation to the dedicated and committed team ofemployees for their contribution to the Company and rendering high quality services to theclients.

Your Directors wish to place on their record sincere thanks to the stakeholders fortheir endeavours and confidence they have reposed on the management of the Company.

For and on behalf of the Board of Directors of
XL ENERGY LIMITED
Sd/- Sd/-
Place: Hyderabad Dinesh Kumar Aneesh Mittal
Date: 14.08.2018 Managing Director Wholetime Director
(DIN: 00054833) (DIN: 00061635)