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Directors Report of Easun Reyrolle Ltd.

Mar 31, 2015

Dear Members,

The Directors of your Company present the 40th Annual Report, with the statement of the audited accounts for the financial year ended 31st March, 2015.

1. Financial Performance

The standalone and consolidated audited financial results for the year ended 31st March, 2015 are as follows:

[Rupees in lacs]

Standalone

Particulars 2014-15 2013-14

Sales and Other Income 6,937 18,434

Earnings before interest, Depreciation and (226) 710 Tax (EBIDTA) (226) 710

Depreciation 734 802

Interest 2,599 2,749

Profit / (Loss) before tax & Exceptional Items (3,559) (2,841)

Exceptional Items (601) (369)

Profit / (Loss) before Tax (4,160) (3,210)

Provision for Taxation 430 -

Net Profit / (Loss) (3,730) (3,210)

Consolidated

Particulars 2014-15 2013-14

Sales and Other Income 12,658 26,557

Earnings before interest, Depreciation and Tax (EBIDTA) 530 2,988

Depreciation 2,051 2,623

Interest 2,645 3,023

Profit / (Loss) before tax & Exceptional Items (4,166) (2,658)

Exceptional Items (601) (369)

Profit / (Loss) before Tax (4,766) (3,026)

Provision for Taxation 430 84

Net Profit / (Loss) (4,336) (3,110)

2. Dividend

Your Directors do not recommend payment of dividend for the year under review on equity shares in view of the loss incurred.

3. Fund Raising - Equity - Rights Issue

During the year under review, your Company successfully placed 99,87,127 equity shares of Rs.2 each at a price of Rs.59 aggregating to Rs.5892 lacs to existing shareholders on rights basis in the Ratio of 12:25.

The proceeds received through Rights issue were utilised for the purpose for which it was raised.

Consequent to the above, the paid up value of the equity share capital of the Company stands increased from Rs.4.16 crores to 6.15 crores.

5. Human Resource Development

The Company’s industrial relations remained peaceful at all factories and establishments during the financial year. The Company is continuously improving employees skill sets through training and personality development programs.

6. Material changes and commitments affecting the financial position of the Company which have occurred between March 31, 2015 and 29th May, 2015 (date of the Report) There were no material changes and commitments affecting the financial position of the Company between the end of financial year (March 31, 2015) and the date of the Report (29.05.2015)

7. Internal Control Systems and their Adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

8. Subsidiary Companies and Consolidated Financial Statements:

The Company has 7 subsidiaries as on March 31, 2015. There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 (“Act”). There has been no material change in the nature of the business of the subsidiaries.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company’s Subsidiaries, (in Form AOC-1) is attached to the financial statements as Annexure - D.

Pursuant to the provisions of section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate accounts in respect of subsidiaries, are available on the website of the Company.

9. Deposits from public

The Company did not invite or accept any fixed deposit pursuant to provisions of Section 76 of the Companies Act, 2013. During the year no amount either on interest or principal, remained outstanding as on the date of the Balance Sheet.

10. Corporate Governance Report

Your Company has been practicing the principle of good Corporate Governance over the years and ensures to comply with the provisions of Clause 49 of the Listing Agreement with Stock Exchanges. A detailed report on the Corporate Governance Code and practices of the Company along with a certificate from the statutory Auditor regarding compliance of the conditions of Corporate Governance as stipulated under the Listing Agreement is attached as Annexure - A to this Report.

11. Auditors

M/s. Brahmayya & Co., Chartered Accountants and M/s R Subramanian & Co., Chartered Accountants, Joint Statutory Auditors of the Company, retire at the forthcoming Annual General Meeting and are eligible for re-appointment. The Company has received confirmation from both the firms regarding their consent and eligibility under Sections 139 and 141 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 for appointment as the Auditors of the Company.

As required under Clause 41 of the Listing Agreement, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Audit Committee and the Board of Directors recommended their re-appointment for the year 2015-16. The necessary resolution is being placed before the shareholders for approval.

12. Secretarial Audit

Pursuant to provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, your Company engaged the services of Mr. S. Viswanathan, Company Secretary in Practice, Bangalore to conduct the Secretarial Audit of the Company for the financial year ended March 31, 2015. The Secretarial Audit Report (in Form MR-3) is attached as Annexure - C to this Report.

13. Management reply to the Statutory Auditor’s & Secretarial Auditor’s Report

The explanations and comments by the Board on qualifications made by Statutory Auditors and Secretarial Auditor is attached as Annexure - G to this Report.

14. Extract of Annual Return

An extract of Annual Return in Form MGT-9 as on March 31, 2015 is attached as Annexure - F to this Report.

15. Directors and Key Managerial Personnel

During the year under review, Mr JDN Sharma, Non-Executive Director and Mr M Raman, Independent Director stepped down from the Board. The Board wishes to place on record its deep sense of appreciation for the valuable contributions made by them to the Board and the Company during their tenure as Directors.

Pursuant to the provisions of Section 149 of the Act, which came into effect from April 1, 2014, Dr William Stanley Jones and Mr Rakesh Garg were appointed as independent directors at the annual general meeting of the Company held on 29th September, 2014. The terms and conditions of appointment of independent directors are as per Schedule IV of the Act. They have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as independent director during the year.

Mr Hari Eswaran, Director retire by rotation and being eligible, have offered himself for re-appointment. A brief background of Mr Hari Eswaran, Director is given in the Corporate Governance Report.

Pursuant to the provisions of Section 203 of the Act, which came into effect from April 1, 2014, the appointments of Mr P Chandrasekaran, Chief Financial Officer, as key managerial personnel of the Company were formalised and Mr Praveen Hegde appointed as Company Secretary and Compliance officer in the month of September, 2014.

16. Policy on Directors’ appointment and remuneration and other details

The Company’s policy on Directors’ appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the directors’ report.

A statement containing the details of the Remuneration of KMP’s as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in the corporate governance report, which forms part of the directors’ report.

17. Number of Meetings of the Board

Five meetings of the board were held during the year. For details of the meetings of the board, please refer to the corporate governance report, which forms part of this report.

18. Board evaluation

The board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India (“SEBI”) under Clause 49 of the Listing Agreements (“Clause 49”).

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee (“NRC”) reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

In addition, the Chairman was also evaluated on the key aspects of his role. In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive and non-executive directors.

19. Directors’ Responsibility Statement

As required under Section 134(5) of the Companies Act, 2013, the Directors of the Company hereby state and confirm that:

(i) in the preparation of Annual Accounts for the year, applicable Accounting Standards have been followed along with proper explanations relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit and loss of the Company for the year under review;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the Annual Accounts on a going concern basis.

(v) That proper internal financial control was followed by the Company and that such internal financial control are adequate and were operating effectively.

(vi) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

20. Audit committee

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

21. Particulars of loans, guarantees and investments

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

22. Vigil Mechanism / Whistle Blower Policy

Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board of Directors had approved the Policy on Vigil Mechanism/ Whistle Blower and the same was hosted on the website of the Company. This Policy inter-alia provides a direct access to the Chairman of the Audit Committee. Your Company hereby affirms that no Director/ employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year. The policies have been uploaded on the Company’s website, under the web link: http://www.easunreyrolle.com/ policy-final.pdfuploads/investorrels/2014/12/13918511951418634190 ERL%20-%20whistle-blower-

23. Related Party Transactions

There have been no materially-significant related party transactions made by Company with the promoter, the Directors, the Key managerial personnel which may be in conflict with the interest of the Company at large. All related party transactions as placed before the Audit Committee has also received approval from the Board. The policy on related party transactions as approved by the Board can be accessed on the Company website : http://www.easunreyrolle.com/uploads/investorrels/2015/8/137862789514392 65073 Final-Policy%20on%20related%20party%20transactions.pdf

The details of related party transactions are set out in the notes to the financial statements, as well as form AOC-2 is attached as Annexure-E to this report.

24. Risk management

The Board of the Company has formed a risk management committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of this report.

25. Corporate Social Responsibility

Your Company has not come under the purview of the Section 135 of the Companies Act, 2013 as Company having less Net worth or Turnover or Net profit as specified in the Section.

26. Disclosure requirements

As per Clause 49 of the listing agreements entered into with the stock exchanges, corporate governance report with auditors certificate thereon and management discussion and analysis are attached, which form part of this report.

As per Clause 55 of the listing agreements entered into with the stock exchanges, a business responsibility report is attached and forms part of this annual report.

Policy on dealing with related party transactions is available on the website ofthe Company (URL: http://www.easunreyrolle.com/uploads/investorrels/2015/8/137862789514392 65073 Final-Policy%20on%20related%20party%20transactions.pdf).

The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of the Section 177(9) of the Act and the revised Clause 49 of the Listing Agreements with stock exchanges (URL: http://www.easunreyrolle.com/uploads/investorrels/2014/12/13918511951418 634190 ERL%20-%20whistle-blower-policy-final.pdf).

27. Particulars of Research and Development, Conservation of Energy, Technology Absorption, and Foreign Exchange Earnings/Outgo:

Information required under Section 134 of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, is attached as Annexure B and forms part of this Report.

28. Concluding Remarks

The Directors wish to express their appreciation to all employees of the Company for their sincere and dedicated services during the year. The Directors take this opportunity to express their gratitude to all Shareholders, Bankers, Vendors and other Stakeholders who have reposed trust and extended their constant support.

For and on behalf of Board of Directors Hari Eswaran

Place : Chennai Chairman Date : 29th May, 2015 (DIN No. 00196760)




Mar 31, 2014

To the Members

The Directors of your Company present the 39th Annual Report, with the statement of the audited accounts for the financial year ended 31st March, 2014.

1. Financial Performance

The standalone and consolidated audited financial results for the year ended 31st March, 2014 are as follows:

[Rupees in lacs] Standalone Particulars 2013-14 2012-13

Sales and Other Income 18,434 24,467

Earnings before interest, Depreciation, 710 3,076

Tax, Amortization and Exceptional Items (EBIDTAE)

Depreciation 802 717

Interest 2,749 2,159

Profit / (Loss) before tax & Exceptional Items (2,841) 200

Exceptional Items (369) -

Profit / (Loss) before Tax (3,210) 200

Provision for Taxation - 187

Net Profit / (Loss) (3,210) 12

Particulars Consolidated 2013-14 2012-13

Sales and Other Income 26,557 31,397

Earnings before interest, Depreciation, 2,988 4,476

Tax, Amortization and Exceptional Items (EBIDTAE)

Depreciation 2,623 2,302

Interest 3,023 2,342

Profit / (Loss) before tax & Exceptional Items (2,658) (168)

Exceptional Items (369) -

Profit / (Loss) before Tax (3,026) (168)

Provision for Taxation 84 189

Net Profit / (Loss) (3,110 (357)

2. Dividend

The Company''s cash generation is inadequate to support a reasonable dividend at this juncture, therefore the Directors with regret have to recommend that we do not pay any dividend for the financial year 2013-14.

3. Operations Review:

The performance of your Company on a standalone basis and of the various operating subsidiaries is as follows:

ERLPhase Power Easun Reyrolle Technologies ERL Marketing Int. Ltd India Ltd.Canada FZE Sharjah (Rs.In lacs) (000 USD) (000 USD)

Particulars 13-14 12-13 13-14 12-13 13-14 12-13

Sales 18,218 22,045 8,252 7,508 1,725 1,115

EBIDTA 341 3,076 2,034 1,323 6 (340)

PBT (3,210) 200 (281) (736) (30) (372)

PAT (3,210) 12 (281) (736) (30) (372)

Particulars Switchcraft Europe Electrical Distribution GmbH, Germany Solutions Pty Limited (000 Euro) (000 USD) 13-14 12-13 13-14 12-13

Sales 651 349 313 -

EBIDTA 955 759 (87) -

PBT 257 53 (95) -

PAT 257 51 (95) -

Note: Effective from 1st April, 2012, considering the reduced business opportunity, the Company suspended operations of Switchcraft Limited, Hong Kong.

4. Management Discussions and Analysis:

The operating and financial review is intended to convey the management''s perspective on the financial condition and on the operating performance of the Company as at the end of the Financial Year 2013-14.

This Financial year was yet another challenging year for the Indian economy. The Company''s growth was affected by many factors like volatility in commodity prices, exchange cost, higher interest cost, etc., The uncertain macro-economic environment also affected the company, especially in the power sector. Even though the order growth was reasonable, revenues declined and the profitability was also impacted due to high project cost and delay in payments.

Due to the poor financial position of most of the electrical utilities in India, there is an impact in the performance of the electrical industries, which has resulted in higher receivables, cost over runs and higher finance cost.

Considering the performance of subsidiary companies, all the four subsidiaries have shown positive and satisfactory turnover. It is important to note that most of the subsidiaries PBT is showing an improved figure in comparison with the previous years.

In July, 2013, your company has invested 82% equity and ownership in Electrical Distribution Solutions Pty Limited (EDS) Australia. EDS, is a Private Limited Company registered under the Australian Corporations Act, 2001. The Company is a distributor of electrical equipment for Australian utilities and is operating in Brisbane, Queensland, Australia for over 5 years. EDS has developed a wide range of products and having well established manufacturing facility at Brisbane. This strategic acquisition would help ERL India and its other overseas subsidiaries to establish and hold presence in prospering Australian power transmission and distribution market.

During the year, your company started supplying of Ring Main Units from Global Manufacturing facility Plant to the Australian Utility, M/s Energex Limited. The Company is taking all efforts to complete the execution of US$ 84 Million order in 7 years. The Company has also made inroads in a number of export markets in conjunction with ERL Switchcraft Europe GmbH, its German Subsidiary.

On May, 2014 your company has successfully completed the fund raising exercise (fully subscribed) and raised paid up capital by way of allotting 99,87,127 Equity Shares of Rs.2 each at a price of Rs.59 aggregating to Rs.5892 Lacs to existing Shareholders on Rights Basis in the Ratio of 12:25. The Company has realised Rs.2912 Lacs from Public & Financial Institutions and Rs. 2980 Lacs by way of adjusting the Promoter''s loan.

To improve margins in coming years, your company is taking all efforts to increase its efficiency by way of cost reduction, selection of orders with good margins and Exports Orders, etc.,

5. Subsidiary Companies and Consolidated Financial Statements:

There has been no material change in the nature of the business of the subsidiaries.

In accordance with the Statement of Accounting Standard on Consolidated Financial Statements (AS21) issued by the Institute of Chartered Accountants of India, Financial Statements of Company''s subsidiaries have been considered in the accompanying Consolidated Financial Statements of the Company. As per guidance given in the circular issued by Ministry of Corporate Affairs, the Board of Directors has consented for sending annual financial accounts

of the Company without attaching the Balance Sheets of the subsidiary companies. Shareholders who wish to have a copy of the full report and accounts of the subsidiary companies will be provided on receipt of a written request from them. The above documents will also be available for inspection by any shareholder at the registered office of the Company as well as registered office of the subsidiary company, on any working day during the business hours.

6. Human Resource Development

The Company''s industrial relations remained peaceful at all factories and establishments during the financial year. The Company is continuously improving employees skill sets through training and personality development programs.

Employee strength as on 31st March, 2014 was 367 as compared to 385 in the previous year.

7. Fixed Deposit

The Company did not invite or accept any fixed deposit pursuant to provisions of Section 58A of the Companies Act, 1956. During the year no amount either on interest or principal, remained outstanding as on the date of the Balance Sheet.

8. Corporate Governance Report

Your Company has been practicing the principle of good Corporate Governance over the years and ensures to comply with the provisions of Clause 49 of the Listing Agreements with Stock Exchanges. A detailed report on the Corporate Governance Code and practices of the Company along with a certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under the Listing Agreements are given in a separate section in this Annual Report (Annexure – A).

9. Directors

Mr Hari Eswaran, Director retire by rotation and being eligible for re-appointment, have offered himself for re-appointment.

In terms of Sections 149, 150, 152, and other applicable and related provisions of the Companies Act, 2013 read with Rules made thereunder, retirement by rotation shall not apply to Independent Directors. In order to comply with the statutory requirements, your company being recommended for appointment of Dr William Stanley Jones, Mr Rakesh Garg and Mr M Raman as Independent Directors for a term upto five consecutive years effective from 29th September, 2014 to September, 2019 on a non-rotational basis.

Details of the proposals of appointment or re-appointment as applicable are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 in the Notice to the 39th Annual General Meeting. Necessary resolutions are being placed before the shareholders for approval.

10. Directors'' Responsibility Statement

As required under Section 217(2AA) of the Companies Act, 1956, the Directors of the Company hereby state and confirm:

(i) that in the preparation of Annual Accounts for the year, applicable Accounting Standards have been followed along with proper explanations relating to material departures;

(ii) that the Directors have selected such accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent so as to give a true

and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for the year under review;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) that the Directors have prepared the Annual Accounts on a going concern basis.

11. Auditors

M/s Brahmayya & Co., Chartered Accountants and M/s R Subramanian & Co., Chartered Accountants Joint Statutory Auditors of the Company, retire at the forth coming Annual General Meeting and are eligible for re-appointment. The Audit Committee and the Board of Directors recommended their re-appointment for the year 2014-15. The necessary resolution is being placed before the shareholders for approval.

12. Cost Auditor

The Company has appointed Mr Rajesh Sai Iyer, Chennai as Cost Auditor for conducting Audit of Company''s cost records for the financial year 2013-14. The due date for filing the Cost Audit Report for the financial year ended 31st March 2014 is 30th September 2014.

13. Particulars of Employees

Information required to be furnished under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are annexed to this Report, and they form part of this Report. However, as provided in Section 219 (1) (b) (iv) of the Companies Act, 1956, the Annual Report and Accounts are being sent to the Members of the Company, excluding statement containing particulars of employees under Section 217(2A) of the Act. Any Member interested in obtaining such particulars, may write to the Company at the Registered Office.

14. Particulars of Research and Development, Conservation of Energy, Technology Absorption, and Foreign Exchange Earnings/Outgo:

Information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is attached as Annexure - B and forms part of this Report.

15. Concluding Remarks

The Directors convey their appreciation to all employees of the Company for their sincere and dedicated services during the year. The Directors take this opportunity to express their gratitude to all Shareholders, Bankers, Vendors and other Stakeholders who have reposed trust and extended their constant support.

For and on behalf of Board of Directors

Place: Chennai Hari Eswaran Date: 13th August, 2014 Chairman


Mar 31, 2012

The Directors present the 37th Annual Report of your Company together with the audited accounts for the financial year ended 31st March 2012

1. Financial Performance

The standalone and consolidated audited financial results for the year ended 31st March 2012 are as follows: [Rs in lacs]

Particulars Standalone Consolidated 2011-2012 2010-2011 2011-2012 2010-2011

Sales and Other Income 29,602 26,983 34,522 30,255

Earnings before interest, Depreciation and Tax (EBIDTA) 3,340 2,508 3,421 1,755

Depreciation 521 468 1,464 1,082

Interest 1,805 894 2,384 990

Profit/(Loss) before tax & Exceptional Items 1,014 1,146 (427) (317)

Exceptional Items - - - -

Profit/(Loss) before tax 1,014 1,146 (427) (317)

Provision for tax 84 312 298 405

Share of Loss / Profit of Associates - - (24) -

Net Profit/(Loss) 930 834 (701) (722)

2. Dividend

After making significant investments over the last few years in globalising the Company's business and also in creating a global manufacturing base in India, your company now needs to focus on successfully taking its entire range of new products to various markets and on ramping up the volumes. Hence there is a need to balance, conserve the resources of the company and to satisfy the shareholders expectations. Keeping in mind these factors your Directors have proposed to pay a dividend of 10% on Equity Shares at Re.0.20 per share of Rs.2 each for the financial year 2011-12 and are hopeful of returning to more substantial dividend payouts in the future.

3. Operations Review

The performance of your company on a standalone basis and of the various operating subsidiaries is as follows:

Easun Reyrolle ERL Phase Power Limited, India Technology, Canada Particulars (Rs. in Lacs) (,000 USD) 11-12 1041 1142 10-11

Sales 29,602 26,983 8,200 5,564

EBIDTA 3,340 2,508 347 (1,092)

PBT 1,014 1,146 192 (1,245)

PAT 930 834 192 (1,245)

ERL Marketing Switchcraft Europe Switchcraft Ltd Int., Sharjah GmbH, Germany Hongkong (,000 USD) (,000 Euro) (,000 USD)

Particulars 11-12 10-11 11-12 1041 11-12 10-11

Sales 6,011 2,706 715 166 136 91

EBIDTA 179 2 (849) (581) (43) (698)

PBT 77 (70) (2,151) (1,147) (141) (763)

PAT 77 (70) (2,471) (1,150) (141) (763)

As can be seen from the above figures, on a standalone basis, the company has achieved a growth of 10% on sales and other income and 5% on the Post tax profit. All the company's subsidiaries in Canada, Sharjah and Germany has shown substantial improvement in their sales and other income and except for Switch craft (Germany and Hong Kong), all other subsidiaries have moved into profit zone.

5. Preparation of Financial Statements in consonance with revised Schedule VI of the Companies Act, 1956 Company has prepared and presented the Financial Statements for the year under review in accordance with the revised Schedule VI of the Companies Act, 1956, as notified by the Ministry of Corporate Affairs. Accordingly, previous year's figures have been regrouped / re-stated wherever necessary to conform to the classification in the current year.

6. Subsidiary Companies and Consolidated Financial Statements

There has been no material change in the nature of the business of the subsidiaries.

In accordance with the Statement of Accounting Standard on Consolidated Financial Statements (AS 21) issued by the Institute of Chartered Accountants of India, Financial Statements of Company's subsidiaries have been considered in the accompanying Consolidated Financial Statements of the Company. As per guidance given in the circular issued by Ministry of Corporate Affairs, the Board of Directors has consented for sending annual financial accounts of the company without attaching the Balance Sheets of the subsidiary companies. Shareholders who wish to have a copy of the full report and accounts of the subsidiary companies will be provided on receipt of a written request from them. The above documents will also be available for inspection by any shareholder at the registered office of the Company as well as registered office of the subsidiary company, on any working day during the business hours.

7. Human Resource Development

During the year under review, your Company continued to have cordial relations with all employees at all the units. The Company recognizes the importance of human capital and strives to enrich professional and technical skills within the organization. Your Directors recognize the team's valuable contribution and place on record their appreciation for the employees across the organization.

Employee strength as on 31st March 2012 was 398 as compared to 432 in the previous year.

8. Employee Stock Option Scheme

The Company introduced an Employee Stock Option Scheme for the benefit of its executives effective from 29th September, 2010.

Details of the stock options granted under the Employee Stock Option Scheme, 2009 are disclosed in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock

Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and set out in Annexure A of this Report.

9. Fixed Deposits

Your Company did not invite or accept any fixed deposit pursuant to provisions of Section 58A of the Companies Act, 1956. During the year no amount either on interest or principal, remained outstanding as on the date of the Balance Sheet.

10. Corporate Governance Report

Your Company has been practicing the principle of good Corporate Governance over the years and ensures to comply with the provisions of Clause 49 of the Listing Agreements with Stock Exchanges. A detailed report on the Corporate Governance Code and practices of the Company along with a certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under the Listing Agreements are given in a separate section in this Annual Report.

11. Directors

Mr. Hari Eswaran, Chairman and Dr W SJones, Director retire by rotation and being eligible, have offered themselves for re-appointment. A brief background of both the Directors is given in the Corporate Governance Report.

The Board of Directors, at its meeting held on 31st March, 2012, appointed, subject to the approval of the Members at the Annual General Meeting, Mr. Raj H Eswaran as the Managing Director of the Company, on a 5-year-term with effect from 1st April, 2012. Members may please refer Item No.7 in the accompanying Notice of the Annual General Meeting for the terms of appointment and remuneration of Mr. Raj H Eswaran.

Mr.J D N Sharma, after serving your Company as Chief Executive for 16 years, retired on 31st March 2012. Directors place on record his significant contributions made towards the progress of the Company. To take advantage of his knowledge gained during the last 16 years the Board invited Mr. J D N Sharma to become a Director and he has accepted to join the Board as Additional Director. Mr. J D N Sharma vacates office as Additional Director and is eligible for appointment as Director at the ensuing General Meeting.

12. Directors' Responsibility Statement

As required under Section 217(2AA) of the Companies Act, 1956, the Directors of the Company hereby state and confirm:

(i) that in the preparation of Annual Accounts for the year, applicable Accounting Standards have been followed along with proper explanations relating to material departures;

(ii) that the Directors have selected such accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for the year under review;

(iii) that the Directors, have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and

(iv) that the Directors have prepared the Annual Accounts on a going concern basis.

13. Auditors

The Statutory Auditors of the Company, M/s Brahmayya & Co., Chartered Accountants and M/s R Subramanian & Co., Chartered Accountants retire at the ensuing Annual General Meeting

and have confirmed their eligibility for re-appointment in terms of Section 224 (1B) of the Companies Act, 1956.

The Audit Committee and the Board of Directors recommend appointment of M/s Brahmayya & Co., Chartered Accountants and M/s R Subramanian & Co., Chartered Accountants as Statutory Auditors of the Company from the conclusion of ensuing Annual General Meeting up to the conclusion of the next Annual General Meeting of the Company.

14. Particulars of Employees

The information required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, are annexed to this Report, and they form part of this Report. Having regard to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Reports together with Accounts, are being sent to the members of the Company, excluding statement of Particulars of Employees under Section 217(2A) of the Act. Any Member interested in receiving copy of the Particulars of Employees, may write to the Company at the Registered Office

15. Particulars of Research and Development, Conservation of Energy, Technology Absorption and Foreign Exchange Earnings / Outgo

Information required under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in Report of the Board of Directors) Rules, 1988, is attached as Annexure - C and forms part of this Report.

16. Acknowledgement

The Directors accept and convey their sincere appreciation to all employees of the Company for their continued commitment towards achieving company's goal. The Directors also acknowledge and are grateful to the Bankers, Shareholders, Vendors and other Stakeholders for their continued confidence, co-operation and support.

For and on behalf of Board of Directors

Place: Chennai Hari Eswaran

Date: 14th August 2012 Chairman


Mar 31, 2011

To the Members

The Directors are pleased to present the Annual Report along with the Audited Financial Statements for the period from 1st April 2010 to 31st March 2011.

1. Financial Results

Highlight of Financial Results for the year are as under:

[Rupees in lacs]

2010-11 2009-10

Particulars Standalone Consolidated Standalone Consolidated

Sales 26,833 29,761 21,585 25,717

Other Income 150 494 388 572

Total Income 26,983 30,255 21,973 26,289

Total Expenditure 24,556 28,581 20,217 25,262

Profit/(Loss) before depreciation, interest and Exceptional Items 2,427 1,674 1,750 1,027

Depreciation 468 1,082 455 766

Interest 812 909 581 604

Profit/(Loss) before Exceptional Items 1,147 (317) 720 (343)

Exceptional Items - - - -

(i) Surplus on FCCB Buyback - - 6,113 6,113

(ii) Net Foreign Exchange Fluctuation - - (158) (1,58)

Profit/(Loss) before Tax 1,147 (317) 6,674 5,612

Provision for Taxation 312 405 1,084 1,101

Adjustment for Minority Interest - - - (15)

Net Profit/(Loss) 835 (722) 5,590 4,496

2. Dividend

Directors are pleased to recommend a dividend of Rs. 1.20 per equity share of the face value of Rs.2 for the year ended 31st March, 2011 (Previous year Rs.4 per share, including Rs.3 per share as one-time special dividend on account of exceptional items). This dividend, subject to the approval at the AGM on August 29lh 2011 will be paid to the shareholders whose names appear on the Register of Members as on 23rd August 2011. The dividend will absorb Rs.291 lacs including dividend tax.

3. Performance:

During the year under review, the Company has achieved revenue on consolidated basis at Rs.303 Crores compared to previous year's revenue of Rs.263 Crores. The pre-tax loss (without considering the exceptional items) was reduced from Rs.3.43 crores during 2009-10 to Rs.3.17 crores during 2010-11.

4. Management Discussions and Analysis

(i) Industry Environment and outlook for the future:

During the year 2010 -11 electrical equipment industry has experienced sustained growth momentum with a growth rate of approximately 14%. The overall outlook for the industry future continues to be healthy.

While the general picture is thus fairly rosy, there are a number of factors that continue to cause concern; addressed in a focused manner, can brighten the picture even further. The large gap between the budgeted capacity addition during the fifth plan and the reality till date indicates that the shortfall in the planned capacity addition will be substantial. Same is the case with respect to investments in transmission and distribution sector through RAPDRP Schemes as well as other initiatives. 2011 -12 being the last year of the fifth-five-year-plan is expected to see the usual last minute efforts to reduce this gap resulting in increased opportunities. However, what is required is sustained level of high investment in these areas if India were to address its power needs efficiendy and eliminate the scourge of power shortages in the near future.

International markets for power system equipment which your Company is addressing also show sustained growth, with the utilities in USA increasing their spend under various government initiatives and various countries in Europe particularly Eastern Europe and Russia drawing up plans for substantial increase in their investments in modernization of power sector. Green initiatives across the Western Europe are also a cause for optimism. African market, in the long term has a huge potential for growth.

Thus the overall outlook for various products, systems, solutions and projects in which your company is engaged in remains healthy. However, substantial capacity additions and fairly large gap between the plans and achievements with respect to capacity additions and other investments in this sector, particularly in India, would also mean continued pressure on margins.

(ii) Overall Company strategy:

Since its inception as a joint venture, the company had an arrangement of receiving its technology from its JV partner and addressing primarily the Indian market. Since 2003 the company started branching out into lines of business other than those of its JV and developing its own technology for these business lines.

Exit of its the then JV partner from the company in 2006 gave your company the freedom and an opportunity to grow in the global markets and at the same time the challenge of self reliance in the field of technology was posed. Your company accepted this challenge of ensuring that all its product lines offer the state-of-the-art-technology acceptable across the global markets and consequendy the opportunity of being able to address the global markets for its rapid and sustained growth.

Towards this your company has invested significantly in acquiring and strengthening high technology companies in Canada and in Germany and in establishing significant R&D facilities in India. This strategy has now enabled the company to be able to offer, starting from the year 2011-12, an array of new products and technologies in the global markets, which will propel the growth of the company in the future.

In parallel, the company has put in place a strategy of backward integration to capture the value chain in the manufacturing activity through significant investments in world class manufacturing facilities - mainly in India for basic manufacturing and in other countries in local manufacturing as appropriate. This will not only allow us to offer competitive products across the global markets but will also help in improving margins.

The twin strategies of ownership of state-of-the-art-technology and the related IPs in all its core activities and capturing significant parts of the value chain will be the foundation of your company's march towards sustained and rapid growth in the future.

(iii) Operations:

During the year 2010-11, the Indian operations of the Company have grown satisfactorily both in terms of sales as well as profits. Sales have shown a growth of 24% which is ahead of the market growth and the profits from ordinary operations (without considering the exceptional items) at EBIDTA level have grown by 50% over the year 2009 -10. The growth of order book is also generally satisfactory though the Company has consciously stayed away from low profitability opportunities particularly in the area of Turnkey projects. Considering the healthy order book and the expected growth of the industry in the coming year, your company expects to grow significantly during the year 2011-12.

The Company's international operations continue to gain strengths as the Company is gradually moving from investment phase into market realization phase. Thus the Company's Canadian operations at ERL Phase have shown a 20% increase in order input, its international sales and marketing operations at ERLMINT has doubled its Order intake and Switch craft Europe GmbH in Germany has seen the first orders from the European markets. As these subsidiaries in Canada and Germany complete their new product introduction, which have been somewhat delayed, during 2011-12 the international operations are expected to show considerable growth during 2011-12 and sustained growth at higher levels thereafter.

In order to counter the pressures on the margins and to be able to cater to the expected growth in global demand through its various international operations, the Company has initiated major investments in manufacturing and backward integration with a new manufacturing base at Harohalli, near Bangalore. The first phase of the investment is likely to be completed and the commercial production of the same will be commenced during the second half of the current financial year. This coupled with growth of the business and various odier actions being taken by your Company to reduce costs, would address the issues concerning the pressure on the margins and the results from the same can be expected from the year 2012-13 onwards.

5. Subsidiary Companies and Consolidated Financial Statements:

There has been no material change in the nature of the business of the subsidiaries.

Consolidated Accounts in accordance with the requirements of Accounting Standards AS 21 (read with AS 23) issued by the Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries are annexed to this Annual Report. A statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiaries in India and abroad, is attached to mis Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any Member of the Company/its subsidiaries seeking such information. Annual Accounts of the subsidiary companies will also be available for inspection by any Member of the Company/its subsidiaries at the Registered Office of the Company.

6. Human Resource Development

During the year under review, a number of HR and training initiatives were taken to supplement the Company's effort towards business sustainability and growth. On the industrial relations front, your Company has a cordial relationship with its employees and union.

The total number of employees as at 31st March 2011 was 432.

7. Employee Stock Option Scheme:

The Company introduced an Employee Stock Option Scheme for the benefit of its executives effective from 29th September 2010.

Details of the stock options granted under the Employee Stock Option Scheme, 2009 are disclosed in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and set out in Annexure A of this Report

8. Fixed Deposit

The Company has not accepted any public deposit and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

9. Corporate Governance Report

Reports on Corporate Governance in accordance with Clause 49 of the Listing Agreements with Stock Exchanges, along with Auditors Report thereon are given separately as Annexure B in this Annual Report.

10. Directors

Mr Hari Eswaran and Mr Rakesh Garg, Directors retire by rotation and being eligible have offered themselves for re-appointment. A brief background of both the directors is given in the Corporate Governance Report.

11. Directors' Responsibility Statement

As required under Section 217(2AA) of the Companies Act, 1956, the Directors of the Company hereby state and confirm:

(i) that in the preparation of Annual Accounts for the year, applicable Accounting Standards have been followed along with proper explanations relating to material departures;

(ii) that the Directors have selected such accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for the year under review;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) that the Directors have prepared the Annual Accounts on a going concern basis.

12. Auditors

M/s. Brahmayya & Co., Chartered Accountants and M/s R Subramanian & Co., Chartered Accountants, the joint statutory auditors of the Company, hold office upto the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

13. Particulars of Research and Development, Conservation of Energy, Technology Absorption, etc:

The particulars as prescribed under section 217(l)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are set out in Annexure C to this Report.

14. Particulars of Employees

The information required to be furnished under Section 217 (2 A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is set out in the annexure to the Directors' Report. Having regard to the provisions of Section 219 (1) (b) (iv) of the Companies Act, the Annual Report together with Accounts, is being sent to the Members of the Company, excluding statement of particulars of employees under Section 217(2A) of the Act. Members desiring to have a copy of the same may write to the Registered Office of the Company.

15. Acknowledgement

Your Directors thank all its valued customers, suppliers and other business associates. They appreciate continued support from Banks and look forward to their co-operation in the future.

Your Directors place on record their appreciation of the dedicated efforts put in by the employees at all levels and wish to thank the Shareholders for their unstinted support and co-operation.

For and on behalf of Board of Directors

Place: Chennai Hari Eswaran

Date: 25th July, 2011 Chairman









 
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