Mar 31, 2018
To the Members of
BGR ENERGY SYSTEMS LIMITED
The directors have pleasure in presenting their 32nd Annual Report together with the audited standalone and consolidated financial statements for the year ended March 31, 2018 and the auditorsâ reports thereon.
FINANCIAL RESULTS
The highlights of the standalone financial performance of the Company during the financial year ended March 31, 2018 as compared with the previous financial year ended March 31, 2017 are summarized below:
(Rs. in Crore)
Description |
2017-18 |
2016-17 |
Income from operations |
3299 |
3448 |
Other income |
21 |
- |
Total Income |
3320 |
3448 |
Earnings before Interest, Depreciation, Tax and Amortization |
394 |
334 |
Profit before exceptional item and tax |
82 |
48 |
Exceptional item |
-11 |
20 |
Tax Expense |
32 |
24 |
Net Profit after tax |
39 |
44 |
Other Comprehensive income(net) |
-0.27 |
0.64 |
Transfer to general reserve |
- |
4 |
Net Worth |
1417 |
1378 |
No material changes and commitments have occurred after the closure of the Financial Year 2017-18 till the date of this Report, which would affect the financial position of your Company.
DIVIDEND AND APPROPRIATION
In order to augment working capital resources of your Company through retention of internal accruals, your Board of Directors have not recommended dividend during the year. Your Board of Directors does not propose to appropriate any amount to reserves and wish to carry the entire profits to balance sheet.
OPERATING PERFORMANCE
The Companyâs state of affairs, operations review and future outlook have been discussed and analyzed in the Management Discussion & Analysis report (Annexure VII) forming part of this Directors report.
SUBSIDIARIES AND JOINT VENTURES
In terms of the Settlement and Seperation Agreement entered into with Hitachi in respect of joint venture companies viz., BGR Boilers Private Limited and BGR Turbines Company Private Limited certain transactions have been completed during the year. BGR Boilers Private Limited made an operating income of Rs. 312.61 Crores and incurred a loss of Rs. 24.51 Crores for the year. BGR Turbines Company Private Limited has made an operating income of Rs. 34.90 Crores and incurred a loss of Rs. 15.39 Crores for the year. These perfomance figures have not been audited. These JV companies have carried necessary and significant accounting adjustments consequent to the Settlement Agreement and such adjustments have been duly dealt with in the respective companyâs books of account and has had no impact on your Companyâs financial statements.
THE PERFORMANCE AND FINANCIAL POSITION OF EACH SUBSIDIARY AND JV
A report on the performance and financial position of each of the subsidiaries and joint venture as per rule 5 of the Companies (Accounts) Rules, 2014 is provided as annexure to the consolidated financial statement and hence not repeated here for the sake of brevity as required under rule 8(1) of the Companies (Accounts) Rules, 2014.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with Companies Act, 2013 and implementation requirements of Indian Accounting Standards (Ind AS) Rules on accounting and disclosure requirements, and as prescribed by Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Audited Consolidated Financial Statements are provided in this Annual Report.
As required under Section 129 of the Companies Act, 2013, a separate statement containing the salient features of the financial statements of subsidiaries is attached along with the financial statements.
In terms of Section 136 of the Companies Act, 2013, the Company has placed on its website the standalone and consolidated financial statements and the separate audited and unaudited accounts of all subsidiary companies, as the case may be, and the Company will provide a copy of separate financial statements in respect of each of its subsidiary, to any shareholder of the company who asks for it.
BOARD OF DIRECTORS
In accordance with the provisions of Companies Act, 2013, Mr.V.R.Mahadevan, Director retires by rotation and being eligible offers himself for reappointment. Consequent to expiry of the term of appointment, Mrs.Swarnamugi R Karthik, was reappointed as Director - Corporate Strategy for a period of 5 years from February 08, 2018. Her appointment is subject to the approval of the shareholders in the ensuing AGM. A brief profile of Mr.V.R.Mahadevan and Mrs.Swarnamugi R Karthik are given in the notice convening the 32nd Annual General Meeting of the Company. The Board of Directors recommends these appointments.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
MEETINGS OF BOARD
During the year, 4 Board meetings and 4 Audit Committee meetings were convened and held. The details of these meetings are given in the Corporate Governance Report. The intervening gap between any two meetings was within the period prescribed under the Companies Act, 2013.
ANNUAL EVALUATION OF BOARD
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and having due regard to the SEBIâs Guidance Note on Board Evaluation dated January 05, 2017, the Board has carried out an annual evaluation of its own performance, individual directors separately as well as the evaluation of the working of its Audit Committee, Committee of Directors, Stakeholders Relationship Committee and Nomination and Remuneration Committee. A comprehensive evaluation process formulated by the Nomination and Remuneration Committee covering various aspects of the functioning of the Board was circulated to all the Directors to evaluate the performance of the Board. The performance evaluation of the Non-Independent Directors and the Board as a whole was carried out by the Independent Directors. The performance evaluation of the Chairperson of the Company was also carried out by the independent directors, taking into account the views of the executive and non-executive directors. The Directors expressed their satisfaction with the evaluation process.
AUDIT COMMITTEE
The Audit Committee of the Board comprises of four directors of which three members are independent directors and all the members of Audit Committee are financially literate. More details of the Audit Committee are provided in the Corporate Governance Report. All key recommendations and observations of the Audit Committee were accepted and acted upon by the management and compliance thereof are regularly reviewed by the Committee.
SHARE CAPITAL
The paid-up equity share capital of the Company as on March 31, 2018 was Rs. 72.16 Crores. During the year under review, the Company has not issued new shares, shares with differential voting rights nor granted stock options nor sweat equity.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
In compliance with Section 124(5) of the Companies Act, 2013, a sum of Rs. 5,11,700 being the unclaimed dividend declared by the Company for the financial year ended March 31, 2010 was transferred to the Investor Education and Protection Fund of the Central Government in November 2017 after giving sufficient notice to the concerned shareholders.
Dividend which remains unclaimed out of the dividend declared by the Company for the financial year ended March 31, 2011 at the Annual General Meeting held on September 22, 2011 will be transferred to the Investor Education and Protection Fund of the Central Government in November 2018 pursuant to the provisions of Section 124(5) of the Companies Act, 2013. Thereafter no claim shall lie on these dividends from the shareholders.
Pursuant to the provisions of Section 124(6) of the Companies Act, 2013 and the Rules made thereunder the shares pertaining to the unclaimed dividend for the FY 2008-09 and FY 2009-10 were transferred to the demat account of Investor Education and Protection Fund(IEPF).
HUMAN RESOURCES
An overview on the Companyâs human resources development and efforts to acquire and nurture talent is given in the Management Discussion & Analysis report (Annexure VII) forming part of this Directors report.
For prevention, prohibition and redressal of sexual harassment of Women at Workplace the Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, no complaint was received by the Internal Complaints Committee (ICC) with allegations of sexual harassment.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided elsewhere in the Annual Report.
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the annual report. Having regard to the provisions of the first proviso to Section 136(1) of the Act, the annual report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
DEPOSITS
Your Company has not accepted deposit from the public and hence did not have outstanding deposits any time during the year under review.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure I. During the FY 2017-18, the Foreign exchange earnings and outgo were Rs. 324 Crores and Rs. 1 Crore respectively.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS
Your Company has in place adequate internal control system which includes financial control, commensurate with the size, scale and complexity of companyâs operations. The internal audit function evaluate the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective and remedial action in their respective areas of responsibility and thereby strengthen the controls. Significant audit observations and corrective actions thereon are periodically reviewed by the Audit Committee. During the year no reportable material weakness or significant deficiencies in the design or operation of internal financial controls was observed.
CORPORATE SOCIAL RESPONSIBILITY
The Company has the Corporate Social Responsibility Committee of the Board of Directors with Mrs.Sasikala Raghupathy as Chairperson and Mrs.Swarnamugi R Karthik and Mr.Gnana Rajasekaran as members of the Committee. The CSR Policy formulated and recommended by the Committee is in place. The Policy is in line with Schedule VII of the Companies Act, 2013 and the Company is focusing on CSR activities pertaining to education, health, skill development and destitute women care and welfare. The Annual Report on CSR activities is annexed herewith as Annexure II.
REMUNERATION POLICY
The Remuneration Policy formulated under section 178 of the Companies Act 2013 by the Nomination and Remuneration Committee is given in Annexure III.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has established a vigil mechanism for directors and employees to report genuine concerns as required by Section 177 of the Companies Act 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 and the policy / mechanism has adequate safeguards against victimization of persons who use such mechanism and provision for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Particulars of loans, guarantees or investments covered under the provisions of Section 186 of the Companies Act, 2013 are disclosed in the note No.3 to the Financial Statements.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were in the ordinary course of business and on an armâs length basis. There were no other materially significant related party transactions made by the Company with promoters, directors, key managerial personnel or other designated persons which may have a potential conflict with the interest of the Company. All related party transactions are placed before the Audit Committee for approval. A transaction not on armâs length is placed before the Board for approval subsequent to the recommendation and approval of Audit Committee. The Policy on related party transactions as approved by the Board is uploaded on Companyâs website.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATIONS IN FUTURE
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company.
RISK MANAGEMENT POLICY
The Company as part of Standard Operating System and Procedure institutionalized risk management covering risk identification, mitigation and management measures. This Risk Charter and Policy have been brought to practice as part of internal control systems and procedures. The Management has applied the risk management policy to business activities and processes and this is reviewed to ensure that executive management manages risk through means of a properly defined framework. The Company is taking steps to have robust risk management process.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(3)(c) of the Companies Act, 2013 with respect to Directorsâ responsibility statement, it is hereby confirmed that:
a) In the preparation of the annual accounts for the Financial year ended March 31, 2018, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any ;
b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for the Financial year ended on that date ;
c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
d) the Directors had prepared the annual accounts for the year ended March 31, 2018 on a going concern basis.
e) the Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
STATUTORY AUDITORSâ AND AUDITORâS REPORT
N.R.Doraiswami & Co, Chartered Accountants, Chennai (Firm Regn. No. 000771S) were appointed as the Statutory Auditors of the Company at the 31st Annual General Meeting held on September 27, 2017 to hold office until the conclusion of the 36th Annual General Meeting to be held in the year 2022 subject to ratification of appointment at every annual general meeting in terms of Section 139 of the Companies Act 2013. They were appointed in place of Manohar Chowdhry & Associates whose term of office expired at the conclusion of 31st Annual General Meeting of the Company. The requirement for annual ratification of appointment of Auditors at AGM has since been dispensed with by the Companies (Amendment) Act, 2017 effective May 07, 2018. Accordingly, no ratification is required henceforth and the statutory auditors would continue in the normal course till the conclusion of 36th AGM. N.R.Doraiswami & Co have confirmed that they are not disqualified from continuing as Auditors of the Company.
COST RECORDS AND COST AUDITORS
The Company is required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 and accordingly during the year such accounts and records were made and maintained by the Company. The Board of Directors appointed Mr.A.N.Raman, Cost Accountant as the Cost Auditor of the Company for the Financial year 2018-19, under Section 148 of the Companies Act, 2013. The Cost Audit Report for the financial year ended March 31, 2017 issued by Mr.A.N.Raman, Cost Auditor was submitted to the Central Government on September 07, 2017.
SECRETARIAL AUDIT
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 has appointed M / s. B.Chitra & Co, Company Secretaries in practice to undertake the secretarial audit of the Company. The Report of secretarial audit is annexed as Annexure IV. The audit report is unqualified and without reservation or adverse comment on compliance.
REPORTING OF FRAUDS BY AUDITORS
During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditor have not reported any instance of fraud committed in the Company by its officers or employees to the Audit Committee under Section 143(12) of the Companies Act, 2013, details of which needs to be reported.
CORPORATE GOVERNANCE
A Report on Management Discussion & Analysis of Performance (Annexure VII) and Compliance of Corporate Governance under SEBI (LODR) and the certificate from the auditors confirming compliance of the conditions of Corporate Governance are included in this Annual Report as Annexure V
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure VI
ANNEXURES FORMING PART OF BOARDâS REPORT
The annexures referred to in this report and other information which are required to be disclosed are annexed herewith and form part of this Report of the Board.
Annexure |
Particulars |
I |
Energy conservation and Technology absorption |
II |
Annual Report on CSR activities |
III |
Remuneration Policy |
IV |
Secretarial Audit Report |
V |
Corporate Governance Report along with the Certificate of Auditors |
VI |
Extract of Annual Return in Form MGT-9 |
VII |
Management Discussion & Analysis Report |
ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation for the excellent support and co-operation given by customers, shareholders, vendors, collaborators, business partners / associates, statutory authorities, Central and State Governments during the year under review.
Your Directors also record their appreciation to the bankers for their trust and continuous support to the Company. Your Directors place on record their sincere appreciation to the employees of the company at all levels for their commitment and valuable contribution to the Company.
For and on behalf of the Board
Place : Chennai Sasikala Raghupathy
Date : August 14, 2018 Chairperson
Mar 31, 2015
Dear Members,
The directors have pleasure in presenting their 29th Annual Report
together with the audited financial statements for the year ended March
31,2015.
FINANCIAL RESULTS
The highlights of the financial performance of the Company during the
financial year ended March 31, 2015 as compared with the previous
financial year ended March 31,2014 are summarized below:
(RS. Crore)
Description 2014-15 2013-14
Income from
operations 3365 3295
Other income 1.50 0.50
Total Income 3367 3296
Earnings
before Interest,
Depreciation, Tax
and Amortization 310 393
Profit before tax 79 192
Tax Expense 37 82
Net Profit 42 110
Amount available
for appropriation 42 110
Less:
a) Dividend - 22
b) Tax on dividend - 04
c) Transfer to
general reserve 4 11
Balance carried to
Balance Sheet 38 73
DIVIDEND AND APPROPRIATION
Your Board of Directors in order to shore up net worth and retained
funds have not recommended dividend for the FY 2014-15. Your directors
wish to carry an amount of RS. 38 crores to the Balance Sheet after
appropriation of RS. 4 crores to general reserve.
OPERATING PERFORMANCE
During the year, the Company has successfully commissioned the 1 x 600
MW Mettur thermal power plant in Tamil Nadu. The plant has achieved
commercial operation and was handed over to the client TANGEDCO for
regular commercial operations. Another major milestone for the Company
was the successful achievement of commercial operation date for Unit 1
of the 2x660 MW Krishnapatnam Project, which was the first Super
Critical BoP project undertaken by the Company. Your Company has
achieved commercial operation date (COD) for Unit 1 of the 2 x 600 MW
EPC Kalisindh Project and the Unit is currently under commercial
operation by the client, RRVUNL.
Air Fin Cooler ("AFC") division has achieved a record growth of
turnover in the backdrop of tough market conditions. The division has
maintained its market leadership in India with significant orders from
Reliance and BPCL. The division is expected to reach the position of a
dominant player in international market in the foreseeable future. The
Company now lays thrust on high value orders and higher grade of
materials of construction. Investments have been made in manpower as
well as manufacturing capability and quality systems so that AFC is
competent for bigger growth in international markets.
In the year 2014-15, Electrical Project Division ("EPD") has secured
despite a competitive environment, 4 Sub-station project contracts from
TANTRANSCO. These projects cover installation of EHV switchyard of 63
bays with 2740 MVA of transformation capacity. EPD made substantial
completion of supplies for the first unit of Nuclear Power Project of
Kakrapar(KAPP) in Gujarat.
Environmental Engineering Division ("EED") has bagged order for supply
of Deaerators for 2 x 660 MW for super critical project at Malwa.
During the year under review the division manufactured and supplied 13
numbers of Deaerators which includes super critical and nuclear power
stations. The division has successfully executed first large size
desalination plant with a capacity of 13.5 Millions of Liters per
Day(MLD) in a record time of seven months. The division successfully
commissioned two water treatment plants during the year under review.
Oil & Gas Equipment division ("OGED") has signed a co-operation
agreement for technical support with AMR Process, Canada.
This tie-up, is expected to enable the division to widen its potential.
INDUSTRY ANALYSIS - POWER
The policy initiatives of the Union Government are expected to
facilitate resurgence of the power sector's value chain as a whole in
the next 5 years, especially in the backdrop of the action plan towards
coal production target to 1 Billion MT and 24 x 7 power in the entire
country.
Despite the positive indicators of the power sector, the investment
climate in power sector in the current year remains bearish. Fuel
security issues, funding issues, dire financial situation of many State
Discoms, lesser participation of IPPs in the market due to macro issues
pose as road blocks to the power industry. The GDP growth at just over
6%, low per capita electricity consumption, downward spiraling prices
of crude in the last 3 quarters would augur well for development of the
economy.
With fewer projects getting off the ground, the problem of too few for
too many players has arisen and this unfavourable situation forced all
players into fierce competition. Investments in the Power and
Infrastructure Sector have slowed down to a great extent, except
Central/ State Utilities such as NTPC, Department of Atomic Energy,
resulting in extreme pressure on prices. The situation is expected to
improve when investments in major infrastructure projects take-off in
the coming years.
FUTURE OUTLOOK
India's demand for Electricity is expected to take a sharp leap upwards
with "Make in India" programme of the Government of India gaining
momentum. Your Company envisages opportunities for EPC/BoP projects for
combined capacity of around 30,000 MW over the next 3 years. Your
Company is well placed to secure a significant market share in these
prospects. The completion of first and second stage of coal mines
allotment through e-auction to both the Power and Industry Sectors
likely to give impetus to many projects which were at planning stage to
move forward with implementation of projects.
The water market especially on the municipal and urban sector are
growing at an exponential pace and since water is fast
becoming a scarce commodity, the business to treat waste water is
gaining critical importance. Having gained the requisite experience in
primary and secondary treatment of water, your Company now making
efforts to leap into the waste water treatment business in a big way by
associating with international leaders in respective field of
specialization. Central power PSUs viz., NTPC and NLC and several State
Gencos are now moving towards BTG and BoP method of contracting. Your
Company will continue to leverage its capability and value proposition
in BoP contracting and will extend this proposition to all customers
who are following the BoP contractual methodology.
India is also set to triple its Nuclear Power Project generation
capacity in the next decade. Prospects for capacity addition of 2800 MW
are on the horizon and scope of work for Balance of Plant (BoP) and
construction are likely to be available. Nuclear Power Projects for
capacity addition of 3400 MW have witnessed the initial ground-
breaking ceremonies and civil works are now being awarded. The
tendering processes for downstream activities are slated to commence in
FY 2015-16 for 3400 MW. This provides another opportunity for EPD given
its proven credentials in this segment.
Considering the slowdown in the Indian power sector, the Company has
identified Bangladesh, Indonesia and Africa as potential markets and is
now bidding for contracts. Your Company will utilize the next 12-18
months to augment and address international markets for Oil & Gas for
supply of gas processing equipment & systems, EPC power projects in
South East Asia, Middle East and CIS countries. Your company has given
thrust to high "Health, Safety and Environment" Standards, high
quality, superior engineering so as to sustain the confidence of
international clients. AFC and OGED are focusing on domestic and
international markets with emphasize on Middle East, East Europe and
South East Asia and to achieve greater penetration forging alliances
for technical and sales support services.
Your Company's in depth expertise in engineering of complex power
projects gives confidence to undertake projects in water, oil & gas,
nuclear power, transmission and distribution, desalination projects,
sewage treatment plants and infrastructure projects.
PROGRESS AND STATUS OF JOINT VENTURES
BGR Boilers Private Limited and BGR Turbines Company Private Limited
These joint venture companies with Hitachi were set up in 2010 to carry
on the business of design, engineering and manufacture of supercritical
steam generators (SG) and supercritical steam turbine and generators
(STG) of 660 MW, 800 MW and 1000 MW capacity. During the year under
review, these JV companies have not witnessed significant progress in
setting up of manufacturing facilities. Until the previous year, these
companies have acquired substantial private lands required for
manufacturing facilities and also made significant progress towards
purchase of capital equipment.
On February 1,2014 the global integration of thermal power businesses
of Mitsubishi Heavy Industries Limited (MHI) and Hitachi, Ltd. (HL)
through a joint venture viz., Mitsubishi Hitachi Power Systems Limited
(MHPS) was brought into effect. In the light of this global
integration, Hitachi, Ltd. and Hitachi Power Europe GmbH (HPE) have
ceased to be Qualified Manufacturers (QM) of steam turbine and
generators and steam generators respectively. This, as a consequence,
has impacted setting up of manufacturing facilities and carrying on
future business.
These developments had also impacted the on-going contracts for supply
of SG and STG to NTPC and DVC. NTPC sought to address and remedy
certain issues through Novation Agreement whereby MHPS and MHPSE would
substitute themselves as technical collaborator, joint venture partner
/ equity shareholder in these joint venture companies.
Your company asserted its contractual rights under various joint
venture contract documents and also initiated certain legal action.
Your company also engaged in bilateral negotiations with Hitachi and
trilateral discussions with Hitachi and NTPC to find fair and
acceptable settlement of contractual issues arose on account of
aforesaid global integration.
These efforts remain inconclusive and your company believes that
circumstances exist for a way forward.
Performance and financial position of each subsidiary, JVs
A report on the performance and financial position of each of the
subsidiaries and joint venture as per rule 5 of the Companies
(Accounts) Rules, 2014 is provided as annexure to the consolidated
financial statement and hence not repeated here for the sake of
brevity. These information so disclosed may also be treated for the
purpose of rule 8(1) of the Companies (Accounts) Rules, 2014.
CONSOLIDATED FINANCIAL STATEMENT
The Consolidated Financial Statements of the Company prepared in
accordance with relevant Accounting Standards (AS-21 and AS-27) issued
by the Institute of Chartered Accountants of India form part of this
Annual Report.
As required under Section 129 of the Companies Act, 2013 a separate
statement containing the salient features of the financial statement of
subsidiaries is attached along with the financial statement.
In terms of Section 136 of the Companies Act, 2013 the Company has
placed on its website the standalone and consolidated financial
statements and the separate audited and unaudited accounts of all
subsidiary companies as the case may be and the Company will provide a
copy of separate audited financial statements in respect of each of its
subsidiary, to any shareholder of the company who asks for it.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. K. Chandrashekhar, Director - Projects resigned and he was relieved
from the services of the Company effective May 31, 2014. In accordance
with the provisions of Companies Act, 2013 Mr. V. R. Mahadevan,
Director retires by rotation and being eligible offers himself for
reappointment. A brief profile of Mr.V. R. Mahadevan is given in the
notice convening the 29th annual general meeting of the Company.
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and Clause 49 of the listing agreement.
At the Board Meeting held on May 30, 2014 Mr.R.Ramesh Kumar, President
- Corporate & Secretary and Mr.PR.Easwar Kumar, Chief Financial Officer
were appointed and designated as "Key Managerial Personnel" of the
Company pursuant to Section 203 of the Companies Act, 2013.
MEETINGS OF BOARD
During the year 4 Board meetings and 4 Audit Committee meetings were
convened and held, the details of which are given in the Corporate
Governance Report. The intervening gap between any two meetings was
within the period prescribed under the Companies Act, 2013.
ANNUAL EVALUATION OF BOARD
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the listing agreement, the Board has carried out an annual evaluation
of its own performance, individual directors separately as well as the
evaluation of the working of its Audit Committee, Committee of
Directors, Stakeholders Relationship Committee and Nomination and
Remuneration Committee. A robust review system was adopted by the
Nomination and Remuneration Committee covering various aspects of the
functioning of the Board and every Director for evaluation of
performance.
AUDIT COMMITTEE
The Audit Committee of the Board comprises of four directors of which
three members are independent directors and all the members of Audit
Committee are financially literate. More details of the Audit
Committee are provided in the Corporate Governance Report.
SHARE CAPITAL
The paid-up equity share capital of the Company as on March 31, 2015
was RS. 72.16 Crores. During the year under review, the Company has not
issued shares with differential voting rights nor granted stock options
nor sweat equity.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
In compliance with Section 205(C) of the Companies Act, 1956 a sum of
RS. 9,60,140/- being the unclaimed refund amount of balance application
money in respect of the issue of equity shares in the initial public
offer (IPO) of the Company made in the year 2007 was transferred to the
Investor Education and Protection Fund of the Central Government in
January 2015 after giving sufficient notice to the concerned
shareholders.
Dividend which remains unclaimed out of the dividend declared by the
Company for the financial year ended March 31, 2008 at the Annual
General Meeting held on September 19, 2008 will be transferred to the
Investor Education and Protection Fund of the Central Government in
October 2015 pursuant to the provisions of Section 205A of the
Companies Act, 1956. Thereafter no claim shall lie on these dividend
from the shareholders.
HUMAN RESOURCES
Your Company has always had a strong conviction that the human capital
is the pivotal force behind organization's success and therefore, has
considered people development to be a vital need. The learning and
development initiatives continued to receive importance. Accordingly,
training programs based on development needs identified through
competency gap analysis were designed and organised. In all, 150
programmes were organised and 1986 participants attended these
programmes.
The Human resources function has been actively engaged in being a
strategic partner of business. The people processes play a key role in
ensuring that the Company remains a vibrant organization. As a step
forward towards institutionalization of contemporary people processes,
a HR study was undertaken facilitated by renowned external HR
Consultants. With a view to ensure participative approach, the
consultants had interacted with a number of employees in order to elicit
their views and expectations. Consequently, the areas of improvements
were identified and brainstormed by three Task forces consisting of
employees from various divisions / functions and levels. Based on their
recommendations, a number of new Employee Engagement initiatives have
been introduced in the areas of improving work-life balance, creating
better living conditions at project sites, launch of interactive
Intranet portal, organizing sports and cultural events. These
initiatives have been received well by the employees and have gone a
long way to boost the morale of the employees and many more such
initiatives are at works. Industrial Relations at various project sites
and manufacturing units were cordial through the year.
Your Company is committed to permeating performance driven culture and
towards this objective, it is imperative that employees are
distinguished based on their contribution and recognized and rewarded
adequately. Accordingly, the performance excellence awards were
introduced and 49 employees were honoured in the Founder's day
celebrations on September 28, 2014.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Act read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are
provided elsewhere in the Annual Report.
In terms of the provisions of Section 197(12) of the Act read with
Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, a statement showing the names and
other particulars of the employees drawing remuneration in excess of
the limits set out in the said rules are provided in the Annual Report.
Having regard to the provisions of the first proviso to Section 136(1)
of the Act, the Annual Report excluding the aforesaid information is
being sent to the members of the Company. The said information is
available for inspection at the registered office of the Company during
working hours and any member interested in obtaining such information
may write to the Company Secretary and the same will be furnished on
request.
EMPLOYEE STOCK OPTION SCHEME
Your Company has implemented the Employee Stock Option Scheme 2007 in
accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999. The Nomination and Remuneration
Committee, administers and monitors the Scheme. The applicable
disclosures as stipulated under the SEBI Guidelines as at March 31,2015
are attached as Annexure - I of this report.
DEPOSITS
Your Company has not accepted deposit from the public during the period
under review and hence did not have outstanding deposits.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information on conservation of energy, technology absorption
stipulated under Section 134(3)(m) of the Companies Act, 2013 read with
Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as
Annexure II. During the FY 2014-15, the Foreign exchange earnings and
outgo were RS. 104906 lakhs and RS. 1125 lakhs respectively.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH
REFERENCE TO FINANCIAL STATEMENTS
Your Company has internal control system which includes financial
control commensurate with the size, scale and complexity of company's
operations. The internal audit function evaluate the efficacy and
adequacy of internal control system in the Company, its compliance with
operating systems, accounting procedures and policies at all locations
of the Company. Based on the report of internal audit function, process
owners undertake corrective action in their respective areas and
thereby strengthen the controls. Significant audit observations and
corrective actions thereon are periodically presented to the Audit
Committee of the Board.
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility Committee was constituted by the Board of
Directors on May 30, 2014 with Mrs.Sasikala Raghupathy as Chairman and
Mrs.Swarnamugi Karthik and Mr.Gnana Rajasekaran as members of the
Committee. The CSR Policy formulated and recommended by the Committee
was approved by the Board on November 12, 2014. The Policy is in line
with Schedule VII of the Companies Act, 2013 and the Company will be
focusing on CSR activities pertaining to education, health, skill
development and destitute women care and welfare. The contents of CSR
Policy is given in the Corporate Governance Report. The Annual Report on
CSR activities is annexed herewith as Annexure III.
REMUNERATION POLICY
The Remuneration Policy formulated by the Nomination and Remuneration
Committee is given in Annexure IV.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has established a vigil mechanism for directors and
employees to report genuine concerns as required by the Companies
(Meetings of Board and its Powers) Rules, 2014 and the policy/mechanism
has adequate safeguards against victimization of persons who use such
mechanism and provision for direct access to the chairperson of the
Audit Committee in appropriate or exceptional cases.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Particulars of loans, guarantees or investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
note No.34 to the Financial Statements.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the
financial year were in the ordinary course of business and on an arm's
length basis. There were no materially significant related party
transactions made by the Company with Promoters, Directors, Key
Managerial Personnel or other designated persons which may have a
potential conflict with the interest of the Company at large. All
related party transactions are placed before the Audit Committee for
approval. The Policy on related party transactions as approved by the
Board is uploaded on Company's website.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR
COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S
OPERATIONS IN FUTURE
There are no significant and material orders passed by the regulators
or courts or tribunals impacting the going concern status of the
Company.
SECRETARIAL AUDIT
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 has appointed M/s.B.Chitra & Co,
Company Secretaries in practice to undertake the secretarial audit of
the Company. The Report of secretarial audit is annexed herewith as
Annexure V. The audit report is unqualified and without reservation or
adverse comment on compliance.
RISK MANAGEMENT POLICY
The Company as part of Standard Operating System and Procedure
institutionalized risk management covering risk identification,
mitigation and management measures. This Risk Charter and Policy have
been brought to practice as per part of internal control systems and
procedures. The Management has applied the risk management policy to
activities and processes of the business and this is reviewed to ensure
that executive management manages risk through means of a properly
defined framework.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(3) (c ) of the Companies
Act, 2013 with respect to Directors' responsibility statement, it is
hereby confirmed that:
a) in the preparation of the annual accounts for the Financial year
ended March 31, 2015, the applicable accounting standards had been
followed along with proper explanation relating to material departures
;
b) the Directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at March 31,2015 and of the profit of the Company for the
Financial year ended on that date ;
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
d) the Directors had prepared the annual accounts for the year ended
March 31, 2015 on a going concern basis.
e) the Directors had laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively.
f) the Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
STATUTORY AUDITORS' AND AUDITOR'S REPORT
Manohar Chowdhry & Associates, Chartered Accountants, Statutory
auditors of the Company, hold office until the conclusion of the
ensuing Annual General Meeting and are eligible for reappointment.
Manohar Chowdhry & Associates, Chartered Accountants confirmed that
their re- appointment, if made, would be within the limits prescribed
under Section 139 of the Companies Act, 2013 and that they are not
disqualified for re-appointment in terms of Section 141 of the
Companies Act, 2013.
Explanation to Auditor's report on consolidated financial statements as
required under Section 134(3) of the Companies Act, 2013
Auditor's Qualification:
The Auditors have expressed a qualified opinion stating that the
consolidated financial statement include unaudited financial
statement and other financial information of two subsidiaries, namely,
BGR Boilers Private Limited and BGR Turbines Company Private Limited
whose aggregate assets of RS. 1,11,800 lakhs as at March 31 , 201 5,
aggregate revenue of RS. 1,28,645 lakhs and cash out flow amounting to
RS. 277 lakhs for the year then ended. These unaudited financial
statements as approved by the respective Board of Directors of the
subsidiary companies have been furnished to the Auditors by the
management of the holding company and the Audit report insofar as it
relates to the amounts included in respect of these subsidiaries are
based solely on such unaudited financial statements. The Auditors have
stated that they are unable to comment on adjustments that may have
been required to the accompanying consolidated financial statements had
such unaudited financial statements been audited.
(Refer Page No. 72 in the Annual Report 2015).
Board's reply:
As the audited accounts of these subsidiaries were not received before
approval of accounts by the Board of Directors of the holding Company,
the consolidation was done on the basis of provisional unaudited
financial statements taken on record by the Board of Directors of the
respective subsidiary companies.
COST AUDITORS
The Board of Directors at its meeting held on May 28, 2015 approved the
appointment of Mr.A.N.Raman, Cost Accountant as the Cost Auditor of the
Company for the Financial year 2015-16, pursuant to the applicable
provisions under the Companies Act, 2013.
Pursuant to Section 233(B)(4) of the Companies Act, 1956 Cost Audit
Report for the financial year ended March 31, 2014 issued by
Mr.R.Vaidhyanathan, Cost Auditor was submitted to the Central
Government on October 27, 2014.
CORPORATE GOVERNANCE
A Report on Management Discussion & Analysis of Performance and
Compliance of Corporate Governance under Clause 49 of the Listing
Agreement and Certificate from auditors confirming compliance of
conditions of Corporate Governance are included in this Annual Report as
Annexure VI.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form
MGT-9 is annexed herewith as Annexure VII.
ANNEXURES FORMING PART OF DIRECTORS' REPORT
The annexures referred to in this report and other information which
are required to be disclosed are annexed herewith and form part of this
Report of Directors.
ANNEXURE PARTICULARS
I Disclosure on ESOP as per SEBI Guidelines
II Energy conservation and Technology absorption
III Annual Report on CSR activities
IV Remuneration Policy
V Secretarial Audit Report
VI Corporate Governance Report along with the
Certificate of Auditors
VII Extract of Annual Return in Form MGT-9
VIII Management Discussion & Analysis
ACKNOWLEDGEMENTS
Your Directors wish to thank the customers, vendors, collaborators,
business partners/ associates, statutory authorities, Central and State
Governments and shareholders for their support and cooperation during
the year under review.
Your Directors also record their appreciation to the bankers for their
continued financial support and guidance. Your Directors place on
record their sincere appreciation to all the employees of the company
for their unstinted commitment and continued contribution to the
Company.
For and on behalf of the Board
Sasikala Raghupathy
Chairman
Place : Chennai
Date : August 03, 2015
Mar 31, 2014
To the Members of
BGR ENERGY SYSTEMS LIMITED
The directors have pleasure in presenting Twenty Eighth Annual Report
together with the audited financial statements for the year ended March
31, 2014.
FINANCIAL RESULTS_
The highlights of the financial performance of the Company during the
financial year ended March 31, 2014 as compared with the previous
financial year ended March 31, 2013 are summarized below:
(Rs. Crore)
Description 2013-14 2012-13
Income from 3295 3107
operations
Other income 0.50 5
Total Income 3296 3112
Earnings before 393 433
Interest, Depreciation, Tax and
Amortization
Profit before tax 192 245
Tax Expense 82 81
Net Profit 110 164
Amount available for 110 164
appropriation
Less :
a) Dividend 22 51
b) Tax on dividend 4 8
c) Transfer to general 11 16
reserve
Balance carried to 73 89
Balance Sheet
Dividend and Appropriation_
Your Board of Directors have recommended a dividend of Rs. 3/- per equity
share of Rs. 10/- each subject to the approval of the Members at the
forthcoming 28th Annual General Meeting. This will result in dividend
payment of Rs. 21.65 crores and payment of dividend tax of Rs. 3.68 crores.
The dividend will be paid to members whose names appear on the Register
of Members as on September 25, 2014 and as informed to the Company by
National Securities Depository Limited and Central Depository Services
(India) Limited, in respect of shares held in demat mode. Your
directors wish to carry an amount of Rs. 73.62 crores to the Balance
Sheet after appropriation towards dividend, corporate dividend tax and
transfer to general reserve.
PERFORMANCE REVIEW_
During the year, your Company has received Letter of Award from Odisha
Power Generation Corporation for execution of BoP works for
2 Ã 660 MW Thermal Power Plant in the State of Odisha. Your Company won
its first BoP international contract to execute a 4 Ã 125 MW Gas based
Power Plant at Nasiriyah, Iraq and the Ministry of Electricity,
Government of Iraq issued the Letter of Award on October 13, 2013.
Your Company has completed commissioning of unit 1 (1 Ã 600 MW EPC) of
Kalisindh project and unit 2 (1 Ã 600 MW EPC) of the same project is
under progress. In respect of Mettur Project (1 Ã 600 MW EPC) trial
operations were completed and the plant is under commercial operation.
Your Company has achieved good progress in the implementation of all
ongoing EPC and BoP project contracts viz., Chandrapur (2 Ã 500 MW
BoP), Marwa (2 Ã 500 MW BoP), Nawapara (2 Ã 300 MW EPC), Krishnapatnam
(2 Ã 660 MW BoP), Mettur (1 Ã 600 MW EPC).
In respect of Super Critical technology space secured through NTPC''s
bulk tender process, Your Company is progressing in the execution of
contracts viz. NTPC Solapur (2Ã660 MW Boiler and its auxillary), DVC
Raghunathpur (2Ã660 MW Boiler and its auxillary), NTPC Lara (2x800 MW
STG and its auxillary) and NTPC Meja (2Ã660 MW Boiler and its
auxillary). Your company is executing these Boiler contracts in
collaboration with BGR Boilers Private Limited and Hitachi Power
Europe. The contract for supply of Steam Turbine and Generator to Lara
project is being executed in collaboration with BGR Turbines Company
Private Limited and Hitachi Japan.
Your Company is initiating execution of new contracts secured during
the year Viz. OPGCL- Odisha (2X660 MW BoP), Nasiriyah GTPP-Iraq (4x125
MW EPC).
As part of emphasis on achieving high standards of Quality Management,
Power Projects Division received ISO 9001:2008 Certification.
Air Fin Cooler division has retained its dominant market leadership in
Indian market and secured orders from Reliance and BPCL. Excellence in
execution backed by senior level customer relationship and strategies
has helped your Company to achieve highest order booking of Rs. 241
Crore. AFC has earned highest ever profit during the year by product
mix and cost reduction strategies. The outlook for AFC business is
quite promising in the international market, especially in Oman and
Kuwait with major investments happening.
In the year 2013-14, Electrical Project Division saw one more year of
achievement in establishing its core competency of the Division as a
source of engineering excellence. During the year under review by
active cooperation of selected manufacturers and suppliers, division
carried out extensive type test and seismic test to verify
and obtain approval for supplies of Major range of electrical equipment
required for Nuclear Power Projects. During the year 400 KV GIS was
installed and commissioned for TANGEDCO for their 1Ã600 MW Mettur
Thermal Power Project (Stage III) at Mettur, Salem District and also
achieved 6000 kms in terms of total live line installation of OPGW.
Environmental Engineering Division has bagged India''s largest Deaerator
package from L & T for NPCIL for 2Ã700 MW RAPP and also bagged first
export order to Raksaya, Indonesia for Deaerator. EED completed first
CPU PG Test at BHEL (GSECL), Ukal -1Ã500 MW and the Second CPU PG Test
in progress at North Chennai 2Ã500 MW- Unit II. Your Company has bagged
first WTP order on EPC basis from Public Works Department, Government
of Odisha - 42 MLD Water supply to Puri town. The overall financial
performance of the division during the year has been generally in line
with the market conditions which have not been very encouraging.
Nevertheless, the division could register many operating achievements
during the year.
Oil & Gas Equipment Division with a breakthrough order from Reliance,
is ready for turn around. OGED is working for a major order for
Gathering Centers. During the year under review, prime focus was on
getting registration and establishing customer approvals.
INDIAN POWER SECTOR SCENARIO
With a production of 1,006 TWh (including captive generation), India is
the fifth largest producer and consumer of electricity in the World.
Although power generation has grown over 100-fold since independence,
demand growth has been even higher due to accelerating economic
activity.
The country''s installed power generation capacity has more than doubled
to 237.74 GW during the past 10 years and the current thermal installed
capacity in the country stands at 163.30 GW. For the 12th Five-Year
Plan, a total of 88.5 GW of power capacity addition is targeted, of
which 72.3 GW constitutes thermal power. Thus, the total capacity
addition targeted was 18,432 MW, while the actual capacity addition
achieved till Feb''14 was 12,539 MW.
EPC INDUSTRY ANALYSIS
The EPC companies represent an important cog in the wheel of power
capacity addition in the country. Over the past few years, some large
EPC companies have witnessed impressive growth in their revenues and
order books. However, this growth is not reflected in their bottom line
performance.
This slowdown/squeeze in profits can be attributed to multiple causes Â
time overruns due to regulatory bottlenecks, cost overruns,
inflationary pressures, project delays, commodity price fluctuations,
aggressive bidding, resource constraints, delayed payments from
clients, inability to receive design in time and scope change approvals
from clients. All these factors, adversely impacted project cash flows
and consequently interest outgo and lower profits. The added debt
burden affects overall profitability. Furthermore, companies have been
adversely affected by the slowdown in award of projects, execution
hurdles and rising interest rates. This has resulted in stretched
working capital requirements and has led to an increased debt burden on
the balance sheet. In the present scenario, companies face an
increasing need to realign their strategies and focus on profitability
as against revenue growth.
FUTURE OUTLOOK, THE YEAR AHEAD
Your Company has been able to sustain the ongoing sluggish period in
the Power Sector in terms of new order intake and implementation of
existing projects. The recent positive economical and policy indicators
in the form of fast track approval process for new projects adopted by
Government; debt restructuring to rejuvenate the SEB''s, coal allocation
for projects, have had favourable effect on the sector and the
dividends of the same will be witnessed in the coming years.
The Company is poised to further strengthen its position in domestic
market. The Company is currently in an active transition mode to gear
up from a Domestic EPC Company to a Global EPC solution provider of
International standards and repute. New methodology in project and
civil work execution, new strategies for talent management, additional
capital investment in Plant and Machinery for increased mechanization,
strategies to ramp up the HSE policies, quality of workmanship are
being actively pursued.
The Company will focus aggressively on products catering to the process
industry in the oil & gas and petrochemical sectors. The equipment
offering of your Company such as Air Fin Cooler, Deaerator and CPU were
able to gain the significant market share and are now the most
preferred product supplier for many of the large conglomerates in India
and abroad. New methodology implemented for cost reduction in
manufacturing, improvements in quality and service of these products
have reaffirmed market prominence in these segments.
The first International EPC order for a Power Project in Iraq, has
enabled the Company to ascertain the Company''s core Engineering and
Project Management capabilities and instill confidence to international
clients of your Company''s capability as a Global EPC company. The
Company will strive to demonstrate significant presence in the South
East Asian Markets and Middle East where number of coal and gas based
power projects are planned. These markets would continue to
attract big investment due to their low per capita consumption of
electricity, high demand and vast energy resource availability. Hence,
your Company would strive to further gain strength in International
markets by targeting projects of high value.
PROGRESS AND STATUS OF JOINT VENTURE
BGR Boilers Private Limited and BGR Turbines Company Private Limited
These joint venture companies with Hitachi have substantially completed
acquisition of private lands required for the project and engaged in
the process of acquiring the necessary government lands. The Companies
meanwhile have obtained construction permits for the proposed
manufacturing plant. During the year the Joint Venture Partner Hitachi
Power Europe GmbH, Germany (HPE) as part of global integration of
thermal power system business of MHI and Hitachi has merged its thermal
Power business with Mitsubishi Heavy Industries Limited to form a new
joint venture "Mitsubishi Hitachi Power Systems Limited". HPE has
indicated that they will however continue with the Joint Venture in
India and the matters of concern arising due to the global integration
of thermal power business between Hitachi and MHI are being addressed
and your Company is looking forward to find mutually beneficial and
acceptable solutions.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard (AS-21) on Consolidated
Financial Statements read with Accounting Standard (AS-27) on financial
reporting of interest in Joint Ventures, the audited Consolidated
Financial Statements are annexed to this annual report.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Statement of
Profit and Loss and other documents of the Subsidiary companies are not
attached with the financial statements of the Company. The Company will
make available the annual financial statements of the Subsidiary
companies and related information to the members of the Company who may
be interested in obtaining the same. The annual accounts of the
Subsidiary companies will be open for inspection by shareholders at the
Registered and Corporate Office of the Company and Subsidiary
companies. The Consolidated Financial Statements presented by the
Company include the financial results of its Subsidiary companies.
HUMAN RESOURCES
Skill development continues to be the focus during this year as well.
Training is an important aspect of people development which enables
enhancement of technical, behavioural and managerial skills of the
employees and therefore, it is imperative for any organization to
provide adequate opportunities and encouragement to its employees to
learn and develop.
Keeping the above in view, a detailed exercise was carried out to map
the competency requirements and identify competency gaps of each
employee and based on such competency gaps, suitable training programs
were designed and implemented across levels / functions / locations.
During the year, 112 training programs were organised and 2228
participants attended the programs across the organization.
EMPLOYEE STOCK OPTION SCHEME
The Company has implemented the Employee Stock Option Scheme 2007 in
accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999. The Compensation Committee,
constituted in accordance with the SEBI Guidelines, administers and
monitors the Scheme. The applicable disclosures as stipulated under the
SEBI Guidelines as at March 31, 2014 are attached as Annexure  I of
this report.
DEPOSITS
Your Company has not accepted any deposit from the public during the
period under review and did not have any outstanding deposits.
STATUTORY INFORMATION
Information pursuant to Section 217 (1) (e) of the Companies Act, 1956
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 with respect to conservation of energy
are not applicable to your Company. The particulars relating to
technology absorption are enclosed as Annexure  II of this report.
During the FY 2013-14, the Foreign exchange earnings and outgo were Rs.
17995 lakhs and Rs. 679 lakhs respectively. In terms of the provisions of
Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975 as amended, the names and other
particulars of the employees are set out in the annexure to the
Directors'' Report. Having regard to the provisions of Section
219(1)(b)(iv) of the Companies Act, 1956 the annual report excluding
the aforesaid information is being sent to all the members of the
Company. Any member interested in obtaining such information, may write
to the Company Secretary of the Company.
LEADERSHIP
Mr. B.G. Raghupathy, Founder / Chairman of the Company passed away on
July 28, 2013. Your directors wish to place on record its deep grief
and sorrow on the untimely and sudden demise of the visionary leader,
who steered the Company and built BGR Energy Systems Limited as a
professionally competent and competitive company in the Power sector.
Subsequent to the untimely demise of Mr.B.G.Raghupathy the Board of
Directors on July 31, 2013 constituted an "Empowered Committee of
Directors" with substantial powers of management so as to enable
seamless transition until such time the Promoter group and the Board
make decision on appointment of Chairman of the Board and Managing
Director. The Empowered Committee discharged all important functions
and affairs of the Company at apex level. Mrs. Sasikala Raghupathy was
appointed as Chairman of the Board of Directors of the Company by the
Board of Directors on September 11, 2013. Thereafter, the Board and
Promoters with careful consideration and analysis has appointed a
leadership team consisting of two joint managing directors effective
from October 2013.
Accordingly, Mr. V.R.Mahadevan was
re-designated as Joint Managing Director and Mr. A.Swaminathan was
appointed as Joint Managing Director & CEO. Mr. Mahadevan is entrusted
with responsibility of technology initiatives, joint ventures and
capital projects, technology infrastructure, and strategic
collaboration. Mr. Swaminathan will lead the whole of business
operations including Progen Systems and Technologies Limited.
BOARD OF DIRECTORS
Mr. M.Gopalakrishna and Mr. S.A.Bohra, Directors, retire by rotation
and being eligible, offer themselves for re-appointment as independent
directors to hold office consecutively for a term up to March 31, 2019.
The Board recommends their re-appointment. In terms of Section 149 and
other applicable provisions of the Companies Act, 2013 the Board
recommends the re-appointment of remaining independent directors namely
Mr. S.R.Tagat and Mr. Heinrich Bohmer to hold office consecutively for
a term up to March 31, 2019 and Mr. M.S.Sundara Rajan and Mr. Gnana
Rajasekaran to hold office consecutively for a term up to the
conclusion of Annual General Meeting in the year 2019. Profile of the
directors is given in the notice convening the 28th annual general
meeting of the Company.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors'' Responsibility Statement, it is
hereby confirmed that:
(a) In the preparation of the annual accounts for the Financial year
ended March 31, 2014, the applicable accounting standards read with
requirements set out under Schedule VI to the Companies Act, 1956 have
been followed and there are no material departures from the same;
(b) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31, 2014 and of the profit of the Company
for the Financial year ended on that date;
(c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
(d) the Directors have prepared the annual accounts for the year ended
March 31, 2014 on a going concern basis.
STATUTORY AUDITORS AND AUDITORS'' REPORT
Manohar Chowdhry & Associates, Chartered Accountants, Statutory
auditors of the Company, hold office until the conclusion of the
ensuing Annual General Meeting and are eligible for re-appointment.
Manohar Chowdhry & Associates, Chartered Accountants confirmed that
their re-appointment, if made, would be within the limits prescribed
under Section 139 of the Companies Act, 2013 and that they are not
disqualified for re-appointment in terms of Section 141 of the
Companies Act, 2013.
COST AUDITORS
The Board of Directors at its meeting held on May 30, 2014 approved the
appointment of Mr. R. Vaidhyanathan, Cost Accountant as the Cost
Auditor of the Company for the Financial year 2014-15, pursuant to the
applicable provisions under the Companies Act, 2013. Pursuant to
Section 209(1)(d) of the Companies Act, 1956 Cost Audit Report for the
Financial year ended March 31, 2013 issued by Mr. R.Vaidhyanathan, Cost
Accountant was submitted to the Central Government on November 08,
2013.
CORPORATE GOVERNANCE
A Report on Management Discussion & Analysis of Performance and
Compliance of Corporate Governance under clause 49 of the listing
agreement and Certificate from auditors confirming compliance of
conditions of Corporate Governance is included in this Annual Report.
ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation for the
excellent support and co-operation given by customers, shareholders,
vendors, collaborators, business partners/ associates, statutory
authorities, Central and State Governments during the year under
review.
Your Directors also record their appreciation to the bankers for their
continued support and timely financial assistance in meeting the
Company''s resource requirements. Your Directors acknowledge the
dedicated services rendered by all the employees of the company.
For and on behalf of the Board
Place : Chennai Sasikala Raghupathy
Date : 30.05.2014 Chairman
Mar 31, 2013
To the Members of BGR ENERGY SYSTEMS LIMITED
The directors have pleasure in presenting the Twenty Seventh Annual
Report together with the audited financial statements for the year
ended March 31, 2013.
FINANCIAL RESULTS
The highlights of the financial performance of the Company during the
financial year ended March 31, 2013 as compared with the previous
financial year ended March 31, 2012 are summarized below:
(Rs. Crore)
Description 2012-13 2011-12
Income from operations 3107 3447
Other income 5 5
Total Income 3112 3452
Earnings before Interest, 433 473
Depreciation, Tax and Amortization
Profit before tax 245 327
Tax Expense 81 103
Net Profit 164 224
Amount available for appropriation 164 224
Less :
a) Dividend 51 51
b) Tax on dividend 8 8
c) Transfer to general reserve 16 22
Balance carried to Balance Sheet 89 143
DIVIDEND
Your Board of Directors have recommended a dividend of Rs. 7 per equity
share of Rs. 10/- each subject to the approval of the Members at the
forthcoming 27th Annual General Meeting. This will result in dividend
payment of Rs. 50.51 crores and payment of dividend tax of Rs. 8.19
crores. The dividend will be paid to members whose names appear on the
Register of Members as on September 25, 2013 and as informed to the
Company by National Securities Depository Limited and Central
Depository Services Limited, in respect of shares held in demat mode.
Your directors wish to carry an amount of Rs. 88.60 crores to the
Balance Sheet after appropriation towards dividend, corporate dividend
tax and transfer to general reserve.
PERFORMANCE REVIEW
During the year, your Company successfully bid for a BoP Contract from
Odisha Power Generation Corporation Limited and the resulting contract
is expected to be received shortly in the current financial year.
Your Company has achieved progress in the implementation of all ongoing
EPC and BoP project contracts viz., Kalisindh (2 X 600 MW EPC), Marwa
(2 x 500 MW BoP), Mettur (1 X 600 MW EPC), Chandrapur (2 x 500 MW BoP),
Nawapara (2 X 300 MW EPC), Krishnapatnam (2 X 660 MW BoP).
In respect of break-through contracts in Super Critical technology
space secured through NTPC''s bulk tender process for supply of 6 units
of 660 MW steam generators to Solapur (2 X 660), Meja (2 x 660) and
DVC-Raghunathpur (2 X 660), your Company is executing engineering works
and commenced manufacturing activities in collaboration with BGR
Boilers Private Limited and Hitachi Power Europe. Similarly, the
contract for supply of 2 x 800 MW Steam Turbine and Generator to Lara
project is being executed in collaboration with BGR Boilers Private
Limited and Hitachi Japan.
During the year under review, Electrical Project Division has
commissioned all 4 units of 33 MW Hydroelectric project for NHPC at
Teesta, Siliguri, West Bengal as e-BoP contractor and this is the first
hydroelectric project carried out by your Company. The Division has
completed over 4750 KM of OPGW stringing under LIVE-LINE conditions on
EHV transmission lines rated up to 400 KV which was spread over 10
States of India. This Division is executing e-BoP contract for 4 units
of 700 MW Nuclear projects of Nuclear Power Corporation. Your Company
has taken steps to qualify for e-BoP projects including EHV switchyards
for Ultra Mega Power projects for which tenders are being floated by
clients.
Air Fin Cooler division has achieved growth in profit by 38% compared
to the previous financial year and this is the second consecutive year
to achieve more than 30% growth in profit. Your Company received major
orders from IOCL for Paradip Refinery and BPCL, Siemens for NMDC
project in Chattisgarh. Your Company supplied equipment to
International clients/markets, including GPS, Al-Hassan, Toledo,
Dodsal, CCC, SiadMi and AlKhorayef. Your Company has successfully
completed IBR Tube Bundles for IOCL - Paradip with shortest lead time
of 5 months. Opportunities in Indian market have been very poor as no
new refineries came up in the year 2012-13. However, there are signs of
improvement with expansion of two major refineries viz., BPCL and
Reliance Jamnagar and they are expected to open up good business in the
current financial year. Your Company would lay focus on business
prospects in new markets like Nigeria, South East Asia and North Africa
and repeat orders from clients.
Environment Engineering Division has bagged a prestigious order from
Dodsal for 2 x 700 MW Deaerator Package for Khakrapara- NPCIL project.
This, when executed, will be the largest Deaerator in India surpassing
the earlier largest one supplied by your Company to NPCIL. During FY
2012-13, your Company firmly established itself as a significant market
player in Condensate Polishing Units.
Oil & Gas Equipment division posted muted performance due to
competition and constraints in bidding for large projects due to lack
of pre-qualification. Your Company has adopted strategy to tie-up with
global technology majors and bid for large EPC and LSTK projects. The
benefits of this market approach will be realized in the years to come.
INDIAN POWER SECTOR SCENARIO
The Policy emphasis laid by the Govt. of India to the power sector in
the preceding years, has facilitated setting up of additional power
generation capacity in the country. Bulk tenders invited by NTPC for 11
units of 660 MW and 9 units 800 MW Super-critical Steam Generators and
Steam Turbine Generators have played a critical role in catalyzing the
sector.
Some of the major challenges affecting the Power sector generation
capacity addition are:
1. Availability of land
2. Lack of firm commitment on fuel supply and unpredictable pricing of
imported fuel (coal/gas)
3. Slow and tedious process of environmental clearances linked with
clearance for coal mines
4. Deteriorating financial health of State Power Utilities
There is a significant back log of new power projects which are held up
for either grant of fuel linkages or for conversion of assured linkages
to firm Fuel Supply Agreements. Some of these projects (without Fuel
Supply Agreements) are already under advanced stages of construction.
Even many completed projects are awaiting fuel supply to start
generation. It is being reported that around 7-8% of the installed base
of the country 223 GW is idle because of either lack of fuel (coal and
gas) or evacuation challenges. Most of the IPPs on the planning stage
which had called for bids have either shelved their plans or have put
them on hold due to the reasons mentioned above. The combined effect of
all the above created serious short term concerns for the entire power
sector and all its stake holders. As an immediate impact the market
size for new power projects has shrunk and as a result competition has
become very intense impacting margins of contracts for new power
projects.
Mounting losses of the State Utility/Discom companies have severely
impacted the cash flow of projects under implementation. This also
adversely impacts financing of new power projects. The Financial
Restructuring Plan implemented by the Central Government in late 2012
is expected to improve financial health of the State Utility/ Discoms
and could become harbinger for overall improvement of Power sector.
Despite the huge challenges and shrinking market size, your Company has
closed the year with healthy order book of over Rs. 11000 Crores.
FUTURE OUTLOOK, THE YEAR AHEAD
The challenges in Power sector are still persisting. However,
considering the fact that power being the most crucial component of
economic growth and sustenance the current challenges are expected to
be resolved sooner than later. Thermal power projects will constitute
almost 2/3rd of the new power projects in the next decade and almost
all coal based power projects will be based on super-critical
technology. Your Company will continue to play a significant role in
its area of strength and in the short term your Company will focus
projects which are free of present bottlenecks and is confident of
securing large value BoP and equipment contracts and in the near term
keep itself agile to the supercritical technology based power projects.
Your Company''s design and Engineering strength and proven execution
track record will help your Company to weather the current market
conditions and stay nimble footed so as to avail of opportunities when
the sector''s fortunes turn around.
In this backdrop, your Company has taken initiatives to explore
overseas power project prospects, with a specific emphasis on Middle
East markets, where a number of gas power projects are coming up.
The underlying aspects of the slow growth phase bottoming out and
promise of latent power demand in the country are the silver lining for
the sector and your Company will continue to play a significant role in
the development of the power infrastructure of the country.
PROGRESS AND STATUS OF JOINT VENTURE & SUBSIDIARY
During the year under review, your Company signed a Memorandum of
Understanding with the Tamil Nadu Government in November 2012 to secure
the support of the Government of Tamil Nadu for the Joint Venture
Projects.
BGR BOILERS PRIVATE LIMITED
The Joint Venture established to Design, Manufacture, Install and
Commission of Supercritical Boilers of 660 MW, 800 MW and 1000 MW
rating capacity has obtained all approvals required to commence
construction of its manufacturing plant and is expects to start
production by early 2015.
BGR TURBINES COMPANY PRIVATE LIMITED
The Joint Venture was established to Design, Manufacture, Install and
Commission of Supercritical Steam Turbines and Generators of 660 MW,
800 MW and 1000 MW units. The company plans to commence production by
later 2015.
SRAVANAA PROPERTIES LIMITED, SUBSIDIARY
Your Company on 2nd November, 2012 acquired 100% of the equity share
capital of Sravanaa Properties Limited, which owns landed property in
Chennai. Your company intends to set up its office in this land
property to house the operating divisions and corporate office of the
Company.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard (AS-21) on Consolidated
Financial Statements read with Accounting Standard (AS-27) on financial
reporting of interest in Joint Ventures, the audited Consolidated
Financial Statements are annexed to this annual report.
In accordance with the general Circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Statement of
Profit and Loss and other documents of the subsidiary companies are not
attached with the financial statements of the Company. The Company will
make available the Annual financial statements of the subsidiary
companies and related information to the members of the Company who may
be interested in obtaining the same. The Annual reports of the
subsidiary companies will be open for inspection by shareholders at the
Registered and Corporate Office of the Company and Subsidiary
companies. The Consolidated Financial Statements presented by the
Company include the financial results of its subsidiary companies.
HUMAN RESOURCES
Your Company''s focussed effort of talent building over the last few
years have yielded very good results and the company has in place a
strong team of experienced and competent professionals. Being an EPC
Organization, Project Management is of paramount importance and
therefore, during the year, your Company had substantially strengthened
the Project Management teams through induction of senior level
resources.
Your Company has also successfully established an effective performance
driven culture and this has motivated the employees to perform better.
The focus during the current financial year was towards nurturing,
equipping the talent pool to manage bigger challenges in the coming
years by providing them with adequate training in technical and
behavioral areas. With a view to enhance the Company''s in-house Project
Management capabilities, exclusive Certification courses were organised
for the core Project Management team which has resulted in overall
improvement. In addition, training in vital areas like Leadership, Time
management and Communication by leading trainers during the year have
also helped to enhance Company''s Employee Capabilities.
EMPLOYEE STOCK OPTION SCHEME
The Company has implemented the Employee Stock Option Scheme 2007 in
accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999. The Compensation Committee,
constituted in accordance with the SEBI Guidelines, administers and
monitors the Scheme. The applicable disclosures as stipulated under the
SEBI Guidelines as at March 31, 2013 are attached as Annexure - I of
this report.
DEPOSITS
Your Company has not accepted any deposit from the public during the
period under review and did not have any outstanding deposits.
STATUTORY INFORMATION
Information pursuant to Section 217 (1) (e) of the Companies Act, 1956
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 with respect to conservation of energy
are not applicable to your Company. The particulars relating to
technology absorption are enclosed as Annexure - II of this report.
During the FY 2012-13, the Foreign exchange earnings and outgo were Rs.
8488 lakhs and Rs. 949 lakhs respectively. In terms of the provisions
of Section 217 (2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975 as amended, the names and other
particulars of the employees are set out in the annexure to the
Directors'' Report. Having regard to the provisions of Section 219(1)
(b)(iv) of the Companies Act, 1956 the annual report excluding the
aforesaid information is being sent to all the members of the Company.
Any member interested in obtaining such information, may write to the
Company Secretary of the Company.
BOARD OF DIRECTORS
Mr. T. Sankaralingam, Managing Director relinquished his office and he
was relieved from the office of Managing Director of the Company with
effect from 31st December 2012. Your directors wish to place on record
their appreciation for valuable contribution and services rendered by
Mr. T. Sankaralingam during his tenure as the Managing Director of the
Company.
Mrs. Sasikala Raghupathy, Mr. Heinrich Bohmer and Mr. A. Swaminathan,
Directors, retire by rotation and being eligible for re-appointment,
offer themselves for re-appointment. The Board recommends their
re-appointment. Profiles of these directors are given in the notice
convening the 27th annual general meeting of the Company.
On November 01, 2012, Mr. K. Chandrashekhar was co-opted as an
additional director on the Board and he retires at the forthcoming
Annual General Meeting and seeks appointment in terms of Section 257 of
the Companies Act, 1956. He has been appointed as Wholetime Director
for a period of 5 years with effect from 1st November 2012. The profile
of Mr. K. Chandrashekhar and the terms and conditions of his
appointment including remuneration are given in the Notice of 27th
Annual General Meeting of the Company. On February 08, 2013, Ms.
Swarnamugi Karthik was co-opted as an additional director on the Board
and she retires at the forthcoming Annual General Meeting and seeks
appointment in terms of Section 257 of the Companies Act, 1956. She has
been appointed as Wholetime Director for a period of 5 years with
effect from 8th February 2013. The profile of Ms. Swarnamugi Karthik
and the terms and conditions of her appointment including remuneration
are given in the Notice of 27th Annual General Meeting of the Company.
The Company has received notices proposing Mr. K. Chandrashekhar and
Ms. Swarnamugi Karthik for appointment to the office of director. The
Board of Directors recommends these proposed appointments.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 217 (2AA) of the Companies
Act, 1956 with respect to Directors'' responsibility statement, it is
hereby confirmed that:
a) In the preparation of the annual accounts for the Financial year
ended March 31, 2013, the applicable accounting standards read with
requirements set out under Schedule VI to the Companies Act, 1956 have
been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31, 2013 and of the profit of the Company
for the Financial year ended on that date;
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
d) the Directors have prepared the annual accounts for the year ended
March 31, 2013 on a going concern basis.
STATUTORY AUDITORS'' AND AUDITORS'' REPORT
Manohar Chowdhry & Associates, Chartered Accountants, Statutory
auditors of the Company, hold office until the conclusion of the
ensuing Annual General Meeting and are eligible for reappointment.
Manohar Chowdhry & Associates, Chartered Accountants confirmed that
their re-appointment, if made, would be within the limits prescribed
under Section 224(1B) of the Companies Act, 1956 and that they are not
disqualified for re-appointment in terms of Section 226 of the
Companies Act, 1956.
COST AUDITORS
As per the Order dated 24th January, 2012 issued by the Ministry of
Corporate Affairs, the appointment of Cost Auditors becomes mandatory
for your Company pursuant to the provisions of Section 233B of the
Companies Act, 1956. Accordingly, the Board of Directors at its meeting
held on 29th May, 2013 approved the appointment of Mr. K. Vaidyanathan,
Cost Accountant as the Cost Auditors of the Company for the Financial
year 2013-14, subject to the approval of the Central Government.
CORPORATE GOVERNANCE
A Report on Management Discussion & Analysis of Performance and
Compliance of Corporate Governance under clause 49 of the listing
agreement & Certificate from Auditors confirming compliance of
conditions of Corporate Governance is included in this Annual Report.
ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation for the
excellent support and co-operation given by customers, shareholders,
vendors, collaborators, business partners/associates, statutory
authorities, Central and State Governments during the year under
review.
Your Directors also record their appreciation and gratitude to the
Bankers for their continued support and timely assistance in meeting
the Company''s resource requirements. Your Directors acknowledge the
dedicated services rendered by all the employees of the company.
For and on behalf of the Board
Place : Singapore B. G. RAGHUPATHY
Date : May 29, 2013 Chairman & Managing Director
Mar 31, 2012
To the Members of BGR ENERGY SYSTEMS LIMITED
The directors are pleased to present Twenty Sixth Annual Report
together with the audited financial statements for the year ended March
31, 2012.
FINANCIAL RESULTS
During FY 2011-12, your company has achieved total income of Rs. 3452.31
Crores. The highlights of the financial performance of the Company
during the financial year ended March 31, 2012 as compared with the
previous financial year ended March 31, 2011 are summarized below:
(Rs. Crores)
Description 2011-12 2010-11
Income from operations 3447 4750
Other income 5 19
Total Income 3452 4769
Earnings before Interest, 473 540
Depreciation, Tax and Amortization
Profit before tax 327 482
Tax Expense 103 158
Net Profit 224 324
Amount available for appropriation 224 324
Less :
a) Dividend 51 72
b) Tax on dividend 8 12
c) Transfer to general reserve 22 32
Balance carried to Balance Sheet 143 208
DIVIDEND
Your Board of Directors have recommended a dividend of Rs. 7 per equity
share of Rs. 10 each subject to the approval of the Members at the
forthcoming 26th Annual General Meeting. This will result in dividend
payment of Rs. 50.51 Crores and payment of dividend tax of Rs. 8.20 Crores.
The dividend will be paid to members whose names appear on the Register
of Members as on September 21, 2012 and as informed to the Company by
National Securities Depository Limited and Central Depository Services
Limited, in respect of shares held in demat mode. Your directors wish
to carry an amount of Rs. 142.46 Crores to the Balance Sheet after
appropriation towards dividend, corporate dividend tax and transfer to
general reserve. Your directors kept in view of the requirement of
resources to finance increased working capital, equity contribution for
setting up of Steam Generator, Steam Turbine and Generator
manufacturing facilities and decline in profit in FY 2011-12.
BUSINESS PERFORMANCE
The Power Projects business of your Company is executing EPC and BoP
turnkey project contracts for State electricity utilities and private
sector IPPs. The projects have rated capacity of 500 MW, 600 MW and 660
MW and are of Sub critical and Super Critical technologies. The capital
goods businesses are engaged in Electrical, Environment, Oil and Gas
sector in India and abroad for executing turnkey contracts for supply
of high tech equipment and installation of power equipment.
An overview and major milestones of operations during the year are as
under;
a) An Engineering, Procurement and Construction ("EPC") contract
for 2 x 300 MW coal based thermal power project located in Chattisgarh
from TRN Energy Private Limited, for a value of Rs. 1,698 Crores was
secured.
b) Your company has emerged as the lowest bidder in the tender called
for by NTPC for supply of 9 x 800 MW super critical Steam Turbine and
Generators units and would supply 4 units of 2 x 800 MW to Lara Super
Thermal Power project and 2 x 800 MW Darlipali Super Thermal Power
project for an aggregate value of Rs. 2,968 Crores.
c) Your company has also emerged as the lowest bidder in NTPC's 11 x
660 MW Super critical boiler tender. This tender is for supply of 11
Super critical boilers of 660 MW capacity. Your Company would supply 6
units to 2 x 660 MW Solapur Super Thermal power project, 2 x 660 MW
Meja Thermal Power project and 2 x 660 MW Raghunathpur Thermal Power
project for an aggregate value of Rs. 5,565 Crores.
d) Your Company successfully completed, perhaps, the World's largest
and tallest natural draught cooling tower with height of 202 meters and
diameter of 145 meters at Kalisindh 1200 MW power project in Rajasthan.
e) Electrical Project Division has bagged a large EPC contract for
Electrical systems for 4 units of 700 MW of Nuclear Power projects for
a value of Rs. 444.48 Crores from Nuclear Power Corporation. Electrical
Projects business is qualified to implement large OPGW live-line
projects and has installed over 2400 KM in various States for Power
Grid Corporation. This division has executed projects for supply and
installation of Gas Insulated Switch gear for PSU customers.
f) Air Fin Cooler division has achieved ever highest turnover of Rs. 178
Crores registering over 36% growth over the previous year and closed
the year with healthy order book position of Rs. 180 Crores. Your Company
made significant expansion of export markets in Kuwait, Oman and Qatar.
Despite stiff competition and challenges in international markets, Air
Fin Cooler business has achieved secular improvement in its
performance.
g) Environment Engineering division is engaged in the business of
supply of Deaerators, Condensate Polishing Unit ("CPU") and Water
Treatment Plant. During the year, significant success was made in
Deaerator business and your company firmly established its market
position in CPU business.
h) Despite drop in sales over the previous year, the Oil & Gas
Equipment division has profitably executed contracts for supply of Oil
storage tanks, Mobile Test separator, scrapper launching / receiving
stations and gas processing units. The USD 80.5 Million contract with
SCOP, Iraq for Akash and Al-Mansuriya gas field development was
terminated with mutual consent of the company and client and
contractual claims will be settled with mutual agreement. This
termination of contract became necessary in view of the client's
decision to award gas development projects to private companies.
PROGRESS AND STATUS OF JOINT VENTURE
The joint venture companies established in strategic partnership with
Hitachi Japan and Germany for Super Critical Steam Turbine and
Generators and Steam Generators ("BTG") are progressing well and
are gearing up to commence the manufacturing during the first half of
FY 2013-14. The strategic tie up through joint venture has positioned
your company as a full service EPC company with capability design,
engineering and manufacture of BTG and BoP equipment and civil works in
the same platform with BHEL and L&T.
BGR BOILERS PRIVATE LIMITED
Your Company invested Rs. 94.90 Crores towards equity contribution
constituting 70 % in the equity capital of BGR Boilers Private Limited.
The Joint venture with Hitachi Power Europe, Germany has acquired lands
for setting up of manufacturing facility for Super critical steam
generators of 660 MW, 800 MW and 1000 MW capacity. Towards
implementation of the project, technology transfer and technical
training from Hitachi Power are progressing and the JV company has also
placed orders for purchase of long lead capital equipment. The Joint
venture company is expected to achieve financial closure for the
manufacturing facility during the current financial year.
BGR TURBINES COMPANY PRIVATE LIMITED
Your Company has so far invested Rs. 136.16 Crores towards equity
contribution constituting 74 % in the equity capital of BGR Turbines
Company Private Limited. The joint venture with Hitachi, Japan has
acquired lands required for setting up of manufacturing facility for
Steam Turbines and Generators. During the year, technology transfer and
technical training have commenced. The JV company has placed orders for
purchase of long lead capital equipment. The Joint venture company is
expected to achieve financial closure for the manufacturing facility
during the current financial year.
INDIAN POWER SECTOR SCENARIO
The Indian power sector is making slow but steady progress even with
peak shortage of 10.3% during FY 2011 - 12. The growth of power sector
is synonymous with the sustenance and the drive to keep up growth
momentum of GDP The Government of India, State and Central utilities
continue to give greater importance of adopting Super critical
technology in all fossil fuel based power plants, with high
efficiencies and lower emission. India made a modest beginning in
deploying Super critical technology based power equipment of large unit
sizes viz., Boilers, Turbine and Generators with increased visible
presence only in recent years. In 12th plan period, about 60% of the
coal based power projects are of Super critical technology and in 13th
plan period all coal based projects are likely to be based on super
critical technology.
The increase in variable cost and interest rate has adversely affected
the cost of power generation for Central, State utilities & independent
power producers and it has in turn laid thrust on more efficient power
plants in future to save on cost of fuel. The Integrated Energy Policy
envisages coal to be the predominant fuel till 2031 - 32. With Central
Electricity Authority directive of blending of 30% of imported coal and
coal shortage, has further increased the importance of efficiency of
power plants and proven technology products from BTG suppliers, with
ability to handle variety of coal combinations. During the year under
review, there has been a slow down and delays in award of contracts for
large power projects by Central and State utilities and Independent
power producers on account of variety of reasons including natural gas
availability, coal linkage, abnormal increase in price of imported
coal, land acquisition, environmental clearance and poor financial
health of State Discoms. These factors adversely affected the economics
of power generation, which in turn has drastically reduced the market
potential for power plant EPC contractors and equipment manufacturers
in the last fiscal year.
Your company's capital goods business service Power and Process sector
in India and abroad. These businesses also have witnessed slowdown and
delays in capacity addition by industries.
FUTURE OUTLOOK, THE YEAR AHEAD
In Supercritical technology based power projects, many customers are
opting for complete range of Engineering, Procurement and Construction
("EPC") route over the multiple package route. The in-house
capability to manufacture Super critical BTG have enabled your company
to equip with proven, efficient and cost competitive technology
solutions to customers. Your company is one of the three Indian EPC
companies to manufacture both Super critical boilers and steam turbine
generators, which has a distinct advantage in offering a competitive
and complete EPC package due to the vast experience in turnkey Balance
of Plant. Your company have an added advantage of continuous
improvements in in-house engineering standards, augmentation, retention
of human resources, adoption of best practices in construction,
in-house manufacturing, increased mechanization and augmentation of
construction equipment for faster execution.
The Capital goods business segment would continue to lay thrust on
domestic and international markets. GIS sub stations, OPGW, LNG
terminal, Hydro Carbon sector and export markets would offer
significant growth opportunities for these business segment.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Accounting Standard (AS-21) on Consolidated
Financial Statements read with Accounting Standard AS-27 on financial
reporting of interest in Joint Ventures, the audited Consolidated
Financial Statements are annexed to this annual report.
In accordance with the general Circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Statement of
Profit and Loss and other documents of the subsidiary companies are not
attached with the financial statements of the Company. The Company will
make available the Annual financial statements of the subsidiary
companies and related information to the members of the Company who may
be interested in obtaining the same. The Annual reports of the
subsidiary companies will be open for inspection by shareholders at the
Registered and Corporate Office of the Company and Subsidiary
companies. The Consolidated Financial Statements presented by the
Company include the financial results of its subsidiary companies.
HUMAN RESOURCES
The Company's business has been growing at a rapid pace and in order to
ensure a vibrant organization which is capable of coping up with the
challenges of growth thrust areas in FY 2011 - 12 have been ;
a) Building highly competent and committed team of people.
b) Inculcating a performance driven culture.
c) Identifying and developing employee potential through adequate
training and developmental interventions.
Building an organization of highly competent work force has been of
vital importance and consequently talent acquisition across different
levels, functions and business verticals has been the most significant
effort. The Company, over a period of time, has established itself as a
visible, respected brand in the industry thereby attracting talent at
senior levels from across leading companies in the country. Your
Company added 930 employees, mostly engineers and professionals during
the year. Your company has set up Engineering & Project Management
Centre of Excellence at New Delhi Regional Office, in addition to its
existing infrastructure in Chennai.
In addition to lateral induction across various levels, your company
has taken steps to build talent pool through Graduate and Post Graduate
trainee programme so as to sustain and manage organizational challenges
over period of times. These graduates are recruited from premier
campuses across the country and are imparted comprehensive tailor made
training.
The Company laid stress on performance reward driven culture thereby
creating and nurturing an environment that fosters highly motivated
work force. In order to ensure overall employee growth, your company
imparts in-house as well as external training in the areas of
technical, techno commercial and behavioral skills. In the coming
years, in order to enhance knowledge and skill levels to cope-up with
the changing business needs and the training would focus on project
management, communication and leadership besides technical training.
EMPLOYEE STOCK OPTION SCHEME
The Company has implemented the Employee Stock Option Scheme 2007 in
accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999. The Compensation Committee,
constituted in accordance with the SEBI Guidelines, administers and
monitors the Scheme. The applicable disclosures as stipulated under the
SEBI Guidelines as at March 31, 2012 are attached as Annexure - I of
this report.
STATUTORY INFORMATION
Information pursuant to Section 217 (1) (e) of the Companies Act, 1956
read with the Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 with respect to conservation of energy
are not applicable to your Company. The particulars relating to
technology absorption are enclosed as Annexure - II of this report.
During the FY 2011-12, the Foreign exchange earnings and outgo were Rs.
454.51 Crores and Rs. 686.95 Crores respectively. In terms of the
provisions of Section 217 (2A) of the Companies Act, 1956 read with the
Companies (Particulars of Employees) Rules, 1975 as amended, the names
and other particulars of the employees are set out in the annexure to
the Directors' Report. Having regard to the provisions of Section 219(1
)(b)(iv) of the Companies Act, 1956, the annual report excluding the
aforesaid information is being sent to all the members of the Company.
Any member interested in obtaining such information, may write to the
Company Secretary of the Company.
BOARD OF DIRECTORS
Mr.S. Rathinam, Director - Finance relinquished his office with effect
from February 7, 2012. Your directors wish to place on record their
appreciation for valuable service and guidance rendered by Mr.Rathinam
during his tenure on the Board of the Company. The Board also wish to
convey its gratitude to Mr.Rathinam for the invaluable contribution and
wise counsel rendered by him during his two decades of service with the
company.
Mr.S.R. Tagat and Mr.V.R. Mahadevan, Directors, retire by rotation and
being eligible for re-appointment, offer themselves for re-appointment.
The Board recommends their re-appointment. Profiles of these directors
are given in the notice convening the 26th annual general meeting of
the Company.
On November 14, 2011, Mr.M.S. Sundara Rajan has been co-opted as an
independent director on the Board and he holds office up to the date of
the forthcoming annual general meeting in terms of Section 257 of the
Companies Act, 1956. The Company received a notice proposing Mr.M.S.
Sundara Rajan for appointment to the office of director. The profile of
Mr.M.S. Sundara Rajan is given in the notice convening the 26th annual
general meeting of the Company. The Board recommends his appointment.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 217 (2AA) of the Companies
Act, 1956 with respect to Directors' responsibility statement, it is
hereby confirmed that:
a) In the preparation of the annual accounts for the Financial year
ended March 31, 2012, the applicable accounting standards read with
requirements set out under Schedule VI to the Companies Act, 1956 have
been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31, 2012 and of the profit of the Company
for the Financial year ended on that date;
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
d) the Directors have prepared the annual accounts for the year ended
March 31, 2012 on a going concern basis.
STATUTORY AUDITORS' AND AUDITORS' REPORT
Manohar Chowdhry & Associates, Chartered Accountants, Statutory
auditors of the Company, hold office until the conclusion of the
ensuing Annual General Meeting and are eligible for reappointment.
Manohar Chowdhry & Associates, Chartered Accountants confirmed that
their re-appointment, if made, would be within the limits prescribed
under Section 224(1 B) of the Companies Act, 1956 and that they are not
disqualified for re-appointment in terms of Section 226 of the
Companies Act, 1956.
CORPORATE GOVERNANCE
The Company is committed to maintain and comply with the standards of
Corporate Governance as set out in Clause 49 of the Listing Agreement
and your Directors are pleased to attach a report on Corporate
Governance together with the following Certificates / Declarations.
a) Chief Executive Officer and Chief Financial Officer certificate.
b) Declaration on code of conduct.
c) Certificate from the Company's Auditors.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis report for the financial year under
review, is presented in a separate section forming part of the Annual
Report.
ACKNOWLEDGEMENTS
Your Directors would like to express their appreciation for the
patronage, support and co-operation received from the customers,
vendors, consortium of banks, collaborators, business partners /
associates, statutory authorities, Central and State Governments during
the year under review. Your Directors place on record their sincere
appreciation of the contribution made by the employees of the Company
at all levels through their hard work, dedication and performance.
For and on behalf of the Board
Place : Chennai B. G. RAGHUPATHY
Date : May 30, 2012 Chairman & Managing Director
Mar 31, 2011
To the Members of
BGR ENERGY SYSTEMS LIMITED
The Directors have pleasure in presenting the Twenty Fifth Annual
Report together with the audited financial statements for the year ended
March 31, 2011.
FINANCIAL RESULTS Ã ÃBILLION DOLLARÃ REVENUE
During FY 2010-11, the total income of the Company crossed Rs. 4700
Crore, thus becoming a Billion Dollar company in revenues.
The highlights of the financial performance of the Company during the
financial year ended March 31, 2011 as compared with the previous
financial year ended March 31, 2010 are summarized below:
(Rs. in Crore)
Description 2010-11 2009-10
Sales 4747 3069
Other income 22 25
Total Income 4769 3094
Expenditure 4210 2726
Profit before depreciation, Interest 559 368
and Tax
Interest 60 54
Depreciation 17 10
Profit before tax 482 305
Provision for tax and FBT 158 104
Profit after tax 324 201
Amount available for appropriation 324 201
Less:
a) Dividend 72 50
b) Tax on dividend 12 9
c) Transfer to general reserve 32 20
Balance carried to Balance Sheet 208 122
The sales registered a growth of 55% and stood at Rs. 4747.49 Crore as
compared to Rs. 3069.25 Crore in the previous year. The CompanyÃs Profits
from Operations for the year ended 31st March, 2011 increased by 52% to
Rs. 559.28 Crore as compared to Rs. 368.22 Crore in the previous year. The
consolidated financial statements are attached to this report.
DIVIDEND
The Board of Directors recommended a dividend of Rs. 10 per equity share
of Rs. 10 each subject to the approval of the Members at the forthcoming
25th Annual General Meeting. The dividend will be paid to members whose
name appear in the Register of Members as on September 22, 2011. Your
directors wish to carry an amount of Rs. 207.55 Crore to the Balance
Sheet after appropriation towards dividend, corporate dividend tax and
transfer to general reserve.
BUSINESS PERFORMANCE
The progress in growth achieved by your Company during the last three
years has been well recognized and the leading financial dailies and
magazines have consistently categorized your Company as a ÃFast Growing
Company.Ã Your Company achieved quantum growth over the previous year
in income, Profitability and other key performance parameters.
A brief overview and major milestones of operations are as follows:
a) The Power Projects Division secured a contract for Balance of Plant
(ÃBoPÃ) for 2 x 660 MW coal based supercritical thermal power project
at Krishnapatnam, Andhra Pradesh from Thermal Powertech Corporation
India Limited, promoted by Gayathri projects, and Semcorp, Singapore.
The value of the order is Rs. 2168 Crore.
b) Your Board takes pride to inform that the 500 MW Vijayawada Thermal
Power Station project was completed and after successful performance
test handed over to APGENCO during the year. The 500 MW Kakatiya
Thermal Power Project of APGENCO has achieved commercial operation
during September, 2010. The 500 MW Kothagudam Thermal Power project of
APGENCO achieved plant synchronization in March, 2011. The 500 MW
Khaperkheda Thermal Power project of MAHAGENCO achieved plant
synchronization in March, 2011. Your Directors wish to state that your
Company is the only private sector EPC Company in India to have
completed three BoP contracts for 500 MW units and successfully
commissioned and synchronized the plants.
c) The 600 MW Mettur Thermal power project of TNEB achieved boiler
hydro test during December, 2010 and the unit is gearing up for
commencement of power generation in September, 2011. The boiler hydro
test for 2 x 600 MW Kalisindh project of RRVUNL was completed during
April, 2011. Your Company is executing the Mettur and Kalisindh
projects on EPC basis including supply of Boiler, Steam Turbine and
Generator.
d) Electrical Projects Division has secured a contract for Rs. 17.02
Crore from Nuclear Power Corporation of India Limited for Bharatiya
Nabikiya Vidyut Nigam Limited at Kalpakkam for supply of cabling
systems and other electrical works for Power island area in the 500 MW
Prototype Fast Breeder Reactor and a turnkey contract for Rs. 36.61 Crore
from Power Grid Corporation of India Limited for fiber optic cable based
communication solutions over powerlines in Southern region, which is
being implemented in lieu of the existing Unified Load Despatch Centre.
e) Environmental Engineering Division has achieved a breakthrough
during the year in Condensate Polishing Unit business by bagging two
orders for Super Critical power projects of 2 x 660 MW Tiroda
(Maharashtra) and 2 x 660 MW Kawai (Rajasthan) of Adani Power Limited.
The division also commissioned Mannari and Karaipudur common effuent
treatment plants using Reverse Osmosis Technology during the year.
f) Air Fin Cooler division has registered sales of Rs. 130 Crore and
closed the year with a healthy order book of Rs. 155 Crore. The division
has expanded its production facilities during the year.
g) During the year, Oil & Gas Equipment division has successfully
executed contracts for SCOP, Iraq, Akash & Al-Mansuriya and Southern
Refnery Company. The division has bagged orders from Cairn Energy, GEO
Enpro Petroleum, GPEC, Bharuch, IOCL and other reputed customers in
India. The new 100% Export Oriented Unit is now servicing international
markets.
STRATEGIC INITIATIVES
During the year under review, your CompanyÃs strategic alliance with
Hitachi for Super Critical Steam Turbine and Generators and Steam
Generators have been successfully consummated into joint ventures.
These joint ventures have brought to life two special purpose companies
with equity participation from Hitachi as explained below.
Hitachi Power Europe GmbH, Germany à BGR Boilers Private Limited
Your Company has signed a Joint Venture agreement with Hitachi Power
Europe GmbH, Germany for the business of design, engineering and
manufacture of Super Critical Steam Generator of 600 MW, 800 MW, 1000
MW and 1100 MW rating and the new JV Company ÃBGR Boilers Private
Limitedà will establish manufacturing facilities as a Special Purpose
Vehicle. Hitachi Power Europe will contribute 30% of the equity share
capital of the new JV Company. During FY 2010-11, your Company invested
Rs. 36.05 Crore in the share capital of JV Company and holds 70% of the
equity capital.
Hitachi, Ltd., Japan à BGR Turbines company Private Limited
Your Company has signed a Joint Venture agreement with Hitachi, Ltd.,
Japan for the business of design, engineering and manufacture of
Supercritical Steam Turbine and Generators of 660 MW, 800 MW and 1000
MW capacity and the new JV Company ÃBGR Turbines Company Private
Limitedà will establish manufacturing facilities as a Special Purpose
Vehicle. Hitachi will contribute 26% of the equity share capital of the
JV Company. During FY 2010-11, your Company invested Rs. 95.96 Crore in
the share capital of the JV Company and holds 74% of the equity
capital.
With these strategic Joint Ventures your Company has positioned itself
well to capture entire value chain in EPC contracting business for
power sector.
INDIAN POWER SECTOR SCENARIO
The Indian economy has emerged rapidly from the global slowdown of
2007-2009 and remains one of the fast growing economies of the world.
The GDP growth is well over 8% and the growth momentum is maintained.
The Government of India and State and Central utilities continue to
accord primacy to capacity addition in power generation. In view of
environmental consideration and need for higher efficiency, there has
been marked preference for supercritical technology based power
equipment viz., Boiler, Turbine and Generator of large unit sizes
during the year under review. The capacity addition target for the 12th
Five year plan is well over 100,000 MW. Of this, it is estimated that
about 80,000 MW would be coal based thermal power plants utilizing
supercritical technology. The Government policy on power sector
investment encourages manufacturing capacity build-up within the
country. During the year, the investment interest in power sector by
private sector industries has witnessed a positive trend. A number of
IPP projects currently planned on merchant power plant basis auger well
for the power sector development in India. Your Company is now
targeting projects for an aggregate capacity of 40,000 MW and
anticipates to be successful to secure sizeable market share.
During the year under review, there has been a slow down and delays in
award of contracts for large power projects by State and Central
utilities on account of variety of reasons including coal linkage,
environmental clearance, land acquisition etc.
FUTURE OUTLOOK, THE YEAR AHEAD
The growth trajectory of Indian economy makes it imperative for the
public and private sector utilities to make investment in generation,
transmission and distribution of power. The capacity addition programme
of 12th Five Year Plan and investment plans by private parties in power
sector offer robust growth opportunities for your Company. Your
CompanyÃs strategic initiative to set up manufacturing facilities to
manufacture Super Critical Boiler, Turbine and Generator would provide
competitive edge in terms of cost, price and delivery. EPC and BOP
contracting business of the Company faces intense competition from
domestic players. Your CompanyÃs position of pre-eminence in the
industry, despite intense competition and cost pressures, is expected
to reinforce your CompanyÃs ability to overcome these challenges. With
robust demand for power in the foreseeable future and the resulting
opportunities for power generation equipment and EPC business, your
CompanyÃs power projects division is well positioned to sustain the
growth momentum in the mid-term and in the long-term as well. The
proven execution capabilities, competencies and the capacity to offer
the entire range of services and equipment viz., design, engineering,
project execution, construction, manufacturing and supply of Steam
Generator, Steam Turbine and Generator, BOP equipment and civil works
would continue to facilitate your Company to achieve improved order
booking, revenue and Profitability.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Accounting Standard AS-21 on Consolidated
Financial Statements read with Accounting Standard AS-27 on financial
reporting of interest in Joint Ventures, the audited Consolidated
Financial Statements are annexed to this Annual Report.
PERFORMANCE OF SUBSIDIARIES
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit and
Loss Account (wherever applicable) and other documents of the
subsidiary companies are not attached with the financial statements of
the Company. The Company will make available the annual accounts of the
subsidiary companies and related information to the members of the
Company who may be interested in obtaining the same. The annual
accounts of the subsidiary companies will also be kept open for
inspection at the Registered Office of the Company. The Consolidated
Financial Statements presented by the Company include the financial
results of its subsidiary companies.
HUMAN RESOURCES
In the backdrop of growth in power and infrastructure sector, there has
been an acute shortage of human resources. However, your Company has
been successful in attracting talents at senior and middle level
positions to manage design, engineering and project management
responsibilities. Your Company has initiated steps to build a highly
competent and motivated manpower pool and has recruited graduate
engineers from colleges of National repute.
In order to evaluate, reward and recognize performance, the Company has
installed robust Performance Management System. The CompanyÃs Human
Resource process is being IT enabled. Your Company continues to lay
strong emphasis on HR, talent acquisition and retention. Your Company
has witnessed a rapid growth in human resources during the financial
year 2010-11 and the current employee strength is 1829.
EMPLOYEE STOCK OPTION SCHEME
The Company has implemented the Employee Stock Option Scheme (ÃSchemeÃ)
in accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 (Ãthe SEBI GuidelinesÃ). The
Compensation Committee, constituted in accordance with the SEBI
Guidelines, administers and monitors the Scheme. The applicable
disclosures as stipulated under the SEBI Guidelines as at March 31,
2011 are attached as Annexure à I of this report.
STATUTORY INFORMATION
The disclosure of information pursuant to Section 217 (1) (e) of the
Companies Act, 1956 read with the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 with respect to
conservation of energy are not applicable to your Company. The
particulars relating to technology absorption are enclosed as Annexure
à II of this report. During the FY 2010-11, the Foreign exchange
earnings and outgo were Rs. 1124.90 Crore and Rs. 24.32 Crore respectively.
In terms of the provisions of Section 217 (2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules 1975, as
amended, the names and other particulars of the employees are set out
in the annexure to the Directorsà Report. Having regard to the
provisions of Section 219(1) (b)(iv) of the said Act, the Annual Report
excluding the aforesaid information is being sent to all the members of
the Company. Any member interested in obtaining such particulars, may
write to the Company Secretary of the Company.
BOARD OF DIRECTORS
Mr. M. Gopalakrishna and Mr. S.A. Bohra, Directors, retire by rotation
and being eligible for re-appointment, offer themselves for
re-appointment. The Board recommends their re-appointment. profile of
these Directors are given in the Notice convening the 25th Annual
General Meeting of the Company.
On February 10, 2011, Mr. Gnana Rajasekaran has been co-opted as an
independent Director on the Board and he holds Office up to the date of
the forthcoming Annual General Meeting in terms of Section 257 of the
Companies Act, 1956. The Company received a notice proposing Mr. Gnana
Rajasekaran for appointment to the Office of Director. The profile of
Mr.Gnana Rajasekaran is given in the Notice convening the 25th Annual
General Meeting of the Company. The Board recommends his appointment.
Mr. S. Rathinam was re-appointed as Director à Finance of the Company
for a period of one year effective from February 7, 2011. The profile
of Mr. S. Rathinam and the terms and conditions of his appointment
including remuneration are given in the Notice convening the 25th
Annual General Meeting of the Company.
DIRECTORSÃ RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 217 (2AA) of the Companies
Act, 1956 with respect to Directorsà responsibility statement, it is
hereby confirmed that:
a) In the preparation of the annual accounts for the Financial year
ended March 31, 2011, the applicable accounting standards read with
requirements set out under Schedule VI to the Companies Act, 1956 have
been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31, 2011 and of the Profit of the Company for
the financial year ended on that date;
c) the Directors have taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
d) the Directors have prepared the annual accounts for the year ended
March 31, 2011 on a going concern basis.
STATUTORY AUDITORSÃ AND AUDITORSÃ REPORT
Manohar Chowdhry & Associates, Chartered Accountants, Statutory
Auditors of the Company, hold Office until the conclusion of the ensuing
Annual General Meeting and are eligible for re-appointment.
The Company has received a letter from Manohar Chowdhry & Associates,
Chartered Accountants to the effect that their re- appointment, if
made, would be within the limits prescribed under Section 224(1B) of
the Companies Act, 1956 and that they are not disqualified for
re-appointment within the meaning of Section 226 of the Companies Act,
1956.
CORPORATE GOVERNANCE
The Company is committed to maintain and comply with the standards of
Corporate Governance as set out in Clause 49 of the Listing Agreement
and your Directors are pleased to attach a report on Corporate
Governance together with the following Certifcates / Declarations.
a) Chief Executive Officer and Chief Financial Officer certifcate.
b) Declaration on code of conduct.
c) Certifcate from the CompanyÃs Auditors.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis report for the financial year under
review, as stipulated under Clause 49 of the Listing Agreement with the
Stock Exchanges, is presented in a separate section forming part of the
Annual Report.
ACKNOWLEDGEMENTS
Your Directors wish to take this opportunity to thank the customers,
vendors, consortium of banks, collaborators, business partners /
associates, statutory authorities, Central and State Governments for
the valuable co-operation, assistance and support received during the
last financial year. Your Directors place on record their sincere
appreciation of the contribution made by the employees of the Company
at all levels through their hard work, dedication and support.
For and on behalf of the Board
Place : Chennai B. G. Raghupathy
Date : May 26, 2011 Chairman & Managing Director