Mar 31, 2023
Your Directors are pleased to present their Eighty-Sixth Annual Report on the business and operations of your Company along with the audited financial statements, both standalone and consolidated, for the financial year ended 31 March 2023.
COMPANY PERFORMANCE
Your Company''s standalone turnover from operations was '' 6,580 Crore during the year under review, as compared to '' 5,159 Crore in the previous year, representing a YoY growth of 28%, and the consolidated turnover was '' 6,973 Crore as compared to '' 5,484 Crore in the previous year, representing a YoY growth of 27% over the previous year.
Your Company''s financial performance for the year ended 31 March 2023 as compared to the previous year is given in the Table below.
COMPANY FINANCIAL HIGHLIGHTS |
(in '' Crore) |
|||
Standalone |
Consolidated |
|||
2022-23 |
2021-22 |
2022-23 |
2021-22 |
|
Net Sales and Services |
6,580 |
5,159 |
6,973 |
5,484 |
EBIDTA |
1,016 |
642 |
1,061 |
671 |
Less: Finance costs |
14 |
66 |
16 |
68 |
Less: Depreciation and amortisation expenses |
75 |
74 |
95 |
99 |
Profit before exceptional items |
927 |
502 |
950 |
504 |
Exceptional items (net) |
56 |
240 |
52 |
248 |
Profit before tax |
983 |
742 |
1,002 |
752 |
Less: Tax Expense |
198 |
115 |
206 |
122 |
Profit from continuing operations |
785 |
627 |
796 |
630 |
Less: Minority Interest |
NA |
NA |
0 |
(1) |
Add: Profit from discontinued operations |
- |
- |
167 |
284 |
Profit for the year |
785 |
627 |
963 |
913 |
The Company recorded robust performance during the year under review resulting in growth in revenue and EBITDA.
A detailed review of the operations and financial performance of your Company and each of its business segments is contained in the ''Management Discussion and Analysis'' section of this Annual Report.
b) Power Systems:
The Power Systems recorded revenue of '' 2,023 Crore as compared to '' 1,516 Crore during the year 2021-22, registering a growth of 33% as compared to previous year. The operating profit before interest and tax of Power Systems stood at '' 225 Crore as compared to '' 138 Crore during the previous year, registering a growth of 63%.
a) Industrial Systems:
The Industrial Systems recorded revenue of '' 4,934 Crore as compared to '' 3,953 Crore during the year 2021-22, registering a growth of 25% as compared to previous year. The operating profit before interest and tax of Industrial Systems stood at '' 787 Crore as compared to '' 482 Crore during the previous year, registering a growth of 63%.
In order to meet the expected increase in demand for the products of the Company, the Board has approved the following expansion projects during the year:
A. Expansion of manufacturing capacity of Motors at the Company''s plant at Ahmednagar and Goa at an investment of '' 230 Crore. The said expansion would increase the manufacturing capacity of Low Tension Motors ("LT Motors") upto 19.92 lakhs nos. per annum, from the existing capacity of 9.93 lakhs nos. per annum.
B. Expansion of manufacturing capacity of Power Transformers and Distribution Transformers units of the Company at its plants at Malanpur and Bhopal at an investment of '' 126 Crore. The said expansion would increase the capacity from 17,000 MVA to 25,000 MVA for Power Transformer and from 6,900 MVA to 9,900 MVA for Distribution Transformers.
The Board of Directors of the Company, at its Meeting held on 19 October 2022 has approved a draft Scheme of Arrangement ("Scheme") under Section 230 and other applicable provisions of the Companies Act, 2013 ("Act"). The Scheme inter-alia provides for capital reorganization of the Company, whereby it is proposed to transfer ''400 Crore from the General Reserves to the Retained Earnings of the Company with effect from the Appointed Date
i.e. the effective date of the Scheme. The Scheme is subject to receipt of regulatory approvals/ clearances from the Hon''ble National Company Law Tribunal, Mumbai Bench ("NCLT"), Securities and Exchange Board of India ("SEBI"), BSE Limited and National Stock Exchange of India Limited and such other approval/clearances, as may be applicable. BSE is appointed as the Designated Stock Exchange by the Company to obtain the No Objection Certificate (âNOCâ) from SEBI under Regulation 37 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the said NOC is awaited. On receipt of the NOC, the Scheme shall be presented to the NCLT for its approval.
The Company had on 5 December 2022 redeemed its 20,000 Unlisted, Unsecured, Unrated, Redeemable, Non-Convertible Debentures of face value '' 1,00,000/- each aggregating to '' 200 Crore, which were issued on 4 December 2020 pursuant to the terms and conditions of the Master Implementation cum Compromise Settlement Agreement and
Debenture Trust Deed dated 20 November 2020. The said debentures were redeemed by the Company by exercising the right of early redemption on completion of two years from the date of allotment.
As stated in the Annual Reports of the Company for previous years, due to financial stress and unviable operations, decisions were taken from time to time to prune / close down certain subsidiaries of the Company. In furtherance of the same, during the year under review, the liquidation process of the Company''s Step-Down Subsidiary - CG Power & Industrial Solutions Middle East FZCO, Dubai UAE was completed.
During the year under review, the Company repaid all its long-term debts to the lending banks. The Company has received an improved Credit Rating of ''IND AAâ from India Ratings & Research as against the earlier rating of ''IND AA-''.
Company has settled all the guarantee obligations to its lenders (Standard Chartered Bank, Barclays Bank and Exim Bank) towards loans availed by the erstwhile Subsidiaries in Belgium.
Company has received approval of BMC for renewal of the lease of land where the CG House is located.
The Board of Directors at their Meeting held on 2 March 2023, declared an interim dividend of '' 1.50 (Rupees One and Paise Fifty only) (75%) per equity share of '' 2/- (Rupees Two only) each. The interim dividend was paid to the shareholders on 29 March 2023. The total outflow on account of said dividend was '' 229.07 Crore. Your Board does not recommend any further dividend for the financial year 2022-23.
The dividend declared is in accordance with the Dividend Distribution Policy of the Company. The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is available on the Company''s website at - https://www.cgglobal.com/admin/ uploads new/Dividend Distribution Policy.pdf
Your Directors do not propose to transfer any amount to the reserves.
Details of subsidiaries as on 31 March 2023 : There are 3 Indian and 18 foreign subsidiaries (including 2
subsidiaries in Belgium along with their subsidiaries declared as bankrupt; 5 subsidiaries under voluntary liquidation and 1 subsidiary declared insolvent). During the year under review, your Company has not incorporated or acquired any company.
The Corporate Insolvency Proceedings initiated under the Insolvency and Bankruptcy Code, 2016 during the financial year 2021-22, by the Company against its Wholly Owned Subsidiary - CG Power Solutions Limited, is pending before the Hon''ble National Company Law Tribunal, Mumbai Bench.
Pursuant to Section 136 of the Companies Act, 2013 ("the Act"), the audited financial statements, including the consolidated financial statements and related information of your Company and audited/ unaudited annual accounts of each of its subsidiaries are placed on the website of your Company.
Highlight of performance of subsidiaries of the Company is given below:
1. CG Adhesive Products Limited (formerly known as CG-PPI Adhesive Products Limited):
CG Adhesive Products Limited (âCGAPLâ) is the Company''s subsidiary in Goa. Your Company holds 82.76% of CGAPL''s equity share capital. CGAPL manufactures and deals in specialty adhesive tapes and labels.
During the year under review, CGAPL recorded revenue of '' 23.60 Crore (previous year: '' 23.24 Crore) and registered profit before tax of '' 2.90 Crore (previous year: '' 3.78 Crore).
QEI, LLC is the subsidiary of CG Power Americas, LLC, and a wholly owned step-down subsidiary of your Company in US, operating in multiple markets and business sectors within and relating to distribution control, load management control, supervisory control and data acquisition systems.
During the year under review, QEI, LLC recorded revenue of $ 11.46 Mn i.e. equivalent to '' 94.23 Crore (previous year: $10.33 Mn i.e. equivalent to '' 77.87 Crore). It registered profit before tax of $ 1.41 Mn i.e. equivalent to '' 11.62 Crore (previous year: $ 3.18 Mn i.e. equivalent to '' 23.96 Crore).
CG Drives & Automation Sweden AB is a subsidiary of CG Industrial Holdings Sweden AB and a wholly owned step-down subsidiary of your Company in Sweden. It is a technology partner for energy efficient products and solutions. It develops, manufactures and markets the equipment for control and protection of industrial processes.
During the year under review, CG Drives & Automation Sweden AB recorded revenue of SEK 299.85 Mn i.e. equivalent to '' 236.57 Crore (previous year: SEK 258.69 Mn i.e. equivalent to '' 208.19 Crore) and registered profit before tax of SEK 21.84 Mn i.e. equivalent to '' 17.23 Crore (previous year: SEK 7.11 Mn i.e. equivalent to '' 5.72 Crore).
CG Drives & Automation Germany GmbH is a subsidiary of CG International BV, Netherlands, and a wholly owned step-down subsidiary of your Company in Germany. It is into manufacture, sale, maintenance and repair of electronic devices and facilities in the area of drive technology.
During the year under review, CG Drives & Automation Germany GmbH recorded revenue of ⬠22.24 Mn i.e. equivalent to '' 196.20 Crore (previous year: ⬠19.67 Mn i.e. equivalent to '' 165.78 Crore). It registered profit before tax of ⬠1.52 Mn i.e. equivalent to '' 13.40 Crore (previous year: ⬠0.80 Mn i.e. equivalent to '' 6.75 Crore).
CG Drives & Automation Netherlands BV is a subsidiary of CG International BV, Netherlands, and a wholly owned step-down subsidiary of your Company in Netherlands. It is into development, production and marketing of inverter products including electrical motor drives, and trading of related products.
During the year under review, CG Drives & Automation Netherlands BV recorded revenue of ⬠8.09 Mn i.e. equivalent to '' 71.32 Crore (previous year: ⬠6.34 Mn i.e. equivalent to '' 53.42 Crore) and registered profit before tax of ⬠0.58 Mn i.e. equivalent to '' 5.14 Crore (previous year: ⬠0.59 Mn i.e. equivalent to '' 4.99 Crore).
Other than above, the remaining subsidiaries of the Company do not have any business operations. In terms of Section 129 of the Act, statement containing salient features of the financial statements of your Company''s subsidiaries/ associates/ joint ventures companies in Form AOC-1 is given in the notes to the financial statements in this Annual Report.
as Directors of companies by the SEBI, Ministry of Corporate Affairs, or any such other statutory authority.
BOARD MEETINGS
During the financial year 2022-23, your Board of Directors met 5 times, in accordance with the provisions of the Act, SEBI LODR and other statutory provisions.
Details of Board Meetings held and the attendance of Directors are given in the Section titled âReport on Corporate Governanceâ, which forms part of this Annual Report.
COMMITTEES OF THE BOARD
Your Board has established following committees in compliance with the requirements of the Act and SEBI LODR: (i) Audit Committee, (ii) Nomination and Remuneration Committee, (iii) Corporate Social Responsibility Committee, (iv) Risk Management Committee, and (v) Stakeholders'' Relationship Committee.
Details of composition of the statutory committees, number of meetings held and attendance of Committee Members thereof during the financial year, are given in the Section titled âReport on Corporate Governanceâ forming part of this Annual Report.
All recommendations of the Audit Committee have been accepted by the Board.
Your Board has constituted a Finance Committee comprising of Mr. Vellayan Subbiah, Chairman of the Board and Mr. Natarajan Srinivasan, Managing Director, to inter-alia take decisions relating to borrowings, investments and lending from time to time within such limits / sub-limits as may be decided by the Board.
KEY MANAGERIAL PERSONNEL ("KMP")
Pursuant to Section 203 of the Act, the Key Managerial Personnel of the Company as at the end of the financial year were:
⢠Mr. Natarajan Srinivasan, Managing Director
⢠Mr. Susheel Todi, Chief Financial Officer
⢠Mr. P Varadarajan, Company Secretary
REMUNERATION POLICY AND CRITERIA FOR DETERMINING THE ATTRIBUTES, QUALIFICATION, INDEPENDENCE AND APPOINTMENT OF DIRECTORS
Your Company has formulated a Remuneration Policy governing the appointment and remuneration
Pursuant to Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI LODRâ), a policy for determining material subsidiary of your Company as approved by the Board of Directors is made available on the website under: https://www.cgglobal.com/ admin/uploads new/Policy determining Mat Subsidiaries.pdf
MATERIAL ORDERS OF REGULATORS / COURTS / TRIBUNALS
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.
UPDATE ON INVESTIGATIONS INITIATED IN THE PREVIOUS YEARS
The investigations by Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO) and Enforcement Directorate (ED) into the affairs of your Company and its subsidiaries pertaining to the past period and against the erstwhile promoters/directors of the Company relating to transactions that took place when the Company was under the control of the previous management / promoters, details of which have already been reported to the stock exchanges / in the previous Annual Reports of the Company, are in progress. Your Company is extending full co-operation to these agencies and information and documents as sought by them are being promptly provided by the Company.
AUDITORS AND AUDIT REPORTS STATUTORY AUDITORS
M/s. S R B C & CO LLP, Chartered Accountants (ICAI Firm Registration Number 324982E/E300003) were appointed as Statutory Auditor of the Company at the 81st Annual General Meeting ("AGM") held on 28 September 2018 to hold office from the conclusion of the said meeting till the conclusion of the 86th AGM. Accordingly, the term of office of M/s. S R B C & CO LLP, as Statutory Auditors of the Company will conclude at the close of the forthcoming AGM of the Company.
The Board of Directors of the Company, based on the recommendation of the Audit Committee, at its Meeting held on 8 May 2023, has proposed to the shareholders of the Company for their approval at the ensuing AGM, the re-appointment of M/s. S R B C & CO LLP, Chartered Accountants (ICAI Firm Registration Number 324982E/E300003) as the Statutory Auditor of the Company to hold office for a second term of five consecutive years from
the conclusion of the 86th AGM till the conclusion of the 91st AGM to be held in the year 2028. The Notice convening the 86th AGM to be held on 27 July 2023 sets out the details in this regard.
M/s. S R B C & CO LLP have confirmed that they satisfy the independence criteria required under the Act.
The Auditor''s Report on the financial statements of the Company for the year ended 31 March 2023, which forms part of the Annual Report of the Company, does not contain any qualification, reservation or adverse remark.
COST AUDITOR
As per the requirement of Section 148(1) of the Act read with rules made thereunder, your Company is required to maintain cost accounts and records. Accordingly, your Company has maintained cost accounts and records for financial year 2022-23 as applicable for its product range.
During the year under review, the Company filed the Cost Audit Report for the financial year 2021-22 with the Registrar of Companies, Mumbai, within the prescribed statutory timelines.
Upon recommendation of the Audit Committee, the Board has re-appointed M/s. R. Nanabhoy & Co., Cost Accountants as Cost Auditor of your Company for financial year 2023-24 at a remuneration of '' 8,30,000/- (Rupees Eight Lakh Thirty Thousand only) per annum plus out-of-pocket expenses and taxes, as applicable. The Act mandates that the remuneration payable to the Cost Auditor is ratified by the shareholders. Accordingly, a Resolution seeking the Shareholders'' ratification of the remuneration payable to the Cost Auditors for the financial year 2023-24 is included in the Notice convening the ensuing Annual General Meeting.
SECRETARIAL AUDITOR
Your Company had appointed M/s. Parikh & Associates, Practicing Company Secretaries, Mumbai (Firm Registration Number: P1988MH009800), to undertake the Secretarial Audit of the Company for financial year 2022-23.
Your Company has generally complied with the Secretarial Standards and the Secretarial Audit Report is annexed in Form MR-3 for financial year 2022-23 as Annexure 4 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
INTERNAL FINANCIAL CONTROLS
The Company emphasizes the importance of robust internal control system which lays down the foundation of strong governance structure and promote a culture of integrity, transparency, and accountability in the business. Given the nature of business and size of its operations, the Company has designed and instituted a strong internal control system that comprises well-defined organization structure, roles and responsibilities, documented policies and procedures to reduce business risks through a framework of process controls. A detailed note on Internal Financial Controls is included in the Management Discussion and Analysis.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
BOARD OF DIRECTORS
Composition
Your Company''s Board of Directors consists of eight Directors comprising (i) Three Non-Executive Non-Independent Directors which includes the Non-Executive Chairman of the Board (ii) Four NonExecutive Independent Directors, and (iii) a Managing Director.
Mr. Vellayan Subbiah, Non-Executive Director, is the Chairman of your Board. Mr. P S Jayakumar, Ms. Sasikala Varadachari, Mr. Sriram Sivaram and Mrs. Vijayalakshmi R Iyer are Independent Directors in terms of Regulation 16 of the SEBI LODR and Section 149 of the Act. Mr. M A M Arunachalam and Mr. Kalyan Kumar Paul are Non-Executive NonIndependent Directors on your Board.
Mr. Natarajan Srinivasan is the Managing Director on your Board.
Your Board consists of professionals with diverse functional expertise, industry experience, educational qualifications and gender mix relevant to fulfilling your Company''s objectives and strategic goals.
During the year under review, based on the recommendations of the Nomination and Remuneration Committee, your Board had appointed Mrs. Vijayalakshmi R Iyer as an Additional Director in the capacity of Non-Executive Independent Director of the Company with effect from 24 September 2022. Her appointment was approved by the Members through Postal Ballot on 14 December 2022.
Mr. Shailendra Roy completed his tenure as an Independent Director of the Company and ceased to be a director on 18 September 2022. The Board places on record its appreciation of the contribution made by Mr. Shailendra Roy during his tenure as an Independent Director of the Company.
Mr. Natarajan Srinivasan was re-appointed as Managing Director for a further period of one year from 26 November 2022 to 25 November 2023 and the said re-appointment was approved by the Members through Postal Ballot on 14 December 2022.
The Board has recommended to the shareholders the re-appointment of Mr. Natarajan Srinivasan as Managing Director of the Company with effect from 26 November 2023 upto 30 April 2025 (both days inclusive) The Notice calling the 86th AGM contains details in this regard.
In terms of the provisions of Section 152 of the Act and the Rules made thereunder and Article 114 of the Articles of Association of the Company, Mr. Kalyan Kumar Paul retires by rotation at the ensuing Annual General Meeting of the Company and is eligible for re-appointment.
As per Regulation 36 of the SEBI LODR and Secretarial Standard-2 on General Meetings issued by the Institute of Company Secretaries of India (SS-2), a brief profile and other relevant details regarding re-appointment of Mr. Kalyan Kumar Paul are contained in the Annexure accompanying the explanatory statement to the Notice of the ensuing Annual General Meeting.
INDEPENDENT DIRECTORSâ DECLARATION
Your Company has received declarations from all its Independent Directors confirming that they meet the criteria of independence as laid down under Section 149 of the Act and Regulation 16 of the SEBI LODR.
In the opinion of the Board, all the Independent Directors of your Company fulfill the conditions of independence as specified in the Act and SEBI LODR and are independent of the management and have the integrity, expertise and experience including the proficiency as required for effectively discharging their roles and responsibilities in directing and guiding the affairs of the Company.
The Company has received a certificate from M/s. Parikh & Associates, Practicing Company Secretaries, confirming that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing
of Directors, KMP Senior Management and other employees. The Remuneration Policy of the Company provides a performance driven and market-oriented framework to ensure that the Company attracts, retains and motivates high quality executives who can achieve the Company''s goals, while aligning the interests of employees, shareholders and all stakeholders in accordance with the Murugappa Group''s values and beliefs. The terms of reference of the Nomination and Remuneration Committee includes formulation of criteria for determining qualifications, positive attributes and independence of Directors.
The Company''s Remuneration Policy is available on the website of the Company under: https://www. cgglobal.com/assets/pdf ffles/CG Remuneration Policy 21 22.pdf
Your Company has adopted a Board Diversity Policy to reap the benefits of a broader experience in decision making.
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
In line with the requirements of the Act and the SEBI LODR, an annual evaluation of performance of the Board, its Committees and individual Directors was carried out during the year under review. Pursuant to the provisions of Schedule IV of the Act and Regulation 25 of the SEBI LODR, the Independent Directors of your Company, at their Meeting held on 1 March 2023, evaluated the performance of Non-Independent Directors, the Board as a whole, performance of the Chairman; and also assessed the quality, quantity and timeliness of flow of information between the Management and the Board.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to Regulation 25 of the SEBI LODR, your Company familiarizes its Independent Directors with their roles, rights, responsibilities as well as the Company''s business and operations. Moreover, Directors are regularly updated on the business strategies and performance, management structure and key initiatives of businesses at every Board Meeting. Details of the programme can be viewed under the following link available on the Company''s website:https://www.cgglobal.com/assets/pdf files/ Familiarisation Programme for Independent Directors.pdf
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year under review were on arm''s length basis and were in the ordinary
for IGBT Converter/ Inverter based operation for âMain Line Electrical Multiple Unit with On Board propulsion system (MEMU-OB)â application, in line with the general design and manufacturing guidelines as specified in IEC 60349-2 and in accordance with the modern traction practices. Special care has been taken to include features to make the Traction Motor suitable for operating in harsh and tropical climatic conditions.
⢠Designed, developed and type tested Composite Converter, which is an integrated product of 6000 HP Traction Converter and 2X500 kVA Hotel Load Converter for Indian Railways complying to IEC 61287, IEC 61373, and IEC 60571. This will replace one diesel generator car, which in turn reduces carbon emission.
⢠Indigenously designed, developed and type tested 150 kVA Auxiliary Power Converter for âMain Line Electrical Multiple Unit with On Board propulsion system (MEMU-OB)â application complying to IEC 61287, IEC 61373, and IEC 60571. Special care has been taken to reduce Total Harmonic Distortion (THD) at both input and output supply.
⢠Indigenously designed and developed
ergonomic Driver''s Desk/Console and Control Panels for âMain Line Electrical Multiple Unit with On Board propulsion system (MEMU-OB)â application considering necessary traction controls, safety controls and passenger amenity items, positioning of various pneumatic gauges, brake controller etc. in line with the UIC 651 norms. Special care has been taken to make the Driver''s console and the control panels compliant to fire protection guidelines as specified in EN 45545 and suitable for excessive shocks and vibration norms as set in IEC 61373.
⢠Indigenously designed and developed 110V DC, 0.44KW DC series motor with ingress protection IP-67 and AC immunization 400V. This motor is used in drives of the point mechanism through friction clutch, reduction gears and throw bar when electric power is supplied.
⢠Indigenously designed and developed external clamp lock assembly for 60kg Thick Web Switch (TWS) Canted rail and this external locking mechanism is used in Dedicated
course of business. Hence, disclosure of particulars of contracts/arrangements entered into by your Company with related parties in Form AOC-2 is not applicable for the year under review. There were no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. The Audit Committee grants omnibus approval for transactions which are of repetitive nature with related parties.
Related party transactions entered into during the year under review are disclosed in the notes to the Financial Statements. None of the Directors had any pecuniary relationship or transactions with the Company, except the payments made to them in the form of remuneration / sitting fee.
The Company''s Related Party Transactions Policy is made available on the website of the Company under: https://www.cgglobal.com/assets/pdf files/ Related Party Transaction Policy 1 Apr 2022.pdf
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Pursuant to the provisions of Section 186 of the Act and Schedule V of the SEBI LODR, particulars of loans, guarantees given and investments made by your Company during financial year 2022-23 are given in the notes to the Financial Statements.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
In terms of Regulation 34 of the SEBI LODR read with relevant SEBI Circulars, new reporting requirements on ESG parameters were prescribed under âBusiness Responsibility and Sustainability Reportâ ("BRSR"). The BRSR seeks disclosure on the performance of the Company against nine principles of the âNational Guidelines on Responsible Business Conduct" ("NGRBCs"). As per the SEBI Circulars, effective from the financial year 2022-23, filing of BRSR is mandatory for the top 1000 listed companies by market capitalization. Accordingly, for the financial year ended 31 March 2023, your Company has prepared the BRSR. The BRSR is enclosed separately and forms an integral part of this Annual Report.
ENTERPRISE RISK MANAGEMENT ("ERM") FRAMEWORK
Company''s comprehensive Risk Management Framework involves a three-tiered approach, taking into account the Enterprise Risks, Process Risks and Compliance Risks.
Enterprise risk identification and mitigation initiatives are handled through an on-going process for each of the businesses, as well as for the Company as a whole. The coverage extends to all key business exposures. After getting a measure of each such enterprise risk, the mitigation actions are tracked.
The Risk Management Committee of the Board reviews the key risks associated with the businesses of your Company and their mitigation measures. A detailed note on ERM is given in the Management Discussion and Analysis, forming part of this report.
RESEARCH AND DEVELOPMENT ("R&D")
During the year under review, your Company''s R&D activities continued to focus on development of indigenous and energy efficient products.
⢠To support the Government of India (GOI) initiative towards building and reinforcing Railway Infrastructure in the country, Company developed two new products 21.6/30.24 MVA, 220/27 kV Trackside Transformer and 1288 kVA MEMU Loco Transformer for Indian Railways.
⢠Developed Inverter duty transformer for Solar application 12.5 MVA 33/0.630*4 kV with 5 winding and successfully conducted Short Circuit Test.
⢠Developed a new 12kV Ring Main Unit ("RMU") family âArista - Vâ with side cable entry feature. Type tested and suitable for both indoor and outdoor installation. It is compact RMU, fitted with robotically welded, hermetically sealed SF6 gas tank making it suitable to operate in most extreme environments. With development of Arista family, Company has increased its product offering range to the Secondary Distribution networks.
⢠Developing design optimization and compact EHV Instrument Transformer for Indian utilities, aimed at compliance of stringent Seismic stability specification of 800kV and 420kV EHV bushing to restrict imports and offer indigenous solution to customers.
⢠In-house development of Silicon Moulded Arrestor for critical short circuit duty cycle, electrostatics and mechanical requirements by offering technologically advanced, light weight and easy to handle solution.
⢠Product upgradation in EHV Switchgear by design upgradation and optimization.
a) 420kV, 63kA Gas Circuit Breaker suitable for -40°C application. This has resulted in executing an order from Ukraine and opened opportunity for similar application in many European countries.
b) 245kV, 50kV Gas Circuit Breaker for higher altitude application.
c) 145kV, 2000A Horizontal Double Break banging type Disconnector.
⢠Indigenously developed and successfully conducted type testing of 66kV-145kV GIS Surge Arrestor (three phase) and 245kV GIS Surge Arrestor (single phase). This will help customers to reduce their dependence on imports, reduction in delivery time, and savings on Forex.
⢠Developed Ultra High Frequency Partial Discharge Sensor (UHF PD Sensor) which were earlier imported. These UHF PD Sensors are used in 145kV GIS as a Prediction Tool for Failure Detection. This development reduces the dependency on imports and supports the âMake in Indiaâ initiative of the Government of India.
⢠Re-layout of 245kV Hybrid GIS by Design optimization resulting into reduction in space occupied and reduced site Installation time, for customer.
Continued to prioritize the development of innovative and energy-efficient products, with a focus on indigenous solutions and achieved several milestones, including:
⢠Development of new VFDs with a rating of 75kW and 90kW, which are designed to operate at higher ambient temperatures and offer the option of flange mounting, thus optimizing cabinet design.
⢠Creation of a new range of power stacks for domestic and overseas customers, offering improved efficiency and reliability.
⢠Introduction of a new Wi-Fi connectivity solution that enables users to control and monitor the performance of their AC drives
using a smartphone application and wireless connection. The solution also provides easy commissioning, faster support, and status reporting.
⢠Development of a 250W hub motor controller for e-bikes with features such as pedal assist and speed accelerators for effortless riding.
⢠Successful certification of the super-premium Non safe area (FLP IIA, IIB, IIC) AC motor IE4 range from ATEX, PESO, BIS for frames 80 to 160, which will help to reduce energy consumption and carbon footprint.
⢠Launch of the âEnticeâ series range of AC motors from NS80 to NS132 frame with improved efficiency, aesthetic appearance and reliability.
⢠Launch of the new SM series alternators for 160 and 180 frames in line with market demands.
⢠Extension of the 450 frame Alternator range up to 2500 KVA, catering to a wider range of customer needs.
⢠Development of EV traction and auxiliary motors, with higher power, meeting superior performance and IP 67 enclosure standards.
⢠Development of Neema D range and Neema premium multi-potential range motors for overseas customers.
⢠Release of the DC motor 450 and 500 frame, mill-duty motor to the market.
⢠Implementation of various latest design tools to analyze the parameters of designed products and achieve cost savings on raw materials.
⢠Provision of retrofitting solutions to customers from our LIM plant.
⢠Expansion of our range of 10/12 pole large motors in frames 630, 710, and 800, with a specific focus on water sector applications.
⢠Provision of application-driven solutions to the agriculture sector, such as chaff cutters, areca nut, pulverizers, threshers, etc., through our FHP plant.
⢠Indigenously designed and developed 246 kW, 4 Pole, 3 Phase AC Asynchronous, Axle hung, nose suspended Traction Motor suitable
Freight Corridor Corporation (DFCC) and METRO Rail''s switching turnout with 220mm throw point machine application.
CONSERVATION OF ENERGY,
TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Details, as required under Section 134 of the Act read with the Companies (Accounts) Rules, 2014, are given in the prescribed format as Annexure 1 to this Report.
ENVIRONMENT, HEALTH AND SAFETY ("EHS")
A detailed review of the Environment, Health and Safety measures undertaken by your Company is given in the BRSR Report, which forms part of this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed review of the operations, performance and future outlook of your Company and its businesses is given in the section titled âManagement Discussion and Analysisâ, which forms part of this Report.
CORPORATE GOVERNANCE
A section on Corporate Governance standards followed by your Company, as stipulated under Schedule V of SEBI LODR, is enclosed separately.
A certificate from M/s. Parikh & Associates, Practicing Company Secretaries, regarding compliance with the conditions of Corporate Governance, as stipulated under SEBI LODR, is annexed to the Report on Corporate Governance.
CORPORATE SOCIAL RESPONSIBILITY
("CSR")
In terms of Section 135 of the Companies Act, 2013 read with CSR Rules, your Company has during the year 2022-23 spent ''69 lakhs being the two percent of the average net profits of your Company during the three preceding financial years in accordance with the CSR Policy of the Company.
Annual Report on CSR initiatives as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended (âCSR Rulesâ) is annexed as Annexure 2 and forms an integral part of this Report.
COMPLAINTS RELATING TO SEXUAL HARASSMENT
Your Company has adopted a Prevention of Sexual Harassment Policy and has also constituted an Internal Complaint Committee in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Complaint Committee has been constituted region-wise, and is presided by a woman employee and is comprising of five to seven Company employees with an external member, to whom employees can address their complaints.
During the year under review, no incident of sexual harassment was reported.
VIGIL MECHANISM
Your Company has set up a vigil mechanism, viz. a Whistle Blower Policy, as per the provisions of Section 177 of the Act and Regulation 22 of the SEBI LODR to enable its stakeholders to report violations, genuine concerns, unethical behaviour and irregularities, if any, which could adversely affect the Company''s operations. No person has been denied access to the Chairman of the Audit Committee of the Board.
The Ombudsperson appointed by your Board deals with the complaints received by or against employees, customers and vendors of the Company and supervises the investigation, ensures appropriate action and submits a report to the Chairman of the Audit Committee on a quarterly basis.
PUBLIC DEPOSITS
Your Company has not accepted any deposits from public or its members under Chapter V of the Act and no deposits were outstanding as on 31 March 2023.
SHARE CAPITAL
During the year under review, your Company has allotted 8,52,88,405 equity shares of '' 2 each, fully paid up, as detailed below:
a) 8,52,33,645 equity shares were allotted to Tube Investments of India Limited (âTIIâ) on 18 May 2022 pursuant to conversion of balance 8,52,33,645 warrants by TII into equal number of equity shares, and receipt of the balance amount due on the warrants so exercised by them. Pursuant to the above conversion, the aggregate shareholding of TII has increased to 58.05% of the share capital of the Company from 55.57%.
in conformity with the applicable accounting standards along with proper explanation relating to material departures, if any;
b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2023 and of the profit of the Company for the year ended on that date;
c) that proper and sufficient care has been taken 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;
d) that the annual Financial Statements have been prepared on a going concern basis;
e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively;
Details of the composition of the CSR Committee and CSR Policy of the Company are also provided in the said Annexure.
REGISTRAR AND SHARE TRANSFER AGENT
Your Company has appointed Datamatics Business Solutions Limited ("DBSL"), an entity which is registered with SEBI, as its Registrar and Share Transfer Agent. Contact details of DBSL are mentioned in the section titled âReport on Corporate Governanceâ of this Annual Report.
Disclosures pertaining to remuneration and other details as required under Section 197 of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given in Annexure 3 to this Report. In accordance with the provisions of Section 197(12) of the Act, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of the employees covered under the said rule shall be made available to any Member on a specific request made in this regard, by him or her in writing.
EMPLOYEE STOCK OPTION PLAN 2021
The Shareholders of the Company had, through Special Resolution passed by Postal Ballot on 23 September 2021, approved the introduction and implementation of Employee Stock Option Plan 2021 ("ESOP 2021" / "Scheme") and authorized the Board/ Nomination and Remuneration Committee to issue to the eligible employees, such number of Options under the ESOP 2021, as would be exercisable into, not exceeding 2,70,00,000 (Two Crore Seventy Lakhs) fully paid-up equity shares of '' 2/- each in the Company. ESOP 2021 is in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.
The Company has granted 22,87,240 Options to employees upto 31 March 2023. 18,34,100 options were granted in the year 2021-22 and 4,53,140 Options were granted during the year 2022-23.
The disclosures required to be made under SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 are made available on the website of the Company under https://www.cgglobal.com. The certificate under the said regulations shall be made available for inspection in accordance with statutory requirement.
b) 54,760 shares under ESOP Scheme 2021 -19,760 equity shares were allotted on 22 December 2022 and 35,000 equity shares were allotted on 9 March 2023 to the option grantees who had exercised their options.
As at 31 March 2023, the share capital of the Company is as follows:
⢠The authorized share capital of your Company is '' 407,60,00,000/- (Rupees Four Hundred Seven Crore and Sixty Lakh) divided into 203,80,00,000 equity shares of '' 2/-(Rupees two) each.
⢠The subscribed and paid-up share capital of your Company stood at '' 305,42,62,868/-(Rupees Three Hundred Five Crore Forty Two Lakhs Sixty Two Thousand Eight Hundred Sixty Eight only) consisting of 152,71,31,434 equity shares of '' 2/- (Rupees two) each.
Your Company''s equity shares are listed and traded on BSE Limited and National Stock Exchange of India Limited.
Pursuant to Sub-Section 3(a) of Section 134 and Sub-Section (3) of Section 92 of the Act, a copy of the Annual Return of the Company as on 31 March 2023 is placed on the website of the Company and the same is available on the following link: https://www.cgglobal.com/financials#annual report
REPORTING OF FRAUDS BY AUDITORS
During the year under review, the Statutory Auditors of the Company had not reported any matter under Section 143(12) of the Act. Therefore, disclosure is not applicable in terms of Section 134(3)(ca) of the Act.
a) Issue of equity shares with differential rights
The Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.
There are no applications or any proceedings pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) against the Company.
During the year under review, the Company has not entered into one-time settlement with any banks or financial institutions.
d) Material changes and commitments affecting the financial position of your company
There were no material changes and commitments affecting the financial position of the Company, between the end of the financial year and the date of this Report.
DIRECTORSâ RESPONSIBILITY STATEMENT
The Board of Directors confirm that the Company has in place a framework of internal financial controls and compliance system, which is monitored and reviewed by the Audit Committee and the Board besides the statutory, internal and secretarial auditors. To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a) the annual Financial Statements for the year ended 31 March 2023 have been prepared
f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The Board of Directors wishes to convey its gratitude and appreciation to all employees for their tremendous efforts as well as their exemplary dedication and contribution to the Company''s performance. The Directors would also like to thank the Central and State Governments, Shareholders, State Bank of India, Ministry of Corporate Affairs, Customers, Suppliers, Dealers, Employees and Employee Unions and all other business associates for their continued support extended to your Company.
On behalf of the Board of Directors
Chairman (DIN: 01138759)
Mar 31, 2022
Your Directors are pleased to present their Eighty-Fifth Annual Report on the business and operations of your Company along with the audited financial statements, both standalone and consolidated, for the financial year ended 31 March 2022.
COMPANY PERFORMANCE
Your Companyâs standalone turnover from operations was ''5,159 crore during the year under review, compared to ''2,526 crore in the previous year representing a YoY growth of 104.24%, and the consolidated turnover was ''5,561 crore compared to ''2,964 crore in the previous year, representing a YoY growth of 87.62% over the previous year.
Details of consolidated segment-wise revenue and profit before interest and tax (âPBITâ) of the two key business segments - Power Systems and Industrial Systems - and how these compare with the previous financial year are given in Table 1. Your Companyâs financial performance for the year ended 31 March 2022 as compared to the previous year is given in Table 2.
01 CONSOLIDATED NET SALES AND PROFIT BEFORE INTEREST AND TAX (PBIT) OF |
||||
THE BUSINESS |
(in '' crore) |
|||
2021-22 |
2020-21 |
|||
Consolidated Net Sales |
||||
Power Systems |
1,594 |
862 |
||
Industrial Systems |
3,953 |
2,092 |
||
Consolidated PBIT |
||||
Power Systems |
161 |
(82) |
||
Industrial Systems |
482 |
201 |
||
02 COMPANY FINANCIAL HIGHLIGHTS |
(in '' crore) |
|||
Standalone |
Consolidated |
|||
2021-22 |
2020-21 |
2021-22 |
2020-21 |
|
Net Sales and Services |
5,159 |
2,526 |
5,561 |
2,964 |
EBIDTA |
642 |
156 |
697 |
219 |
Less: Finance cost |
66 |
166 |
68 |
197 |
Less: Depreciation |
74 |
81 |
101 |
138 |
Profit / (loss) before exceptional items & tax |
502 |
(91) |
528 |
(116) |
Exceptional items (net) |
240 |
915 |
508 |
1,543 |
Profit before tax |
742 |
824 |
1,036 |
1,427 |
Less: Tax Expense |
115 |
135 |
123 |
147 |
Profit from continuing operations |
627 |
689 |
913 |
1,280 |
Less: Minority Interest |
NA |
NA |
(1) |
16 |
Profit for the year |
627 |
689 |
912 |
1,296 |
A detailed review of the operations and financial performance of your Company and each of its business segments is contained in the âManagement Discussion and Analysisâ section of this Annual Report.
of approx. USD 32.5 Mn relating to guarantee obligations of CG International BV, a subsidiary of the Company, were settled by cash settlement of approx. USD 6.5 MN (~ ''49 Crore). Further, an agreement has also been reached with EXIM Bank for settlement of the Companyâs guarantee obligations to it.
c) Sale of land at Kanjurmarg
During the year under review, the Company completed the sale of 3rd tranche of land at Kanjurmarg for a sale consideration of ''382 crore and used the sale proceeds for pre-payment of part of the existing term loan availed from State Bank of India.
DIVESTMENTS AND OTHER DEVELOPMENTS
As stated in the previous yearâs Annual Report of the Company, due to financial stress and unviable operations, decisions were taken from time to time to prune / close down certain subsidiaries of the Company. The status of divestments and other developments in respect of the subsidiaries of the Company are given below:
Name of the Subsidiary |
Status |
CG Holdings Belgium NV CG Power Systems Belgium NV CG Sales Networks France SA CG Power Solutions Saudi Arabia Co. CG Electric Systems Hungary Zrt. |
Bankruptcy proceedings ongoing |
CG - GANZ GENERATOR- £S MOTORGYARTO Korlatolt Felelossegu Tarsasag |
Liquidated during the year under review |
CG Power Solutions UK Limited; CG Power & Industrial Solutions Middle East FZCO; CG Sales Networks Malaysia Sdn. Bhd; CG Power Systems Canada Inc |
In the process of being voluntarily liquidated, subject to receipt of statutory and regulatory approvals |
CG International (Holdings) Singapore Pte. Ltd CG Middle East FZE |
Board has approved proposal for winding up |
CG Power Solutions Limited |
The Company has initiated Corporate Insolvency Proceedings under the Insolvency and Bankruptcy Code, 2016 and the same is pending before NCLT. |
The Company recorded robust performance during the year under review resulting in growth in revenue and EBITDA.
The Industrial Systems recorded revenue of ''3,953 Crore as compared to ''2,092 Crore during the year 2020-21, registering a growth of approx. 88.96% as compared to previous year. The operating profit before interest and tax of Industrial Systems stood at ''482 Crore as compared to ''201 Crore during the previous year, registering a growth of approx. 139.80%.
The Power Systems recorded revenue of ''1,594 Crore as compared to ''862 Crore during the year 2020-21, a growth of approx. 84.92% as compared to previous year. The operating profit before interest and tax of Power Systems stood at ''161 Crore as compared to loss before interest and tax of ''82 Crore during the previous year, registering a growth of approx. 296.34%.
KEY ACCOMPLISHMENTS DURING THE YEAR
As mentioned in the previous Annual Report for the financial year 2020-21, the one-time settlement of funded facilities and restructuring of the non-funded facilities extended to and availed by the Company, as agreed with the then lenders of the Company (âLenders") in November 2020, inter alia included payment of around ''150 crore (Rupees One Hundred and Fifty Crore) to the Lenders, out of the proceeds from the sale of âCG Houseâ property of the Company, within a period of five years (âCG House Debtâ).
During the year under review, the Company settled the CG House Debt by pre-payment of the discounted value of debt aggregating to ''133 Crore and the CG House Property is now free of any encumbrance.
During the year under review, the Company has settled its guarantee obligations towards Standard Chartered Bank (Singapore) Limited of approx. Euro 26.176 Mn by issuance of 1,38,45,000 equity shares and cash settlement of approx. Euro 3.66 Mn (~''32 Crore). Further, the dues of IndusInd Bank
Considering the inadequacy of profits on account of the accumulated previous year losses, your Board does not recommend any dividend for the financial year ended 31 March 2022.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
As on 31 March 2022, your Company had 3 Indian and 10 foreign subsidiaries (excluding 2 subsidiaries in Belgium along with their subsidiaries declared as bankrupt; 4 subsidiaries in voluntary liquidation and 1 subsidiary declared insolvent). During the year under review, your Company has not incorporated or acquired any company.
Pursuant to Section 136 of the Companies Act, 2013 (âActâ), the audited financial statements, including the consolidated financial statements and related information of your Company and audited/ unaudited annual accounts of each of its subsidiaries are placed on the website of your Company.
Highlights of performance of operational subsidiaries
of the Company are given below:
CG Adhesive Products Limited (âCGAPLâ) is the Companyâs subsidiary in Goa. Its name was changed from CG-PPI Adhesive Products Limited to CG Adhesive Products Limited with effect from 15 March 2022. Your Company holds 81.42% of CGAPLâs equity share capital. CGAPL manufactures and deals in specialty adhesive tapes and labels.
During the year under review, CGAPL recorded revenue of ''23.24 crore (previous year: ''15.30 crore) and registered profit before tax of ''3.78 crore (previous year: ''0.82 crore).
QEI, LLC is the subsidiary of CG Power Americas, LLC, and a wholly owned step-down subsidiary of your Company in US, operating in multiple markets and business sectors within and relating to distribution control, load management control and supervisory control and data acquisition systems.
During the year under review, QEI, LLC recorded revenue of $10.33 Mn i.e. equivalent to ''77.89 crore (previous year: $9.17 Mn i.e. equivalent to ''67.06 crore). It registered profit before tax of $3.18 Mn i.e. equivalent to ''23.96 crore (previous year: $2.45 Mn i.e. equivalent to ''17.89 crore).
CG Drives & Automation Sweden AB is a subsidiary of CG Industrial Holdings Sweden AB and a wholly owned step-down subsidiary of your Company in Sweden. It is a technology partner for energy efficient products and solutions. It develops, manufactures and markets the equipment for control and protection of industrial processes.
During the year under review, CG Drives & Automation Sweden AB recorded revenue of SEK 258.69 Mn i.e. equivalent to ''208.19 crore (previous year: SEK 241.12 Mn i.e. equivalent to ''208.52 crore) and registered profit before tax of SEK 7.11 Mn i.e. equivalent to ''5.72 crore. (previous year: SEK 2.58 Mn i.e. equivalent to ''2.23 crore).
CG Drives & Automation Germany GmbH is a subsidiary of CG International BV, Netherlands, and a wholly owned step-down subsidiary of your Company in Germany. It is into manufacture, sale, maintenance and repair of electronic devices and facilities in the area of drive technology.
During the year under review, CG Drives & Automation Germany GmbH recorded revenue of â¬19.67 Mn i.e. equivalent to ''165.78 crore (previous year: â¬15.64 Mn i.e. equivalent to ''137.18 crore). It registered profit before tax of â¬0.80 Mn i.e. equivalent to ''6.75 crore (previous year: â¬0.22 Mn i.e. equivalent to ''1.96 crore).
b) Voluntary revision of financial statements
Considering that closing balances in the recast financial statements of the Company for the financial year ended 31 March 2019 will have to be carried forward as opening balances for the financial year 2019-20, the financial statements of the Company for the financial year 2019-20 and 2020-21 were required to be revised to give effect to the changes as stated above.
In view of the above, the Company had made an application to NCLT for voluntary revision of the financial statements of the Company for the financial years 2019-20 and 2020-21 in order to maintain consistency with the recast books of accounts. The NCLT, vide its order dated 22 December 2021, approved the said application and allowed the voluntary revision of financial statements of the Company for financial years 2019-20 and 2020-21. The revised financial statements for financial years 2019-20 and 2020-21 were then approved by your Board and thereafter adopted by the shareholders at the previous Annual General Meeting of the Company held on 31 January 2022.
UPDATE ON INVESTIGATIONS
The investigations by Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO) and Enforcement Directorate (ED) into the affairs of your Company and its subsidiaries pertaining to the past period and against the erstwhile promoters/ directors of the Company relating to transactions that took place when the Company was under the control of the previous management / promoters, details of which have already been reported to the stock exchanges / in the Annual Report of the Company for the financial year 2020-21, are in progress. Your Company is extending full co-operation to these agencies and information and documents as sought by them are being promptly provided by the Company.
AUDITORS AND AUDIT REPORTS
STATUTORY AUDITORS
M/s. S R B C & CO LLP, Chartered Accountants (Firm Registration No. 324982E/E300003) (âSRBCâ), the existing Statutory Auditors of the Company, were appointed at the 81st Annual General Meeting of your Company, to hold office for a term of five years up to the conclusion of 86th Annual General Meeting of your Company.
CG Drives & Automation Netherlands BV is a subsidiary of CG International BV, Netherlands, and a wholly owned step-down subsidiary of your Company in Netherlands. It is into development, production and marketing of inverter products including electrical motor drives, and trading of related products.
During the year under review, CG Drives & Automation Netherlands BV recorded revenue of â¬6.34 Mn i.e. equivalent to ''53.42 crore. (previous year: â¬6.80 Mn i.e. equivalent to ''59.59 crore) and registered profit before tax of â¬0.59 Mn i.e. equivalent to ''4.99 crore. (previous year: â¬0.34 Mn i.e. equivalent to ''2.99 crore).
Other than above, the remaining subsidiaries of the Company do not have any business operations. In terms of Section 129 of the Act, statement containing salient features of the financial statements of your Companyâs subsidiaries/ associates/ joint venture companies in Form AOC-1 is given in the notes to the financial statements in this Annual Report.
Pursuant to Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI LODRâ), a policy for determining material subsidiary of your Company as approved by the Board of Directors is made available on the website under https://www.cgglobal.com/policy
MATERIAL ORDERS OF REGULATORS / COURTS / TRIBUNALS
a) Re-opening of the books of accounts by the Ministry of Corporate Affairs
During the year under review, the books of accounts of the Company and its subsidiaries, for the financial years 2014-15 to 2018-19 were re-opened and re-cast pursuant to an order passed by the Honâble National Company Law Tribunal, Mumbai Bench (âNCLTâ) on 5 March 2020 based on a petition filed by the Ministry of Corporate Affairs (âMCAâ). The audited recast financial statements, were submitted by the MCA to NCLT and the same were taken on record by the NCLT vide its order dated 26 October 2021.
The Auditorâs Report on the financial statements of the Company for the year ended 31 March, 2022, which forms part of the Annual Report of the Company, does not contain any qualification, reservation or adverse remark.
As per the requirement of Section 148(1) of the Act read with rules made thereunder, your Company is required to maintain cost accounts and records. Accordingly, your Company has maintained cost accounts and records for financial year 2021-22 as applicable for its product range.
During the year under review, the Company filed the Cost Audit Report for the financial year 2020-21 with the Registrar of Companies, Mumbai, within the prescribed statutory timelines.
Upon recommendation of the Audit Committee, the Board has re-appointed M/s R. Nanabhoy & Co., as Cost Auditor of your Company for financial year 2022-23 at a remuneration of ''7,70,000/- (Rupees Seven Lakhs Seventy Thousand only) per annum plus out-of-pocket expenses and taxes, as applicable. The Act mandates that the remuneration payable to the Cost Auditor is ratified by the shareholders. Accordingly, a resolution seeking the shareholdersâ ratification of the remuneration payable to the Cost Auditors for the financial year 2022-23 is included in the Notice convening the ensuing Annual General Meeting.
Your Company had appointed M/s. Parikh & Associates, Practising Company Secretaries, Mumbai (Firm Registration Number: P1988MH009800), to undertake the Secretarial Audit of the Company for financial year 2021-22.
Your Company has generally complied with the Secretarial Standards and the Secretarial Audit Report is annexed in Form MR-3 for financial year 2021-22 as Annexure 4 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
The Company has adequate internal controls consistent with the nature of business and size of the operations, to effectively provide for safety of its assets, reliability of financial transactions with adequate checks and balances, adherence to applicable statutes, accounting policies, approval procedures and to ensure optimum use of available resources. These systems are reviewed and improved on a regular basis. The Company has a comprehensive budgetary control system to monitor revenue and expenditure against approved budget on an ongoing basis.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
As on the date of this Report, your Companyâs Board of Directors consists of eight Directors comprising
(i) Three Non-Executive Non-Independent Directors which includes the Non-Executive Chairman of the Board (ii) Four Non-Executive Independent Directors, and (iii) a Managing Director.
Mr. Vellayan Subbiah, Non-Executive Director, is the Chairman of your Board. Mr. P S Jayakumar, Mr. Shailendra Roy, Ms. Sasikala Varadachari and Mr. Sriram Sivaram are Independent Directors in terms of Regulation 16 of the SEBI LODR and Section 149 of the Act. Mr. M A M Arunachalam and Mr. Kalyan Kumar Paul are Non-Executive NonIndependent Directors on your Board.
Mr. Natarajan Srinivasan is the Managing Director on your Board.
Your Board consists of professionals with diverse functional expertise, industry experience, educational qualifications and gender mix relevant to fulfilling your Companyâs objectives and strategic goals.
During the year under review, based on the recommendations of the Nomination and Remuneration Committee, your Board had appointed Mr. Sriram Sivaram and Mr. Kalyan Kumar Paul as Additional Directors in the capacity of Non-Executive Independent Director and Non-Executive NonIndependent Director of the Company, respectively, with effect from 11 June 2021. Their appointment as Directors was approved by the Members through Postal Ballot on 30 December 2021.
In terms of the provisions of Section 152 of the Act and the Rules made thereunder and Article 114 of the Articles of Association of the Company, Mr. M A M Arunachalam retires by rotation at the ensuing Annual General Meeting of the Company and is eligible for re-appointment.
As per Regulation 36 of the SEBI LODR and Secretarial Standard-2 on General Meetings issued by the Institute of Company Secretaries of India (SS-2), a brief profile and other relevant details regarding re-appointment of Mr. M A M Arunachalam are contained in the Annexure accompanying the explanatory statement to the Notice of the ensuing Annual General Meeting.
INDEPENDENT DIRECTORSâDECLARATION
Your Company has received declarations from all its Independent Directors confirming that they meet the criteria of independence as laid down under Section 149 of the Act and Regulation 16 of the SEBI LODR.
In the opinion of the Board, all the Independent Directors of your Company fulfill the conditions of independence as specified in the Act and SEBI LODR and are independent of the management and have the integrity, expertise and experience including the proficiency as required for effectively discharging their roles and responsibilities in directing and guiding the affairs of the Company.
The Company has received a certificate from M/s Parikh & Associates, Practising Company Secretaries, confirming that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by the SEBI, Ministry of Corporate Affairs, or any such other statutory authority.
During the financial year 2021-22, your Board of Directors met 9 times, in accordance with the provisions of the Act, SEBI LODR and other statutory provisions.
Details of Board Meetings held and the attendance of Directors are given in the Section titled âReport on Corporate Governanceâ, which forms part of this Annual Report.
Your Board has established following committees in compliance with the requirements of the Act and SEBI LODR: (i) Audit Committee,
(ii) Nomination and Remuneration Committee,
(iii) Corporate Social Responsibility Committee,
(iv) Risk Management Committee, and
(v) Stakeholdersâ Relationship Committee.
Details of composition of the statutory committees, number of meetings held and attendance of
Committee Members thereof during the financial year, are given in the Section titled âReport on Corporate Governanceâ forming part of this Annual Report.
All recommendations of the Audit Committee have been accepted by the Board.
Your Board has constituted a Finance Committee comprising of Mr. Vellayan Subbiah, Chairman of the Board and Mr. Natarajan Srinivasan, Managing Director, to inter alia take decisions relating to borrowings and lending from time to time within such limits / sub-limits as may be decided by the Board.
KEY MANAGERIAL PERSONNEL (âKMPâ)
Pursuant to Section 203 of the Act, the Key Managerial Personnel of the Company as on the date of this Report are:
⢠Mr. Natarajan Srinivasan, Managing Director
⢠Mr. Susheel Todi, Chief Financial Officer
⢠Mr. P Varadarajan, Company Secretary
REMUNERATION POLICY AND CRITERIA FOR DETERMINING THE ATTRIBUTES, QUALIFICATION, INDEPENDENCE AND APPOINTMENT OF DIRECTORS
Your Company has formulated a Remuneration Policy governing the appointment and remuneration of Directors, KMP, Senior Management and other employees. The Remuneration Policy of the Company provides a performance driven and market-oriented framework to ensure that the Company attracts, retains and motivates high quality executives who can achieve the Companyâs goals, while aligning the interests of employees, shareholders and all stakeholders in accordance with the Murugappa Groupâs values and beliefs. The terms of reference of the Nomination and Remuneration Committee includes formulation of criteria for determining qualifications, positive attributes and independence of Directors.
The Companyâs Remuneration Policy is available on the website of the Company under: https://www.cgglobal.com/policv
Your Company has adopted a Board Diversity Policy to reap the benefits of a broader experience in decision making.
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
In line with the requirements of the Act and the SEBI LODR, an annual evaluation of performance of the Board, its Committees and individual Directors was carried out during the year under review. Pursuant to the provisions of Schedule IV of the Act and Regulation 25 of the SEBI LODR, the Independent Directors of your Company, at their meeting held on 23 March 2022, evaluated the performance of Non-Independent Directors, the Board as a whole, performance of the Chairman; and also assessed the quality, quantity and timeliness of flow of information between the Management and the Board.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to Regulation 25 of the SEBI LODR, your Company familiarizes its Independent Directors with their roles, rights, responsibilities as well as the Companyâs business and operations. Moreover, Directors are regularly updated on the business strategies and performance, management structure and key initiatives of businesses at every Board Meeting. Details of the programme can be viewed under the following link available on the Companyâs website: https://www.cgglobal.com/board of directors
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year under review were on armâs length basis and were in the ordinary course of business. Hence disclosure of particulars of contracts/arrangements entered into by your Company with related parties in Form AOC-2 is not applicable for the year under review. There were no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. The Audit Committee grants omnibus approval for transactions which are of repetitive nature with related parties.
Related party transactions entered during the year under review are disclosed in the notes to the Financial Statements. None of the Directors had any pecuniary relationship or transactions with the Company, except the payments made to them in the form of remuneration / sitting fee.
The Companyâs Related Party Transactions Policy is made available on the website of the Company under https://www.cgglobal.com/policv
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed review of the operations, performance and future outlook of your Company and its businesses is given in the section titled âManagement Discussion and Analysisâ, which forms part of this Report.
CORPORATE GOVERNANCE
A section on Corporate Governance standards followed by your Company, as stipulated under Schedule V of SEBI LODR, is enclosed separately.
A certificate from M/s Parikh & Associates, Practising Company Secretaries, regarding compliance with the conditions of Corporate Governance, as stipulated under SEBI LODR, is annexed to the Report on Corporate Governance.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company is now a part of the Murugappa Group, which is known for its tradition of philanthropy and community service.
It may be noted that in view of the average net profits of the Company for past three financial years being negative, there was no statutory requirement to incur any CSR expenditure during the year under review. Accordingly, your Company has not incurred any CSR expenditure during the year under review.
However, your Company is committed towards inclusive growth and based on the recommendation of the Board-level CSR Committee; your Company will be identifying focus areas / CSR initiatives to be carried out in the coming financial years in order to have a maximum impact.
Details of the composition of the CSR Committee and CSR Policy of the Company are given in the Section titled âAnnual Report on CSR initiatives for financial year 2021-22â in
Annexure 2 of this Report.
REGISTRAR AND SHARE TRANSFER AGENT
Your Company has appointed Datamatics Business Solutions Limited (âDBSLâ), an entity which is registered with SEBI, as its Registrar and Share Transfer Agent. Contact details of DBSL are mentioned in the section titled âReport on Corporate Governanceâ of this Annual Report.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section 197 of the Act, read
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Pursuant to the provisions of Section 186 of the Act and Schedule V of the SEBI LODR, particulars of loans, guarantees given and investments made by your Company during financial year 2021-22 are given in the notes to the Financial Statements.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34 of the SEBI LODR, the Business Responsibility Report for the year 202122 highlighting the initiatives taken by the Company in the areas of environment, social, economic and governance is given in the Section titled âBusiness Responsibility Report", which forms part of this Report and is also available on the website of your Company under: https://www.cgglobal.com/financials
ENTERPRISE RISK MANAGEMENT (ERM) FRAMEWORK
Companyâs comprehensive Risk Management Framework involves a three-tiered approach, taking into account the Enterprise Risks, Process Risks and Compliance Risks.
Enterprise risk identification and mitigation initiatives are handled through an on-going process for each of the businesses, as well as for the Company as a whole. The coverage extends to all key business exposures. After getting a measure of each such enterprise risk, the mitigation actions are tracked.
The Risk Management Committee of the Board reviews the key risks associated with the businesses of your Company and their mitigation measures.
RESEARCH AND DEVELOPMENT (R&D)
During the year under review, your Companyâs R&D activities continued to focus on development of indigenous and energy efficient products.
⢠Developed and successfully conducted short circuit test of Trackside Transformer of 21.6/30.24 MVA, 110/27 kV for Indian Railways.
⢠Expanded product range by introducing three Phase Zig-Zag connected power transformer filled with Environment Friendly Ester oil and also developed high current (>6000 A) energy efficient distribution transformer.
⢠Added three new varieties of Capacitor Voltage Transformers (CVTs) to product basket to enhance the customer reach for wider applications and launched new design of Current Transformer (CT) with Internal Arc Test withstand capability to prove the safety and reliability.
⢠Successfully developed / launched new products such as
- 362 kV Instrument Transformers for exports
- New application condenser bushings i.e. Oil to Oil bushings for Transformer and Instrument Transformers meeting Indian Railways (RDSO) specifications
- SF6 Gas 145kV GIS Surge Arrester and Partial Discharge Sensor Suitable for Gas Insulated Switchgear
- SF6 Gas 145kV GIS with Compact Circuit Breaker with reduced size,
- 690 V, 5000A, 63 kA rating Vacuum Interrupter (VI) for low Voltage and high Current Circuit Breaker application.
- 36 kV Load Break Switch for switching of Transformers and 12 kV, 200 Amp (Capacitive current), 3 Pole Vacuum Contactor for Capacitor Switching application.
- 52 kV, 2000A Off Circuit Tap Changer (OCTC) for Railwayâs track side Power Transformers.
- Multiple variants of 12kV Ring Main Unit (RMU) family âArista-Sâ for Smart Distribution application suitable for indoor and outdoor installation.
⢠Expanded product range in Instrument Transformer by developing polymeric insulator current and Inductive Voltage transformer for 0.5g seismic acceleration application.
⢠Completed Eco-design directive compliance for entire range of IP20 and IP54 drives which comply with the highest efficiency class as defined by IEC 61800-9-2.
⢠Developed and type tested the E2.1 frame for 75 and 90kW drives with 20% reduction in size with better competitiveness.
⢠Developed high power stacking blocks for drives greater than 200kW which reduces the floor space requirement in higher powers by approx. 30% and also developed DC-DC converter solutions for high power requirements in voltage range of 100 - 800 VDC which opens up application possibilities in renewable energy segment including fuel cell power generation and also for traditional sectors like automotive test beds and marine.
⢠Compact liquid cooled drives were developed primarily for marine segment in Europe which enables the company to offer 33% more power in the same volumes compared to earlier design.
⢠Developing Premium efficiency IE4 Non safe area application Motor (FLP series) for hazardous area to meet international and Indian standard requirements.
⢠Indigenously designed and developed two variants of BLDC Industrial fans - 65 W, 18â and 85 W, 24", providing performance parameters like Air delivery and speed comparable to that of 150 W, 18â and 200 W, 24â Induction motor based Industrial fans.
⢠Designed and developed Switch board cabinet for LHB AC coaches and also developed switch board cabinet for LHB Garib Rath AC coaches (including two cubicles under-slung and onboard) as per IEC 61439, which operates on 3 Phase 750V AC, 50 Hz and consists of all power and control switchgear for coach lighting, Air conditioning, Pantry, Pump control, Sanitary system, Public Addressing system and Head on Generation (HOG) filters selection etc.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Details, as required under Section 134 of the Act read with the Companies (Accounts) Rules, 2014, are given in the prescribed format as Annexure 1 to this Report.
ENVIRONMENT, HEALTH AND SAFETY (EHS)
A detailed review of the Environment, Health and Safety (EHS) measures undertaken by your Company is given in the Section titled âManagement Discussion and Analysisâ, which forms part of this Report.
with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given in Annexure 3 to this Report. In accordance with the provisions of Section 197(12) of the Act, read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of the employees covered under the said rule shall be made available to any Member on a specific request made in this regard, by him or her in writing.
EMPLOYEE STOCK OPTION PLAN 2021
The shareholders of the Company had, through special resolution passed by Postal Ballot on 23 September 2021, approved the introduction and implementation of Employee Stock Option Plan 2021 (âESOP 2021â / âSchemeâ) and authorised the Board / Nomination and Remuneration Committee to issue to the eligible employees, such number of Options under the ESOP 2021, as would be exercisable into, not exceeding 2,70,00,000 (Two Crore Seventy Lakhs) fully paid-up equity shares of ''2 each of the Company. ESOP 2021 is in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.
During the year under review, your Company has granted 18,34,100 options to the eligible employees under ESOP 2021.
The disclosures required to be made under SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 are made available on the website of the Company under https://www.cgglobal.com/. The certificate under the said regulations shall be made available for inspection in accordance with statutory requirement.
COMPLAINTS RELATING TO SEXUAL HARASSMENT
Your Company has adopted a Prevention of Sexual Harassment Policy and has also constituted an Internal Complaint Committee in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Complaint Committee has been constituted region-wise, and is presided by a woman employee and comprising five to seven Company employees with an external member, to whom employees can address their complaints.
During the year under review, no incident of sexual harassment was reported.
Your Company has set up a vigil mechanism, viz. a Whistle Blower Policy, as per the provisions of Section 177 of the Act and Regulation 22 of the SEBI LODR to enable its stakeholders to report violations, genuine concerns, unethical behaviour and irregularities, if any, which could adversely affect the Companyâs operations. None of the Whistle Blowers was denied access to the Chairman of the Audit Committee of the Board.
The Ombudsperson appointed by your Board deals with the complaints received by or against employees, customers and vendors of the Company and supervises the investigation, ensures appropriate action and submits a report to the Chairman of the Audit Committee on a quarterly basis.
DIVIDEND DISTRIBUTION POLICYPursuant to Regulation 43A of the SEBI LODR, your Company has formulated a Dividend Distribution Policy. It is available on the website of the Company under: https://www.cgglobal.com/policy
PUBLIC DEPOSITSYour Company has not accepted any deposits from public or its members under Chapter V of the Act and no deposits were outstanding as on 31 March 2022.
SHARE CAPITALDuring the year under review, your Company has allotted equity shares on preferential allotment / private placement basis as follows:
a) On 5 July 2021, your Company allotted 1,38,45,000 equity shares to Standard Chartered Bank (Singapore) Limited on preferential allotment basis, for settlement of guarantee obligations of the Company under the Guarantee Obligations (SCB) Settlement Agreement.
b) On 11 February 2022, your Company allotted 9,00,00,000 equity shares to Tube Investments of India Limited (âTII") pursuant to conversion of 9,00,00,000 warrants by TII into equal number of equity shares, and receipt of the balance amount due on the warrants so exercised by them. Pursuant to the above conversion, the aggregate shareholding of TII has increased to 55.57% of the share capital of the Company. As on the date of this report, TII continues to hold the balance 8,52,33,645 warrants of the Company, which are exercisable on or before 25 May 2022.
Consequently, as on the date of this Report, the share capital of the Company is as follows:
⢠The authorised share capital of your Company is ''407,60,00,000/- (Rupees Four Hundred Seven Crore And Sixty Lakh) divided into 203,80,00,000 equity shares of ''2/-(Rupees two) each.
⢠The subscribed and paid-up share capital of your Company stood at ''288,36,86,058/- (Rupees Two Hundred And Eighty Eight Crore Thirty Six Lakhs Eighty Six Thousand and Fifty Eight only) consisting of 144,18,43,029 equity shares of ''2/- (Rupees two) each.
Your Companyâs equity shares are listed and traded on BSE Limited and National Stock Exchange of India Limited.
At the beginning of the financial year under review, the Company had 1,04,462 Global Depositary Receipts (GDRs). Pursuant to the approval of the Board of Directors on 5 February 2021, the trading of the GDRs of the Company on London Stock Exchange (âLSEâ) was cancelled and the GDRs were delisted from LSE w.e.f. 24 May 2021. Company did not have any outstanding GDRs at the end of the financial year under review.
ANNUAL RETURNPursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Act, a copy of the Annual Return of the Company as on 31 March 2022 is placed on the website of the Company and the same is available on the following link: https://www.cgglobal.com/financials
REPORTING OF FRAUDS BY AUDITORSDuring the year under review, the Statutory Auditors of the Company had not reported any matter under Section 143(12) of the Act. Therefore disclosure is not applicable in terms of Section 134(3)(ca) of the Act.
OTHER DISCLOSURES / REPORTINGa) Issue of equity shares with differential rights
The Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.
The following entities had filed petitions
under IBC in the previous year(s) in respect of amount dues to them. All their dues have since been paid, no-dues certificate obtained from them and consequently the petitions have been dismissed as withdrawn / in the process of being withdrawn:
- JMD Precision Equipments Private Limited
- ATO (I) Limited
- Permali Wallace Private Limited
- Hi-Tech Radiators Private Limited
- Cargill India Private Limited
During the year under review, the Company has not entered into one-time settlement with any banks or financial institutions.
There were no material changes and commitments affecting the financial position of the Company, between the end of the financial year and the date of this Report.
DIRECTORSâ RESPONSIBILITY STATEMENTThe Board of Directors confirm that the Company has in place a framework of internal financial controls and compliance system, which is monitored and reviewed by the Audit Committee and the Board besides the statutory, internal and secretarial auditors. To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013:
a) the annual Financial Statements for the year ended 31 March 2022 have been prepared in conformity with the applicable accounting standards along with proper explanation relating to material departures, if any;
b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2022 and of the profit of the Company for the year ended on that date;
c) that proper and sufficient care has been taken 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;
d) that the annual Financial Statements have been prepared on a going concern basis;
e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively;
f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENTSThe Board of Directors wishes to convey its gratitude and appreciation to all employees for their tremendous efforts as well as their exemplary dedication and contribution to the Companyâs performance. The Directors would also like to thank the Central and State Governments, Shareholders, State Bank of India, Ministry of Corporate Affairs,
Customers, Suppliers, Dealers, Employees and Employee Unions and all other business associates for their continued support extended to the Company.
On behalf of the Board of Directors
Chairman (DIN: 01138759)
Mumbai, 2 May 2022
Mar 31, 2018
To,
The Members
The Directors are pleased to present their Eighty-first Annual Report on the business and operations of the Company along with the Audited Financial Statements, both Stand-alone and Consolidated, for the financial year ended 31 March 2018.
THE YEAR IN RETROSPECT
The stand-alone and consolidated financial statements of the Company represent the continuing operations for the year ended 31 March 2018. The discontinued operations have been presented under a separate head.
The Company achieved a stand-alone net turnover from continued operations of Rs.4,981 crore, during the year under review, compared to Rs.4,356 crore during the previous year, recording a growth of 14.3%. The consolidated net turnover of the Company during FY2018 from continued operations grew by 12.1% and stood at Rs.6,189 crore, compared with Rs.5,517 crore in the previous year.
Details of net Sales and Profit before Interest and Tax of the respective Business Units in comparison with the previous financial year are given in Table 1. Further the Financial Performance of the Company for the continuing operations for the year ended 31 March 2018 is given in Table 2.
net sales and profit before interest and tax(PBIT)
in Rs. crore
BUSINESS UNIT |
SALES |
PBIT |
||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Power Systems |
||||
Stand-alone |
2,700 |
2,505 |
185 |
208 |
Consolidated |
3,633 |
3,417 |
312 |
344 |
Industrial Systems |
||||
Stand-alone |
2,282 |
1,852 |
187 |
190 |
Consolidated |
2,541 |
2,082 |
166 |
175 |
A detailed review of the operations and financial performance of the Company and each of the Businesses is contained in the section titled âManagement Discussion and Analysisâ of this Annual Report.
DIVESTMENTS AND OTHER DEVELOPMENTS
The Companyâs overall strategy is to focus its synergies to core operations and markets including India and Indonesia which provides a significant growth opportunity. In line with this, during the year the Company successfully completed divestment of its power business in USA comprising its overseas step down subsidiaryâCG Power USA Inc. on 31 July 2017 to WEG Electric Corp for an enterprise value of US$31 million. WEG Electric Corp is a nominee of WEG S.A., a Brazilian publicly listed company. Consequently, CG Power USA Inc. ceased to be a wholly owned step-down subsidiary of the Company and has been renamed as WEG Transformers USA Inc.
Further with respect to the Companyâs business in Hungary, CG Electric Systems Hungary Zrt. (ESHU), the Companyâs step-down subsidiary and CG International BV, the Companyâs subsidiary have inter-alia entered into a Business Transfer Agreement and Share Sale and Purchase Agreement with Ganz Villamossagi Zrt. and Alester Holdings Limited (âthe Purchasersâ) for sale of Assets (excluding switchgear business) and Shares of ESHU respectively for an enterprise value of Euro 38 Million with expected completion by 31 March 2018 subject to requisite approvals. Upon request of the Purchasers, the completion date has been extended pending the receipt of the requisite approvals. Thereafter, the necessary documents for effecting transfer of all the shares of ESHU to the Purchasers have been executed. Considering certain conditions subsequent to be performed between the parties, the shares have been held in escrow and will be handed over to the Purchasers upon completion of such conditions. Consequent to this, ESHU will cease to be a step-down subsidiary of the Company.
During the year CG Power Systems Belgium NV (PSBE), divested its 49% stake in its Joint Venture in Saudi Arabia, Saudi Power Transformer Co. Limited. CG Power Solutions Saudi Arabia Co. in which CG Holdings Belgium NV, a step down overseas subsidiary of the Company, holds 51 % equity shareholding shall be liquidated upon completion of its open orders. During the year the Solutions businesses in US and UK and the Switchgear business in Hungary have been phased out.
The above divestments are in line with the Companyâs strategy to exit from identified geographies / products of its international businesses and focus its synergies on the retained ones including India and Indonesia with the objective of improving the overall operational efficiency, reducing debt and for enhancing shareholdersâ value.
Financial highlights in Rs. crore
PARTICULARS |
STAND-ALONE |
CONSOLIDATED |
||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Gross Revenue from Operations |
5,079 |
4,761 |
6,288 |
5,924 |
Less: Excise Duty |
98 |
405 |
99 |
407 |
Net Revenue from Operations |
4,981 |
4,356 |
6,189 |
5,517 |
EBIDTA |
543 |
512 |
494 |
510 |
Less: Finance Cost |
214 |
164 |
219 |
186 |
Less: Depreciation |
102 |
91 |
149 |
143 |
Profit Before Exceptional Items & Tax |
227 |
257 |
126 |
181 |
Exceptional Items |
(453) |
(100) |
(443) |
(73) |
Profit / (loss) Before Tax |
(226) |
157 |
(317) |
108 |
Less: Tax expense / (Credit) |
47 |
11 |
75 |
28 |
Profit / (loss) from continuing operations |
(273) |
146 |
(392) |
80 |
Less: Minority Interest |
- |
- |
2 |
- |
Share of profit / (loss) in Associates / Joint Ventures |
- |
- |
(2) |
(1) |
Profit / (loss) after minority interest and share of Associates and Joint Venture |
(273) |
146 |
(392) |
79 |
Profit / (loss) before tax from discontinued operations |
(79) |
(33) |
(799) |
(592) |
Tax expense/ (Credit) from discontinued operations |
(27) |
(12) |
(27) |
(22) |
Net profit / (loss) on discontinued operations |
(52) |
(21) |
(772) |
(570) |
Total profit / (loss) for the year |
(325) |
125 |
(1,164) |
(491) |
DIRECTORS AND KEY MANAGERIAL PERSONNEL BOARD OF DIRECTORS COMPOSITION
As on the date of this report, the Companyâs Board of Directors consists of nine Directors comprising of one Executive Director and eight Non-Executive Directors of which five are Independent Directors. The Chairman, Mr Gautam Thapar is a Non-Executive Director and represents the Promoter Group. Mr K N Neelkant is the CEO and Managing Director. Five other Non-Executive Directorsâ
Mr Sanjay Labroo, Dr Valentin von Massow,
Ms Ramni Nirula, Mr Jitender Balakrishnan and Mr Ashish Kumar Guha are Independent in terms of Regulation 16 of the Listing Regulations and Section 149 of the Act.
Two other Directors
Mr B Hariharan and Dr Omkar Goswami are Non-Executive Directors. The Board consists of reputed professionals with diverse functional expertise, industry experience, educational qualifications, ethnicity and gender mix relevant to fulfilling the Companyâs objectives and strategic goals.
CHANGE IN COMPOSITION OF THE BOARD
On recommendation of the Nomination and Remuneration Committee of the Company, Mr Ashish Kumar Guha was appointed as an Additional Director (Non-Executive Independent) on the Board of Directors of the Company with effect from 9 November 2017. In accordance with Section 161 of the Act, Mr Guha holds office up to the date of the ensuing Annual General Meeting. The Company has received a notice from a member proposing candidature of Mr Guha for appointment as Director. Accordingly, your Directors recommend his appointment as Non-Executive Independent Director in the ensuing Annual General Meeting. Attention of Members is invited to relevant disclosures made in the Notice of the ensuing Annual General Meeting and explanatory statement thereto with respect to his appointment.
Mr Madhav Acharya, Executive Director, Finance and Chief Financial Officer of the Company was re-designated as Non-Executive Director w.e.f. close of business hours on 11 August 2017. Thereafter, he ceased to be a Director of the Company w.e.f. close of business hours on 30 September 2017.
The Board places on record its gratitude and appreciation for the valuable contributions made by Mr Acharya during his tenure.
RETIREMENT BY ROTATION
In terms of the provisions of Section 152 of the Act and the Rules made thereunder and Article 114 of the Articles of Association of the Company, Mr K N Neelkant and Mr B Hariharan retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, seek reappointment. As per Regulation 36 of the Listing Regulations and Secretarial Standard-2 on General Meetings issued by the Institute of Company Secretaries of India (SS-2), the brief profile and other relevant details regarding re-appointment of Mr K N Neelkant and Mr B Hariharan are contained in the Annexure accompanying the explanatory statement to the Notice of the ensuing Annual General Meeting.
The Board recommends their re-appointment as Directors of the Company, liable to retire by rotation.
INDEPENDENT DIRECTORSâ DECLARATION
The Company has received declarations from all its Independent Directors confirming that they meet the criteria of independence as laid down under Section 149 of the Act and Regulation 16 of the Listing Regulations.
BOARD MEETINGS
During FY2018, the Board of Directors met five times to discuss and decide the business strategies and performance in addition to the items reported to the Board in accordance with the provisions of the Act, Listing Regulations and other statutory provisions. The intervening gap between the meetings was within the period prescribed under the Act, Listing Regulations and Secretarial Standard-1 on Board Meetings issued by the Institute of Company Secretaries of India (SS-1). Details of the Board Meetings held and the attendance of the Directors are given in the section titled âReport on Corporate Governanceâ which forms part of this Annual Report.
BOARD COMMITTEES
The Board has established statutory and non-statutory Committees in compliance with the requirements of the Act and Listing Regulations. These are Risk and Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholdersâ Relationship Committee and Securities Transfer Committee. Details of composition of the statutory Committees, their terms of reference, number of meetings held and attendance of the Committee Members thereof during the financial year is given in the section titled âReport on Corporate Governanceâ forming part of this Annual Report.
All recommendations made by the Risk and Audit Committee were accepted by the Board of Directors.
During the year under review, the Board constituted a US Business Divestment Committee, a Hungary Business Divestment Committee and a Business Divestment Committee to evaluate, determine and review the proposals for divestment of identified business of the Company.
The US Business Divestment Committee consists of Mr Jitender Balakrishnan, Ms Ramni Nirula, and Mr K N Neelkant, held one meeting during the year under review on 20 June 2017. On completion of divestment of power business in USA, this Committee was dissolved.
The Hungary Business Divestment Committee consists of Mr Sanjay Labroo, Ms Ramni Nirula, Mr B Hariharan and Mr K N Neelkant. The Committee held two meetings during the year under review on 13 July 2017 and 6 February 2018.
The Business Divestment Committee consists of Mr Gautam Thapar, Mr K N Neelkant and Mr B Hariharan. No meetings were held during the year for this Committee.
KEY MANAGERIAL PERSONNEL
Pursuant to Section 203 of the Act, the Key Managerial Personnel of the Company as on the date of this report are:
- Mr K N Neelkant, CEO and Managing Director
- Mr V R Venkatesh, Chief Financial Officer
- Ms Shikha Kapadia, Company Secretary
During the year under review, Mr Madhav Acharya resigned as Chief Financial Officer of the Company w.e.f. close of business hours on 11 August 2017 and Mr V R Venkatesh was appointed as Chief Financial Officer of the Company w.e.f. 12 August 2017. Mr Manoj Koul resigned as Company Secretary w.e.f. the close of business hours on 23 August 2017 and Ms Shikha Kapadia was appointed as Company Secretary w.e.f. 12 February 2018.
REMUNERATION POLICY AND CRITERIA FOR DETERMINING ATTRIBUTES, QUALIFICATION, INDEPENDENCE AND APPOINTMENT OF DIRECTORS
The Company has formulated a Remuneration Policy governing the appointment and remuneration of Directors, Key Managerial Personnel, Senior Management and other employees of the Company. This Policy also contains criteria for determining qualifications, positive attributes, independence of Directors, provisions relating to loans and advances to the employees of the Company. It also aims to attract and retain high caliber personnel from diverse educational fields and varied experience to serve on the Board of the Company. The Remuneration Policy of the Company is provided as Annexure 6 to this Report.
The Company believes that diversity at Board level is a critical ingredient to maintain competitive advantage, to understand customers and stakeholders from different perspectives and to reap the benefits of a broader experience in decision making. With these in mind, the Company has adopted the Board Diversity Policy which sets out the approach for diversity on the Board of Directors of the Company.
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
In line with the requirements of the Act and the Listing Regulations, the annual evaluation of performance of the Board, as well as the evaluation of the working of its Committees and individual Directors including Chairman of the Board was carried out during the year under review. A detailed questionnaire on various facets such as role and composition of the Board, effectiveness of Board processes, relationships with external stakeholders, strategy and risk management, ethics and compliance of the Board, Committees and individual Directors, including self assessment forms were circulated to all the Directors of the Company. Evaluation of Committees was carried out based on its composition, adequacy of information / material for effective discussion, mandate of the Committees, adequate time allocation for fulfilling its mandate and recommendations to the Board.
The individual and peer assessment of Directors contains facets such as relationship with Board and Senior Management, knowledge, competency and contribution to the Board. The Chairman provides feedback on the individual and peer assessment of Directors.
Based on the feedback received from each Director including the Chairman, the Nomination and Remuneration Committee and the Board of Directors of the Company discussed the outcome of the annual evaluation and indentified Board competencies, compliances, ethics, the Companyâs Risk policies, the Boardâs interaction with management and the Chairmanâs leadership, as the key strengths. Pursuant to the provisions of Schedule IV of the Act and Regulation 25 of the Listing Regulations, the Independent Directors of the Company at their meeting held on 12 February 2018 carried out evaluation of the performance of Non-Independent Directors and the Board as a whole, performance of the Chairman and also assessed the quality, quantity and timeline of flow of information between the Management and the Board.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to Regulation 25 of the Listing Regulations, the Company familiarizes its Independent Directors with their roles, rights, responsibilities as well as the Companyâs business and operations. Moreover, the Directors are regularly updated on the business strategies and performance, management structure and key initiatives of businesses at every Board Meeting. The details of the programme can be viewed under the following link available on the Companyâs website http://www. cgglobal. com/frontend1 finalnonproduct.aspxRs.cnRs.2=yrnPqECUvhk=
PROMOTER GROUP
The Company is a part of the Avantha Group, one of Indiaâs leading business conglomerates. The Group has business interests in diverse areas, including pulp and paper, power transmission and distribution equipment and services, food processing, farm forestry, chemicals, energy, infrastructure, information technology (IT) and IT-enabled services. It is led by the Groupâs Founder & Chairman Mr Gautam Thapar.
SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES
As on 31 March 2018, the Company has 3 Indian subsidiaries, 23 foreign subsidiaries, 1 joint venture and 2 associate companies. Details are provided in Annexure 5 to this Report in Form MGT-9 (Extract of Annual Return).
Pursuant to the Companies (Indian Accounting Standards) Rules, 2015 and Regulation 33 of Listing Regulations, the financial statements of the Company reflect the consolidation of accounts of the Company, its subsidiaries, associates and joint venture companies.
Pursuant to Section 136 of the Act, the audited annual accounts of each of the Companyâs subsidiaries, associates and joint venture entities are placed on the website of the Company and not enclosed in this Annual Report. If any Member of the Company so desires, the Company will make available the said audited annual accounts, on written request. Physical copies of these documents are also available at the Companyâs Registered Office for inspection during normal business hours on all working days, excluding Saturdays, up to the date of the ensuing Annual General Meeting and at the venue of the Annual General Meeting.
In terms of Section 129 of the Act, statement containing salient features of the financial statements of the Companyâs subsidiaries / associates / joint venture companies in Form AOC-1 is given in the notes to the financial statements in this Annual Report.
Pursuant to Regulation 16 of the Listing Regulations, a Policy for determining Material Subsidiary of the Company as approved by the Board of Directors of the Company is available on the website of the Company under http:// www. cgglobal. com/frontend/finalnonproduct. aspxRs.cnRs.2=yrnPqECUvhk=
RELATED PARTY TRANSACTIONS
During the year, all related party transactions entered into by the Company, were at an armâs length basis and in the ordinary course of business. In terms of the India Related Party Transactions Policy of the Company, there are no material related party contracts, arrangements or transactions undertaken by the Company during the year under review. Hence, disclosure of particulars of contracts / arrangements entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Act is not applicable to the Company for the year under review.
An omnibus approval has been granted by the Risk and Audit Committee of the Board, based on the criteria determined and approved by the Board of Directors of the Company as well as by the Risk and Audit Committee, for transactions which are of repetitive nature with related parties. Such omnibus approvals are subjected to renewal by the Risk and Audit Committee every year and are monitored by the Risk and Audit Committee on a quarterly basis. All related party transactions entered into by the Company are presented and reviewed by the Risk and Audit Committee every quarter.
The Companyâs India Related Party Transactions Policy can be downloaded from the website of the Company under http://www.cgglobal.com/ pdfs/policies/lndia%20Related%20Party%20 Transactions%20Policy.pdf
PARTICULARS OF LOANS,
GUARANTEES AND INVESTMENTS
Particulars of loans, guarantees given and investments made by the Company during FY2018, pursuant to the provisions of Section 186 of the Act and Schedule V of the Listing Regulations are given in the notes to the financial statements in this Annual Report.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34 of the Listing Regulations, the Business Responsibility Report highlighting the initiatives taken by the Company in the areas of environment, social, economic and governance, is available on the website of the Company under http://www.cgglobal.com/ frontend/finalnonproduct.aspxRs.cnRs.2=Nu/tTrrPIMI=
ENTERPRISE RISK MANAGEMENT FRAMEWORK
Integrating the process for managing risks across the Companyâs business and operations is the Companyâs philosophy for Enterprise Risk Management (ERM). In this regard, the Company has developed a comprehensive ERM framework to identifiy risk, conduct risk assessment and suggest mitigation procedure to the Board of Directors of the Company to ensure that management controls the risks through a properly defined framework.
ERM framework aims to imbibe a ârisk cultureâ throughout the organization, facilitate risk based decision making, improve governance and accountability, protect and enhance stakeholdersâ value.
The Companyâs ERM framework helps to identify elements of risk based on the risk identification techniques, analyze and comprehend the nature of risk, escalate and consolidate risks at Unit level to the overall Business Unit, monitor and review risks and implement action plans to mitigate risk. These risks cover business strategy, technology, financial, operations, systems, IT, legal, regulatory and human resources. The Risk and Audit Committee reviews the key risks associated with the businesses of the Company and their mitigation measures.
During the year under review, none of the risks identified threaten the existence of the Company.
INTERNAL FINANCIAL CONTROLS
The Company has in place an effective and efficient internal controls testing and monitoring system which enables the Company to ensure that these controls are operating effectively.
Such systems have been designed to provide reasonable assurance with regard to maintaining of proper internal controls, monitoring of operations, protecting assets from unauthorised use or losses, compliances with regulations, and the reliability of financial reporting.
RESEARCH AND DEVELOPMENT (R&D)
During the year under review, the Companyâs R&D activities continued to focus on development of indigenous and energy efficient products.
One of the significant achievements was the indigenous development and manufacture of 6 MW 6.6 kV vertical motor for Nuclear Power Corporation of India Limited (NPCIL) for use in its nuclear reactor. At present, the Company is the sole Indian manufacturer to develop this motor for NPCIL. It has undergone and passed inspection by NPCIL at every stage of development.
The Companyâs Transformers Division has developed ester oil filled transformers. The Division also developed 2 MVA 33 kV transformers with synthetic ester oil, and 8 MVA 33 kV transformers with natural ester oil. The Division also designed traction transformers of 30.24 MVA 132 / 27.5 kV for the Nagpur Metro.
The Switchgear Division indigenously designed and developed resin impregnated paper (RIP) bushings. RIP bushings are of a dry type without oil, encapsulated with composite insulators. In RIP bushings, the major insulation consists of a core wound from paper which is subsequently impregnated with epoxy resin. RIP bushings are becoming popular worldwide because of its advantages regarding safety. For this indigenous development we received the runner-up Award at Elecrama 2018 for the âBest Product Category by an Indian Exhibitorâ.
CG has been front runner in offering customized solutions and customer oriented approach. In line with this legacy, the Company has developed a 420 kV polymeric lightning arrestor with a cantilever load of 350 kgFâthe highest ever load in the history of this product segment. Designed according to customer requirements, the development included designing and manufacturing of hollow core composite insulators and other critical components. The highlight of this product is that it weighs less compared to porcelain, has an explosion-proof design and enhanced reliability in extreme climates and polluted environments.
In line with CGâs objective of offering customer centric and smart products, the Company developed a Digital Surge Counter to monitor the health of zinc oxide surge arresters. The product shakes hand with digital technology to measure vital parameters such as total leakage current and total surge counts. Overcoming the use of conventional analog circuits, this product offers real time data acquisition with reliable accuracy and performance.
There was also the development of 170 kV and 362 kV Externally Gapped Line Arresters which protect transmission lines from lightning and, thus, improve performance and reliability. The design is such that it can deal with insulation coordination in worst conditions.
The Companyâs Switchgear division has also developed sectionalisers, auto-reclosers, compact frame vacuum interrupters and a cost efficient range of instrument transformers.
The Low Tension Motors division of the Company developed the entire range of IE3 motors (80-355 frame, 0.37 kW to 250 kW) with an enclosure capable of withstanding the pressure of explosive gas and prevent transfer of flames. This division also developed under slung mounted 500 kVA DG sets for Indian Railways in order to utilize the coach onboard space for transporting goods as additional space.
CG Traction Electronics division, designs and develops Electric Multiple Unit / Mainline Electric Multiple Unit in collaboration with partners. Further CG has also tied up with Centre for Design & Advanced Computing (CDAC) for the project of Control & Monitoring System for locomotives. Recently CG has tied up with Indian Railways to supply Under Slung Electrics for Diesel Electric Tower Car (DETC). Large quantities of DETCs are required for massive track electrification drive taken up by Indian Railways across the country.
----; CGâs R&D efforts enables the Company to manufacture cost competitive products, offer improved and integrated product portfolio, increase its market share, shorten lead time, import substitution and offer high specification products as per requirements of international markets.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Details as required under Section 134 of the Act read with the Companies (Accounts) Rules, 2014, are given in the prescribed format as Annexure 1 to this Report.
ENVIRONMENT, HEALTH & SAFETY (EHS)
CG is committed in conducting its business in a responsible manner that creates a sustained positive impact on society, improves the quality of life of the underserved communities and preserve the ecosystem that supports the communities and the Company.
The Company propagates âZero Harm Cultureâ towards employees, environment and other stakeholders as reflected in our Corporate EHS policy and Cardinal Rules. Through our Corporate EHS Policy, we aim at not only complying with legal requisites of safeguarding our employees, environment and the society at large but also to set high internal standards for compliance.
All CG units in India are certified for quality systems with ISO 9001:2015 Certification / ISO 14001:2015 Environmental Management System Certification and OHSAS 18001:2007 Certification. We are in process of upgrading to ISO 45001.
The Company business at Indonesia was certified for Integration Management System (IMS) for ISO 9001:2015, ISO 14001:2015 and OHSAS 18001:2007. All Units in India have clearance to operate from State Pollution Control Board Authorities and are complying over and above the conditions laid down in consent to operate.
Regular trainings on EHS awareness and sustainable growth are conducted at all manufacturing locations. National Safety Week and World Environment Day campaign is conducted under guidance of Directorate of Industrial Safety and Health and State Pollution Control Board. Fire safety week are also observed in India under the guidance of the Fire Adviser, Ministry of Home Affairs, Government of India.
EHS Key Performance Indicators (KPIs) are linked with SMART goals of all units and individuals for their Annual Performance Management process. Quarterly audits are conducted to review the EHS implementation and process compliances across all locations of the Company. Corrective actions generated from these audits and various EHS events are captured and tracked for closure in an online Event Reporting System portal.
As a part of our continued efforts and commitment towards the environment, the Company has also initiated rooftop solar system installations across all locations of the Company.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company believes in inclusive growth, diversity and equitable development of society. That being so, it has undertaken various CSR projects during the year under review in the areas of education, skill development and upliftment of underserved communities.
The details of the composition of CSR Committee, CSR Policy and projects undertaken by the Company during FY2018 are given in the section titled âAnnual Report on CSR initiativesâ in Annexure 2 of this Report.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company i.e. 31 March 2018 and the date of this Report.
MATERIAL ORDERS OF REGULATORS / COURTS / TRIBUNALS
During the year under review, no significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future.
REGISTRAR & SHARE TRANSFER AGENT
The Company has appointed Datamatics Business Solutions Limited (Formerly Datamatics Financial Services Ltd), (DBSL) as its Registrar & Share Transfer Agent who is registered with SEBI. The contact details of DBSL are mentioned in section titled âReport on Corporate Governanceâ of this Annual Report.
DIVIDEND DISTRIBUTION POLICY
Pursuant to Regulation 43A of the Listing Regulations, the Company has formulated a Dividend Distribution Policy as provided in Annexure 7 of this Report and is also available on the website of the Company under http:// www. cgglobal. com/frontend/finalnonproduct. aspxRs.cnRs.2=yrnPqECUvhk=
PUBLIC DEPOSITS
The Company has not accepted any deposits from public or its members during the year under review as per Sections 73 and 76 of the Act and no deposits exists as on date.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure 3 of this Report.
In accordance with the provisions of Section 197(12) of the Act read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of the employees covered under the said rule are available at the Registered Office of the Company for inspection during working hours up to the date of the ensuing Annual General Meeting and any member interested in obtaining a copy thereof may write to the Company Secretary of the Company.
COMPLAINTS RELATING TO SEXUAL HARASSMENT
In terms of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has adopted a Prevention of Sexual Harassment Policy for protection against sexual harassment and have also constituted Internal Complaint Committee presided by woman employee comprising of five to seven Company employees with an external member to which employees can address their complaints.
During the year under review, no incident of sexual harassment was reported.
VIGIL MECHANISM
The Company has set up a vigil mechanism viz. Whistle Blower Policy as per the provisions of Section 177 of the Act and Regulation 18 of the Listing Regulations to enable its employees to report violations, genuine concerns, unethical behavior and irregularities, if any, noticed by them which could adversely affect the Companyâs operations.
The Head of Internal Audit submits a report to the Chairman of the Risk and Audit Committee on a quarterly basis, on all complaints referred to the Management Committee, nominated by the CEO and Managing Director of the Company, with the status of investigations and actions taken by the Management Committee.
No material concerns or irregularities have been reported during the year under review and none of the Whistle Blowers were denied access to the Risk and Audit Committee of the Board.
AUDITORS AND AUDIT REPORTS STATUTORY AUDITORS
The Board of Directors of the Company have, at its meeting held on 26 April 2018, approved the proposal for availing borrowings up to an amount of approximately US$250 million from a consortium of international lenders (âthe Arrangersâ) at CG International BV (CGIBV), the wholly-owned subsidiary of the Company, for restructuring current debts of the Company and to avail the benefit of lower interest rate and deferred tenor. These funds will be used to retire the existing debt of the Company both in India and overseas. A condition prescribed by the Arrangers requires the Company to get its financial statements audited by one of the Big Four international auditors for the audit from the period ending September 2018 onwards.
Given the importance of this financial restructuring exercise to the Company and consequent to its discussions on this matter with M/s. Chaturvedi &Shah, Chartered Accountants, the then Statutory Auditors of the Company, they have submitted their resignation with immediate effect vide their letter dated 27 April 2018.
In order to fill the casual vacancy caused by the resignation of M/s. Chaturvedi & Shah, Chartered Accountants, based on the recommendation of the Risk and Audit Committee and the Board of Directors, the shareholders of the Company had on 29 May 2018 in terms of the requirement of the Companies Act, 2013, appointed, M/s. K.K. Mankeshwar & Co., Chartered Accountants (with Firm Registration No.106009W), as the Statutory Auditors of the Company, to hold office till the conclusion of the ensuing 8181 Annual General Meeting of the Company.
The proposal for appointment of Statutory Auditors of the Company from the conclusion of the ensuing 81st Annual General Meeting, pursuant to the recommendation of the Risk and Audit Committee and Board of Directors of the Company is contained in the accompanying Notice of Annual General Meeting and the explanatory statement thereto.
During the year under review, the Statutory Auditors have not reported any instances of offence or fraud committed by the officers or employees of the Company, to the Risk and Audit Committee or the Board of Directors of the Company.
COST AUDITOR
As per the requirement of Section 148(1) of the Act, the Company is required to maintain cost accounts and records. Accordingly, the Company has maintained cost accounts and records for FY2018 as applicable for its product range.
The Company had appointed M/s. Ashwin Solanki & Associates, Cost Accountants, Mumbai (Firm Registration No. 100392) to audit the cost records related to the Companyâs products for FY2018. The cost audit report for FY2017 has been filed with the Registrar of Companies, Mumbai within the prescribed statutory deadline.
Upon recommendation of the Risk & Audit Committee, the Board has re-appointed M/s. Ashwin Solanki & Associates as Cost Auditor of the Company for FY2019 at a remuneration of ^600,000 p.a. plus out-of-pocket expenses and taxes, as applicable. The remuneration payable to M/s. Ashwin Solanki & Associates for FY2019 is recommended for ratification by the Members at the ensuing Annual General Meeting.
SECRETARIAL AUDITOR
The Company had appointed M/s. Parikh & Associates, Practising Company Secretaries, Mumbai (Firm Registration No. P1988MH009800) to undertake the Secretarial Audit of the Company for FY2018. Secretarial Audit Report for FY2018 in Form MR-3 is annexed as Annexure 4 to this Report.
There are no qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditor or the Secretarial Auditor in their reports and hence do not call for any further comments.
DIVIDEND
No dividend has been recommended or paid for the year ended 31 March 2018.
RESERVES
The Reserves, on standalone basis, at the beginning of the year amounted to Rs.4,074 crore and at the end of the year stood at Rs.3,715 crore.
SHARE CAPITAL
As on 31 March 2018:
- The authorised share capital of the Company was Rs.4,076,000,000 (Rupees four hundred and seven crore and sixty lakh) divided into 2,038,000,000 equity shares of Rs.2 (Rupees two) each.
- The subscribed and paid-up share capital of the Company stood at Rs.1,253,492,284 (Rupees one hundred and twenty five crore, thirty four lakh, ninety two thousand, two hundred and eighty four) consisting of 626,746,142 equity shares of V2. (Rupees two) each.
The Companyâs equity shares are listed and traded on BSE Limited and National Stock Exchange of India Limited.
The Company has issued Global Depository Receipts (GDRs) in 1996 and the underlying shares for each GDR were issued in the name of The Bank of New York, the Depository. Each GDR of the Company is equivalent to five equity shares. As on 31 March 2018, 164,501 GDRs were outstanding, which represent 822,504 underlying equity shares of the Company.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT-9 is annexed as Annexure 5 of this Report.
DIRECTORSâ RESPONSIBILITY STATEMENT
The Directors would like to assure the Members that the Financial Statements both on stand-alone and consolidated basis, for the year under review conform, in their entirety, to the requirements of the Act.
The Directors confirm that:
- the Annual Accounts have been prepared in conformity with the applicable Accounting Standards alongwith proper explanations relating to material departures;
- the Accounting Policies selected and applied on a consistent basis and judgments and estimates made are reasonable and prudent to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit / loss of the Company for the financial year;
- proper and sufficient care has been taken to maintain adequate accounting records for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- the Annual Accounts have been prepared on a going concern basis;
- the internal financial controls laid down in the Company were adequate and operating effectively;
- the systems devised to ensure compliance with the provisions of all applicable laws were adequate and operating effectively.
ACKNOWLEDGEMENTS
The Board of Directors wish to convey their gratitude and appreciation to all the employees of the Company, for their tremendous efforts as well as their exemplary dedication and contribution to the Companyâs performance.
The Directors would also like to thank the employee unions, shareholders, customers, dealers, suppliers, bankers, government and all other business associates for their continued support extended to the Company and the Management.
On behalf of the Board of Directors
GAUTAM THAPAR
CHAIRMAN
(DIN:00012289)
New Delhi, 10 August 2018
Mar 31, 2017
To,
The Members
The Directors are pleased to present their Eightieth Annual Report on the business and operations of the Company along with the Audited Financial Statements, both Standalone and Consolidated, for the financial year ended31 March2017.
THE YEAR IN RETROSPECT
The Stand-alone and Consolidated Financial Statements of the Company represent the continuing operations for the year ended 31 March 2017. The discontinued operations have been presented under a separate head.
FY2017 has been a steady and an encouraging one. The Company achieved a stand-alone gross turnover from continued operations of 14,761 crore, during the year under review, as compared to 14,225 crore during the previous year, recording a growth of 12.7%. The consolidated net revenue of the Company during FY2017 from continued operations recorded a growth of 9.4% and stood at 16,120 crore, as compared with 15,595 crore in the last year.
The stand-alone profit before tax from continuing operations of the Company for the year under review amounted to 1157 crore as compared to a loss of 1(1,139) crore for the previous year, recording an increase of 113.8%. The consolidated profit before tax from continuing operations for the year under review amounted to 1127 crore as compared to 1180 crore in the previous year, recording a decrease of 29.7% over last year.
Consolidated loss before tax from discontinued operations increased to 1(612) crore from 1(492) crore, in the previous year, an increase of 24.4%.
The tax expense for the year under review amounted to 1(1) crore on stand-alone basis and 117 crore on consolidated basis.
The Company recorded a stand-alone profit after tax from continuing operations of 1158 crore, an increase of 113.3% from loss of 1(1,184) crore in the last year.
Consolidated profit after tax from continuing operations for the year under review stood at 1110 crore as compared with 1115 crore in the last year, a decrease of 4.3%.
Details of Sales and Profit Before Interest and Tax of the respective Business Units in comparison with the previous financial year are given in Table 1. Further, Table 2 highlights details of the Financial Performance of the Company for the continuing operations for the year ended 31 March 2017.
A detailed review of the operations and performance of the Company and each of
BUSINESS UNIT SALES PBIT
2016-17 |
2015-16 |
2016-17 |
2015-16 |
|
Power Systems |
||||
Stand-alone |
2,684 |
2,425 |
208 |
117 |
Consolidated |
3,739 |
3,474 |
384 |
329 |
Industrial Systems |
||||
Stand-alone |
2,078 |
1,801 |
190 |
174 |
Consolidated |
2,361 |
2,119 |
156 |
139 |
the Businesses including its international operations is contained in the section titled âManagement Discussion and Analysisâ, of this Annual Report.
DIVESTMENTS AND OTHER DEVELOPMENTS
The Share Purchase Agreement (SPA) for sale of CGâs Power Businesses in Europe, North America and Indonesia was terminated due to certain conditions precedent, the fulfillment of which was beyond the reasonable control of the parties to the SPA. The Company continues to explore alternative geography / product wise options for sale of its international power businesses excluding Indonesia while continuing with strategic initiatives for improving the overall operational efficiency of its international power businesses.
During the year under review, the Company completed sale of its Automation business comprising of ZIV Applications y Technologic S.L, its subsidiaries and Automation businesses in UK, Ireland, France and India at an Enterprise Value of Euro 120 Million.
The sale is part of the Companyâs strategy to focus on its core operations in Power and Industrial Systems businesses in their respective markets. The Automation business sale has significantly contributed to the reduction of Companyâs international debts.
In line with the Shareholders approval at the previous Annual General Meeting held on 30 August 2016 for sale of its overseas Transmission and Distribution businesses, the Company is actively pursuing divestment of its power business in United States of America (USA) comprised in its overseas step-down subsidiaryâCG Power USA Inc.
Additionally, CG Power Systems Belgium NV (PSBE), the Companyâs overseas step down subsidiary has signed an SPA for exiting from the Joint Venture in Saudi Arabia-Saudi Power Transformer Co Ltd, in which it holds 49% equity shareholding, subject to completion of conditions precedent. The completion of the SPA is expected by 31 October 2017. The SPA also envisages liquidation of CG Power Solutions Saudi Arabia Ltd, in which CG Holdings Belgium NV, a step-down overseas subsidiary of the Company, holds 51% equity shareholding.
Further, the Solutions businesses in USA and UK upon completion of its existing contracts are in the Anal stage of being phased out. The Companyâs branch office in Poland i.e. Crompton Greaves Ltd SA and overseas step-down subsidiaries CG Power Systems Brazil Ltda and Microsol Limited were liquidated on 8 December 2016, 21 December2016and26April2017, respectively.
The above divestments are part of the Companyâs stated strategy of debt reduction and focusing on its core operations and core markets in India which provides significant growth opportunities, besides enhancing shareholderâs value.
NAME CHANGE
Pursuant to the Scheme of Arrangement between the Company and Crompton Greaves Consumer Electricals Limited (CGCEL) as sanctioned by the Honâble High Court of Bombay on 20 November 2015, inter-alia, the trademarks associated with the Companyâs erstwhile consumer products business viz âCromptonâ and âCrompton Greavesâ were transferred to CGCEL. Since the Company, consequent to demerger of its erstwhile consumer products business, operates in a fully integrated B2B segment comprising of Power Transmission, Distribution and Industrial Businesses, the registered trademark âCGâ associated with the B2B business has been retained by the Company.
As a consequence of the above and pursuant to approval of the Members of the Company vide Special Resolution dated 25 January 2017 and the Central Government / Registrar of Companies, Mumbai on 27 February 2017, the Company changed its name from âCrompton Greaves Limitedâ to âCG Power and Industrial Solutions Limitedâ effective 27 February 2017.
The new name âCG Power and Industrial Solutions Limitedâ appropriately represents and reflects the business in which the Company is presently engaged and the existing registered trademark / logo used by the Company. The change of Company name does not result in change of the legal status, constitution, operations, activities of the Company, nor does it affect any rights, liabilities or obligations of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
BOARD OF DIRECTORS
COMPOSITION
As on the date of this report, the Companyâs Board of Directors consists of nine Directors comprising of two Executive Directors and seven Non-Executive Directors of which four are Independent Directors. The Chairman, Mr Gautam Thapar is a Non-Executive Director and represents the Promoter Group. MrKN Neelkant is the CEO and Managing Director. Mr Madhav Acharya is the Executive DirectorâFinance and CFO. Four other Non-Executive DirectorsâMrSanjay Labroo, DrValentin von Massow, Ms Ramni Nirula and Mr Jitender Balakrishnan are Independent in terms of Regulation 16 of the Listing Regulations and Section 149 of the Act. Two other DirectorsâMr B Hariharan and Dr Omkar Goswami are Non-Executive Directors. The Board consists of reputed professionals with diverse functional expertise, industry experience, educational qualifications, ethnicity and gender mix relevant to fulfilling the Companyâs objectives and strategic goals.
CHANGE IN COMPOSITION OF THE BOARD On recommendation of the Nomination and Remuneration Committee of the Board,
Mr Jitender Balakrishnan was appointed as an Additional Director in capacity of NonExecutive Independent Director on the Board of Directors of the Company with effect from 2 May 2017. In accordance with Section 161 of the Act, Mr Jitender Balakrishnan holds office upto the date of the ensuing Annual General Meeting and being eligible, offers himself for appointment as an independent Director. Attention of Members is invited to relevant disclosure made in Notice of the ensuing Annual General Meeting and Explanatory statement thereto, with respect to his appointment.
Ms Meher Pudumjee and Mr Shirish Apte, Non-Executive Independent Directors resigned from the Board, effective from 28 May2016 and 1 April 2017, respectively.
The Board places on record its gratitude and appreciation for the valuable contributions made by Ms Pudumjee and Mr Apte during their respective tenures.
RETIREMENT BY ROTATION In terms of the provisions of Section 152 of the Act and the rules made thereunder and Article 114 of the Articles of Association of the Company, Mr Gautam Thapar and Dr Omkar Goswami retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, seek re-appointment. As per Regulation 36 of the Listing Regulations and Secretarial Standard-2 on General Meetings issued by the Institute of Company Secretaries of India (SS-2), the brief profile and other relevant details regarding re-appointment of Mr Gautam Thapar and Dr Omkar Goswami are contained in the Annexure accompanying the Explanatory Statement to the Notice of the ensuing Annual General Meeting.
The Board recommends their reappointment as Directors of the Company, liable to retire by rotation.
INDEPENDENT DIRECTORS'' DECLARATION
The Company has received declarations from all its Independent Directors confirming that they meet the criteria of independence as laid down under Section 149 of the Act and Regulation 16 of the Listing Regulations.
BOARD MEETINGS
During FY2017, the Board of Directors met four times to discuss and decide the business strategies and performance in addition to the items reported to the Board in accordance with the provisions of the Act, Listing Regulations and other statutory provisions. The intervening gap between the meetings was within the period prescribed under the Act, Listing Regulations and Secretarial Standard-1 on Board Meetings issued by the Institute of Company Secretaries of India (SS-1). The details of the Board Meetings held and the attendance of the Directors thereat are given in the section titled âReport on Corporate Governanceâ which forms part of this Annual Report.
BOARD COMMITTEES The Board has established statutory and non-statutory Committees in compliance with the requirements of the Act and Listing Regulations viz. Risk and Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholdersâ Relationship Committee and
Securities Transfer Committee. The details of composition of the said Committees, its terms of reference, number of meetings held and attendance of the Committee Members thereat during the financial year is given in the section titled âReport on Corporate Governanceâ which forms part of this Annual Report.
During the year under review, the Board constituted ZIV Business Divestment Committee to evaluate, determine and review the proposals for divestment of Automation Business of the Company in India and overseas locations. The Committee comprised of Mr Shirish Apte,
Dr Omkar Goswami, Mr B Hariharan,
MrKN Neelkant and Mr Madhav Acharya. The Committee held two meetings during the year under review on 4 November 2016 and 7 November 2016.
All recommendations made by the Risk and Audit Committee during the year under review were accepted by the Board of Directors.
KEY MANAGERIAL PERSONNEL
Pursuant to Section 203 of the Act, the Key Managerial Personnel of the Company as on the date of this report are:
- MrKN Neelkant, CEO and Managing Director
- Mr Madhav Acharya, Executive Directorâ Finance and CFO
- MrManojKoul,CompanySecretary
During the year under review, there has been no change in the Key Managerial Personnel of the Company.
REMUNERATION POLICY AND CRITERIA FOR DETERMINING ATTRIBUTES, QUALIFICATION, INDEPENDENCE AND APPOINTMENT OF DIRECTORS
The Company has formulated a Remuneration Policy governing the appointment and remuneration of Directors, Key Managerial Personnel, Senior Management and other employees of the Company. The Remuneration Policy also contains the criteria for determining qualifications, positive attributes, independence of Directors, provisions relating to loans and advances to the employees of the Company and also aims at attracting and retaining high calibre personnel
from diverse educational fields and with varied experience to serve on the Board of the Company for guiding the Management team to enhance organizational performance. The Remuneration Policy of the Company is provided in Annexure 6 to this Report.
The Company believes that diversity at Board level is a critical ingredient in maintaining competitive advantage, understanding customers and stakeholders from different perspectives and broad experience leading to better decision making. With this objective, the Company has adopted the Board Diversity Policy which sets out the approach for diversity on the Board of Directors of the Company.
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
Pursuant to the provisions of Section 178 of the Act and Regulation 17 of the Listing Regulations, the Board has carried out the annual evaluation of the performance of the Board, as well as the evaluation of the working of its Committees and individual Directors including Chairman of the Board during the year under review. A detailed questionnaire on various facets such as role of the Board, composition, effectiveness of Board processes, relationships with external stakeholders, strategy and risk management, ethics and compliance of the Board, Committees and individual Directors (Executive, Non-Executive and Independent Director) self assessment form was circulated to all the Directors of the Company.
Evaluation of Committees was carried out based on its composition, adequacy of information / material for effective discussion, mandate of the Committees, adequate time allocation for fulfilling its mandate and recommendations to the Board.
The individual and peer assessment of Directors contains facets such as relationship with Board and Senior Management, knowledge, competency and contribution to the Board including âStart-Continue-Stopâ approach based evaluation of individual Directors. The Chairman provides feedback on the individual and peer assessment.
Based on the feedback received from each Director and the Chairman, the Nomination and Remuneration Committee and the Board of Directors of the Company discussed the outcome of the annual evaluation and identified Directorâs commitment, size of the Board, Board competencies, strong Committee constitution and Chairmanâs leadership as robust areas.
Pursuant to the provisions of Schedule IV of the Act and Regulation 25 of the Listing Regulations, the Independent Directors of the Company at their meeting held on 10 February 2017 carried out evaluation of the performance of Non-Independent Directors and the Board as a whole, performance of the Chairman and also assessed the quality, quantity and timeline of flow of information between the Management and the Board.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to Regulation 25 of the Listing Regulations, the Company familiarizes itâs Independent Directors with their roles, rights, responsibilities as well as the Companyâs business and operations. Moreover, the Directors are regularly updated on the business strategies and performance, management structure and key initiatives of businesses at every Board Meeting.
The details of the programme can be viewed under the following link available on the Companyâs website http://www. cgglobal.com/frontend/finalnonproduct. aspx?cnl2=yrnPqECUvhk=
PROMOTER GROUP
The Company is a part of the Avantha Group, one of Indiaâs leading business conglomerates. Led by Chairman Mr Gautam Thapar, the Avantha Group has global footprint and presence in 90 countries with more than 25,000 employees worldwide. As required under the Listing Regulations,
CG periodically discloses the details of its promoter group and person acting in concert in the shareholding pattern and other filings with the Stock Exchanges.
SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES
As on 31 March 2017, the Company has three Indian subsidiaries, 25 foreign subsidiaries, one joint venture and three associate companies. Details of the subsidiary, joint venture and associate companies existing as of 31 March 2017 and formed or ceased during the year under review are provided in Annexure 5 to this Report in Form MGT-9 (Extract of Annual Return).
The Company has adopted the Indian Accounting Standards (Ind AS), voluntarily, as stated in the Companies (Indian Accounting Standards) Rules, 2015 with effect from 1 April 2015 and thereafter. Pursuant to the Companies (Indian Accounting Standards) Rules, 2015 and Regulation 33 of Listing Regulations, the Financial Statements of the Company reflect the consolidation of accounts of the Company, its subsidiaries, associates and joint venture companies.
Pursuant to Section 136 of the Act, the audited annual accounts of each of the Companyâs subsidiaries, associates and joint venture entities are placed on the website of the Company and not enclosed in this Annual Report. If any Member of the Company so desires, the Company will be happy to make available the said audited annual accounts, on written request. The physical copies of the aforesaid documents will also be available at the Companyâs Registered Office for inspection during normal business hours on all working days, excluding Saturdays, up to the date of the ensuing Annual General Meeting and at the venue of the Annual General Meeting.
In terms of Section 129 of the Act, statement containing salient features of the Financial Statements of the Companyâs subsidiaries / associates / joint ventures / companies in Form AOC-1 is given in the notes to the Financial Statements in this Annual Report.
Pursuant to Regulation 16 of the Listing Regulations, a Policy for determining Material Subsidiary of the Company as approved by the Board of Directors of the Company is available on the website of the Company.
The we blink to download the policy is as under http://www. cgglobal.com/frontend/ finalnonproduct.aspx?cnl2=yrnPqECUvhk=
RELATED PARTY TRANSACTIONS
During the year, related party transactions that were entered into by the Company were on an armâs length basis and in the ordinary course of business. In terms of the India Related Party Transaction Policy of the Company, there are no material related party contracts, arrangements or transactions undertaken by the Company during the year under review. Hence, disclosure of particulars of contracts / arrangements entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Act in Form AOC-2 is not applicable to the Company for the year under review.
An omnibus approval has been granted by the Risk and Audit Committee of the Board, based on the criteria determined and approved by the Board of Directors of the Company and by the Risk and Audit Committee, for transactions which are of foreseen and repetitive nature with related parties. Such omnibus approvals are subjected to renewal by the Risk and Audit Committee every year and are monitored by the Risk and Audit Committee on a quarterly basis. All related party transactions entered into by the Company are presented and reviewed by the Risk and Audit Committee every quarter.
The Companyâs India Related Party Transactions Policy can be downloaded from the website of the Company. The we blink of the same is as under http://www.cgglobal. com/pdfs/policies /India%20Related%20 Party%20Transactions%20Policy.pdf
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Particulars of loans, guarantees given and investments made by the Company during FY2017, pursuant to the provisions of Section 186 of the Act and Schedule V of the Listing Regulations are given in the notes to the Financial Statements in this Annual Report.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34 of the Listing Regulations, the Business Responsibility Report highlighting the initiatives taken by the Company in the areas of environment, social, economical and governance, is available on the website of the Company. The weblink to download the report is as under http://www.cgglobal.com/frontend/ finalnonproduct.aspx?cnl2=Nu/tTrrPlMI=
ENTERPRISE RISK MANAGEMENT FRAMEWORK
Integrating the process for managing risks across the Companyâs business and operations is the Companyâs philosophy for Enterprise Risk Management. In this regard, the Company has developed a comprehensive âEnterprise Risk Management (ERM) frameworkâ for identification of elements of risk, conducting risk assessment and suggesting mitigation procedure to the Board of Directors of the Company to ensure that management controls the risks through a properly defined framework.
ERM framework aims to imbibe a ârisk cultureâ throughout the organization, facilitate risk based decision making, improve governance and accountability, protect and enhance stakeholder value.
The ERM framework enables the Company to identify elements of risk based on the risk identification techniques, analyze and comprehend the nature of risk, escalate and consolidate risks at Unit level to Business Unit level, monitor and review risks and implement action plans to mitigate risk. Quarterly meetings at Unit level and Business Unit level are held for overseeing existing risk portfolio, monitor effectiveness of the risk management framework including mitigation plans identified by the Management, through the risk management exercise. The Risk and Audit Committee reviews the adequacy of the ERM framework of the Company, key risks associated with the businesses of the Company, measures and steps in place to mitigate the same, from time to time.
The assessment of the risks covers Strategy, Technology, Financial, Operations & Systems, Legal & Regulatory and Human Resources risks.
During the year under review, none of the risks identified threaten the existence of the Company.
INTERNAL FINANCIAL CONTROLS
The Company has in place an effective and efficient internal controls testing and monitoring system which enables the Company to ensure that these controls are operating effectively. CGâs controls have been designed to provide reasonable assurance with regard to maintaining of proper internal controls, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations for ensuring reliability of financial reporting.
RESEARCH AND DEVELOPMENT (R&D)
During the year under review, the Companyâs R&D activities continued to focus on development of indigenous and energy efficient products.
Power Transformers Division developed 4.5MVA 33 / 4*380 (4LV IN ONE core coil assembly) inverter duty for solar application and amorphous transformers. Research was carried out for 315MVA 765kV GT & 85MVA 765kV short circuit job and ANSI Standard BH10587 143MVA500kV. All rating from 315KVA to 2500KVA 11kV& 33kV as per IS 1180 level 1 were successfully type tested.
Switchgear Division indigenously designed and developed composite insulators to cater to the changing requirements of utilities for switchgear products and to reduce dependence on imported materials. Switchgear Division also developed Arc assist double motion interrupters that will result in approximately 40% reduction of mechanism energy requirement, algorithms for controlled switching of reactor & transformer and CGâs Arista GIS which will achieve the requirements of global market for the ratings 36kV, 31.5kA, 2500A, 50 / 60Hz.
CG is also in process of developing high voltage vacuum circuit breakers for the rating of 72.5kV, 31.5kA, 2500A which will become a platform technology for future development of 145kV VCB ratings. CG focused on research in SPAR drive for GT01, GAI3S 245kV GIS with spring drive, pole mounted auto-reclosed, oil immersed vacuum breaker for completely self protected transformer, Self Powered Pole Mounted Outdoor Capacitor Switches, Compact 245kV and 145kV GIS, 245kV DTB, CLASS 5ZNO blocks with 16kJ / kV energy and external gapped transmission line arrestor.
Industrial Systems business focused on development of electronic excitation system for 1200KW alternator and 1600HP AC-AC DEMU and 550KW inverter for DEMU. New range of 480Vac âstacked drivesâ (including AFE) from 250kW to 2MW in smaller footprint, AFE drives, next generation control platform, TSA range of Normal Duty soft starters with integrated bypass up to 1100A and next generation IP2X, IP54 (and possibly IP65) variable speed drives were developed during the year. CG also developed CSA certified single phase motors up to 5HP-4P and 6P.
During FY2017, CG registered designs of Compact Series 160C frame Alternator, 450 frame Alternator, Solid Yoke DC Motor-AFS / AUS315, Amply dine for T90 Stabilizer-BEL Chennai, Solid Yoke DC Motor in frame AUS / AFS250 (Locomotive) and Flameproof Brake Motors E90-160.
R&D efforts enables the Company to manufacture cost competitive products, offer improved and integrated product portfolio, increase its market share, shorten lead time, import substitution and offer high specification products as per requirements of international markets.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Details pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134 of the Act read with the Companies (Accounts) Rules, 2014, are given in the prescribed format as Annexure 1 to this Report.
ENVIRONMENT, HEALTH & SAFETY (EHS)
The Company propagates âZero Harm Cultureâ towards employees, environment and other stakeholders as reflected in our EHS Policy and guidelines. Through our EHS Policy, we aim at not only complying with legal requisites of safeguarding our employees, environment and the society at large but also setting high internal standards for compliance.
All CG manufacturing units in Asia,
EMEA and Americas have maintained their IS014001 and OSHAS18001 certifications. Regular trainings on safety awareness and sustainable growth are conducted at all manufacturing locations. Fire safety week is also observed across all locations in India under the guidance of the Fire Adviser, Ministry of Home Affairs, Government of India.
EHS Key Performance Indicators (KPIs) are linked with SMART goals of all units and individuals for their Annual Performance Management process. Quarterly audits are conducted to review the EHS implementation and process compliances across all locations of the Company. Corrective actions generated from these audits and various EHS events are captured and tracked for closure in an Online Event Reporting System Portal, an EHS one stop shop.
During the year under review, CG Mandideep Unit was felicitated with Annual Outstanding Achievement Award 2016 in the EHS category of large industry sector from the Federation of Madhya Pradesh Chamber of Commerce and Industries (FMPCCI) for its best practices and processes adopted for EHS.
The Company also has EHS RECOGNIZE policy aligned with organizational RECOGNIZE drive with the objective of rewarding individual and teams for collective efforts towards EHS. Two units were awarded as Best EHS Unit under the category of CEO Annual Award.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company believes that business sustainability is closely connected to the sustainable development of the communities and hence it uses CSR to integrate economic, environment and social objectives with the Companyâs operations and growth. During the year, the Company has undertaken various CSR projects in the areas of employability, education and health. The Company also supports Avantha Foundation on programs such as reduction of malnutrition and hunger, expansion of Avantha Urban Innovation Project and building capacities of stakeholders in small towns to ensure better delivery of services to citizens.
The details of the composition of CSR Committee, CSR Policy and projects undertaken by the Company during FY2017 are given in the section titled âAnnual Report on CSR initiativesâ in Annexure 2 of this Report.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company i.e. 31 March 2017 and the date of this Report.
MATERIAL ORDERS OF REGULATORS / COURTS / TRIBUNALS
During the year under review, no significant or material orders were passed by the
Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future.
REGISTRAR & SHARE TRANSFER AGENT
The Company has appointed Datamatics Financial Services Limited, (DFSL) as its Registrar & Share Transfer Agent. DFSL is a SEBI-registered Registrar & Share Transfer Agent. The contact details of DFSL are mentioned in the section titled âReport on Corporate Governanceâ of this Annual Report.
DIVIDEND DISTRIBUTION POLICY
Pursuant to Regulation 43A of the Listing Regulations, the Company has formulated a Dividend Distribution Policy to help investors to get a clearer picture on returns from their investments in the Company and also identify the stocks matching their investment objectives. The policy includes the financial parameters, dividend pay-out circumstances, internal and external factors, dividend pay-out ratio and retained earnings utilization which will be considered at the time of declaration of Dividend. The Dividend Distribution Policy is provided in Annexure 7 which forms part of this report and is also available on the website of the Company.
The we blink to download the policy is http:// www.cgglobal.com/frontend/finalnonproduct. aspx?cnl2=yrnPqECUvhk=
PUBLIC DEPOSITS
The Company has not accepted any deposits from Public or its Members during FY2017 under Sections 73 and 76 of the Act and no deposits are subsisting as on date.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section 197 of the Act read with Rule5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure 3 of this Report.
In terms of the provisions of Section 197 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 is given in Annexure 8 which forms part of this Report. The said information is available for inspection at the Registered Office of the Company during working hours up to the date of the ensuing Annual General Meeting and any Member interested in obtaining a copy thereof may write to the Company Secretary / Compliance Officer in this regard.
COMPLAINTS RELATING TO SEXUAL HARASSMENT
In terms of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, it is mandatory to review status of sexual harassment related complaints in the Annual Report.
For protection against sexual harassment, the Company has adopted a Prevention of Sexual Harassment Policy which has formalized a free and fair enquiry process for dealing with such issues with clear timelines.
The Company has also constituted region wise Sexual Harassment Committees presided by a woman employee and comprising of four to six Company employees and an external member to which employees can address their complaints.
During the year under review, the Committee met once a year and conducted 43 workshops and programs covering 1,010 employees to spread awareness on sexual harassment related issues.
There were no incidents of sexual harassment reported during the year under review.
VIGIL MECHANISM
The Company has set up a vigil mechanism viz. Whistle Blower Policy as per the provisions of Section 177 of the Act and Regulation 18 of the Listing Regulations to enable its employees to report violations, genuine concerns, unethical behavior and irregularities, if any, noticed by them which could adversely affect the Companyâs operations. The Policy also lays down the procedures to be followed by Senior Management for tracking of complaints, giving feedback, conducting investigations and taking disciplinary actions, if required.
The Head of Internal Audit submits a report to the Chairman of the Risk and Audit Committee on a quarterly basis, on all complaints referred to the Management Committee, nominated by the CEO and
Managing Director of the Company, with the status of investigations and actions taken by the Management Committee.
No material concerns or irregularities have been reported during the year under review and none of the Whistle Blowers were denied access to the Risk and Audit Committee of the Board.
AUDITORS AND AUDIT REPORTS STATUTORY AUDITORS
At the 79th Annual General Meeting of the Company, M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai (Firm Registration No. 101720W), were appointed as Statutory Auditors of the Company for a term of five years up to the conclusion of the 84th Annual General Meeting and also as Joint Statutory Auditors of the Company along with M/s. Sharp &Tannan, Chartered Accountants (Firm Registration No. 109982W) up to the conclusion of 80th Annual General Meeting.
The term of M/s. Sharp & Tannan as Joint Statutory Auditors of the Company expires at the ensuing 80th Annual General Meeting pursuant to Section 139 of the Act and Rules made there under. The Board places on record its appreciation for the services rendered by M/s. Sharp & Tannan as the Statutory Auditors of the Company.
M/s. Chaturvedi & Shah have provided their consent and confirmed that they meet the eligibility criteria prescribed under Section 141 of the Act read with Rule 4 of the Companies (Audit and Auditors) Rules, 2014 and that they are not disqualified to act as Statutory Auditors of the Company.
M/s. Chaturvedi &Shah have confirmed that the Arm holds a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. They have also furnished a declaration confirming their independence as well as their armâs length relationship with the Company and declared that they have not taken up any prohibited non-audit assignments for the Company.
Accordingly the Risk and Audit Committee and the Board have recommended ratification of appointment of M/s. Chaturvedi & Shah as Statutory Auditors of the Company at the ensuing Annual General Meeting.
During the year under review, the Statutory Auditor have not reported any instances of offence or fraud committed by the officers or employees of the Company, to the Risk and Audit Committee of the Board or the Board of Directors of the Company.
COST AUDITOR
The Company had appointed M/s. Ashwin Solanki & Associates, Cost Accountants, Mumbai (Firm Registration No. 100392) to audit the cost records related to the Companyâs products for FY2017. The cost audit reports for FY2016 were filed with the Registrar of Companies, Mumbai within the prescribed statutory deadline.
Upon recommendation of the Risk and Audit Committee, the Board has re-appointed M/s. Ashwin Solanki & Associates as Cost Auditor of the Company for FY2018 at a remuneration of 15 lakhs plus out of pocket expenses and taxes, as applicable. The remuneration payable to M/s. Ashwin Solanki & Associates for FY2018 is recommended for ratification by the Members at the ensuing Annual General Meeting.
SECRETARIAL AUDITOR
The Company had appointed M/s. Pramod S Shah & Associates, Practicing Company Secretaries, Mumbai (Firm Registration No. P2001MH010300) to undertake the Secretarial Audit of the Company for FY2017. Secretarial Audit Report for FY2017 in Form MR-3 is annexed as Annexure 4 to this Report.
There are no qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditor or the Secretarial Auditor in their reports and hence do not call for any further comments.
DIVIDEND
No dividend has been recommended or paid for the year ended 31 March 2017.
RESERVES
The Reserves, on stand-alone basis, at the beginning of the year amounted to 14,003 crore and at the end of the year stood at 14,074 crore.
SHARE CAPITAL
As at 31 March 2017, the authorized share capital of the Company was 14,076,000,000 (Rupees Four Hundred Seven Crore And Sixty Lakhs only) divided into 2,038,000,000 equity shares of 12 (Rupees two only) each.
As at 31 March 2017, the subscribed and paid-up share capital of the Company stood at 11,253,492,284 (Rupees One Hundred Twenty Five Crore Thirty Four Lakhs Ninety Two Thousand Two Hundred and Eighty Four only) consisting of 626,746,142 equity shares of 12 (Rupees two only) each.
The Companyâs Equity Shares are listed and traded in compulsory dematerialized form on BSE Limited and National Stock Exchange of India Limited.
The Company has issued Global Depository Receipts (GDRs) in 1996 and the underlying shares for each GDR were issued in the name of The Bank of New York, the Depository. Each GDR of the Company is equivalent to five equity shares. As on 31 March 2017, 176,466 GDRs were outstanding, which represent 882,329 underlying equity shares of the Company.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 are given in Annexure 5 to this Report in accordance with Section 92 of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, as amended from time to time.
DIRECTORS'' RESPONSIBILITY STATEMENT
The Directors would like to assure the Members that the Financial Statements both on stand-alone and consolidated basis, for the year under review conform, in their entirety, to the requirements of the Act.
The Directors confirm that:
- the Annual Accounts have been prepared in conformity with the applicable Accounting Standards along with proper explanations relating to material departures;
- the Accounting Policies selected and applied on a consistent basis and judgments and estimates made are reasonable and prudent to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the financial year;
- proper and sufficient care has been taken to maintain adequate accounting records for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- the Annual Accounts have been prepared on a going concern basis;
- the internal financial controls laid down in the Company were adequate and operating effectively;
- the systems devised to ensure compliance with the provisions of all applicable laws were adequate and operating effectively.
ACKNOWLEDGEMENTS
The Board of Directors wish to convey their gratitude and appreciation to all the employees of the Company globally, for their tremendous efforts as well as their exemplary dedication and contribution to the Companyâs performance.
The Directors would also like to thank the employee unions, shareholders, customers, dealers, suppliers, bankers, government and all other business associates for their continued support extended to the Company and the Management.
On behalf of the Board of Directors
GAUTAM THAPAR
Chairman
(DIN:00012289)
New Delhi, 26 May 2017
Mar 31, 2016
The Directors are pleased to present their Seventy Ninth Annual Report
on the business and operations of the Company (or "CG") along with the
audited accounts for the financial year ended 31 March 2016.
THE YEAR IN RETROSPECT
The Stand-alone and Consolidated financials of the Company represents
the continuing operations for the year ended 31 March 2016. The
operations, assets and liabilities of the discontinued operations have
been presented under separate head.
The continued consolidated net revenue of the Company during 2015Â2016
de-grew by 4.2% at Rs.5272 crore, as compared with Rs.5505 crore last
year. The Company has achieved a stand-alone net turnover from
continued operations of Rs.3960 crore, during the year under review, as
compared with Rs.4230 crore during the previous year, a decline of
6.4%.
Consolidated profit before tax from continuing operations decreased to
Rs.87 crore, as compared with Rs.356 crore in the previous year, a
decrease of 75.4% over last year. Stand-alone profit / (loss) before
tax from continuing operations decreased from Rs.342 crore to Rs.(1150)
crore, a decrease of 436.6%.
Consolidated loss before tax from discontinued operations increased to
Rs.(343) crore from Rs.(182) crore, in the previous year, an increase
of 88.7%.
Consolidated profit after tax from continuing operations is Rs.75 crore
as compared with consolidated profit after tax of Rs.368 crore in the
previous year, a decrease of 80%. The Company recorded a stand-alone
profit / (loss) after tax from continuing operations of Rs.(1188)
crore, a decrease of 444.3% from Rs.345 crore last year.
The Sales and Profit Before Interest and Tax (PBIT) of the respective
Business Groups, compared with last year are given in Table 1.
A detailed review of the operations and performance of the Company and
each of the Businesses including its International operations is
contained in the Management
01 SALES AND PROFIT BEFORE INTEREST AND TAX (PBIT)
IN RS. CRORE
BU SALES PBIT
2015-2016 2014-2015 2015-2016 2014-2015
Power Systems (CG
Stand-alone) 2290 2696 117 200
Industrial Systems
(CG Stand-alone) 1611 1497 174 151
Automation Systems
(CG Stand-alone) 75 51 (10) 10
Power Systems
(including Inter
national operations) 2495 2786 188 402
Industrial Systems
(including International
operations) 1929 1834 139 110
Automation Systems 864 900 (6) 7
Discussion and Analysis Report, which is given as a separate chapter in
this Annual Report.
FINANCIAL HIGHLIGHTS
The financial performance of your Company for the continuing operations
for the year ended 31 March 2016 is given in Table 2.
DEMERGER OF CONSUMER BUSINESS
Pursuant to the approval of shareholders of the Company accorded on 13
August 2015, for the Scheme of Arrangement (Scheme) between the Company
and Crompton Greaves Consumer Electricals Limited (CGCEL), the Company
has completed with the demerger of its Consumer Products Business, with
effect from 1 October 2015 upon sanction of the Scheme by the Hon''ble
High Court, Bombay on 20 November 2015 and filing the same with the
Registrar of Companies on 31 December 2015 by the Company. Pursuant to
the Scheme, the shareholders of the Company have been allotted one
equity share of Rs.2/- in CGCEL for every equity share of Rs.2/- each
held in the Company as on 16 March 2016 being the Record Date fixed for
this purpose, which were listed on the BSE and NSE with effect from 13
May 2016.
DIVESTMENTS AND OTHER DEVELOPMENTS
With the strategic objective of debt reduction and focusing on its core
operations in Power business in India and in its Industrial Systems
business, the following divestments have been completed / undertaken by
the Company:
- The Company has sold the Power Assets held by its subsidiary CG Power
Systems Canada Inc, thereby exiting from the Power business in Canada.
- The Company has divested its entire stake in the Joint Venture CG
Lucy Switchgear Limited (presently Lucy Electric India Private Limited)
to W Lucy & Co Limited, UK-the Joint Venture Partner, while retaining
its distribution and supply arrangements with Lucy Electric India
Private Limited.
- The Company has signed a Share Purchase Agreement (SPA) for sale of
its Power Businesses in Europe, North America and Indonesia. The
completion of the SPA is envisaged by 31 October 2016, subject to
requisite consents and regulatory approvals. Upon completion, the
Company would exit completely from its overseas Power businesses.
- The Company has also initiated the process of identifying investors
for its other international B2B businesses including Automation
Business.
02 FINANCIAL HIGHLIGHTS
2016 2015 2016 2015
PARTICULARS STAND-ALONE CONSOLIDATED
Revenue from Operations
(Net of Excise Duty) 3,960 4,230 5,272 5,505
EBIDTA 308 331 453 580
Less: Finance Cost (102) (21) 56 82
Less: Depreciation 108 113 256 245
Profit Before
Exceptional Items & Tax 302 239 141 253
Exchange gain 57 (47) 57 (47)
Exceptional Items (1509) 150 (111) 150
Profit /(loss)
Before Tax (1150) 342 87 356
Less: Tax Expense 38 (3) 14 (10)
Profit /(loss)
After Tax (1188) 345 73 366
Share of profit /
(loss) in associates - - 1 1
Less: Minority
Interest - - 1 1
Profit / (loss) from
continuing operations (1188) 345 75 368
Profit / (loss) from
discontinued
operations 157 371 (343) (182)
Tax expense from
discontinued
operations 61 127 128 163
Net Profit / (loss)
from discontinued
operations 96 244 (471) (345)
Net Profit / (loss)
for the year attri
butable to shareholders (1092) 589 (396) 23
The above steps will enable the Company to improve its Balance Sheet
and enhance shareholders value by refocusing on operations and growth
in India, considering the opportunities in India, in view of the
emphasis of the Government on the Power sector and the growth in demand
of the products in the Industrial Systems'' business in India and
overseas.
During the year, the Distribution Franchisee Agreement (DFA) of the
Company with Maharashtra State Electricity Distribution Company Limited
(MSEDCL) for power distribution at Jalgaon in Maharashtra was
terminated by MSEDCL exercising its step- in rights consequent to
certain unresolved disputes. The Company is confident of arriving at an
amicable settlement with MSEDCL on all pending issues under the DFA.
DIVIDEND
No dividend has been recommended or paid for the year ended 31 March
2016.
RESERVES
The Reserves, on stand-alone basis, at the beginning of the year were
Rs.4490 crore. The Reserves at the end of the year are Rs.4003 crore.
SHARE CAPITAL
As at 31 March 2016, the authorised share capital of the Company was
Rs.407,60,00,000-(Rupees four hundred seven crore sixty lacs) divided
into 203,80,00,000 equity shares of Rs.2/-(Rupees Two) each.
As at 31 March 2016, the paid-up share capital of the Company stood at
Rs.125,34,92,284 (Rupees one hundred twenty five crore thirty four lacs
ninety two thousand two hundred eighty four only) consisting of
626,746,142 equity shares of Rs.2/-(Rupees Two) each.
DIRECTORS AND KEY MANAGERIAL PERSONNEL BOARD OF DIRECTORS
As on the date of this report, the Company''s Board comprises of ten
Directors. The Chairman, Mr Gautam Thapar is a Non- Executive Director
and represents the Promoter Group. Mr K N Neelkant is the CEO and
Managing Director. Mr Madhav Acharya is the Executive Director Â
Finance and CFO. Five other Non-Executive Directors  Mr Shirish Apte,
Mr Sanjay Labroo, Ms Meher Pudumjee,
Dr Valentin Von Massow and Ms Ramni Nirula are independent in terms of
Regulation 16 of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (''Listing Regulations'') and Companies
Act, 2013. Two other Directors  Mr B Hariharan and Dr Omkar Goswami
are Non-Executive Directors. The Directors are reputed professionals
with diverse functional expertise, industry experience, educational
qualifications, ethnicity and gender mix relevant to fulfilling the
Company''s objectives and strategic goals.
Cessation
Mr Laurent Demortier resigned from his role as a CEO and Managing
Director of the Company with effect from 3 February 2016, thereafter,
he continued to serve as a Whole-time Director up to 31 March 2016.
Dr Colette Lewiner, Independent Director stepped down from her
directorship of the Company, with effect from 14 March 2016.
The Board places on record its gratitude and appreciation for Mr Demo
tier and Dr Lewiner for their guidance to the Company during their
tenure as Directors.
Appointment
Mr K N Neelkant was appointed as the CEO and Managing Director with
effect from 3 February 2016.
Mr Madhav Acharya was appointed as Executive Director  Finance with
effect from 1 April 2016, in addition to his role as the CFO of the
Company.
Ms Ramni Nirula was appointed on the Board as an Independent
Non-Executive Director with effect from 6 April 2016.
Retirement by Rotation
In terms of the provisions of Section 152 of the Companies Act, 2013
and the rules made there under and Article 114 of the Articles of
Association of the Company, Dr Omkar Goswami and Mr B Hariharan, retire
by rotation at the ensuing Annual General Meeting of the Company and
being eligible, have offered themselves for the re-appointment. The
profile details of Dr Omkar Goswami and Mr B Hariharan are contained in
the accompanying Notice of the forthcoming Annual General Meeting and
in the Corporate Governance Report. The Board recommends their
re-appointment.
CG has signed a Share Purchase Agreement (SPA) for sale of its Power
businesses in Europe, North America and Indonesia.
Attributes, Qualification & Independence of Directors & their
Appointment
The appointment and remuneration of Directors is governed by the
Remuneration Policy of the Company which also contains the criteria for
determining qualifications, positive attributes and independence of
Directors. The Policy along with the CG Board Diversity Policy aims at
attracting and retaining high caliber personnel from diverse
educational fields and with varied experience to serve on the Board for
guiding the Management team to enhance organizational performance. The
detailed Remuneration Policy is contained in the Corporate Governance
section of this Annual Report.
Independent Directors Declaration
All Independent Directors have submitted declarations that they
continue to meet the criteria of independence as laid down under
Section 149(6) of the Companies Act, 2013 and Regulation 16 of the
Listing Regulations.
Board Meetings
A calendar of meetings is prepared and circulated in advance to the
Directors. The Board of Directors met 6 times during FY2016. The
intervening gap between the meetings was within the period prescribed
under the Companies Act, 2013 and the Listing Regulations. The details
of the meetings and the attendance of the Directors are mentioned in
the Corporate Governance Report.
The Board has established Committees as a matter of good corporate
governance practice and as per the requirements of the Companies Act,
2013. The Committees are Risk and Audit Committee, Nomination and
Remuneration Committee, Corporate Social Responsibility Committee and
Stakeholders'' Relationship Committee. The composition, terms of
reference, number of meetings held and business transacted by the
Committees is given in the Corporate Governance Report.
Annual Board Evaluation
During the year, the Board has carried out the annual evaluation of its
own performance as well as the evaluation of the working of its
Committees and individual Directors, including Chairman of the Board.
This exercise was carried out through a structured questionnaire
prepared separately for Board, Committee and individual Directors. The
questionnaire for Board evaluation was prepared taking into
consideration various aspects of the Board''s functioning such as
adequacy of the composition and role of the Board, Board meeting and
reporting process, effectiveness of strategies, risk management
systems, external relationships, ethics and governance framework.
Committee performance was evaluated on the basis of its composition,
effectiveness in carrying out its mandate, relevance of its
recommendations and allocation of adequate time to fulfil its mandate.
Individual and peer assessment of Directors based on parameters such as
knowledge, contribution, level of engagement, communication /
relationship with Board and Senior Management were received by the
Chairman for individual feedback. The Board acknowledged certain key
improvement areas emerging through this exercise and action plans to
address these are in progress. The performance evaluation of the
Chairman was carried out by the Independent Directors. The Directors
expressed their satisfaction with the evaluation process and its
result.
Familiarization of Independent Directors
The Company has in place the practice of familiarizing the Independent
Directors which inter-alia seeks to update the Directors, while their
induction, on their roles, responsibilities, rights and duties under
the Companies Act, 2013 and other statutes. This process helps the
Independent Directors to take well informed decisions in a timely
manner. The details of this program can be viewed under the following
link on company''s website: http://www.cgglobal.com/frontend/
finalnonproduct.aspxRs,cnl2=yrnPqECUvhk=
KEY MANAGERIAL PERSONNEL
During the year under review Ms Minal Bhosale resigned from the
position of Company Secretary w.e.f. 31 May 2015. The Board of
Directors based on the recommendation of the Nomination and
Remuneration Committee, appointed Mr Manoj Koul as the new Company
Secretary of the Company w.e.f. 3 August 2015.
PROMOTER GROUP
The Company is a part of the Avantha Group, one of India''s leading
diversified conglomerates. Led by Chairman Mr Gautam Thapar, the
Avantha Group has a global footprint and operates in 90 countries with
more than 25,000 employees worldwide.
As required under the Listing Regulations, CG periodically discloses
its promoter group and persons acting in concert in the shareholding
pattern and other filings with the Stock Exchanges.
SUBSIDIARY COMPANIES
As on 31 March 2016, the Company has three Indian subsidiaries and 31
foreign subsidiaries. The particulars are mentioned in Annexure 6 to
this Report in Form No. MGT 9 (Extract of Annual Return).
Pursuant to Section 136 of the Companies Act, 2013 the audited accounts
of each of the Company''s subsidiaries are placed on the website of the
Company and not enclosed in this Annual Report. If any Member of the
Company so desires, the Company will be happy to make available the
Annual Accounts of the subsidiaries to him / her, on request. The
physical copies of the aforesaid documents will also be available at
the Company''s Registered Office for inspection during normal business
hours on all working days, excluding Saturdays, up to the date of the
Meeting.
In terms of Section 129(3) of the Companies Act, 2013, statement
containing salient features of the financial statement of Subsidiaries
/ Associate companies / Joint Ventures is given in this Annual Report.
BRANCH OFFICE IN POLAND
The Company''s branch office in Poland i.e. Crompton Greaves Ltd SA is
under the process of liquidation.
ADOPTION OF IND AS
The Central Government in consultation with the National Advisory
Committee on Accounting Standards (NACAS) under Sectio 133 read with
Section 469 of the Companies Act, 2013 has notified the Indian
Accounting Standards (''Ind AS'') vide G.S.R. 111(E) dated 16 February
2015. The Company has decided for adoption of the aforesaid standards,
voluntarily, as stated in the Companies (Indian Accounting Standards)
Rules, 2015 with effect from 1 April 2015 and thereafter. The aforesaid
Rules have been further amended by the Companies (Indian Accounting
Standards) (Amendment) Rules, 2016 on 30 March 2016. In view of this
notification / amendment and also as per the Regulation 33 of Listing
Regulations, the Company has prepared the Financial Statements (both
stand-alone and consolidated) for the year ended 31 March 2016 as per
Ind AS, as amended.
RISK AND AUDIT COMMITTEE
As on the date of this Report, the Risk and Audit Committee is
comprised of three Non-Executive Directors, of whom two are
independent. The composition is as under:
- Mr Shirish Apte (Chairman, Independent Director)
- Dr Omkar Goswami (Non-Executive Director)
- Mr Sanjay Labroo (Independent Director)
All recommendations made by the Risk and Audit Committee during the
year were accepted by the Board of Directors.
RELATED PARTY TRANSACTIONS
The Company''s Related Party Policy governs the norms for inter-company
transaction pricing between the Company and its subsidiaries. Since the
Company has a network of wholly-owned subsidiaries, manufacturing, as
well as, engaged in sales of various products comprising the different
businesses of CG, a substantial quantum of related party transactions
comprise transactions with subsidiaries for purchase and sale of goods
and services, in the ordinary course of business.
An omnibus approval has been granted by the Risk and Audit Committee of
the Board for transactions which are of a foreseen and repetitive
nature with other related parties. Such omnibus approvals are
subjected to review by the Risk and Audit Committee every year and are
monitored by the Risk and Audit Committee on a quarterly basis. All
Related Party Transactions are presented to the Risk and Audit
Committee every quarter.
All related party transactions that were entered into during the
financial year were on an arm''s length basis and were in the ordinary
course of business. There are no material related party contracts,
arrangements or transactions undertaken by the Company during the year
in terms of its India Related Party Transaction Policy of the Company
and hence the disclosure of particulars of contracts / arrangements
entered into by the Company with related parties referred to in
sub-section (1) of Section 188 of the Companies Act, 2013 in Form AOC-2
(Annexure 1 to this Report) is nil.
The Company''s India Related Party Transactions Policy is uploaded on
the website of the Company and the we blink is as under:
http://www.cgglobal.com/pdfs/ policies/India%20Related%20Party%20
Transactions%20Policy.pdf
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of loans, guarantees given and investments made by the Company
during FY2016, pursuant to the provisions of Section 186 of the
Companies Act, 2013 and Schedule V of the Listing Regulations are given
in the notes to the Financial Statements.
BUSINESS RISK MANAGEMENT
A risk management policy has been developed and implemented by the
Company for identification of elements of risk, if any, which in the
opinion of the Board may threaten the existence of the Company. In
order to bring in more clarity on the objective, process and spell out
the roles and responsibilities for an effective implementation of the
Risk Management Process, the Board of Directors have adopted revised
Risk Management Framework. The revised framework enables risk
identification and its escalation and consolidation at unit level to
business unit level, identification of risk mitigation process.
In terms of the framework, the Risk and Audit Committee shall review
the adequacy of the risk management framework of the Company, the key
risks associated with the businesses of the Company and the measures
and steps in place to mitigate the same, from time to time. The
assessment of the risks covers Strategy, Technology, Financial,
Operations & Systems, Legal & Regulatory and Human Resources Risks.
There is appropriate assurance and monitoring mechanism in place to
monitor the effectiveness of the risk management framework including
the mitigation plans identified by the Management for key risks
identified through the risk management exercise.
INTERNAL FINANCIAL CONTROLS
CG has in place, adequate systems and procedures for implementation of
internal financial control across the organization which enables the
Company to ensure that these controls are operating effectively.
RESEARCH AND DEVELOPMENT
During the year, the Company''s R&D activities continued to focus on
development of improved energy efficient and reliable products. Power
transformers focused on research in cost competitiveness, oil tightness
and validation of hot spot calculation. Research was also carried out
in GAI3S 245 kV GIS with spring drive, 170 kV mobile GIS, 420 kV CT
with Casting Tank, Composite Insulator CVTS, digital interface (digital
surge counter) to the lightning arrester for condition monitoring of
products, which is a vital communication link for smart substations and
study of external withstand and flashover characteristics of air
insulations for development of new and niche products. Other areas of
research in power products included Inverter Duty 12 Pulse Transformer
3.2 MVA with foil winding,
Four Inverter Feed 4.25 MVA Transformer with foil winding and 2X12
Pulse Four Winding Transformers for solar application.
Automation business R&D activities, led by the R&D Centre of
Excellence, together with the R&D teams at different locations, are
mainly focused on new products and features to maintain its
technological leadership in Protections and Control as well as in
metering and communications.
Industrial systems business focused on control platform, new DSP
technology for high performance DTC, SVPWN and FOC for AM, PMSM and
SynRM and new UC technology for integrated connectivity and
communication. CSA certified single phase motors up to 5HP 4P and 6P
were developed. In Railways Signalling Division, R&D activity was
carried out to design and develop two key products for railway and one
customized product for Honda Motors such as 110Volts AC Fan with
specially designed SS guard having better aesthetics to suit advanced
interior of EMUs., 230 Volts AC BLDC Fan with special feature of speed
regulation having customized design for Honda Motors and 380 Volts AC 3
Phase Point Machine for Metro rail.
The above R&D efforts would result in extended product range, increase
in operating income and expansion in new markets.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
As required by the Companies Act, 2013, read with the Companies
(Accounts) Rules, 2014, the relevant data pertaining to conservation of
energy, technology absorption and foreign exchange earnings and outgo
is given in the prescribed format as Annexure 2 to this Report
ENVIRONMENT, HEALTH & SAFETY (EHS)
By and large, EHS Management system, programs and policies were
enhanced and overhauled during the year. All CG manufacturing units in
Asia, EMEA and Americas have maintained their ISO14001 and OSHAS18001
certifications.
CG''s EHS policy and guidelines are a reflection of CG''s strong EHS
commitment. The EHS Guidelines prescribe responsibilities
and accountabilities of individual functions and the standards for
adherence with the Guidelines. Behaviour Based Championship Model was
introduced, resulting in increased overall EHS awareness. Additionally,
bi- monthly regional EHS network conference calls were conducted for
cross business and cross regional EHS knowledge sharing.
Smart EHS goals now form a part of KPI''s of individual leaders. Monthly
online EHS Balanced Score Card concept was introduced under which all
units set their annual targets towards EHS KPI''s and individual unit''s
EHS performance against the set targets were evaluated. Corporate EHS
audit process was revamped with the inclusion of skip level meeting and
interview process. These audits were more focused on EHS
implementation and performance, rather than EHS documentation, as a
journey towards continuous improvement in EHS excellence. Corrective
actions generated from these audits and various EHS events are captured
and tracked for closure in Online Event Reporting System portal (ERS)
as EHS one stop shop.
With the objective of rewarding individual and collective efforts
towards EHS, EHS RECOGNIZE policy was introduced and aligned with
organisational RECOGNIZE drive. Two units were awarded as Best EHS unit
CEO annual award.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company''s undeterred commitment towards CSR initiatives endeavor to
embrace responsibility for its corporate actions and achieve fruitful
impact of its business actions not only on its stakeholders, but also
the society at large. As part of its CSR initiatives, CG has undertaken
projects in the areas of education, employability and health. CG
supports Avantha Foundation on programs such as reduction of
Malnutrition and Hunger and building capacities of stakeholders in
small towns to ensure better delivery of services to citizens. The
Annual Report on CSR activities of CG for FY2016 is stated at Annexure
3 to this Report.
GREEN INITIATIVES
Electronic copies of the Annual Report and Notice of the 79th Annual
General Meeting are sent to all members whose email addresses are
registered with the Company / Depository Participant(s) for
communication purposes. For members who have not registered their
email addresses, physical copies of the Notice and Annual Report are
sent in the permitted mode. Members requiring physical copies can send
a request to the Company. The physical copies of the aforesaid
documents will also be available at the Company''s Registered Office for
inspection during normal business hours on all working days, excluding
Saturdays, up to the date of the Meeting.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE
COMPANY
There are no material changes and commitments affecting the financial
position of the Company which has occurred between the end of the
financial year of the Company i.e., 31 March 2016 and the date of this
Directors'' report.
MATERIAL ORDERS OF REGULATORS / COURTS / TRIBUNALS
No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company''s
operations in future.
DIRECTORS'' RESPONSIBILITY STATEMENT
The Directors would like to assure the Members that the financial
statements for the year under review conform in their entirety to the
requirements of the Companies Act, 2013. The Directors confirm that:
- the Annual Accounts have been prepared in conformity with the
applicable Accounting Standards;
- the Accounting Policies selected and applied on a consistent basis,
give a true and fair view of the affairs of the Company and of the
profit for the financial year;
- sufficient care has been taken that adequate accounting records have
been maintained for safeguarding the assets of the Company; and for
prevention and detection of fraud and other irregularities;
- the Annual Accounts have been prepared on a going concern basis;
- the internal financial controls laid down in the Company were
adequate and operating effectively;
- the systems devised to ensure compliance with the provisions of all
applicable laws were adequate and operating effectively.
SHARE REGISTRAR & TRANSFER AGENT
The Company''s Registrar & Transfer Agents for shares is Datamatics
Financial Services Ltd (DFSL). DFSL is a SEBI- registered Registrar &
Transfer Agent. The contact details of DFSL are mentioned in the
Corporate Governance Report.
investors are requested to address their queries, if any to DFSL;
however, in case of difficulties, as always, they are welcome to
contact the Company''s Investor Services Department, the contact
particulars of which are contained in the Corporate Governance Report.
FIXED DEPOSITS
The Company has not accepted any deposits from public or its members
during FY2016 under Section 73 of the Companies Act, 2013 and no
deposits are subsisting as on date.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 197(12) of the Companies Act,
2013 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 forms part of this
Report. However regard to the provisions of the first proviso to
Section 136(1) of the Companies Act, 2013, 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. Disclosures pertaining to
remuneration and other details as required under Section 197(12) of the
Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014, is given at
Annexure 4 to this report.
COMPLAINTS RELATING TO SEXUAL HARASSMENT
In terms of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act and Rules, 2013, it is mandatory to
review status of sexual harassment related complaints in the Annual
Report. There were no incidents of sexual harassment reported in the
Company. For protection against sexual harassment, CG has formed an
internal complaints committee to which employees can write in their
complaints. The Company has a Prevention of Sexual Harassment Policy
which has formalised a free and fair enquiry process for dealing with
such issues, with clear timelines. During FY2016, a number of workshops
and programs were conducted by the Company to spread awareness on
sexual harassment related issues.
VIGIL MECHANISM
The Company has formulated CG Whistle Blower Policy with a view to
providing a mechanism for CG employees to report violations and assure
them of the process that will be followed to address the reported
violation. The Policy also lays down the procedures to be followed by
Senior Management for tracking of complaints,
giving feedback, conducting investigations and taking disciplinary
actions. It also provides assurances and guidelines on confidentiality
of the reporting process and protection from reprisal to complainants.
A Management Committee as nominated by CEO and Managing Director is
formed upon completion of the investigation and requiring action by the
Committee. Decisions taken by the Management Committee and actions
taken by the Company or exoneration cases are informed by the Head of
Internal Audit to the Risk and Audit Committee on a quarterly basis.
Actions taken by the Management Committee are implemented subject to
applicable law(s).
AUDITORS STATUTORY AUDITORS
In view of the mandatory rotation of auditor requirement and to ensure
smooth transition, it is proposed to appoint M/s Chaturvedi & Shah as
Joint Statutory Auditors along with M/s Sharp & Tannan, the existing
Statutory Auditors of the Company. Both the Auditors will be jointly
and severally responsible during FY2017.
M/s Chaturvedi & Shah are proposed to be appointed for a period of 5
continuous years i.e. from the conclusion of 79th Annual General
Meeting till the conclusion of 84th Annual General Meeting of the
Company. M/s Sharp & Tannan and M/s Chaturvedi & Shah, have informed
the Company vide letters both dated 24 May 2016 respectively that their
appointment, if made, would be within the limits prescribed under
Section 141 of the Companies Act, 2013. M/s Sharp & Tannan and M/s
Chaturvedi & Shah, have confirmed that they have subjected themselves
to the peer review process of the Institute of Chartered Accountants of
India (ICAI) and hold valid certificates issued by the Peer Review
Board of the ICAI. M/s Sharp & Tannan and M/s Chaturvedi & Shah, have
also furnished a declaration confirming their independence as well as
their arm''s length relationship with the Company and declared that they
have not taken up any prohibited non-audit assignments for the Company.
COST AUDITOR
The Company had appointed M/s Ashwin Solanki & Associates, Cost
Accountants, to audit the cost accounts related to the Company''s
products for 2015Â 2016. The cost audit reports were filed within the
statutory deadline.
Upon recommendation of the Risk & Audit Committee, the Board had
appointed M/s Ashwin Solanki & Associates as Cost Auditors, for the
financial year 2016-2017. At the ensuing Annual General Meeting, their
remuneration is proposed to be approved and ratified by the
shareholders.
SECRETARIAL AUDITOR
The Company has appointed Dr K R Chandratre, Practising Company
Secretary to undertake the Secretarial Audit of the Company. The Report
of the Secretarial Audit for FY2016 is annexed herewith as Annexure 5
to this Report.
There are no qualifications, reservations or adverse remarks or
disclaimers made by the Statutory Auditor or the Secretarial Auditor in
their reports and hence do not call for any further comments.
During the year under review, neither the Statutory Auditor nor the
Secretarial Auditor had reported any matter under Section 143(12) of
the Companies Act, 2013, therefore no details are required to be
disclosed under Section 134(3)(d) of the Companies Act, 2013.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form
MGT 9 is annexed herewith as Annexure 6.
ACKNOWLEDGEMENTS
The Directors wish to convey their gratitude and appreciation to all of
the Company''s employees at all its locations worldwide for their
tremendous efforts as well as their collective dedication and
contribution to the Company''s performance.
The Directors would also like to thank the employee unions,
shareholders, customers, dealers, suppliers, bankers, government and
all other business associates for their continued support extended to
the Company and the Management.
On behalf of the Board of Directors
G THAPAR
Chairman
DIN (00012289)
Mumbai, 27 May 2016
Mar 31, 2013
To The Members,
The Directors are pleased to present their seventy Sixth Annual Report
on the business and operations of the Company and the accounts for the
financial year ended 31 March 2013.
THE YEAR IN RETROSPECT
The consolidated net revenue of the Company during 2012-2013 grew by
7.5% at Rs. 12,094 crore, as compared with Rs.11,249 crore last year.
The Company has achieved a stand-alone net turnover of Rs.7135 crore,
during the year under review, as compared with Rs.6485 crore during the
previous year, a rise of 10%.
Consolidated profit before tax (after exceptional item) decreased to
Rs.64 crore, as compared with Rs.550 crore in the previous year, a
decrease of 88.4% over last year. Stand-alone profit before tax
decreased from Rs.677 crore to Rs.596 crore, a decrease of 11.9%.
Consolidated loss aftertax (after exceptional item) was Rs.36 crore as
compared with consolidated profit after tax of Rs.374 crore in the
previous year, a decrease of 109.7%. The Company recorded a stand-alone
profit after tax of Rs.446 crore, a decrease of 11.7%.
The Sales and Profit Before Interest and Tax (PBIT) of the respective
Business Groups, compared with last year is given in Table 1 A detailed
review of the operations and performance of the Company and each ''
Business Group as well as the Company''s International operations is
contained in the Management Discussion and Analysis Report, which is
given as a separate chapter in the Annual Report.
ACQUISITION
On 27 July 2012, the Company acquired ZIV Group based in Spain, engaged
in the design, engineering, manufacturing and support of Intelligent
Electrical Devices (lEDs) and power automation systems for Utilities
and Industries, for an Enterprise Value of Â147 million.
ZIVÂs offerings span from Substation and Distribution Automation, to
Advanced Metering Infrastructure (AMI). ZIV has installed more than 1.4
million lEDs for Utilities and Industries across the world. This
acquisition expands the CG portfolio for power system automation and
protection and creates a strong platform for CG in the smart grid
arena.
On 11 January 2013, the Company acquired the Compact Fluorescent Lamps
(CFL) business of Karma Industries at Baddi, Himachal Pradesh, for an
approximate value of Rs. 145 million. The acquisition will double the
CompanyÂs capacity in the fast-growing CFL lighting segment and
reinforce its presence in the rapidly growing Indian consumer market.
AMALGAMATION
CG-ZIV Power Automation Solutions Ltd (CG-ZIV) is a Joint Venture
Company between the Company and ZIV Spain. Post acquisition of ZIV
Group, for simplification of the shareholding structure and operational
synergies, the Board of Directors at their Meeting held on 13 April
2013, approved the amalgamation of CG-ZIV with the Company, A Scheme of
Amalgamation will shortly be filed with the High Court of Judicature at
Bombay.
JOINT VENTURE
On 2 May 2013, the Company entered into a Joint Venture Agreement with
PT Prima Layanan Nasional Enjinring (PLNE) of Indonesia, for the
manufacture of high voltage (HV) and extra high voltage (EHV)
switchgear ranging from 70kV to 500kV in Indonesia. The Joint Venture
will be owned 51 % by CG and 49% by PLNE.
RATIONALIZATION
The Company has been progressively evaluating opportunities for
improving operational viability of the various businesses of CG. The
transformer market in Western Europe is facing both over capacity and
price pressure. Therefore, in order to have globally competitive and
sustainable business operations in Europe, it was decided that CG''s
Belgium operations be optimised for cost advantages, through
administrative cost reduction measures and a right-sizing of its
workforce at its Mechelen, Belgium site.
This rationalisation program was concluded on 14 December 2012 with the
separation of approximately 200 employees. Job Search and other
employee help programs were implemented to assist separated employees
to find new jobs. Post the project, a "Fresh Start" program comprising
communication and engagement initiatives was launched to reinforce
Company''s strategy, vision and expectations, monthly updates on the
business situation and weekly department meetings. Senior Management is
actively involved through a Fresh Start Steering Committee which
oversees the overall communication and employee involvement processes
to sustain employee productivity commitment and morale after the
rationalization.
DIVIDEND
The Company declared two interim dividends during the year:
- Rs.0.40 per equity share (20%) aggregating to a total dividend payout
of Fis.30 crore (including dividend tax) declared on 20 July 2012; the
Book Closure for this purpose was 28 July 2012 to 3 August 2012 and the
Interim Dividend was paid on 8 August 2012.
- Rs.0.40 per equity share (20%) aggregating to a total dividend payout
of Rs.30 crore (including dividend tax) declared on 2 November 2012;
the Record Date for this purpose was 8 November 2012 and the Interim
Dividend was paid on 20 November 2012.
The above mentioned dividend payout as a percentage of the share
capital works out to 40%.
The Board of Directors have recommended a Final Dividend of 20%,
declared on 24 May 2013; the Book Closure for this purpose is Monday,
29 July 2013 to Tuesday, 6 August 2013, both days inclusive.
RESERVES
The Reserves, on stand-alone basis, at the beginning of the year were
Rs.2,573 crore. The Reserves at the end of the year are Rs.2,929
crore.
DIRECTORATE
Mr B Hariharan was appointed as an Additional Director on the Company''s
Board of Directors with effect from 1 November
2012. Dr (Mrs) C Lewiner was appointed as an Additional Director on the
Company''s Board of Directors with effect from 28 January 2013. Mr S
Apte was appointed as an Additional Director on the Company''s Board of
Directors with effect from 18 April 2013. Mr Hariharan, Dr Lewiner and
Mr Apte hold office upto the date of the forthcoming annual general
meeting, and considering that the Company will benefit from their
continuance as a Director, their appointments are being recommended.
MrS Bayman, Independent Director stepped down from his directorship of
the Company, with effect from 1 April 2013. The 3oard places on record
its gratitude and appreciation for Mr Bayman''s guidance to the Company
during his tenure as Director.
CG Non-India
CG Stand-aione Consolidated *@ : CG Consolidated"
Particulars 2013 2012 2013 2012 2013 2012
A Gross Sales 7,571 6,850 5,097 4,794 12,533 11,615
B Less: Excise
Duty 43(3 365 439 366
C Net Sales 7,135 6,485 5,097 4,794 12,094 11,249
0 Less:
Operating
Expenses 6,540 5,764 5,324 4,726 11,711 10,445
E Operating
Profit 595 721 (227) 68 383 804
F Add:
Dividend
and Other
Income 53 50 39 16 76 52
G Profit
before Interest,
Depreciation,
Amortisation
and Taxes 648 771 (188) 84 459 856
H Less:
Finance costs (20) 3 90 42 71 46
1 Profit before
Depreciation,
Amortisation
and Taxes 668 768 (278) 42 388 810
J Less:
Depreciation,
Amortisation 72 91 125 169 203 260
K Profit before
exceptional
items and taxes 596 677 (403) (127) 185 550
L Less:
Exceptional
Items 121 121
M Profit Before
Tax 596 677 (524) (127) 64 550
SI Less:
Provision
for Current
Year Tax 143 193 40 23 185 217
0 Less: Provision
for Deferred Tax 7 (21) (90) (14) (84) (35)
P Profit After
Tax ,, 446 505 (474) (136) (37) 368
Q Minority
Interest 1 0 1 1
A Share of Profit
of Associate
Companies (net) (2) 0 0 5
S Profit
available for
distribution 446 505 (475) (136) (36) 374
* Consolidated Accounts of CG International BV (CGIBV), the holding
company for CG''s international operations. " Includes results of CG
Stand-alone and Indian subsidiaries, Crompton Greaves Holdings
Mauritius Limited, CG International Holdings Singapore PTE Ltd and
CGIBV consolidated @ Figures have been regrouped for the purposes of
consolidation.
CG Non-India
CG Stand-alone Consolidated *@ j CG Consolidated"
Particulars 2013 2012 2013 2012 2013 2012
A Gross Sales 1,080 1,035 727 724 1,788 1,755
B Less: Excise
Duty 62 55 63 55
C Net Sales 1,018 980 727 724 1,725 1,700
D Less:
Operating
Expenses 933 871 759 714 1,670 1,578
E Operating
Profit 85 109 (32) 10 55 122
F Add: Dividend
and Other
Income 7 8 6 2 10 8
G Profit before
Interest,
Depreciation,
Amortisation
and Taxes 92 117 (26) 12 65 130
H Less:
Finance costs (3) 1 13 6 10 7
j Profit before
Depreciation,
Amortisation
and Taxes 95 116 (39) 6 5 5
123
J Less:
Depreciation,
Amortisation 10 14 18 26 ,29 39
K Profit before
exceptional
items and taxes 85 102 (57) (20) 26 84
L Less:
Exceptional
Items 17 17
M Profit
Before Tax 85 102 (74) (20) 9 84
J Less:
Provision
for Current
Year Tax 20 29 6 3 26 33
0 Less:
Provision
for Deferred Tax 1 (3) (13) (2) (12) (5)
P Profit After
Tax 64 76) (67) (21) (5) 56
Q Minority
Interest 0 0 0 0
B Share of
Profit of
Associate
Companies (net) 0 0 0 1
S Profit
available for
distribution 64 76 (67) (21) (5) 57
* Consolidated Accounts of CG International BV (CGIBV), the holding
company for CG''s international operations. ** Includes results of CG
Stand-alone and Indian Subsidiaries, Crompton Greaves Holdings
Mauritius Limited, CG International Holdings Singapore PTE Ltd and
CGIBV consolidated @ Figures have been regrouped for the purposes of
consolidation. Note: Average exchange rate considered for 1 EURO in
2012-13 is Rs.70.1028 and in 2011-12 is Rs.66.1764
Mr SP Talwar, Independent Director stepped down from his directorship
of the Company, with effect from 24 May 2013. The Board places on
record its gratitude and appreciation for Mr SP Talwar''s guidance to
the Company during his tenure as Director.
DrOGoswami, MsM Pudumjeeand MrS Prabhu are the Directors who retire by
rotation at the forthcoming Annual General Meeting; and being eligible,
offer themselves for re- appointment to the Board.
The details of the Directors being recommended for appointment and
re-appointment are contained in the accompanying Notice of the
forthcoming Annual General Meeting.
PROMOTER GROUP
The Company is a part of the USD 4 Billion Avantha Group, one of
India''s leading business conglomerates, led by Chairman Mr Gautam
Thapar. With a global footprint, the Avantha Group operates in 90
countries with more than 25,000 employees worldwide.
As required by the Listing Agreement with Stock Exchanges, CG
periodically discloses its promoter group and persons acting in concert
in the shareholding pattern and other filings with the Stock Exchanges.
RESEARCH AND DEVELOPMENT
CG''s continues its commitment and increased focus on R&D, since these
efforts are important drivers for global competitiveness and growth.
Our business units were consolidated globally to reflect "One CG", and
the offerings of CG have been re-aligned along "Global Product Lines".
This has necessitated realignment of R&D initiatives globally. SBU R&D
units and the Global R&D Centre have been suitably integrated to create
internal and external synergies and extract better value from the new
model for R&D.
Energy efficiencies and cost reduction were the main triggers for
product innovation during the year. Extended range of IE3 motors,
motors with regenerative drives, low loss, low noise transformers,
extended range of LED based light sources, low energy consuming fans &
appliances, lighting management systems for small buildings are salient
examples in our drive to reach out to the market.
Some of these new products have been highlighted in the Annexure to the
Report.
CG has been consistently leading technological innovations, fulfilling
the evergrowing requirements of its customers in India and worldwide.
CG continues to have a strong presence and has commercialized
production of its 1200 kV offerings in India - Capacitive Voltage
Transformer, Surge Arrester and Power Transformer. R&D continues to
facilitate the indigenous design, development and manufacturing of 800
kV Power transformers, gas circuit breakers, instrument transformers
and surge arresters.
CG''s R&D efforts have resulted in 15 R&D units which have received
recognition from the Department of Scientific & Industrial Research,
Ministry of Science &Technology, India. These recognitions further
support CG in its quest for building a stronger foundation for
innovativeness in development of technology as an important driver
towards a stronger global presence, in future.
T Consolidated Accounts of CG International BV (CGIBV), the holding
company for CG''s international operations. "Includes results of CG
Stand-alone and Indian Subsidiaries, Crompton Greaves Holdings
Mauritius
Limited, CG International Holdings Singapore PTE Ltd and CGIBV
consolidated @ Figures have been regrouped for the purposes of
consolidation. Note: Average exchange rate considered for 1 USD in
2012-13 is Rs.54.4316andin2011-12isRs.48.1233
Limited (CGPS).
In addition to the above, the Company has
41 foreign subsidiaries as under:
- Crompton Greaves Holdings Mauritius Ltd
- CG International Holdings Singapore PTE Ltd
- CG International B.V.
- PT. CG Power Systems Indonesia
- CG Holdings Belgium N.V.
- CG Power Holdings Ireland Ltd
- CG Power Systems Belgium N.V.
- CG Automation Systems UK Ltd
- CG Power Systems USA Inc
- CG Automation Solutions USA Inc
- CG Power Systems Ireland Ltd
- Viserge Ltd
- CG Sales Networks France SA
- Microsol Ltd
- CG Service Systems Curacao NV
- CG Service Systems France SAS
- CG Holdings Hungary Kft
- CG Holdings Germany GmbH
- CG Electric Systems Hungary Zrt » CG Sales Networks Americas Inc
- CG Power Solutions USA Inc
- CG Power Systems Canada Inc
- CG Power Solutions UK Ltd
- CG Power Solutions Saudi Arabia Ltd
- CG Sales Networks Singapore PTE Ltd
- CG Holdings USA Inc
- CG Power Systems Brazil Ltda
- CG Power County LLC
- CG Drives & Automation Germany GmbH
- Emotron Latin America Inc
- CG Industrial Holdings Sweden AB
- Crompton Greaves Holdings Sweden AB
- CG Drives & Automation Sweden AB
- CG Drives & Automation Netherlands BV
- ZIVI D Smart Energy Networks
- ZIVAplicacionesyTecnologiaSL
- ZIV Communications SA
- ZIV Metering Solutions SL
- ZIV USA Inc
- ZIV Grid Automation SL
- ZIVdoBrasilLtda
Pursuant to a general exemption granted by the Ministry of Corporate
Affairs under Section 212 of the Companies Act, 1956, the Company is
not required to annex to this Report, the Annual Reports of the
abovementioned 4 Indian subsidiaries and 41 foreign subsidiaries, for
the year ended 31 March 2013. However, if any Member of the Company or
the respective
subsidiaries so desires, the Company will be happy to make available
the Annual Accounts of the subsidiaries to them, on request. These will
also be available for inspection at the Registered Office of the
Company and of its subsidiaries, during working hours up to the date of
the Annual General Meeting.
The details of each subsidiary with respect to capital, reserves, total
assets, total liabilities, details of investment (except in case of
investment in subsidiaries), turnover, profit before taxation,
provision for taxation, profit after taxation and proposed dividend as
prescribed by the Ministry of Corporate Affairs, are detailed in
Information in respect of subsidary companies in the accounts section
of this Report.
BRANCH OFFICE
The Company has established a branch office at Poland. The stand-alone
financial statements of the Company includes the financial statements
of its Poland branch i.e. Crompton Greaves Ltd SA.
CONSOLIDATION OF ACCOUNTS
As required by Accounting Standards AS- 21 and AS-23 of the Institute
of Chartered
Accountants of India, the financial statements of the Company reflect
the consolidation of the Accounts of the Company, its 45 subsidiaries
mentioned above, and five Associate Companies. The Associate Companies
are Avantha Power & Infrastructure Limited, CG Lucy Switchgear Limited,
Pauwels Middle East Trading & Contracting Pvt Co. LLC, K.K. El Fi
Japan and Saudi Power Transformers Company Ltd.
CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
As required by the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, the relevant data pertaining to
conservation of energy, technology absorption and foreign exchange
earnings and outgo are given in the prescribed format as Annexure to
this Report.
PARTICULARS OF EMPLOYEES
The statement of particulars required pursuant to Section 217(2A) of
the Companies Act,
1956 read with the Companies (Particulars of Employees) (Amendment)
Rules, 2011, forms a part of this Report. However, as permitted by the
Companies Act, 1956, the Report and Accounts are being sent to all
Members and other entitled persons excluding the above statement. Those
interested in obtaining a copy of the said statement may write to the
Company Secretary at the Registered Office and the same will be sent by
post. The statement is also available for inspection at the Registered
Office, during working hours up to the date of the Annual General
Meeting,
DIRECTORS'' RESPONSIBILITY STATEMENT
The Directors would like to assure the Members that the financial
statements for the year under review conform in their entirety to the
requirements of the Companies Act, 1956. The Directors confirm that:
- the Annual Accounts have been prepared in conformity with the
applicable Accounting Standards;
- the Accounting Policies selected and applied on a consistent basis,
give a true and fair view of the affairs of the Company and of the
profit for the financial year;
- sufficient care has been taken that adequate accounting records have
been maintained for safeguarding the assets of the Company; and for
prevention and detection of fraud and other irregularities;
- the Annual Accounts have been prepared on a going concern basis.
AUDITORS
The Company''s Statutory Auditors, Sharp &Tannan, hold office up to the
conclusion of the forthcoming Annual General Meeting; and, being
eligible, are recommended for re-appointment on terms to be negotiated
by the Audit Committee of the Board of Directors. They have furnished
the requisite certificate to the effect that their re-appointment, if
effected, will be in accordance with Section 224(1 B) of the Companies
Act, 1956.
The Company had appointed Ashwin Solanki & Associates, Cost
Accountants, to audit the cost accounts related to the Company''s
products for 2011 -2012. The due date for filing the above cost audit
reports was 28 February 2013; the actual date of filing was 27 December
2012. The Company has re-appointed Ashwin Solanki & Associates as Cost
Auditors, for the financial year 2012-2013.
FIXED DEPOSITS
The Company has discontinued acceptance of fresh deposits and also
renewal of existing deposits. One person has not claimed repayment of
his matured deposit amounting to Rs. 10,000 as at 31 March 2013. At the
date of this Report, an amount of Rs.4,27,000 has been claimed and
repaid, or transferred to the Investor Education Protection Fund, on
completion of seven years.
Link Intime India Pvt. Ltd (formerly Intime Spectrum Registry Limited)
continues to be the Company''s Registrars for all matters related to the
Company''s Fixed Deposit Scheme. The contact details of Link Intime
India Pvt. Ltd are mentioned in the Report on Corporate Governance.
SHARE REGISTRARS TRANSFER AGENT
The Company''s Registrar & Transfer Agents for shares is Datamatics
Financial Services Ltd (DFSL). DFSL is a SEBI-registered Registrar &
Transfer Agent. The contact details of DFSL are mentioned in the Report
on Corporate Governance.
Investors are requested to address their queries, if any to DFSL;
however, in case of difficulties, as always, they are welcome to
contact the Company''s Investor Services Department, the contact
particulars of which are contained in the Report on Corporate
Governance.
ENVIRONMENT. HEALTH 8 SAFETY
CG''s global initiative to review and monitor the energy, paper & water
consumption as well as health & safety parameters at its various
divisions/entities in India and abroad through an Environment, Health &
Safety (EHS) scorecard is progressing well. Targets assigned to each
division/entity to reduce the resource consumption for next year is
regularly monitored through an EHS scorecard and reviewed at monthly
business review meetings. The improved awareness for EHS and also the
Key Performance Indicators identified by each division/entity for
improvements has helped CG to reduce the number of accidents
significantly. Water consumption has reduced by 15% and paper
consumption has reduced by 17%.
To strengthen this initiative further, a new Key Performance Indicator
of material waste reduction has been added for 2013-2014. All units
have budgeted targets for reduction in material waste. This initiative
of optimum utilization of materials will be an important contribution
from CG, for environment protection activities.
During the year, CG has formed a core group for exchange of knowledge
and to standardize the systems and procedures across all CG locations
worldwide. This core group also assesses the various Units on safety
and environment protection improvement activities. Audits were
conducted by this core group twice during the year.
CG has implemented several company-wide processes at its Units,
including improved awareness and communication programmes, safety
audits, periodic health check-ups for its employees as well as accident
prevention and investigation programs, to further improve its EHS track
record. Safety Week was observed across all Units from 4 March 2013 to
10 March 2013 to create continuing awareness on safety.
28 manufacturing plants of CG worldwide have achieved certifications
for ISO 140Q-1 - Environmental Management Systems and OHSAS 18001 -
Occupational Health & Safety Assessment series. CG is pursuing similar
Certification for its other remaining locations. Certifying
authorities periodically conducts surveillance audits of both ISO 14001
and OHSAS 18001, to ensure continued conformity with these Standards.
ACKNOWLEDGEMENTS
The Directors wish to convey their gratitude and appreciation to all of
the Company''s employees at all its locations worldwide for their
tremendous personal efforts as well as their collective dedication and
contribution to the Company''s performance.
The Directors would also like to thank the employee unions,
shareholders, customers, dealers, suppliers, bankers, government and
all other business associates for their continued support extended to
the Company and the Management.
On behalf of the Board of Directors
G Thapar
Chairman
Mumbai, 24 May 2013
Mar 31, 2012
To,
The Members,
The directors are pleased to present their Seventy fifth annual report
on the business and operations of the Company and the accounts for the
Financial year ended 31 March 2012.
The Year in Retrospect
The consolidated net revenue of the Company during 2011-2012 grew by
12.4% at Rs.11,249 crore, as compared with Rs.10,005 crore last year.
The Company has achieved a stand-alone net turnover of Rs.6,485 crore,
during the year under review, as compared with Rs.5951 crore during the
previous year, a rise of 9%.
Consolidated profit before tax decreased to Rs.550 crore, as compared
with Rs.1,229 crore in the previous year, a decrease of 55.3% over last
year. Stand-alone profit before tax decreased from Rs.927 crore to
Rs.677 crore, a decrease of 27% over last year.
Consolidated profit after tax decreased to Rs.374 crore as compared with
Rs.889 crore in the previous year, a decrease of 58% over last year.
The Company recorded a stand-alone profit after tax of Rs.505 crore, a
decrease of 27.3% as compared with last year.
The Sales and Profit Before Interest and Tax (PBIT) of the respective
Business Groups, compared with last year is given in Table 1.
A detailed review of the operations and performance of the Company and
each Business Group as well as the Company's International operations
is contained in the Management Discussion and Analysis Report, which is
given as a separate chapter in the Annual Report.
Amalgamation
On 20 September 2011, the Company completed the amalgamation of its
wholly- owned subsidiary, CG Capital & Investments Limited with itself,
as reported in the previous year's Directors' Report.
Acquisition of emotron Group and qei inc
On 19 May 2011, the Company acquired Emotron of Sweden for an
enterprise value equivalent to Ã57.8 Million. Emotron has an excellent
track record in West European markets especially Germany and the
Benelux countries. This company manufactures Low Voltage AC Drives and
Soft Starters with
Table 1 Sales and Profit before interest and tax In Rs. Crore
SBU Sales PBIT
2011-2012 2010-2011 2011-2012 2010-2011
Power Systems
(CG stand-alone) 2,867 2,554 311 460
Industrial Systems
(CG stand-alone) 1,520 1,407 225 263
Consumer Products 2,134 2,021 263 293
Power Systems
(including International
operations) 7,315 6,503 239 807
Industrial Systems
(including International
operations) 1,820 1,497 210 264
Latest technology. With this acquisition, the Company has taken a big
step in expanding its offering of energy saving solutions to the global
market with state-of-the-art power electronics technology.
On 27 May 2011, the Company acquired QEI Inc of USA for an enterprise
value equivalent to US$30 Million. With this acquisition, CG has
further strengthened its position in SCADA and automation. The
acquisition of QEI will further strengthen the Company's penetration in
the North American automation market, and creating potential
capabilities for distribution automation in India and Europe.
Change in accounting Policy for Goodwill on acquisitions
During the year, the Company has decided to change its accounting
policy for accounting of goodwill arising on acquisitions, commencing 1
April 2012, to "testing for impairment" methodology, as compared with
the earlier methodology of amortization over 10 years followed up to 31
March 2012. Management believes, this change in accounting policy
better aligns with leading international practices and reflects the
longer term net present value derived from goodwill, post acquisitions.
Dividend
The Company declared three interim dividends during the year: - Rs.0.80
per equity share (40%) aggregating to a total dividend payout of Rs.60
crore (including dividend tax) declared on 19 October 2011; the Record
Date for this purpose was 25 October 2011 and the Interim Dividend was
paid on 4 November 2011. - Rs.0.20 per equity share (10%) aggregating
to a total dividend payout of Rs.15 crore (including dividend tax)
declared on 31 January 2012; the Record Date for this purpose was 6
February 2012 and the Interim Dividend was paid on 14 February 2012. -
Rs.0.40 per equity share (20%) aggregating to a total dividend payout
of Rs.30 crore (including dividend tax) declared on 23 March 2012; the
Record Date for this purpose was 31 March 2012 and the Interim Dividend
was paid on 12 April 2012.
The abovementioned dividend payout as a percentage of the share capital
works out to 70%.
Reserves
The Reserves, on stand-alone basis, at the beginning of the year were
Rs.2,176 crore. The Reserves at the end of the year are Rs.2,573
crore.
Directorate
At the Board Meeting held on 2 June 2011, Mr Laurent Demortier was
appointed as the CEO and Managing Director of the Company for an
initial period of 5 years. Mr Demortier's appointment as CEO and
Managing Director was approved by the shareholders at the Annual
General Meeting held on 19 July 2011; and by the Central Government
subsequently.
CG's former Managing Director, Mr SM Trehan continues on the Board as a
Non- Executive Director and Vice-Chairman of the Board.
Mr S Labroo, Mr SP Talwar and Dr V von Massow are the Directors who
retire by rotation at the forthcoming Annual General Meeting; and being
eligible, offer themselves for re-appointment to the Board.
The details of the Directors being recommended for re-appointment are
contained in the accompanying Notice of the forthcoming Annual General
Meeting.
Promoter Group
The Company is a part of the USD 4 Billion Avantha Group, an Industrial
conglomerate
Table 2 Financial HighLights Rs. Crore, for the year ended 31 March
2012 and 31 March 2011
Particulars CG Stand-alone CGIBW
Consolidated * CG-Consolidated**
2012 2011 2012 2011 2012 2011
A Gross Sales 6,850 6,276 4,794 4,151 11,615 10,331
B Less: excise duty 365 325 0 0 366 326
C Net Sales 6,485 5,951 4,794 4,151 11,249 10,005
D Less: operating
expenses 5,764 5,019 4,726 3,713 10,445 8,661
E Operating Profit 721 933 68 438 804 1,344
F add: dividend and
other Income 50 79 16 22 52 99
G Profit before
Interest,
Depreciation,
Amortisation and
Taxes 771 1,012 84 460 856 1,443
H Less: finance costs 3 4 42 16 46 20
I Profit before
Depreciation,
Amortisation and
Taxes 768 1,008 42 444 810 1,423
J Less: depreciation
and amortisation 91 81 169 113 260 194
K Profit Before Tax 677 927 (127) 331 550 1,229
L less: Provision
for Current year
tax 193 244 23 49 217 293
M Less: Provision
for deferred tax (21) (11) (14) 38 (35) 17
N Profit After Tax 505 694 (136) 244 368 919
O minority Interest 0 0 0 0 1 0
P Share of Profit of
Associate
Companies (net) 0 0 0 1 5 8
Profit after tax,
minority interest
and share of profit of
Q associate Companies
(net) 0 0 (136) 245 374 927
R Extraordinary Item 0 0 0 (38) 0 (38)
S Profit available for
distribution 505 694 (136) 207 374 889
* Consolidated accounts of CG International Bv (CGIBV), the holding
company for Cg's international operations.
** Includes results of Cg Stand-alone and Indian subsidiaries, Crompton
greaves holdings mauritius limited, Cg International holdings Singapore
Pte limited and CGIBV consolidated.
# figures have been regrouped for the purposes of consolidation.
led by Mr Gautam Thapar. The Avantha Group has a worldwide presence in
10 countries with more than 20,000 employees. As required by Listing
Agreement with Stock Exchanges, CG periodically discloses its promoter
group and persons acting in concert in the shareholding pattern and
other flings with the Stock Exchanges.
Research And Development
CG continues its commitment and increased focus on R&D, since these
efforts are important drivers for global competitiveness and growth.
CG continues to build on the foundation of its existing technologies by
adding new applications and technologies required to meet its future
challenges. During the year, the turnover from new Products (less than
3 years) as compared with last year was further enhanced.
CG's R&D efforts are also prioritized to provide more energy efficient
Products at competitive prices with greater safety and reliability. The
BLDC technology based motors and fans, LED based Lighting management
Systems and the Apex series energy efficient motors meeting IE2/IE3
standards are some examples. CG's new global "N series" Large
industrial motors meeting IEC norms are designed to offer higher power
in more compact frames, for customers in cement, power Plants and other
industries.
CG's R&D actively partners with the product technology groups from each
business, and closely collaborates with customers to translate their
expectations of new Products into reality. The critical need of the
telecom industry customers to reduce energy consumption has been
fulfilled by developing a new patented variable speed generator with the
potential to reduce energy consumption significantly. Another Project
with an air-conditioner manufacturer has resulted in replacing a higher
energy consuming motor with a new state-of-art permanent magnet based
motor, thus substantially reducing energy consumption.
CG is continuously developing intelligent solutions and incorporating
these into its Large product. Some examples are à a new Lighting
management system for office applications, new control switching
technology for gas circuit breakers and electronically controlled
motors with intelligent features.
Research and Development efforts, initiated by CG in Belgium, have led
to greater insights and improvements in the control of vibration and
noise from transformers which is an increasing need of the environment
conscious market. CG Power now manufactures transformers that produce
40 DBA sound pressure at 30 cm, that is the equivalent of the humming
sound of a mosquito.
Some of these new Products have been highlighted in the Annexure to the
Report.
CG has been consistently leading technological innovations, fulfilling
the evergrowing requirements of its customers in India and abroad. CG
was amongst the first companies to take up the challenge of indigenously
developing UHV Products for Power Grid Corporation of India Limited's
(PGCIL) 1200 kV research station. This year it has completed supply of
all 1200 kV offerings to PGCIL Ã a Capacitive Voltage Transformer, a
Surge Arrester and a Power Transformer. The Company has established
one of the world's Largest Ultra High Voltage (1200 kV) research
centres at Nashik, India. This research centre will be a centre of
excellence for high voltage technologies paving the way for
pathbreaking research in this area, towards better servicing of world
markets.
In addition, R&D has facilitated the indigenous design, development and
manufacturing of 800 kV power transformers, gas circuit breakers,
instrument transformers and surge arresters. To cater to the growing
demand for EHV power transformers by electricity transmission utilities
in South East Asia, the Company also inaugurated the newly built 550 kV
EHV Test Laboratory at PT CG Power Systems Indonesia (PTID). This world
class facility à the first of its kind in South-East Asia, provides
opportunities to address the 550 kV market in the Asia-Pacifc region.
CG's R&D organization has been strengthened with four more R&D units
achieving DSIR recognition. Hence CG now has, 15 R&D units which have
received DSIR recognition. These recognition further support CG in its
quest for building a stronger foundation for innovativeness in
technology development.
Subsidiary Companies
The Company has four Indian subsidiaries à CG Energy Management
Limited, CG-PPI Adhesive Products Limited, CG-ZIV Power Automation
Solutions Limited and CG Power Solutions Limited.
In addition to the above, the Company has 42 foreign subsidiaries as
under: - Crompton Greaves Holdings Mauritius Ltd - CG International
Holdings Singapore
PTE Ltd - CG International BV - PT CG Power Systems Indonesia - CG
Holdings Belgium NV - CG Power Holdings Ireland Limited - CG Power
Systems Belgium NV - CG Automation Systems UK Ltd - Pauwels Trafo Gent
NV - CG Power Systems Ireland Limited - Viserge Ltd
- CG Sales Networks France SA - Microsol Ltd
- CG Service Systems Curacao NV - CG Service Systems France SAS - CG
Holdings Hungary KFT - CG Holdings Germany GMBH - CG Electric Systems
Hungary ZRT - CG Sales Networks Americas Inc - CG Power Solutions USA
Inc - CG Power Systems Canada Inc - CG Power Solutions UK Ltd
- CG Power Solutions Saudi Arabia Ltd
- CG Sales Networks Singapore PTE Ltd
- CG Holdings USA Inc
- CG Power Systems Brazil Ltd
- CG Power County LLC
- CG Power Systems USA Inc
- CG Automation Solutions USA Inc
- CG Industrial Holdings Sweden AB
- P-EM 2007 AS
- Crompton Greaves Holdings Sweden AB
- Emotron Holding AB
- CG Drives & Automation Sweden AB
- CG Drives & Automation Netherlands BV
- CG Drives & Automation Germany GMBH
- Emotron Latin America Inc
- Scandialogic AB
- Emotron EL-Fi AB
- Emotron EL-Fi UK Ltd
- Emotron Drives AB
- Emotron Drives UK Ltd
Hence, in totality, as on 31 March 2012, the Company has 46
subsidiaries, 4 Indian and 42 foreign.
Pursuant to a general exemption granted by the Ministry of Corporate
Affairs under Section 212 of the Companies Act, 1956, the Company is
not required to annex to this Report, the Annual Reports of the
abovementioned 4 Indian subsidiaries and 42 foreign subsidiaries, for
the year ended 31 March 2012. However, if any Member of the Company or
the respective subsidiaries so desires, the Company will be happy to
make available the Annual Accounts of the subsidiaries to them, on
request. These will also be available for inspection at the Registered
Office of the Company and of its subsidiaries, during working hours up
to the date of the Annual General Meeting.
The details of each subsidiary with respect to capital, reserves, total
assets, total liabilities, details of investment (except in case of
investment in subsidiaries), turnover, profit before taxation, provision
for taxation, profit after taxation and proposed dividend as prescribed
by the Ministry of Corporate Affairs, are detailed at Page 117 of this
Report.
Branch office
The Company has established a branch office at Poland. The stand-alone
Financial statement of the Company includes the Financial statement of
its Poland branch i.e. Crompton Greaves Ltd SA.
Consolidation of accounts
As required by Accounting Standards AS-21 and AS-23 of the Institute of
Chartered Accountants of India, the Financial statements of the Company
refect the consolidation of the Accounts of the Company, its 46
subsidiaries mentioned above, and five Associate Companies. The
Associate Companies are Avantha Power & Infrastructure Limited, CG Lucy
Switchgear Limited, Pauwels Middle East Trading & Contracting Pvt Co.
LLC, K.K. El Fi Japan and Saudi Power Transformers Company Ltd.
Conservation of energy, technology absorption and foreign exchange
earnings and outgo
As required by the Companies (Disclosure of Particulars in the Report
of Board of
Directors) Rules, 1988, the relevant data pertaining to conservation of
energy, technology absorption and foreign exchange earnings and outgo
are given in the prescribed format as Annexure to this Report.
Particulars of employees
The statement of particulars required pursuant to Section 217(2A) of
the Companies Act, 1956 read with the Companies (Particulars of
Employees) (Amendment) Rules, 2011, forms a part of this Report.
However, as permitted by the Companies Act, 1956, the Report and
Accounts are being sent to all Members and other entitled persons
excluding the above statement. Those interested in obtaining a copy of
the said statement may write to the Company Secretary at the Registered
Office and the same will be sent by post. The statement is also
available for inspection at the Registered Office, during working hours
up to the date of the Annual General Meeting.
Directors' responsibility Statement
The Directors would like to assure the Members that the Financial
statements for the year under review conform in their entirety to the
requirements of the Companies Act, 1956.
The Directors confirm that:
- the Annual Accounts have been prepared in conformity with the
applicable Accounting Standards;
- the Accounting Policies selected and applied on a consistent basis,
give a true and
Table 3 Financial Highlights Euro Million, for the year ended 31 March
2012 and 31 March 2011
Particulars CG Stand-alone CGIBV Consolidated * CG-Consoli
dated**
2012 2011 2012 2011 2012 2011
A Gross Sales 1,035 1,037 724 686 1,755 1,707
B Less: excise duty 55 54 0 0 55 54
C Net Sales 980 983 724 686 1,700 1,653
D Less: operating
expenses 871 829 714 614 1,578 1,431
E Operating Profit 109 154 10 72 122 222
F Add: dividend and
other Income 8 13 2 4 8 16
Profit before Interest,
Depreciation,
G Amortisation and
taxes 117 167 12 76 130 238
H Less: Finance Costs 1 1 6 3 7 3
I Profit before
Depreciation,
Amortisation and
Taxes 116 166 6 73 123 235
J Less: depreciation
and amortisation 14 13 26 19 39 32
K Profit Before Tax 102 153 (20) 54 84 203
L Less: Provision for
Current year tax 29 40 3 8 33 48
M Less: Provision
for deferred tax (3) (2) (2) 6 (5) 3
N Profit After Tax 76 115 (21) 40 56 152
O Minority Interest 0 0 0 0 0 0
P Share of Profit of
Associate
Companies (net) 0 0 0 0 1 1
Profit after tax,
minority interest
and share of profit
Q of associate Companies
(net) 0 0 (21) 40 57 153
R Extraordinary Item 0 0 0 (6) 0 (6)
S Profit available for
distribution 76 115 (21) 34 57 147
Note average exchange rate considered for 1 euro in 2011-12 is rs.
66.1764 and in 2010-11 is rs.60.5116. * Consolidated accounts of Cg
International Bv (CGIBV), the holding company for Cg's international
operations. ** Includes results of Cg Stand-alone and Indian
subsidiaries, Crompton greaves holdings mauritius limited, Cg
International holdings Singapore Pte limited and CGIBV consolidated. #
figures have been regrouped for the purposes of consolidation.
Fair view of the affairs of the Company and of the profit for the
Financial year;
- Sufficient care has been taken that adequate accounting records have
been maintained for safeguarding the assets of the Company; and for
prevention and detection of fraud and other irregularities;
- The Annual Accounts have been prepared on a going concern basis.
auditors
The Company's Statutory Auditors, Sharp & Tannan, hold office up to the
conclusion of the forthcoming Annual General Meeting; and, being
eligible, are recommended for re-appointment on terms to be negotiated
by the Audit Committee of the Board of Directors. They have furnished
the requisite Certificate to the effect that their re-appointment, if
effected, will be in accordance with Section 224(1B) of the Companies
Act, 1956.
The Company had appointed Ashwin Solanki & Associates, Cost
Accountants, to audit the cost accounts related to the Company's
Products, namely, Electric Lamps, Electric Fans, Electric Motors, Power
Driven Pumps, Transformers and Alternators,
TabLe 4 Financial HighLights USD Million, for the year ended 31 March
2012 and 31 March 2011
Particulars CG Stand-alone CGIBV Consolidated
*# CG-Consolidated**
2012 2011 2012 2011 2012 2011
A Gross Sales 1,424 1,377 996 911 2,414 2,267
B Less: excise
duty 76 71 0 0 76 72
C Net Sales 1,348 1,306 996 911 2,338 2,195
D Less: operating
expenses 1,198 1,101 981 815 2,171 1,900
E Operating
Profit 150 205 15 96 167 295
F Add: Dividend
and other Income 11 17 3 5 11 22
Profit before
Interest,
Depreciation,
G amortisation
and taxes 161 222 18 101 178 317
H Less: Finance
Costs 1 1 9 4 10 5
I Profit before
Depreciation,
Amortisation
and Taxes 160 221 9 97 168 312
J Less: depreciat
-ion and
amortisation 19 18 35 25 54 42
K Profit Before Tax141 203 (26) 72 114 270
L Less: Provision
for Current
year tax 40 53 5 11 45 64
M Less: Provision
for deferred tax (4) (2) (3) 8 (7) 4
N Profit After Tax 105 152 (28) 53 76 202
O Minority Interest 0 0 0 0 0 0
P Share of Profit of
Associate
Companies (net) 0 0 0 0 1 1
Profit after tax,
minority interest
and share of profit
Q of associate
Companies (net) 0 0 (28) 53 77 203
R Extraordinary
Item 0 0 0 (8) 0 (8)
S Profit available
for distribution 105 152 (28) 45 77 195
Note Average exchange rate considered for 1 USD in 2011-12 is
Rs.48.1233 and in 2010-11 is Rs.45.5712. * Consolidated Accounts of CG
International BV (CGIBV), the holding company for Cg's international
operations. ** Includes results of Cg Stand-alone and Indian
subsidiaries, Crompton greaves holdings mauritius limited, Cg
International holdings Singapore Pte limited and CGIBV consolidated. #
figures have been regrouped for the purposes of consolidation. for
2010-2011. The due date for fling the above cost audit reports was 30
September 2011; the actual dates of fling were 24 September 2011 and 27
September 2011. The Company has re-appointed Ashwin Solanki &
Associates as Cost Auditors, for the Financial year 2011-2012, for all
the above six Products as well as for captive gas based power Plant at
its Baroda factory.
fixed deposits
The Company has discontinued acceptance of fresh deposits and also
renewal of existing deposits. 34 persons have not claimed repayment of
their matured deposits amounting to Rs.4,37,000 as at 31 March 2012. At
the date of this Report, an amount of Rs.60,000 has been claimed and
repaid there from, or transferred to the Investor
Education Protection Fund, on completion of seven years.
Link Intime India Pvt. Ltd (formerly Intime Spectrum Registry Limited)
continues to be the Company's Registrars for all matters related to the
Company's Fixed Deposit Scheme. The contact details of Link Intime
India Pvt. Ltd are mentioned in the Report on Corporate Governance.
Share registrar & transfer agent
The Company's Registrar & Transfer Agents for shares is Datamatics
Financial Services Ltd (DFSL). DFSL is a SEBI-registered Registrar &
Transfer Agent. The contact details of DFSL are mentioned in the Report
on Corporate Governance.
Investors are requested to address their queries, if any to DFSL;
however, in case of difficulties, as always, they are welcome to contact
the Company's Investor Services Department, the contact particulars of
which are contained in the Report on Corporate Governance.
Environment, health & Safety
At CG, we understand the importance of responsible Environment, Health
and Safety (EHS) management to our growth, Profitability and long term
sustainability. CG is committed to meeting the highest standards of
corporate citizenship by protecting the health and safety of its
employees and others working at its facilities, by safeguarding the
environment, and by creating long lasting positive impact on the
communities where it does business. One of CG's highest priorities is
to provide a safe and healthy workplace. CG also expects its employees
to take individual responsibility for their health and safety and to
exhibit and encourage safe work behaviours. CG has implemented several
company-wide processes at its divisions, including improved awareness
and communication programmes, safety audits, periodic health check-ups
for its employees as well as accident prevention and investigation
programs, to further improve its track record. Safety procedures
related to hazardous processes are also regularly reviewed, monitored
and strengthened. Besides, mock drills related to safety & fre,
organized training sessions on First Aid and emergency preparedness are
also conducted at regular intervals.
Safety Week was observed across all divisions from 4 March 2012 to 10
March 2012 in order to create continuing awareness on safety. Unit
Safety Committees function across divisions, which deal with the safety
and environment issues of each division. These committees, meet at
regular intervals to resolve matters concerning employee safety.
CG has also been contributing to the reduction of "global warming" by
exploring the replacement of SF6 gas with Helium and Nitrogen in the
Gas Insulated Switchgear manufacturing processes. Other initiatives
include waste segregation and recycling of waste including cardboard
and plastics and establishment of effluent treatment Plants.
During the year, the Company commenced a global initiative to review
and monitor the energy, paper & water consumption as well as health &
safety parameters at its various divisions/entities in India and abroad
through an EHS scorecard. Targets have been assigned to each
division/entity to reduce the resource consumption for next year. The
progress on the EHS scorecard is reviewed at monthly business review
meetings.
All manufacturing locations of the Company worldwide have achieved ISO
14001 Environmental Standards and
Management Certification and OHSAS 18001 Certification for Occupational
Health & Safety Assessment Systems. The Company periodically conducts
surveillance audits of both ISO 14001 and OHSAS 18001, to ensure
continued conformity with these standards.
Acknowledgements
The Directors wish to convey their gratitude and appreciation to all of
the Company's employees for their enormous personal efforts as well as
their collective dedication and contribution to the Company's
performance.
The Directors would also like to thank the employee unions,
shareholders, customers, dealers, suppliers, bankers, government and
all the other business associates for their support extended to the
Company, and their confidence in the Management.
On behalf of the Board of Directors
G Thapar
Chairman
Mumbai, 25 May 2012
Mar 31, 2011
The Directors are pleased to present their Seventy Fourth Annual
Report on the business and operations of the Company and the accounts
for the financial year ended 31 March 2011.
THE YEAR IN RETROSPECT
The consolidated net revenue of the Company during 2010-2011 grew by
9.5% at Rs.10005 crore, as compared with Rs.9141 crore last year. The
Company has achieved a stand-alone net turnover of Rs.5951 crore,
during the year under review, as compared with Rs.5284 crore during the
previous year, a rise of 12.6%. Whilst order input has grown at a rate
of 11.1% at a consolidated level during the year; growth in revenue has
been, and is expected to be subdued on account of delayed off-takes by
customers in the Power and Industrial segments.
Stand-alone Power Systems grew by 1.8%, whilst consolidated Power
Systems grew by 16.9% in Euro terms. A healthy growth in the slim
transformer, gas insulated switchgear and project business in the Power
Systems segment were the key growth drivers for this segment.
The Industrial Systems segment grew quite significantly, by 18.9%
during the year, largely due to revival in demand from steel, cement,
fertilizers, oil & gas and other end user industries. The Company has
successfully integrated the businesses of traction electronics, SCADA
and drives which it acquired from Nelco last year; and is poised to
increase its offering in this segment as a part of its larger vision to
transform itself from a Product company
to a Solutions Provider status. It has established a new plant
dedicated to the manufacture of drives and automation, spread over
30,000 sq feet, equipped with modern equipment. The plant adds a new
frontier to the technological capabilities of the Company as a
Solutions Provider.
The Consumer Products segment continued to outperform the market, with
a growth of 25.4% fuelled by higher disposable incomes and the
continuing growth in the construction sector.
Consolidated profit before tax increased to Rs.1229 crore, as compared
with Rs.1189 crore in the previous year, an increase of 3.4% over last
year. Stand-alone profit before tax increased from Rs.870 crore to
Rs.927 crore, an increase of 6.5% over last year. Stiff competition
from Korean and Chinese players created continuing margin pressures,
which was further aggravated by rising prices of key materials. The
Company has succeeded in sustaining operating margins largely on
account of productivity enhancements, upgradation of production
facilities, R&D-led savings in raw material consumption, process
technology improvements, global sourcing initiatives, better working
capital management and a debt free financial structure.
Consolidated profit after tax (before extraordinary items) increased to
Rs.927 crore as compared with Rs.825 crore in the previous year, an
increase of 12.4 %
over last year. Consolidated profit after tax increased to Rs.889 crore
compared with Rs.860 crore in the previous year, an increase of 3.3%
over last year. The Company recorded a stand-alone profit after tax of
Rs.694 crore, an increase of 20.3% as compared with last year.
The Profit before interest and tax of the respective Business Groups,
compared with last year is given in TABLE 1.
A detailed review of the operations and performance of each Business
Group as well as the Companys International operations is contained in
the Management Discussion and Analysis Report, which is given as a
separate chapter in the Annual Report.
SBU
IN RS. CRORE
2010-11 2009-10
Power Systems 460 462
(CG stand-alone)
Industrial Systems 263 260
(CG stand-alone)
Consumer Products 293 230
Power Systems 807 769
(including International
operations)
Industrial Systems 264 276
(including International
operations)
AMALGAMATIONS
The Board of Directors at their meeting held on 28 January 2011,
approved the amalgamation of CG Capital and Investments Ltd (CG
Capital), the Companys wholly-owned subsidiary with the Company. After
divesting most of its portfolio of investments, CG Capital was
practically dormant; and administratively, it was felt more convenient
to manage the residual investments of CG Capital through the Company
directly, instead of maintaining a separate entity. Pursuant to the
Scheme of Amalgamation, filed by CG Capital with the High Court of
Judicature at Bombay, the regulatory procedures are in an advanced
stage of progress.
On 6 July 2010, the Company completed the amalgamation of its
wholly-owned subsidiary, Brook Crompton Greaves Limited with it, as
reported in the previous years Directors Report.
JOINT VENTURES
During the year, to consolidate its market share in the Middle East
market, the Company entered into a strategic alliance with the EIC
Group, from Saudi Arabia, for establishment of 2 joint venture
companies - Saudi Power Transformers Company
Ltd (SPTC) and CG Power Systems of Saudi Arabia Ltd (PS SA). SPTC will
strengthen the Companys manufacturing presence of medium power
transformers in Saudi Arabia, whilst PS SA will enhance the Companys
EPC footprint in Saudi Arabia and other Middle East countries. The
Company holds a 49% equity stake in SPTC and a 51% equity stake in PS
SA, through its overseas subsidiaries, CG Power Systems Belgium N.V.
and CG Holdings Belgium N.V. respectively. In November 2010, the
Company established CG-ZIV Power Automation Solutions Limited (CGZIV),
a joint venture company in India with ZIV Aplicaciones y Tecnologia,
S.L. (ZIV), for the manufacture of Substation Automation systems for
substations in EHV and UHV range. ZIV, headquartered in Spain, is a key
player in serving the needs of the electrical industry in Protection,
Control, Measurement and Communications through state of art
innovative, cost effective and customer oriented solutions in over 50
countries. This joint venture is yet one more major step by the Company
in establishing itself as a full Solutions Provider. The Company holds
a 70% equity stake in CGZIV.
DIVIDEND
The Company declared three interim dividends during the year :
+ RS.0.80 PER EQUITY SHARE (40%)
aggregating to a total dividend payout of Rs.60 crore (including
dividend tax) declared on 25 October 2010; the Record Date for this
purpose was 1 November 2010 and the Interim Dividend was paid on 12
November 2010.
+ RS.0.80 PER EQUITY SHARE (40%)
aggregating to a total dividend payout of Rs.60 crore (including
dividend tax) declared on 28 January 2011; the Record Date for this
purpose was 4 February 2011 and the Interim Dividend was paid on 14
February 2011.
FINANCIAL HIGHLIGHTS
IN RS. CRORE
CG STAND-
ALONE CGIBV
CONSOLIDATED*@ CGCONSOLIDATED**
PARTICULARS 31.3 31.3 31.3 31.3 31.3 31.3
2011 2010 2011 2010 2011 2010
a Gross Sales 6,276 5,516 4,151 3,824 10,331 9,375
b Less: Excise Duty 325 232 0 0 326 234
c Net Sales 5,951 5,284 4,151 3,824 10,005 9,141
d Less: Operating
Expenses 5,019 4,427 3,711 3,442 8,661 7,864
e Operating Profi t 933 857 440 382 1,344 1,277
f Add: Dividend and
Other Income 79 69 22 32 100 94
g Profi t before Interest,
Depreciation,
Amortisation
and Taxes 1,012 926 462 414 1,444 1,371
h Less: Interest (net) 4 4 18 17 21 27
i Profi t before
Depreciation,
Amortisation and
Taxes 1,008 922 444 397 1,423 1,344
j Less: Depreciation
and Amortisation 81 52 113 97 194 155
k Profi t Before Tax 927 870 331 300 1,229 1,189
l Less: Provision for
Current Year Tax 244 274 49 37 293 314
m Less: Provision for
Deferred Tax (11) 19 38 30 17 51
n Profit After Tax 694 577 244 233 919 824
o Minority Interest 0 0 0 0 0 (2)
p Share of Profit/(Loss)
of Associate Companies 0 0 1 0 8 3
q Profi t after tax,
minority interest
and share of profit/
(loss) of 694 577 245 233 927 825
Associate Companies
r Extraordinary Item 0 40 (38) 0 (38) 35
s Profi t available for
distribution 694 617 207 233 889 860
t Balance brought forward
from previous years 1,272 811 0 0 0 0
u Amount transferred on
amalgamation 8 0 0 0 0 0
Appropriation/Distribution
v Transfer to General
Reserve (70) (62) 0 0 0 0
w Interim Dividend (141) (81) 0 0 (141) (81)
x Corporate Tax on
Dividend (23) (13) 0 0 (24) (14)
BALANCE CARRIED TO
BALANCE SHEET 1,740 1,272 207 233 724 765
*Consolidated Accounts of CG International BV, the holding company for
CGs international operations. ** Includes results of CG Stand-alone,
Indian subsidiaries and CGIBV Consolidated. @ Figures have been
regrouped for the purposes of consolidation.
+ RS.0.60 PER EQUITY SHARE (30%)
aggregating to a total dividend payout of Rs.45 crore (including
dividend tax) declared on 23 March 2011; the Record Date for this
purpose was 28 March 2011 and the Interim Dividend was paid on 8 April
2011. The above mentioned dividend payout as a percentage of the share
capital works out to 110%. These dividends were paid on the enlarged
equity base of Rs.128.30 crore, consequent to the bonus issue of 3
shares for every 4 shares held, made in March 2010, which when computed
on a pre-bonus share capital works out to 192%, as compared with last
years dividend rate of 110%.
RESERVES
The Reserves, on a stand-alone basis, at the beginning of the year were
Rs.1636 crore. The Reserves at the end of the year are Rs.2176 crore.
DIRECTORATE
In 2009, the Board of Directors had formed a Succession Committee to
carry out a global search, both external and internal, to identify a
successor for Mr Trehan.
The Succession Committee identified Mr Laurent Demortier as the new CEO
and Managing Director, who will take over as successor to Mr SM Trehan.
Although, Mr SM Trehans tenure as Managing Director of the Company was
scheduled for completion on 2 May 2011, until such time as Mr Demortier
was appointed as CEO and Managing Director, Mr Trehans term was
extended from 3 May 2011 to 1 June 2011 on the same remuneration as
well as other terms and conditions applicable to his earlier tenure.
Mr SM Trehan retired as the Managing Director of the Company on 1 June
2011; however he will continue as a Nonà Executive Director and has
been appointed Vice Chairman of the Board.
Mr Trehan has served the Company with dedication for 28 years; and was
elevated to the position of Managing Director in
FINANCIAL HIGHLIGHTS
IN EURO MILLION
CG STAND-ALONE CGIBV
CONSOLIDATED*@ CG CONSOLIDATED**
PARTICULARS 31.3 31.3 31.3 31.3 31.3 31.3
2011 2010 2011 2010 2011 2010
a Gross Sales 1,037 817 686 567 1,707 1,390
b Less: Excise Duty 54 34 0 0 54 35
c Net Sales 983 783 686 567 1,653 1,355
d Less: Operating
Expenses 829 656 613 510 1,431 1,166
e Operating Profit 154 127 73 57 222 189
f Add: Dividend and
Other Income 13 10 3 5 17 14
g Profi t before
Interest,
Depreciation,
Amortisation and
Taxes 167 137 76 62 239 203
h Less: Interest (net) 1 0 3 3 4 4
i Profi t before
Depreciation,
Amortisation and
Taxes 166 137 73 59 235 199
j Less: Depreciation
and Amortisation 13 8 19 14 32 23
k Profit Before Tax 153 129 54 45 203 176
l Less: Provision for
Current Year Tax 40 40 8 6 48 46
m Less: Provision for
Deferred Tax (2) 3 6 4 3 8
n Profi t After Tax 115 86 40 35 152 122
o Minority Interest 0 0 0 0 0 0
p Share of Profit/(Loss)
of Associate Companies 0 0 0 0 1 0
q Profi t after tax,
minority interest and
share of profit/(loss) 115 86 40 35 153 122
of Associate Companies
r Extraordinary Item 0 6 (6) 0 (6) 5
s Profi t available for
distribution 115 92 34 35 147 127
t Balance brought
forward from previous
years 204 135 0 0 0 0
u Amount transferred on
amalgamation 1 0 0 0 0 0
Appropriation/Distribution
v Transfer to General
Reserve (12) (9) 0 0 0 0
w Interim Dividend (23) (12) 0 0 (23) (12)
x Corporate Tax on
Dividend (4) (2) 0 0 (4) (2)
BALANCE CARRIED TO
BALANCE SHEET 281 204 34 35 120 113
*Consolidated Accounts of CG International BV, the holding company for
CGs international operations.
** Includes results of CG Stand-alone, Indian subsidiaries and CGIBV
Consolidated.
@ Figures have been regrouped for the purposes of consolidation.
Note: Average exchange rate considered for 1 EURO in 2010-11 is Rs
60.5116 and in 2009-10 is Rs.67.4706.
May 2000. During his tenure as Managing Director, the Company has
transformed itself from an Indian company to a truly Transnational
Corporation. During the past 11 years as Managing Director, the Company
witnessed a very successful turnaround. Under his able leadership, the
Company has grown from a modest Rs.1254 crore company to a Rs.10000
crore company, an eight-fold growth, with a compounded annual growth
rate exceeding 19% for net revenues and over 30% for net profits, over
the last five years. Today, the Company is a force to reckon with, and
the 7th largest transformer manufacturer in the world. It has a
manufacturing presence in 10 countries, and a workforce that consists
of more than 8,000 employees from different backgrounds and cultures.
The Board places on record its gratitude and appreciation for Mr
Trehans inspirational leadership, unstinted commitment, dedication and
bias for action, which grew the Company and its market capitalization
multifold during his tenure as Managing Director.
Mr Demortier has been appointed as an Additional Director of the
Company, pursuant to Section 260 of the Companies Act, 1956 at the
Board Meeting held on 2 June 2011. At this Meeting, Mr Demortier has
also been appointed the CEO and Managing Director of the Company w.e.f
from 2 June 2011, initially for a period of
5 years. Mr Demortier brings with him rich experience and professional
expertise in the business areas relevant to the Company. Mr Demortier
was most recently Senior Vice-President, of Alstom Power Sector
in-charge of the Power Automation and Control Business Unit. He joined
Alstom in the year 2000 and has led several Business Units (BU) both in
T&D and Power sectors.
During his eleven years with Alstom, Mr Demortier has spent eight years
within Transmission and Distribution (T&D) and the last three years
within the Power Business. In T&D he has run businesses of up to Euro
1.1 billion turnover and has led global operations employing up to
6,200 people with 65 units across 43 countries. He has
FINANCIAL HIGHLIGHTS
IN USD MILLION
CG STAND-ALONE CGIBV
CONSOLIDATED*@ CG CONSOLIDATED**
PARTICULARS 31.3 31.3 31.3 31.3 31.3 31.3
a Gross Sales 1,377 1,155 911 801 2,267 1,964
b Less: Excise Duty 71 48 0 0 72 49
c Net Sales 1,306 1,107 911 801 2,195 1,915
d Less: Operating
Expenses 1,101 927 814 721 1,900 1,647
e Operating Profit 205 180 97 80 295 268
f Add: Dividend and
Other Income 17 14 4 7 22 20
g Profi t before
Interest,
Depreciation,
Amortisation and
Taxes 222 194 101 87 317 288
h Less: Interest (net) 1 1 4 4 5 6
i Profi t before
Depreciation,
Amortisation and Taxes 221 193 97 83 312 282
j Less: Depreciation and
Amortisation 18 11 25 20 42 32
k Profi t Before Tax 203 182 72 63 270 250
l Less: Provision for
Current Year Tax 53 57 11 8 64 66
m Less: Provision for
Deferred Tax (2) 4 8 6 4 11
n Profi t After Tax 152 121 53 49 202 173
o Minority Interest 0 0 0 0 0 (1)
p Share of Profit/(Loss)
of Associate Companies 0 0 0 0 1 1
q Profi t after tax,
minority interest and
share of profit/(loss) 152 121 53 49 203 173
of Associate Companies
r Extraordinary Item 0 8 (8) 0 (8) 7
s Profi t available for
distribution 152 129 45 49 195 180
t Balance brought forward
from previous years 289 193 0 0 0 0
u Amount transferred on
amalgamation 2 0 0 0 0 0
Appropriation/Distribution
v Transfer to General
Reserve (15) (13) 0 0 0 0
w Interim Dividend (31) (17) 0 0 (31) (17)
x Corporate Tax on
Dividend (5) (3) 0 0 (5) (3)
BALANCE CARRIED TO
BALANCE SHEET 392 289 45 49 159 160
*Consolidated Accounts of CG International BV, the holding company for
CGs international operations.
** Includes results of CG Stand-alone, Indian subsidiaries and CGIBV
Consolidated.
@ Figures have been regrouped for the purposes of consolidation.
Note: Average exchange rate considered for 1 USD in 2010-11 is Rs.
45.5712 and in 2009-10 is Rs. 47.7446.
led divestment, integration, acquisition, turnaround and organic growth
mandates across the Americas, Europe, Middle East, Africa and Asia,
with considerable exposure to emerging markets. More recently, within
the Power Business, he has built a new BU dedicated to the development
of Power Conversion and Power Automation Solutions for all type of
Power Generation Plants. This BU included three R&D facilities and 14
engineering centres in Europe, America and Asia.
Prior to Alstom, Mr Demortier worked with Honeywell Corporation between
1990 and 2000. At Honeywell, Mr Demortier held several senior
responsibilities as Managing Director of the European Advanced Control
Engineering Business; Head of the Industrial Automation & Control
Division France, Head of the European Measurement and Control BU; and,
Country President for Honeywell France.
Mr Demortier holds an MBA from The Wharton School of the University of
Pennsylvania, USA and a Masters Engineering Degree in Physics from
Ecole Centrale Marseille, France.
Mr Demortier holds office up to the date of the forthcoming Annual
General Meeting, and considering that he has been appointed as CEO and
Managing Director, the Board recommends his appointment to the Members.
His appointment will also be subject to Central Government approval
thereafter.
Mr SM Trehan, Mr G Thapar and Mr S Bayman are the Directors who retire
by rotation at the forthcoming Annual General Meeting; and being
eligible, offer themselves for re-appointment to the Board.
The details of the Directors being recommended for extension of tenure,
appointment and re-appointment are contained in the accompanying Notice
of the forthcoming Annual General Meeting.
PROMOTER GROUP
The Avantha Group is the promoter of the Company. For the purposes of
the SEBI (Substantial Acquisition of Shares And Takeovers) Regulations,
1997, the names
of the Promoter entities and other entities comprising the ÃGroupà as
on 31 March 2011, as defined under the Monopolies and Restrictive Trade
Practices Act, 1969, are detailed at ANNEXURE 1 to this Report.
RESEARCH AND DEVELOPMENT
The Companys ÃTechnology Vision 2015Ã continues to steer the Companys
efforts on development of new products. During the year, a significant
percentage of the turnover generated in India was through recent
products developed, which were less than 3 years old. The Company has
also launched initiatives for eight platform technologies which would
be pursued in the near future.
In the Company, R&D projects are undertaken in India as well as at
overseas locations, driven centrally by the Global R&D Centre in India.
A collaborative approach on project selection, prioritization and
regular reviews ensures adequate focus on commitments and time-frames
which keeps the R&D efforts aligned with its Technology Vision and
business priorities, at all times.
The recent development of products suitable for Extra High Voltage
transmission of 1200 kV is a testimony to the success of the focused
approach of recent years. The Company has been in the forefront for
developing high voltage products and after developing products of up to
800 kV, over the last two years has indigenously designed and developed
the first 1200 kV Current Voltage Transformer and first 1200 kV Surge
Arrester in the world for a research station being established by Power
Grid Corporation of India Limited (PGCIL), the largest power utility in
India.
Towards attaining global leadership in high voltage power products, the
Company has also established one of the worlds largest Ultra High
Voltage (UHV) Research Centres at Nashik, which would be operational by
2012. This UHV research centre is a giant leap towards fulfilling the
Companys cherished objective of positioning itself as the dominant
player in the Ultra High Voltage arena.
Exhaustive information about the new products and processes developed
during the year along with technology absorption, energy conservation
measures and future directions are detailed at annexure 2 to this
Report.
The Companys efforts at innovation was recognised by the Industry,
when it received the ÃIndia Power Award for R&D effortsà for New
Product Development, for its 765 kV SF6 circuit breaker.
It is a matter of pride that, 11 out of 14 R&D technology centres have
been recognized by the Department of Scientific and Industrial Research
(DSIR). These recognitions will also enable the Company to achieve
enhanced tax benefits and provide greater impetus for R&D activities.
The balance three technology centres are in the process of applying for
recognition.
SUBSIDIARY COMPANIES
The Company has four Indian subsidiaries - CG Energy Management Limited
(CEM), CG Capital & Investments Limited (CG Capital), CG-PPI Adhesive
Products Limited (CGPPI) and CG-ZIV Power Automation Solutions Limited
(CGZIV). CEM, CG Capital and CGZIV are subsidiaries of the Company, and
CGPPI, being a subsidiary of CG Capital, in terms of the provisions of
the Companies Act, 1956, is also the Companys subsidiary.
The Netherlands-based CG International B.V, a 100% subsidiary of the
Company, is the ultimate mother holding company of the 30 downstream
subsidiaries, as under :
+ CG HOLDINGS BELGIUM N.V.
+ CG POWER HOLDINGS IRELAND LIMITED
+ CG POWER SYSTEMS BELGIUM N.V.
+ CG AUTOMATION SYSTEMS UK LIMITED
+ PAUWELS TRAFO GENT N.V.
+ CG AUTOMATION SYSTEMS USA INC.
+ CG POWER SYSTEMS IRELAND LIMITED
+ VISERGE LIMITED
+ CG SALES NETWORKS FRANCE SA
+ MICROSOL LIMITED
+ CG SERVICE SYSTEMS CURACAO N.V
CG SERVICE SYSTEMS FRANCE SAS + CG HOLDINGS HUNGARY KFT + CG HOLDINGS
GERMANY GMBH
CG ELECTRIC SYSTEMS HUNGARY ZRT. + CG SALES NETWORKS AMERICAS INC. +
CG POWER SOLUTIONS USA INC. + CG POWER SYSTEMS CANADA INC. + CG POWER
SOLUTIONS UK LIMITED + CG POWER SYSTEMS OF SAUDI ARABIA LTD + CG POWER
SYSTEMS USA INC. + CG HOLDINGS USA INC + CG SALES NETWORKS SINGAPORE
PTE. LTD + CG POWER COUNTY LLC + CG HOLDINGS BRAZIL LTDA + POWER COUNTY
WIND PARK SOUTH LLC + CG GLENMORE LLC + POWER COUNTY WIND PARKS LLC +
PT. CG POWER SYSTEMS INDONESIA + POWER COUNTY WIND PARK NORTH LLC
In totality, as on 31 March 2011, the Company has 35 subsidiaries, 4
Indian and 31 foreign.
Pursuant to a general exemption granted by the Ministry of Corporate
Affairs under Section 212 of the Companies Act, 1956, the Company is
not required to annex to this Report, the Annual Reports of the above
mentioned 4 Indian subsidiaries and 31 foreign subsidiaries, for the
year ended 31 March 2011. However, if any Member of the Company or its
subsidiaries so desires, the Company will make available the Annual
Accounts of the subsidiaries to them, on request. These will also be
available for inspection at the Registered Office of the Company and of
its subsidiaries, during working hours up to the date of the Annual
General Meeting.
The details of each subsidiary with respect to capital, reserves, total
assets, total liabilities, details of investment (except in case of
investment in subsidiaries), turnover, profit before taxation,
provision for taxation, profit after taxation and proposed dividend are
detailed at Page 123 of this Report.
BRANCH OFFICE
The Company has established a branch office at Poland. The stand-alone
financial statement of the Company includes the financial statement of
its Poland branch i.e. Crompton Greaves Ltd SA.
CONSOLIDATION OF ACCOUNTS
As required by Accounting Standards AS-21 and AS-23 of the Institute of
Chartered Accountants of India, the financial statements of the Company
reflecting the consolidation of the Accounts of the Company, its 35
subsidiaries mentioned above, and five Associate Companies, are annexed
to this Report. The Associate Companies are Avantha Power &
Infrastructure Limited, CG Lucy Switchgear Limited, Pauwels Middle East
Trading & Contracting Pvt Co. LLC, CEnergy-Glenmore Windfarm 1 LLC and
Saudi Power Transformers Company Ltd.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
As required by the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, the relevant data pertaining to
conservation of energy, technology absorption and foreign exchange
earnings and outgo are given in the prescribed format as ANNEXURE 2 to
this Report.
PARTICULARS OF EMPLOYEES
The statement of particulars required pursuant to Section 217(2A) of
the Companies Act, 1956 read with the Companies (Particulars of
Employees) (Amendment) Rules, 2011, forms a part of this Report.
However, as permitted by the Companies Act, 1956, the Report and
Accounts are being sent to all Members and other entitled persons
excluding the above statement. Those interested in obtaining a copy of
the said statement may write to the Company Secretary at the Registered
Office and the same will be sent by post. The statement is also
available for inspection at the Registered Office, during working hours
up to the date of the Annual General Meeting.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors would like to assure the Members that the financial
statements for the year under review conform in their entirety to the
requirements of the Companies Act, 1956.
The Directors confirm that : + the annual accounts have been
prepared in conformity with the applicable
Accounting Standards;
+ the accounting policies selected and applied on a consistent basis,
give a true and fair view of the affairs of the Company and of the
profit for the financial year;
+ sufficient care has been taken that adequate accounting records have
been maintained for safeguarding the assets of the Company; and for
prevention and detection of fraud and other irregularities;
+ the annual accounts have been prepared on a going concern basis.
AUDITORS
The Companys Statutory Auditors, Sharp & Tannan, hold office up to the
conclusion of the forthcoming Annual General Meeting; and, being
eligible, are recommended for re-appointment on terms to be negotiated
by the Audit Committee of the Board of Directors. They have furnished
the requisite certificate to the effect that their re-appointment, if
effected, will be in accordance with Section 224(1B) of the Companies
Act, 1956.
At the 73rd Annual General Meeting of the Members of the Company held
on 19 July 2010, the Members had empowered the Board of Directors to
approve appointment as well as fixation of remuneration of Branch
Auditors. The Company proposes to appoint Pricewaterhouse Coopers as
the Branch Auditors to audit the accounts for the Companys Poland
Branch.
The Company had appointed Ashwin Solanki & Associates, Cost
Accountants, to audit the cost accounts related to the Companys
products, namely, Electric Lamps, Electric Fans, Electric Motors, Power
Driven Pumps, Transformers and Alternators, for 2009-2010. The due date
for filing the above cost audit reports was
30 September 2010; the actual date of filing was 8 September 2010. The
Company has re-appointed Ashwin Solanki & Associates as Cost Auditors,
for the financial year 2010-2011, for all the above six products.
FIXED DEPOSITS
The Company has discontinued acceptance of fresh deposits and also
renewal of existing deposits. 59 persons have not claimed repayment of
their matured deposits amounting to Rs.7,49,000 as at
31 March 2011. At the date of this Report, an amount of Rs.30,000 has
been claimed and repaid therefrom, or transferred to the Investor
Education Protection Fund, on completion of seven years.
Link Intime India Pvt. Ltd (formerly Intime Spectrum Registry Limited)
continues to be the Companys Registrars for all matters related to the
Companys Fixed Deposit Scheme. The contact details of Link Intime
India Pvt. Ltd are mentioned in the Report on Corporate Governance.
SHARE REGISTRAR & TRANSFER AGENT
The Companys Registrar & Transfer Agents for shares is Datamatics
Financial Services Ltd (DFSL). DFSL is a SEBI-registered Registrar &
Transfer Agent. The contact details of DFSL are mentioned in the Report
on Corporate Governance.
Investors are requested to address their queries, if any to DFSL;
however, in case of difficulties, as always, they are welcome to
contact the Companys Investor Services Department, the contact
particulars of which are contained in the Report on Corporate
Governance.
ENVIRONMENT, HEALTH & SAFETY
All manufacturing locations of the Company have received ISO 14001
Environmental Standards and Management Certification and OHSAS 18001
Certification for Occupational Health & Safety Assessment Systems. The
Company periodically conducts surveillance audits of both ISO 14001 and
OHSAS 18001, to ensure continued conformity with these standards.
The theme of this year has been achievement of Ãzero reportable
accident statusà across the Companys manufacturing locations in India.
Personal protection equipment provided to workmen was enhanced at
various locations, which has resulted in reduction of the number of
reported accidents. Safety audits were undertaken by independent
assessors to assess the safety effectiveness at locations. The Company
periodically conducts mock/ test drills for improving overall awareness
and responsiveness towards emergency situations. On-the-job training is
provided for handling risks associated with electrical equipment, hot
works, working at heights, fire fighting and the various measures to
handle resultant medical emergencies. An external audit for evaluation
of fire risks was conducted at some manufacturing locations.
National Safety Week was observed at all the Companys locations from 4
March 2011 to 10 March 2011, during which safety and first aid
awareness was enhanced amongst employees by conducting essay
competitions and lectures on different aspects of safety.
The Company fosters environment friendly manufacturing practices at all
locations. In this endeavour, it has been replacing use of hazardous
substances such as lead and mercury used during certain manufacturing
processes, with environment friendly processes. The Company is entirely
replacing thermocol packaging for its Consumer Products, with
environment friendly packaging materials.
A hygienic and healthy working environment is the norm followed across
all manufacturing locations. Various health check-ups for employees are
regularly undertaken at all of the Companys locations, especially for
the workmen who are working with hazardous processes.
The Company is also increasing its focus on manufacturing value added
products, which conserve energy or which can be utilized for power
generation through non- conventional renewable sources such as wind and
solar energy.
ACKNOWLEDGEMENTS
The Directors acknowledge and are grateful for the encouragement and
co-operation extended by the financial institutions, banks, government
authorities, customers, vendors and Members during the year under
review and look forward to their continued support.
The Directors also wish to convey their sincere appreciation to the
Companys employees at all levels, for their continued dedication, hard
work and commitment which has been a significant enabler in achieving
the Companys high performance levels.
On behalf of the Board of Directors
G THAPAR
Chairman
Mumbai, 2 June 2011
Mar 31, 2010
The Directors are pleased to present their Seventy Third Annual Report
on the business and operations of the Company and the accounts for the
financial year ended or iVlarcn zuiu,
OPERATIONS
After the world-wide economic and financial turmoil of 2008, the global
economic outlook has improved with a positive growth of above 3%
predicted for 2010 after a decline of 1.1% in 2009. Global trade
showed signs of bouncing back in the second half of 2009. However, the
sustainability of credit revival after the withdrawal of stimulus
packages across the world is still to be tested.
Regarding the transmission and distribution (T&D) segment - to which
your Company pre-dominantly belongs - the story is somewhat mixed.
There are two clear positives. First, the power transformer business is
seeing significant growth in India, China, South-East Asia and the
Middle East. Second, there is a definite surge in demand for
renewables, especially wind. This is true everywhere, but especially so
in Europe, the USA and Canada. Equally, there is a negative factor.
The housing sector in Europe and the
USA remains in doldrums. Consequently, the distribution transformers
segment continues to be badly affected.
Overall, however, demand is growing, with power transformers, wind and
renewables, and the business of providing end-to-end solutions doing
well, and counteracting the decline in sale of distribution
transformers. An over- riding focus on public as well as private
investment in transmission systems by many countries, and the drive for
energy efficiency, have so far kept the T&D market reasonably buoyant -
although not as it was in 2006-07 and 2007-08.
In response to market conditions, your Company has enhanced its
competitive momentum by forcefully targeting the growth oriented
utility power transformer segment to offset the slowdown in industry
demand for distribution transformers and motors. The Companys order
backlog of Rs 6,370 crore is marginally lower than the position a year
ago. However, a healthy order intake growth of 21 % in the last quarter
suggests that the momentum is accelerating.
Your Company is also building competencies and pursuing new attractive
segments such as renewable energy, ultra high voltage and energy
automation. Its SLIMî transformers remain a market leader in wind farm
installations. The Company secured major long term agreements from
Siemens Wind Power, Enercon, Multibrid and other players in this
market. Besides its product strengths, the Company made a successful
foray into turnkey solutions for the renewable segment. Its maiden
project of designing and building the transmission grid connection for
a 165 MW offshore windpark Belwind, located 50 kilometers into the
coastal waters of Belgium, in consortium with other reputed players is
making good progress and will be commissioned in September 2010.
Emerging market economies including India have led the global recovery,
driven by domestic demand and recovering exports. The reforms announced
by the United Progressive Alliance Government in 2009-10 have set the
agenda for Indias growth. Pushed to a low growth level of 6.7% in
2008-09 by the consequences of the worldwide slowdown, after averaging
over 9% in the preceding three years, the Indian economy has grown more
than 7% in 2009-10. During April-January 2009-10, Index of Industrial
Production (IIP) growth was 9.6% compared to 3.3% during April- January
2008-09.
In the Eleventh Five Year Plan, the Government of India has fixed an
ambitious target of 78,700 MW of power capacity addition. It is
pursuing, through the Central Transmission Utility of India, the 765kV
Ultra High Voltage (UHV) upgrading of the current infrastructure. For a
couple of years now, your Company has been harnessing its technological
competence in the UHV segment. In partnership with its Hungarian
subsidiary and ZTR Ukraine, it has secured major orders from the Power
Grid Corporation of India Limited (PGCIL) in this area. These projects
- won against stiff global competition from Indian and multinational
companies - denote a strategic entry of the Company in the UHV market.
With the PGCIL orders, your
Company has become the first Indian corporation to firmly establish
itself as a major and reliable player in the UHV segment.
For the Indian business, the most encouraging event was the recovery of
capital goods industry with 11.1% growth and resurgence of the consumer
durables industry with 12.5% growth - which resulted in growth for the
Companys Industrial Systems and Consumer Products businesses. The
Companys Industrial Systems SBU grew by 11.3% over previous year
through introduction of new products for different markets, such as
small motors for agro applications and extension of range up to 5 MW of
large rotating machines for several industrial applications. Capacity
expansion for several models of traction machines were undertaken
during the year. Your Company became the largest supplier of
alternators in the
To enhance its solutions capabilities, the CG Group acquired one more
company towards the end of the year. On 29 March 2010, the Company
acquired Power Technology Solutions Limited (PTS), located in the
United Kingdom. domestic market for the smaller range. Specially
designed Slip Ring alternators were introduced in the rural market,
amidst stiff operating conditions.
The Companys Consumer Products SBU grew by 22%, growing 1.5 times the
market. The business has made an entry into Integrated Security and
Home Automation, Light Emitting Diode (LED) lighting systems,
industrial fans and industrial pumps during the year. A focus area for
the Consumer Products business is tapping the vast potential of the
Indian rural markets, estimated at Rs.65,000 crore for FMCG products
and Rs.5,000 crore for consumer durables. To implement this, changes
have been made in the SBUs organisation structure, with a dedicated
Head of Rural Marketing and his team of managers.
Margin expansion continued to be a thrust area. This has been driven by
several factors: various value engineering initiatives, better product
designs, higher efficiencies in supply chain management and cycle time
reduction undertaken by the businesses during the year. The
Company-wide global sourcing initiative for critical components,
including renegotiation of prices with suppliers and approving new
supply sources, resulted in substantial reduction in operations costs -
thus ensuring the sustainability of the Companys margin expansion.
Through all these expansion activities, the Company retained its focus
on quality. It implemented the One World Quality, Manufacturing
Excellence and Project Unipower initiatives, with rigour. The Companys
Consumer business renewed its thrust on enhanced after-sales service by
commissioning its Customer Call Centre and a network of
franchisee-based Authorised Service Centres in metro locations. It
also formalised its service promise of "Respond in 6 hours and Resolve
in 72 hours".
On 15 October 2009, the Company unveiled its new Brand Identity, CG.
Today, CG is the common brand expression across all the Companys
subsidiaries, operating in various businesses, in diverse geographies
across the world. The new brand reflects the ability of the Company to
provide "Smart solutions" and the value that is placed on "Strong
relationships" across all its businesses, geographies and customers.
The new brand identity is an important step in the integration of newly
acquired companies, reflecting the effective transition of the Company
from an India- based electrical equipment manufacturer to a global
solutions organisation.
To enhance its solutions capabilities, the CG Group acquired one more
company towards the end of the year. On 29 March 2010, the Company
acquired Power Technology Solutions Limited (PTS), located in the
United Kingdom. PTS is a high voltage electrical engineering company
which provides consultancy, technical and engineering support to
Regional Electricity Companies (RECs) including, but not limited to
conceptual engineering/ system studies and also complete EPC detailed
engineering, spanning electrical (relay/control, SCADA and sub-station
automation) and civil/structural (site foundation, development and
structural design).
The above initiatives have enabled the Company to achieve a stand-alone
net turnover of Rs.5,284 crore, during the year under review, as
compared with Rs.4,611 crore during the previous year 2008-09, a rise
of 15%.
The consolidated net turnover of the Company increased from Rs.8,737
crore to Rs.9,141 crore, an increase of 5%.
The Company has recorded a noteworthy stand-alone Profit Before Tax
(before extraordinary item) of Rs.870 crore, an increase of 42% as
compared with last year. The consolidated Profit Before Tax (before
extraordinary item) increased from Rs.867 crore to Rs.1,189 crore. The
Company has also recorded a significant stand-alone Profit After Tax
(before extraordinary item) of Rs.577 crore, an increase of 45% as
compared with last year, and Profit After Tax (including an
extraordinary item) of Rs.617 crore, an increase of 55% as compared
with last year. The consolidated Profit After Tax (before extraordinary
item) increased from Rs.563 crore to Rs.824 crore and Profit After Tax,
minority interest, share of profit / loss in associate companies
(including an extraordinary item) increased from Rs.560 crore to Rs.860
crore.
FINANCIAL HIGHLIGHTS
CG STAND-ALONE CGIBV CONSOLIDATED*@ CG-CONSOLIDATED**
PARTICULARS IN 31.3.2010 31.3.
2009 31.3. 31.3. 31.3 31.3
2010 2009 2010 2009
RS. CRORE
(a> Gross Sales 5516 4904 3824 4128 9375 9031
(b) Less: Excise
Duty 232 293 0 0 234 294
(c) Net Sales 5284 4611 3824 4128 9141 8737
(d) Less: Operating
Expenses 4427 3973 3442 3794 7864 7742
(e) Operating Profit 857 638 382 334 1277 995
(f) Add: Dividend
and Other Income 69 36 32 22 94 59
(g) Profit before
Interest, Depreciation,
Amortisation and
Taxes 926 674 414 356 1371 1054
(h)Less: Interest
(net) 4 15 17 43 27 65
(i) Profit before
Depreciation, Amorti
sation and Taxes 922 659 397 313 1344 989
(j) Less: Depreciation,
Amortisation and
Impairment 52 45 97 71 155 122
(k) Profit Before
Tax 870 614 300 242 1189 867
(1) Less: Provision
for Current Year Tax 274 200 37 59 314 261
(m) Less: Provision
for Deferred Tax 19 12 30 24 51 38
(n) Less: Provision
for Fringe Benefit
Tax 0 5 0 0 0 5
(o) Profit After Tax 577 397 233 159 824 563
(p) Minority Interest 0 0 0 1 (2) (2)
(g) Share of Profit/
(Loss) of Associate
Companies 0 0 0 0 3 (1)
(r) Profit after tax,
minority interest
and share of profit/
(loss) of Associate
Companies 577 397 233 160 825 560
(s) Extraordinary
Item 40 0 0 0 35 0
(t) Profit available
for distribution 617 397 233 160 860 560
(u) Balance brought
forward from previous
years 811 540 0 0 0 0
Appropriation/Distribution
(v) Transfer to
General Reserve (62) (40) 0 0 0 0
(w) Interim Dividend (81) (73) 0 0 (81) (73)
(x) Corporate Tax
on Dividend (13) (13) 0 0 (14) (13)
BALANCE CARRIED TO
BALANCE SHEET 1272 811 233 160 765 474
Consolidated Accounts of CG International BV, the holding company for
CGs international operations. ** Includes results of CG Stand-alone
and CGIBV Consolidated. @ Figures have been regrouped for the purposes
of consolidation.
The Profit Before Interest and Tax of the respective Business Groups,
compared with last year is given below:
SBU IN R, CRORE 2009-2010 2008-2009
Power Systems (CG stand-alone) 462 349
Industrial Systems (CG stand-alone) 260 204
Consumer Products 230 146
Power Systems (including
International operations) 769 625
Industrial Svstems (including
International operations) 276 213
A detailed review of the operations and performance of each Business
Group as well as the Companys International operations is contained in
the Management Discussion and Analysis Report, which is given as a
separate chapter in the Annual Report.
DIVESTMENT OF MALANPUR CAPTIVE POWER LIMITED
In the year 2006, to gain experience in the power generation and
distribution business, the Company had acquired a 59% shareholding in
Malanpur Captive Power Limited (MCPL), which was developing a 26.19 MW
gas based captive power plant at Malanpur, Madhya Pradesh. This
CG STAND-ALONE CGIBV CONSOLIDATED*@ CG-CONSOLIDATED**
PARTICULARS IN 31.3.2010 31.3.
2009 31.3. 31.3. 31.3 31.3
2010 2009 2010 2009
EURO MILLION
(a) Gross Sales 817 748 567 630 1390 1378
(b) Less: Excise
Duty 34 45 0 0 35 45
(c) Net Sales 783 703 567 630 1355 1333
(d) Less: Operating
Expenses 656 606 510 579 1166 1181
(e) Operating Profit127 97 57 51 189 152
(f) Add: Dividend
and Other Income 10 6 5 3 14 9
(g) Profit before
Interest,
Depreciation,
Amortisation and
Taxes 137 103 62 54 203 161
(h) Less: Interest
(net) 0 2 3 6 4 10
(i) Profit before
Depreciation, Amorti
sation and Taxes 137 101 59 48 199 151
(j) Less: Depreciation,
Amortisation and
Impairment 8 7 14 11 23 19
(k) Profit Before Tax 129 94 45 37 176 132
(1) Less: Provision
for Current Year Tax 40 31 6 9 46 40
(m) Less: Provision
for Deferred Tax 3 2 4 4 8 6
(n) Less: Provision for
Fringe Benefit Tax 0 1 0 0 0 1
(o) Profit After Tax 86 60 35 24 122 85
(p) Minority Interest 0 0 0 0 0 0
(q) Share of Profit/
(Loss) of Associate
Companies 0 0 0 0 0 0
(r) Profit after tax,
minority interest and share
of profit/(loss) of
Associate Companies 86 60 35 24 122 85
(s) Extraordinary
Item 6 0 0 0 5 0
(t) Profit available
for distribution 92 60 35 24 127 85
(u) Balance brought
forward from previous
years 135 94 0 0 0 0
Appropriation/
Distribution
(v) Transfer to
General Reserve (9) (6) 0 0 0 0
(w) Interim Dividend (12) (11) 0 0 (12) (11)
(x) Corporate Tax
on Dividend (2) (2) 0 0 (2) (2)
BALANCE CARRIED TO
BALANCE SHEET 204 135 35 24 113 72
Consolidated Accounts of CG International BV, the holding company for
CGs international operations.
** Includes results of CG Stand-alone and CGIBV Consolidated.
@ Figures have been regrouped for the purposes of consolidation.
Note: Average exchange rate considered for 1 EURO in 2009-10 is
Rs.67.4706 and in 2008-09 is Rs.65.5385.
Investment was made at the face value of Rs 10/- per share.
Pursuant to the Companys investment in Avantha Power & Infrastructure
Ltd. (APIL) last year, engaged in the business of generation,
transmission and distribution of electricity, it was felt that it would
be better aligned, if, in future, the business of MCPL was managed by
APIL. The divestment to APIL was completed in March 2010 at a price of
Rs 51.4 crore, which worked out to Rs 46.63 per share.
MERGER OF BROOK CROMPTON GREAVES LIMITED
In August 2009, the Company, acquired 81,60,000 equity shares
comprising 51 % share capital of Brook Crompton Greaves Limited (BCGL),
a joint venture between the
Company and BTR (European Holding) BV. BCGL thus became a 100%
subsidiary of the Company.
Since opportunities for synergy and operational efficiencies existed
between BCGL and the Companys LT Motors division, the Company and BCGL
have entered into a Scheme of Amalgamation, in which all the assets and
liabilities of BCGL will be transferred to the Company. The entire
share capital of BCGL will be cancelled and the authorised share
capital of the Company will be enhanced to the extent of the authorised
share capital of BCGL.
Pursuant to the Scheme of Amalgamation, filed by BCGL with the High
Court of Judicature at Bombay, the regulatory procedures are in an
advanced
CG STAND-ALONE CGIBV CONSOLIDATED*@ CG-CONSOLIDATED**
PARTICULARS IN 31.3.2010 31.3.
2009 31.3. 31.3. 31.3 31.3
2010 2009 2010 2009
USD MILLION
(a) Gross Sales 1155 1054 801 887 1964 1941
(b) Less: Excise
Duty 48 63 0 0 49 63
(c) Net Sales 1107 991 801 887 1915 1878
(d) Less: Operating
Expenses 927 854 721 815 1647 1664
(e) Operating Profit 180 137 80 72 268 214
(f) Add: Dividend and
Other Income 14 8 7 4 20 12
Profit before
Interest, Depreciation,
(g) Amortisation and
Taxes 194 145 87 76 288 226
(h) Less: Interest
(net) 1 3 4 9 6 14
(i) Profit before
Depreciation, Amorti
sation and Taxes 193 142 83 67 282 212
(j) Less: Depreciation,
Amortisation and
Impairment 11 10 20 15 32 26
(k) Profit Before Tax 182 132 63 52 250 186
(1) Less: Provision
for Current Year Tax 57 43 8 13 66 56
(m) Less: Provision
for Deferred Tax 4 3 6 5 11 8
(n) Less: Provision for
Fringe Benefit Tax 0 1 0 0 0 1
(o) Profit After Tax 121 85 49 34 173 121
(p) Minority Interest 0 0 0 0 (1) 0
(q) Share of Profit/
(Loss) of Associate
Companies 0 0 0 0 1 0
(r) Profit after tax,
minority interest and share
of profit/(loss) of
Associate Companies 121 85 49 34 173 120
(s) Extraordinary Item 8 0 0 0 7 0
(t) Profit available
for distribution 129 85 49 34 180 120
(u) Balance brought
forward from previous
years 193 135 0 0 0 0
Appropriation/Distribution
(v) Transfer to General
Reserve (13) (9) 0 0 0 0
(w) Interim Dividend (17) (16) 0 0 (17) (16)
(x) Corporate Tax
on Dividend (3) (2) 0 0 (3) (2)
BALANCE CARRIED TO
BALANCE SHEET 290 193 49 34 160 102
Consolidated Accounts of CG International BV, the holding company for
GGs international operations
** Includes results of CG Stand-alone and CGIBV Consolidated.
@ Figures have been regrouped for the purposes of consolidation.
Note: Average exchange rate considered for 1 USD in 2009-10 is
Rs.47.7446 and in 2008-09 is Rs.46.5363.
stage progress, and are expected to be completed by June, 2010.
INVESTMENT IN AVANTHA POWER & INFRASTRUCTURE LIMITED
As mentioned in last years Annual Report, CG holds 32% in Avantha
Power and Infrastructure Limited (APIL). This translates to 206.36
million equity shares of APIL at Rs. 11 per share - or an investment of
Rs.227 crore. APIL, an Avantha Group company, is engaged in the
generation, transmission and distribution of electricity.
APIL has filed a draft Red Herring Prospectus with the Securities and
Exchange Board of India (SEBI) for a public issue in the near future.
As a significant investor, CG is supporting this IPO.
BONUS SHARES
In terms of Members approval accorded at its Extra-Ordinary General
Meeting held on 24 February 2010, the Company issued Bonus Shares in
the proportion of 3 (three) new equity shares for every 4 (four) equity
shares of Rs.2/- each. The Record Date for the issue of Bonus Shares
was 9 March 2010.
DIVIDEND
The Company declared two interim dividends during the year: o Rs.0.80
per equity share (40%) aggregating to a total dividend payout of Rs.34
crore (including dividend tax) declared on 27 October 2009; the Record
Date for this purpose was 3 November 2009 and the Interim Dividend was
paid on 16 November 2009.
O Rs.1.40 per equity share (70%) aggregating to a total dividend payout
of Rs.60 crore (including dividend tax) declared on 28 January 2010;
the Record Date for this purpose was 5 February 2010 and the Interim
Dividend was paid on 16 February 2010.
The abovementioned dividend payout as a percentage of the share capital
works out to 110%.
RESERVES
The Reserves at the beginning of the year were Rs.1,169 crore. The
Reserves at the end of the year are Rs.1,636 crore.
DIRECTORATE
Mr. S Prabhu was appointed as an Additional Director on the Companys
Board of Directors with effect from 28 January 2010. He holds office
upto the date of the forthcoming Annual General Meeting, and
considering that the Company will benefit from his continuance as a
Director, his appointment is being recommended.
Dr. O Goswami and Ms. M Pudumjee are the Directors who retire by
rotation at the forthcoming Annual General Meeting, and being eligible,
offer themselves for re- appointment to the Board. The details of the
Directors being recommended for appointment and re-appointment are
contained in the accompanying Notice of the forthcoming Annual General
Meeting.
PROMOTER GROUP
The Avantha Group is the promoter of the Company. For the purposes of
the SEBI (Substantial Acquisition of Shares And Takeovers) Regulations,
1997, the names of the Promoter entities and other entities comprising
the Group as defined under the Monopolies and Restrictive Trade
Practices Act, 1969, are detailed in Annexure 1 to this Report.
RESEARCH AND DEVELOPMENT
The Companys Technology Vision 2015 envisions a scenario in which 25%
of the Companys revenues would be achieved through new products. There
would be 5 Breakthrough Platform Technologies, reduction in Product
Development Cycle time by 75% of the existing cycle time and annual
filing of 1000 IPRs. This Vision envisages an enhanced role for the
Global R&D Centre wherein the R&D budget would progressively grow to 4%
of the total revenues.
The above initiatives have resulted in a greater focus on development
of new products. During the year, 20% of the turnover generated in
India was through products less than 5 years old. The Company had also
rolled out approvals for 6 platform technologies which will be pursued
in the near future.
New products and processes developed during the year are detailed in
Annexure 2 to this Report.
The Company has also entered into an agreement with New York State, to
establish a US R&D facility and take advantage of a New York State
funded public/private partnership at the Albany Nanotech Facility.
This facility is considered as one of the most advanced silicone wafer
R&D and prototype manufacturing facilities in the world and one of the
most advanced Nanopower facilities in the US. The Companys facility
will be located at the Energy and Environmental Technology Applications
Center (E2TAC) of the Nanotech Facility and will be focused on R&D
activities in the fields of smart grid technologies and renewable
energy applications. The R&D Centre will provide the Company a brand
exposure and recognition in the USA. At E2TAC, the Company will work
side by side with industry leaders in smart grid technologies,
alongwith reputed industrial entities, electrical utilities and
universities. The Company will enjoy shared access to state-of-the-art
world-class equipment for nanotechnology, electronics and advanced
materials as well as a large pool of highly skilled workforce.
R&D as a function is undergoing a process of global integration. It has
undertaken several projects by synergizing multi-functional teams of
executives drawn from various geographies in which the Company
operates. Initiatives on analytics and electronics design were extended
to the global level, towards better integration in this area.
SUBSIDIARY COMPANIES
The Company has four Indian subsidiaries viz CG Energy Management
Limited (CEM), CG Capital & Investments Limited (CG Capital), CG-PPI
Adhesive Products Limited (CG PPI) and Brook Crompton Greaves Limited
(BCGL). CEM, CG Capital and BCGL are subsidiaries of the Company, and
CG PPI, being a subsidiary of CG Capital, in terms of the provisions of
the Companies Act, 1956, is also the Companys subsidiary.
To reflect the new Brand Identity of the Company, names of its
international subsidiaries acquired over the years, through various
acquisitions were changed and now the legal entity names start with
CG, to identify with the CG parentage.
The Netherlands-based CG International B.V, a 100% subsidiary of the
Company, is the ultimate mother holding company of the 20 downstream
subsidiaries, as under:
O CG HOLDINGS BELGIUM N.V. (formerly known as Pauwels International
N.V.)
O CG POWER SYSTEMS BELGIUM N.V. (formerly known as Pauwels Trafo
Belgium N.V.)
O PAUWELS TRAFO GENT N.V.
O CG POWER SYSTEMS IRELAND LIMITED
(formerly known as Pauwels Trafo Ireland Ltd)
O CG SALES NETWORKS FRANCE S.A.
(formerly known as Pauwels France S.A.)
O CG SERVICE SYSTEMS CURACAO N.V. (formerly known as Pauwels Trafo
Service
N.V.)
O CG HOLDINGS HUNGARY KFT (formerly
known as Crompton Greaves Hungary Kft)
O CG ELECTRIC SYSTEMS HUNGARY ZRT
(formerly known as Ganz Transelektro Villamossagi Zrt)
O CG POWER SYSTEMS CANADA INC
(formerly known as Pauwels Canada Inc) o cg power systems USA inc
(formerly known as Pauwels Transformers Inc)
O PT CG POWER SYSTEMS INDONESIA (formerly known as PT Pauwels Trafo
Asia) O CG POWER HOLDINGS IRELAND LIMITED
(formerly known as Microsol Holdings Ltd)
O CG AUTOMATION SYSTEMS UK LTD
(formerly known as Microsol UK Ltd)
O CG AUTOMATION SYSTEMS USA INC
(formerly known as Microsol Inc.)
O VISERGE LTD
O MICROSOL LTD
O CG SERVICE SYSTEMS FRANCE SAS
(formerly known as Societe Nouvelle de Maintenance Transformateurs)
O MSE POWER SYSTEMS INC
O CG HOLDINGS GERMANY GMBH (formerly
known as Crompton Greaves Germany GmbH)
O CG SALES NETWORKS AMERICAS INC
(formerly known as Pauwels Americas Inc.)
In totality, the Company has 25 subsidiaries, 4 Indian and 21 foreign.
The Company has obtained an exemption under Section 212 of the
Companies Act, 1956, from annexing to this Report, the Annual Reports
of the abovementioned 4 Indian subsidiaries and 21 foreign
subsidiaries, for the year ended 31 March 2010. However, if any Member
of the Company or its subsidiaries so desires, the Company will make
available, the Annual Accounts of the subsidiaries to them, on request.
The same will also be available for inspection at the Registered Office
of the Company and of its subsidiaries, during working hours upto the
date of the Annual General Meeting. The details of accounts of the
subsidiaries are also available on the Companys website.
The details of each subsidiary with respect to capital, reserves, total
assets, total liabilities, details of investment (except in case of
investment in subsidiaries), turnover, profit before taxation,
provision for taxation, profit after taxation and proposed dividend are
detailed at Page 119 of the Annual Report.
CONSOLIDATION OF ACCOUNTS
As required by Accounting Standards AS-21 and AS-23 of the Institute of
Chartered Accountants of India, the financial statements of the Company
reflecting the consolidation of the Accounts of the Company, its 25
subsidiaries mentioned above, and 5 Associate Companies, are annexed to
this Report. The Associate Companies are Avantha Power &
Infrastructure Limited, CG Actaris Electricity Management Private
Limited, CG Lucy Switchgear Limited, International Components India
Limited and Pauwels Middle East Trading and Contracting Limited.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
As required by the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, the relevant data pertaining to
conservation of energy, technology absorption and foreign exchange
earnings and outgo are given in the prescribed format as Annexure 2 to
this Report.
PARTICULARS OF EMPLOYEES
The statement of particulars required pursuant to Section 217(2A) of
the Companies Act, 1956 read with the Companies (Particulars of
Employees) (Amendment) Rules, 2002, forms a part of this Report.
However, as permitted by the Companies Act, 1956, the Report and
Accounts are being sent to all Members and other entitled persons
excluding the above statement. Those interested in obtaining a copy of
the said statement may write to the Company Secretary at the Registered
Office and the same will be sent by post. The statement is also
available for inspection at the Registered Office, during working hours
upto the date of the Annual General Meeting.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors would like to assure the Members that the financial
statements for the year under review conform in their entirety to the
requirements of the Companies Act, 1956.
The Directors confirm that: o the Annual Accounts have been prepared in
conformity with the applicable Accounting Standards. O the Accounting
Policies selected and applied on a consistent basis, give a true and
fair view of the affairs of the Company and of the profit for the
financial year. O sufficient care has been taken that adequate
accounting records have been maintained for safeguarding the assets of
the Company; and for prevention and detection of fraud and other
irregularities. O the Annual Accounts have been prepared on a going
concern basis.
AUDITORS
The Companys Auditors, Sharp & Tannan, hold office upto the conclusion
of the forthcoming Annual General Meeting and, being eligible, are
recommended for re- appointment on terms to be negotiated by the Audit
Committee of the Board of Directors. They have furnished the requisite
certificate to the effect that their re-appointment, if effected, will
be in accordance with Section 224(1 B) of the Companies Act, 1956.
FIXED DEPOSITS
Currently, the Company has discontinued acceptance of fresh deposits
and also renewal of existing deposits. 93 persons have not claimed
repayment of their matured deposits amounting to Rs. 12,34,000 as at 31
March 2010. At the date of this Report, an amount of Rs.41,000 has been
claimed and repaid therefrom, or transferred to the Investor Education
Protection Fund, on completion of seven years.
Link Intime India Pvt. Ltd (formerly Intime Spectrum Registry Limited)
continues to be the Companys Registrars for all matters related to the
Companys Fixed Deposit Scheme. The contact details of Link Intime
India Pvt. Ltd are mentioned in the Report on Corporate Governance.
SHARE REGISTRAR & TRANSFER AGENT
The Companys Registrar & Transfer Agents for shares continues to be
Datamatics Financial Services Ltd (DFSL). DFSL is a SEBI-registered
Registrar & Transfer Agent. The contact details of DFSL are mentioned
in the Report on Corporate Governance.
Investors are requested to address their queries, if any to DFSL;
however, in case of difficulties, as always, they are welcome to
contact the Companys Investor Services department, the contact
particulars of which are contained in the Report on Corporate
Governance.
ENVIRONMENT, HEALTH & SAFETY
The Company is committed to ensuring the health and safety of all its
employees, contractors, visitors and other persons at the Companys
workplace and protecting the environment.
The Company has Health and Safety Committees at all locations which
regularly monitor the divisions compliance with the Companys Health &
Safety policy. The Company trains and motivates its employees to
understand health and safety responsibilities and to participate
actively in its health and safety programmes.
The Company conducts regular health check-ups for its employees engaged
in handling hazardous materials. It also arranges several seminars and
training sessions on AIDS awareness, cardiac awareness and other fatal
diseases. Safety audits are undertaken by independent assessors to
assess the safety effectiveness at locations.
The Company has also initiated a Group Life Insurance Policy for its
Executives, through which, the family of deceased Executives will
receive a pre-determined amount, in case of the Executives unfortunate
and untimely death during service, due to any cause.
All the manufacturing units of the Company have received ISO 14001
Environmental Standards and Management Certification and OHSAS 18001
Certification for Occupational Health & Safety Assessment Systems. The
Company periodically conducts surveillance audits of both ISO 14001 and
OHSAS 18001, to ensure continued conformity with these standards.
Increasing focus is being placed on innovative, energy efficient and
green products. The Company actively solicits opportunities in the
renewable energy segment, which includes supplying products suitable
for usage in windmills and solar power projects.
Disposal of hazardous waste is undertaken in compliance with the
environmental policies and regulations.
The Company has identified Environment Protection as an important
agenda in its Corporate Social Responsibility arena, and has undertaken
many initiatives in the area of tree plantation, rain water harvesting
etc.
ACKNOWLEDGEMENTS
The Directors acknowledge and are grateful for the encouragement and
co-operation extended by the financial institutions, banks, government
authorities, customers, vendors and members during the year under
review and look forward towards continued support from them.
The Directors also wish to convey their sincere appreciation to the
Companys employees, at all levels, for their continued dedication,
hard work and commitment which has been a significant enabler in
achieving the Companys performance.
On behalf of the Board of Directors
G THAPAR
Chairman
Mumbai, 13 May 2010