Mar 31, 2016
DIRECTORSâ REPORT Dear Members,
The Directors have pleasure in presenting their 21st Annual Report of the Company together with the Audited Accounts for the year ended March 31, 2016.
FINANCIAL PERFORMANCE: (Rs, In Millions )
Particulars |
Year ended |
Year ended |
31.03.2016 |
31.03.2015 |
|
(12 months) |
(12 months) |
|
Income from sale of power |
1069.66 |
1424.03 |
Other Income |
- |
0.47 |
1069.66 |
1424.50 |
|
Profit before interest and depreciation |
45.16 |
83.94 |
Interest and Finance Charges |
25.31 |
31.22 |
Depreciation |
31.94 |
50.97 |
Profit after interest and depreciation but before exceptional Items |
(12.10) |
1.75 |
Exceptional Items (Net) |
86.20 |
912.37 |
Profit/(loss) before Tax |
(98.30) |
(910.62) |
Current Tax |
- |
- |
Mat Credit entitlement |
- |
- |
Profit/(loss) after Tax |
(98.30) |
(910.62) |
REVIEW OF OPERATIONS:
The Board observed that the Company achieved a turnover of Rs.1069.66 million for 12 months (Standalone) as against the previous yearâs turnover of Rs.1424.03 million (standalone) and there is a decrease in turnover by Rs.354.37 millions, which is a decrease by 24.89% over last year. The net loss for the year 2015-16 is Rs.98.30 million as against the net loss for the previous year 2014-15 of Rs.910.62 million which is due to the reason of shut down of one of the gen sets at the Power Plant and also the production of power which was hampered due to the frequent shutting down of another engine for carrying out overhaul in phases.
DIVIDEND:
Your Directors are unable to recommend any dividend on the Equity Capital of the Company due to continuous losses.
DIRECTORS:
In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. K. Vijay Kumar, Executive Director, Mrs. M. Mangatayaru, Director will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself/herself for re-appointment as Directors of the Company. During the year Dr. R.S. Murthy, Mr B.P. Vijaya Rao and Mr. V. Subramanyam have been appointed as Additional Directors on 13th November, 2015 and a notice has been received from members for regularization of their appointment as independent directors and the same are included as item Nos. 6, 7 and 8 of the notice. Similarly Mr. K. Vijay Kumar, is getting re-appointed as Executive Director for a term of 3 years as indicated under item No. 5 of the notice.
Further details about the above directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.
During the year Mr. V.S. Murthy, Director resigned from the Board with effect from 13th November, 2015.
Evaluation of the Boardâs Performance
In compliance with the Companies Act, 2013, and pursuant to LODR regulations, the performance evaluation of the Board and of its Committees was carried out during the year under review. More details on the same are given in the Corporate Governance Report. Familiarization Program for Independent Directors
The Company has formulated a familiarization program for the Independent Directors to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company. The details of such program are available in the Companyâs website www.suryachakra.in
Statement of declaration by Independent Directors
The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed both under Section 149(6) of the Companies Act, 2013 SEBI LODR Regulations.
Nomination & Remuneration Policy
The company follows a policy on remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board. More details on the same are given in the Corporate Governance Report.
Report on the performance and financial position of each of the subsidiaries has been provided in Form AOC-1 at Annexure - 6.
Petition with APTEL against the order of Joint Electricity Regulatory Commission (JERC):
The Appellate Tribunal for Electricity (APTEL), New Delhi has delivered their judgment on 28.11.2014 on the appeals filed by A&N Administration against the order dated 03.07.2013 of the JERC, directing JERC to finalise the completed capital cost issuing certain directives
Meanwhile, the A&N Administration filed a Civil Appeal No.1652 of 2015 in Honâble Supreme Court of India on 09.02.2015 for quashing the order dated 28.11.2014 of APTEL and staying further proceedings at JERC in finalizing the completed cost. However, Honâble Supreme Court admitted the appeal but not stayed any proceedings at JERC.
Accordingly, JERC, in turn as per the directives of APTEL has finalized the completed project cost in its order dated 29.04.2015, fixing the completed project cost at Rs.77.64 Cr and your company consequently submitted a supplementary invoice for the arrears towards differential in quantum of project cost at Rs.141.51 Crore for the period April 2003 to up to March, 2015.
An Complaint Petition was filed before JERC, New Delhi by your Company and the same was posted now posted for 14th September 2015 for adjudication.
The Supreme Court after arguments from both the sides on the CA No.3764 of 2016 and CA No.1652 of 2015 filed by A&N Administration along with CA No.5958 of 2015 filed by Company in its order dated 10.05.2016 directed the A&N Admin to deposit an amount of Rs.15.00 Crores with in a period of 10 weeks from that date. Accordingly, the A&N Admin has deposited Rs.15.00 Crores on 15.07.2016. The Company has since filed withdrawal application in Supreme Court on 21.07.2016 for granting permission to with draw the amount deposited by the A&N Admin. The hearing date is awaited.
MAINTENANCE OF THE POWER PLANT:
Your Company has made arrangements for supply of the required spares and services for overhauling of balance three engines along with certain spares required for regular maintenance of all the engines through a firm and it is expected the overhaul of all the engines will be completed by December, 2016. On completion of the overhauling of all the engines the monthly tariff revenues are expected to increase by about Rs.50 lacs per month from January 2017 onwards.
Management Discussion and Analysis Report for the year under review, pursuant to the LODR regulations, forms part of this Annual Report. The Board reviews the progress of the Company from time to time and guide the Company towards its corporate goals.
DIRECTORâS RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that:
a) in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanations relating to material departures;
b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;
c) the Directors have ensured that proper and sufficient care is taken in the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) The Annual Accounts are prepared on a going concern basis.
e) the directors laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Disclosures Under The Companies Act, 2013
i) Extract of Annual Return:
The details forming part of the extract of the annual return is enclosed in Form MGT.9 at Annexure - I.
ii) Number of Board Meetings:
The Board of Directors met 5 times during the year 2015-2016. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.
iii) Composition of Audit Committee:
The Board has constituted the Audit Committee which comprises of Sri P V Subba Rao as the Chairman and Sri B P Vijaya Rao, and Sri K Vijay Kumar as the members. More details on the committee are given in the Corporate Governance Report.
iv) Related Party Transactions
There are no materially significant related party transactions made by the company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the company at large. Thus disclosure in Form AOC-2 is not required.
v) No Loans/Guarantees / Investments under Section 186 of the Companies Act, 2013 have been made during the year. CORPORATE GOVERNANCE
As per the revised Clause 49 of the Listing Agreement on Corporate Governance, Management Discussion and Analysis Report forms part of the Annual Report (Annexure - 5). The company has complied with the Corporate Governance requirements under the Companies Act, 2013, and as stipulated under the listing agreement with the stock exchanges. A separate section on corporate governance under the Listing Agreement, along with a certificate from the Practicing Company Secretary confirming the compliance, is annexed and forms part of the Annual Report (Annexure - 2).
Corporate Social Responsibility Policy: As per Companies Act 2013, Your Company does not fall under the Corporate Social Responsibility criteria. The Company would ensure the provisions of the Act as and when the same is applicable.
Risk Management Policy
The Board of Directors has developed and implemented Risk Management Policy for the Company. It has identified and assessed internal and external risks, with potential impact and likelihood, that may impact the Company in achieving its strategic objectives or may threaten its existence.
Whistle Blower Policy
The Company has in place a Whistle Blower policy for vigil mechanism for Directors and employees to report to the management about unethical behavior, fraud, violation of Companyâs Code of Conduct. None of the Personnel has been denied access to the audit committee.
Declaration about Compliance with the Code of Conduct by Members of the Board and Sr. Management Personnel.
The Company has complied with the requirements about Code of Conduct for Board members and Sr. Management Personnel.
Disclosure under the sexual harassment of woman at workplace (prevention, prohibition and redressal) Act, 2013.
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trained) are covered under the Policy. The following is a summary of sexual harassment complaints received and disposed off during each Calendar year:
a) No. of Complaints received - NIL
b) No. of Complaints disposed off - NIL
Statutory Auditors:
The Statutory Auditors of the Company viz., M/s M. Bhaskara Rao & Co., Chartered Accountants, Hyderabad were appointed in the Annual General Meeting on 30.09.2014 for 5 years. As per the provisions of section 139 (1) of the Companies Act, 2013, the appointment needs to be ratified by the member at the every subsequent Annual General Meeting. The directors recommend ratification of their appointment.
The Auditorsâ Report to the Shareholders for the year under review contains some qualifications, to which explanations are given below.
Compliance under Regulation 33 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
FORM A (for audit report with unmodified opinion)
1. 2. |
Name of the Company Annual financial statements for the year ended |
Suryachakra Power Corporation Limited March 31, 2016 |
3. |
Type of Audit observation |
Emphasis of Matters on Standalone & Consolidated financial Statements. |
4. |
Frequency of observation |
As detailed below |
Standalone and Consolidated Financial Results i) Note 3(b) of the Statement regarding disinvestment of stake in subsidiary Suryachakra Global Enviro Power Limited. Frequency of observation: Repetitive - First time reported in 2011-12. ii) Note 3(f) (b) of the Statement regarding writing back of the unpaid interest aggregating to Rs. 1359.51 Lakhs recognized prior to financial year 2012-13. Frequency of observation: First time reported in 2015-16 iii) Note 4 of the Statement regarding petition u/s 433(1) (c) of the Companies Act, 1956 before the Honourable High Court of Andhra Pradesh. |
||
5. To be signed by : Managind Director |
(Dr. S.M. Manepalli) |
|
Chief Financial Officer |
(V L Narasimha Rao) |
|
Audit Committees Chairman |
(P. V. Subba Rao) |
|
Auditor of the Company |
For M. Bhaskara Rao & Co. Chartered Accountants Firm Registration Number: 000459S V. K. Muralidhar Partner Membership Number : 201570 |
Compliance under Regulation 33 of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 FORM B (for audit report with modified opinion)
1. Name of the Company |
Suryachakra Power Corporation Limited |
2. Annual financial statements for the year ended |
March 31, 2016 |
3. Type of Audit qualification |
Qualified opinion on Standalone & Consolidated financial statements. |
4. Frequency of qualification |
As detailed below |
5. Draw attention to relevant notes in the annual financial statements and management response to the qualification in the directors report |
Statement of standalone and consolidated financial results i) Qualification: Note 3(a) of the Statement regarding recognition of rejections / withheld amount by Andaman and Nicobar Administration (A&NA) - We are unable to comment on the extent of ultimate recoverability of Rs. 48.87 Lakhs for the quarter ended March 31, 2016 and Rs. 600.93 Lakhs for year ended March 31, 2016 (Quarter ended 31st Dec, 2015 Rs.145.73 Lakhs, Quarter ended March 31, 2015 Rs. 126.39 Lakhs, year ended March 31, 2015 Rs. 493.43 Lakhs) and the total receivables as at March 31, 2016 -Rs. 1426.01 Lakhs (as at March 31, 2015 - Rs.2305.08 Lakhs) which are subject to confirmation by the A&NA. Further, the company, in earlier years, has also recognized interest aggregating to Rs. 1275.74 Lakhs on such rejections / with held amounts which is also subiect to confirmation by the A&NA. |
Frequency of observation: Repetitive - First time reported in 2003 - 04 Management Response: Management is pursuing the matter and is confident of recovering the amount. In this regard, Honorable Supreme Court of India vide its Order dated 10th May 2016, Ordered A & N Administration to deposit an amount of Rs. 15 Crores with Supreme Court for the purpose of consideration of interim relief. |
|
ii) Qualification: Note 3 (c) of the Statement regarding recovery of investments and advances to ts subsidiaries aggregating to Rs. 10,710.97 Lakhs (Previous Year - Rs. 12,935.76 Lakhs). We are unable to comment on the extent of ultimate recoverability of these investments and advances. Frequency of observation: Repetitive - First time reported in 2011 - 12 Management Response: a. SECPL is a 100% subsidiary of the company. SECPL has obtained most of the requisite licenses for setting up the 350MW project; signed a Memorandum of Understanding (MOU) with Chhattisgarh State Electricity Board; and entered into an implementation Agreement with Chhattisgarh State Power Distribution Company Limited, for setting up the said power project. Management is confident of mobilizing the requisite funds to execute the project and recover the investment made in the project. Hence, no provision for diminution in the value of investment is considered necessary in the opinion of the Board. b. Regarding advances to Suryachakra Global Ventures Limited (SGVL), a wholly owned subsidiary of the company incorporated in Hong Kong - Rs. 70,59,96,278 which in turn has advanced the said amount to M/s Symphony Trading and Investment Limited (STIL), Hong Kong for acquiring coal mines for the company/ SGVL during the quarter ended June 2011. In the absence of information regarding financial worthiness of STIL / securities in favour of the company, we are unable to comment on the extent of recoverability of the advance. |
|
iii) Qualification: Note 3 (d) of the Statement regarding advances to certain related parties aggregating to Rs. 669.80 Lakhs (Previous Year - Rs. 687.62 Lakhs) which are considered good and fully recoverable for the reasons stated therein. We are unable to comment on the extent of ultimate recoverability of these advances. Frequency of observation: Repetitive - First time reported in 2014 - 15 Management Response: Management is pursuing to induct strategic investors for completing the project executions and to recover the advances. |
|
iv) Qualification: Note 3 (e) of the Statement regarding capital advances aggregating to Rs.884.28 Lakhs (Previous Year - Rs. 1036.59 Lakhs) considered good and fully recoverable for the reasons stated therein. We are unable to comment on the extent of ultimate recoverability Frequency of observation: Repetitive - First time reported in 2014 - 15 Management Response: The company has advanced for the purpose of refurbishment of DG sets for 20 MW Power Plant situated at Bamboo flat in Andaman & Nicobar Islands. The company is making efforts to carry out the refurbishment of DG sets. |
v) Qualification: Note 3 (f) (a) of the Statement regarding non-accounting of interest expense on certain loans availed by the Company. We are unable to comment on the extent of shortfall in interest expense for the quarter and year ended March 31, 2016 and also regarding cumulative liability up to March 31, 2016. Frequency of observation: Repetitive - First time reported in 2014 - 15 Management Response: The management is in touch with Lenders for OTS without interest and they suggested to give a concrete proposal and the same is under active consideration with the Lenders. Management is confident of resolving the issues pertaining to Lenders amicably and hence no provision of interest has been made. |
|
vi) Qualification: Note 3 (g) of the Statement regarding confirmation of balances from Secured / Unsecured Loan Lenders; Trade Payables; Creditors for Capital works/goods; Loans and Advances given by the Company. We are unable to comment on the extent of adverse variances, if any. Frequency of observation: Repetitive - First time reported in 2014 - 15 Management Response: The Management is confident of convincing all secured creditors, trade creditors and to make OTS and settle their accounts as most of the creditors are known to the management and they would listen to the versions of the management. Hence no confirmations have been obtained from all the creditors. |
|
5. To be signed by : Managing Director |
(Dr. S.M. Manepalli) |
Chief Financial Officer |
(V L Narasimha Rao) |
Audit Committees Chairman |
(P. V. Subba Rao) |
Auditor of the Company |
For M. Bhaskara Rao & Co. Chartered Accountants Firm Registration Number: 000459S V. K. Muralidhar Partner Membership Number : 201570 |
Secretarial Audit:
The Board had appointed M/s L D Reddy & Co, Company Secretaries in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2015-16. The report of the Secretarial Auditor is annexed to this report as Annexure - 3.
The Secretarial Auditorsâ Report to the Shareholders for the year under review contains some qualifications, to which explanations are given below.
Secretarial Auditorâs Qualification Boardâs explanation
An Inquiry was initiated under section 7A of the EPF & MP Due to non-receipt of receivables from our customers, i.e. Electric-ACT 1956 against the company ity Department of Andaman and Nicobar Administration, there are
some defaults and efforts are being made to regularize the same the company has defaulted in payment of bank dues, there- due to non-receipt of receivables from our customers, i.e. electric-fore sbi global factors limited has filed a petition before ity department of andaman and nicobar administration, there are honâble high court of andhra pradesh for winding up of the some defaults and efforts are being made to regularize the same. company due to non-receipt of receivables from our customers, i.e. electricity Department of Andaman and Nicobar Administration, there are some defaults and efforts are being made to regularize the same.
The company is not regular in paying statutory dues like PF, Due to non-receipt of receivables from our customers, i.e. Electric-Gratuity, TDS, Service Tax, Sales Tax, etc. ity Department of Andaman and Nicobar Administration, there are some defaults and efforts are being made to regularize the same. Due to non-receipt of receivables from our customers, i.e. Electricity Department of Andaman and Nicobar Administration, there are some defaults and efforts are being made to regularize the same.
As plant is located in Andaman and Nicobar Islands, Physical Efforts are being made to comply with the Labour Laws at theVerification was not done, therefore we are unable to report on Factory site. the compliance of Labour laws at Factory Site.
Court cases are filed against the company, Directors and other
guarantors for default of payment of dues to bank and to other Discussions are on with the Bankers to sort out the issue.
unsecured creditors.
Court Cases are filed by the company to recover debts and to They are to safeguard the business of the Company only.
safeguard its business.
Thecoal SGVL couM not be recovered so Efforts are being made to recover the balance amount also.
far from Indonesia. Out of US$ 190.00 lacs, the management could recover only US$ 25.91 lacs and the balance is yet to be recovered.
Quarterly Financial Results / Shareholding Pattern, is not posted The Company posted the required information in the on Companyâs Website. Companyâs website
Cost Auditors:
Pursuant to the provisions of Section 148 of the Companies Act, 2013 , M/s. kju & Associates, Practicing Cost Accountants (Firm Regn. No.000474), have been appointed to conduct audit of cost records of Power (Electricity) for the year 2016-17.
Cost Audit Report will be submitted to the Central Government within the prescribed time
Conservation of Energy, Technology Absorption & Foreign Exchange Earnings And Outgo:
The statement giving the particulars with respect to Conservation of Energy, Technology absorption and Foreign Exchange Earnings and outgoings as required under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is annexed hereto at Annexure - 4 and forms part of the Report.
Fixed deposits:
During the year under review, your Company has neither invited nor accepted any deposits from the public.
Insurance:
The properties of your Company including its buildings, plant and machinery and stocks have been adequately insured as required.
Particulars of Employees and related disclosures
The information 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 may be treated as NIL.
Personnel & Industrial Relations:
Relations between employees and the management continued to be cordial during the year. The Human Resource Department is committed in its quest to improve and maintain employee morale and satisfaction at all levels.
Acknowledgments:
Your Directors would like to express their grateful thanks for the assistance and co-operation received from the Financial Institutions, Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the excellent services of the executives, staff and workers of the company.
For and on behalf of the Board of Directors
Dr. S.M. Manepalli Mr. K. Vijay Kumar
Managing Director Executive Director
Place: Hyderabad.
Date: 11.08.2016.
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting their 20th Annual Report of
the company together with the Audited Accounts for the year ended March
31, 2015.
FINANCIAL PERFORMANCE: (Rs. in million)
Particulars Year ended Period ended
31.03.2015 31.03.2014
(12 months) (12 Months)
Income from sale of power 1424.03 1459.95
Other Income 0.47 0.53
1424.50 1460.48
Profit before interest and depreciation 83.94 77.69
Interest and Finance Charges 31.22 38.84
Depreciation 50.97 61.76
Profit after interest and
Depreciation but before 1.75 (22.90)
exceptional items
Exceptional items (net) 912.37 -
Profit/(Loss) before Tax (910.62) (22.90)
Current Tax - -
Mat Credit entitlement - (9.21)
Profit/(Loss) after Tax (910.62) (32.11)
REVIEW OF OPERATIONS:
The Board observed that the company achieved a turnover of Rs.1424.03
Million for 12 months (Stand alone) as against the previous year's
turnover of Rs.1459.95 Million (stand alone) and there is a decrease in
turnover by Rs.35.92 Million, which is a decrease by 2.46% over the
last year. The net loss for the year is Rs.910.62 million against the
net loss for the previous year of Rs.32.11 Million. There was a shut
down of one of the gen sets at the A&N Plant and also the production
was hampered due to frequent overhaul of another genset.
Management Discussion and Analysis Report for the year under review,
stipulated under Clause 49 of the Listing Agreement entered with BSE
Ltd forms part of this Annual Report. The Board reviews the progress of
the Company from time to time and guide the Company towards its
corporate goals.
DIVIDEND:
Your Directors are unable to recommend any dividend on the Equity
Capital of the Company due to continuous losses.
DIRECTORS:
In accordance with the provisions of the Companies Act, 2013 and
Articles of Association of the Company, Mr. K.Vijay Kumar, Director
will retire by rotation at the ensuing Annual General Meeting and being
eligible, offers himself for re-appointment as a Director of the
Company.
Further details about the above director are given in the Corporate
Governance Report as well as in the Notice of the ensuing Annual
General Meeting being sent to the shareholders along with the Annual
Report
Evaluation of the Board's Performance
In compliance with the Companies Act, 2013, and Clause 49 of the
Listing Agreement, the performance evaluation of the Board and of its
Committees was carried out during the year under review. More details
on the same is given in the Corporate Governance Report.
Familiarization Program for Independent Directors
The Company has formulated a familiarization program for the
Independent Directors to provide insights into the Company to enable
the Independent Directors to understand its business in depth and
contribute significantly to the Company. The details of such program
are available in the Company's website www.suryachakra.in
Statement of declaration by Independent Directors
The Company has received declarations from all the Independent
Directors confirming that they meet the criteria of independence as
prescribed bothunder Section 149(6) of the Companies Act, 2013 and
Clause 49 of the Listing Agreement with the Stock Exchange.
Nomination & Remuneration Policy
The company follows a policy on remuneration of Directors and Senior
Management Employees. The policy is approved by the Nomination &
Remuneration Committee and the Board. More details on the same are
given in the Corporate Governance Report.
Disposing Off investment in Loss Making Subsidiaries
During the period under review, Your Company, in order to improve its
financial performance, has disposed off its investments in it's
direct and step down loss making subsidiaries viz., Suryachakra Global
Enviro Power Limited (SGEPL) for Rs.6,27,080/, South Asian Agro
Industries Limited for Rs.1,20,205/-, M.S.M. Energy Limited for
Rs.3,42,600/- and Sri Panchajanya Power Private Limited for
Rs.1,57,800/- on account of continuous losses incurred in power plants
located at Chhattisgarh and Maharashtra and on account of non-viability
of these plants since inception.
The shares held by your Company in SGEPL and the shares held by SGEPL
in the above step-down subsidiaries were already transferred as per the
decision of the board in its meeting held on 3.06.2015.
Report on the performance and financial position of each of the
subsidiaries has been provided in Form AOC-1 at Annexure-6
Petition with APTEL against the order of Joint Election Regulatory
Commission (JERC):
The Appellate Tribunal for Electricity (APTEL), New Delhi has delivered
their judgment on 28.11.2014 on the appeals filed by your Company and
A&N Administration against the order dated 03.07.2013 of the JERC,
directing JERC to finalise the completed capital cost.
Meanwhile the A&N Administration filed a Civil Appeal No.1652 of 2015
in Hon'ble Supreme Court of India on 09.02.2015 for quashing the order
dated 28.11.2014 of APTEL and stay further proceedings at JERC.
However, Hon'ble Supreme Court admitted the appeal but not stayed any
proceedings at JERC.
Accordingly, JERC, in turn, after verifying all the documents in
respect of completed project cost issued its order dated 29.04.2015,
fixing the completed project cost at Rs.77.64 Cr and your company
consequently submitted a supplementary invoice for Rs.141.51 Crore, for
the period upto March, 2015.
An Execution petition was filed before JERC, New Delhi by your Company
and the same was posted now posted for 14th September 2015 for
adjudication.
Maintenance of the power plant:
Your Company has made arrangements for overhauling and repairs of the
engines through a firm and it is expected to be completed by December
2015. On completion of the overhauling the monthly revenues are
expected to increase by about Rs.50 lacs per month from January 2016
onwards.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors
confirm that:
a] in the preparation of the annual accounts, the applicable Accounting
Standards had been followed along with proper explanations relating to
material departures;
b] The Directors had 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 at the end of the financial year and of the profit or loss
of the company for that period;
c] the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act for safeguarding the assets of the
company and for preventing and detecting fraud and other
irregularities;
d] the Annual Accounts were prepared on a going concern basis
e] the directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and were operating effectively.
f] the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
DISCLOSURES UNDER THE COMPANIES ACT, 2013
i) Extract of Annual Return:
The details forming part of the extract of the annual return is
enclosed in Form MGT.9 at Annexure - I.
ii) Number of Board Meetings:
The Board of Directors met 4 times during the year 2014-2015. The
details of the board meetings and the attendance of the Directors are
provided in the Corporate Governance Report.
iii) Composition of Audit Committee:
The Board has constituted the Audit Committee which comprises of Sri V
S Murthy, as the Chairman and Sri P V Subba Rao, and Sri K Vijaya Kumar
as the members. More details on the committee are given in the
Corporate Governance Report.
iv) Related Party Transactions:
There are no materially significant related party transactionsmade by
the company with Promoters, Directors or Key Managerial Personnel etc.,
which may have potential conflict with the interest of the company at
large. Thus disclosure in Form AOC-2 is not required.
v) No Loans/Guarantees / Investments under Section 186 of the Companies
Act, 2013 have been made during theyear.
CORPORATE GOVERNANCE:
As per Clause 49 of the Listing Agreement on Corporate Governance,
Management Discussion and Analysis Report forms part of the Annual
Report (Annexure - 5). The company has complied with the corporate
governance requirements under the Companies Act, 2013, and as
stipulated under the listing agreement with the stock exchanges. A
separate section on corporate governance under the Listing Agreement,
along with a certificate from the Practising Company Secretary
confirming the compliance, is annexed and forms part of the Annual
Report (Annexure - 2).
Corporate Social ResponsibilityPolicy
As per Companies Act 2013, Your Company does not fall under the
Corporate Social Responsibility criteria. The Company would ensure the
provisions of the Act, as and when the same is applicable.
Risk Management Policy
The Board of Directors has developed and implemented Risk Management
Policy for the Company. It has identified and assessed internal and
external risks, with potential impact and likelihood, that may impact
the Company in achieving its strategic objectives or may threaten its
existence.
Whistle Blower Policy
The Company has in place a Whistle Blower policy for vigil mechanism
for Directors and employees to report to the management about unethical
behavior, fraud, violation of Company's Code of Conduct. None of the
Personnel has been denied access to the audit committee.
Declaration about Compliance with the Codeof Conduct by Members of the
Board and Sr.Management Personnel
The Company has complied with the requirements aboutCode of Conduct for
Board members and Sr. Management Personnel.
Disclosure under the SEXUAL HARASSMENT OF WOMEN AT WORK PLACE
(prevention, prohibition and redressal) Act, 2013
The Company has in place an Anti-Sexual Harassment Policy in line with
the requirements of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints
Committee has been set up to redress complaints received regarding
sexual harassment. All employees (permanent, contractual, temporary and
trained) are covered under the Policy. The following is a summary of
sexual harassment complaints received and disposed off during each
Calender year:
a) No. of Complaints received - NIL
b) No. of Complaints disposed off - NIL Statutory Auditors:
The Statutory Auditors of the Company viz., M/s M. Bhaskara Rao & Co.,
Chartered Accountants, Hyderabad were appointed in the Annual General
Meeting on30.09.2014 for 5 years. As per the provisions of section 139
(1) of the Companies Act, 2013, the appointment needs to be ratified by
the member at the every subsequent annual general meeting. The
directors recommend ratification of their appointment.
The Auditors' Report to the Shareholders for the year under review
contain some qualifications, to which explanations are given below.
Cost Auditors
Pursuant to the provisions of Section 148 of the Companies Act, 2013 ,
M/s. kju & Associates, Practicing Cost Accountants (Firm Regn.
No.000474), have been appointed to conduct audit of cost records of
Power (Electricity) for the year 2015-16.
Cost Audit Report will be submitted to the Central Government within
the prescribed time.
Conservation of Energy, Technology Absorption & Foreign Exchange
Earnings and Outgo:
The statement giving the particulars with respect to Conservation of
Energy, Technology absorption and Foreign Exchange Earnings and
outgoing as required under Section 134 of the Companies Act, 2013 read
with Companies (Accounts) Rules 2014 is annexed hereto at Annexure- 4
and forms part of the Report.
Fixed deposits:
During the year under review, your Company has neither invited nor
accepted any deposits from the public. Insurance:
The properties of your Company including its buildings, plant and
machinery and stocks have been adequately insured as required.
Particulars of Employees and related disclosures
The information 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 may be treated as NIL.
Personnel & Industrial Relations:
Relations between employees and the management continued to be cordial
during the year. The Human Resource Department is committed in its
quest to improve and maintain employee morale and satisfaction at all
levels.
Acknowledgment:
Your Directors would like to express their grateful thanks for the
assistance and co-operation received from the Financial Institutions,
Banks, Government Authorities, Customers, Vendors and Members during
the year under review. Your Directors also wish to place on record
their deep sense of appreciation for the excellent services of the
executives, staff and workers of the company.
For and on behalf of the Board of Directors
Dr. S.M. Manepalli Mr. K. Vijay Kumar
Managing Director Executive Director
Place: Hyderabad.
Date: 13.08.2015.
Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting the 19th Annual Report of
the company together with the Audited Accounts for the year ended March
31, 2014.
FINANCIAL PERFORMANCE:
(Rs. in millions)
Particulars Year ended Period ended
31.03.2014 31.03.2013
(12 months) (9 Months)
Income from sale of power 1458.42 1011.56
Other Income 2.05 0.00
1460.47 1011.56
Profit before interest and depreciation 77.69 35.69
Interest and Finance Charges 38.84 78.06
Depreciation 61.76 50.80
Profit after interest, but before
exceptional items (22.90) (93.17)
Exceptional Items (net) -- --
Profit before Tax (22.90) (93.17)
Current Tax -- --
Mat credit entitlement (9.21) --
Profit after Tax (32.11) (93.17)
Profit / (Loss) for the year (32.11) (93.17)
REVIEW OF OPERATIONS:
The Board observed that the company achieved a turnover of Rs.1460.47
Millions for 12 months (Standalone) as against the previous year''s 9
months turnover of Rs.1011.56 Million(standalone) and an improvement in
turnover by Rs.448.92 Millions i.e. an increase in turnover by 43.37%
for 12 months period as against the 9 months turnover of last year,due
to improved methods of production at plant level, although there was a
shutdown of one of the gen sets at the A&N Plant. The operating net
loss for the current year wasRs.(-)32.11Millions after financial
charges when compared to previous year''s net loss of Rs.(-)93.17
Millions. The company''s 20 MW plant at Bamboo flat, Port Blair has
achieved an availability of 67.03%.
Management Discussion and Analysis Report for the year under review,
stipulated under Clause 49 of the Listing Agreement entered with Bombay
Stock Exchange Ltd forms part of this Annual Report. The Board reviews
the progress of the Company from time to time and guide the Company
towards its corporate goals.
JOINT ELECTRICITY REGULATORY COMMISSION (JERC) PETITION:
The Hon''ble JERC after hearing several hearings from both the parties
on the petition filed by the Company in November 2012 has passed order
dated 03.07.2013 in favour of the Company with directions to
respondents i.e. A&N Administration fixing project cost of SPCL at
Rs.78.2965 Crores and certain other issues viz: wavier of liquidated
damages and payment of deemed generation charges and interest on
delayed payment etc., and directing both the parties to submit the
compliance report in this regard to the commission within a fortnight
i.e. by 18.07.2013. The company has submitted invoices for an amount of
Rs.84.18 Crores (approx) as on July 2013 to A&N Administration for
payment of the arrears as per the JERC Order. However the A&N
Administration instead of complying the JERC order, have filed a review
petition on 03.08.2013 for review of the JERC order dated 03.07.2013 on
the tariff issues. The JERC after hearing both the parties at length
has dismissed the review petition filed by the A&N Administration in
its order dated 23.09.2013 for not finding any merit therein and issued
show cause notice to explain why penalty should not be imposed upon
them U/S 142 & 146 read with section 149 of Electricity Act against the
A&N Administration for willful and intentional non-compliance /
contravention of the order dated 03.07.2013 passed by the Commission
and for non-payment of an amount of Rs.84.18 Crores as claimed
by the Petitioner with in a stipulated period of fortnight i.e.,
17.07.2013.Had the amount of Rs.84.18 Crores was received at that time,
this would have immensely helped the company to reduce its debt and
could have restructured all the units for higher performance of SPCL as
well as its subsidiaries. The amount of arrears now accrued to
Rs.102.24 Crores as on 14.08.2014 as per JERC order.
Meanwhile in order to get resolved certain issues viz., reduction in
the quantum of the project cost, part payment of fixed charges before
COD etc., which were not fully recommended by the Hon''ble Joint
Electricity Regulatory Commission even though it was recommended by the
Expert, appointed with mutual consent by JERC, the Company filed an
appeal in the Appellate Tribunal for Electricity (APTEL) along with an
IA application for directing the A&N Administration for implementation
of the JERC order and making the payment and an appeal was also filed
in the APTEL on 02.08.2013. Likewise the A&N Administration has also
filed petition with APTEL on 08.10.2013 for quashing the order issued
by JERC.
Several hearings/arguments took place in the APTEL by both the parties
during the period from Sep 2013 to till date and completed the
arguments. In the latest hearing which took place on 21.08.2014 the
APTEL has directed both the parties to submit their comprehensive
written submissions by 19.09.2014 for the hearing dated 25.09.2014 for
delivering the judgement.
DISCOUNTING OF LC OF RS.14.80 CRORES ISSUE:
SPCL has filed a petition in Hon''ble High Court, Kolkata on
01.03.2014 for issuing a direction to State Bank, IFB, Kolkata for
discounting the L.C. as per the conditions of the L.C. The matter is
still pending in the Kolkata High Court. This being a regular procedure
/ business operation and is within the arrears to be received by the
Company from the A & N Administration.
WINDING UP PETITION FILED BY SBI GLOBAL FACTORS LTD. (AN UNSECURED
CREDITOR):
SBI Global Factors Ltd., filed a petition before the Hon''ble High
Court of Andhra Pradesh for winding up of the Company u/s 443 (1) (c )
of the Companies Act, 1956. The Company has appealed against the
petition and the matter is pending with the Hon''ble High Court,
Hyderabad. The Company is confident of resolving the matter amicably.
EXIT-CUM SHARE PURCHASE AGREEMENT BY CLIMATE CHANGE INVESTMENT II S.A.
CCI opted for Exit cum Share Purchase Agreement dt.24.7.2014 for
purchase by entire holdings of CCI stake (Equity shares) of SGEPL
through SPCL at a price of Re.1/- subject to approval by Reserve Bank
of India and others if any. The matter is under active consideration by
both the Parties.
MAINTENANCE OF THE POWER PLANT:
The maintenance schedule of the power plant could not be taken up in
time due to heavy paucity of funds. However, the partial works which
were needed urgently were attended which resulted in improved
efficiency of the power plant. However, still there is more scope for
further improvement in the efficiency of the power plant.
DIVIDEND:
During the year under review, your Directors are unable to recommend
any dividend on the Equity Capital of the Company due to losses.
SUBSIDIARY COMPANIES:
During the year under review, the performance of the subsidiaries viz.,
Suryachakra Global Enviro Power Limited, South Asian Agro Industries
Limited, M.S.M. Energy Limited and Sri Panchajanya Power Private
Limited, biomass based power plants located at Chhattisgarh and
Maharashtra have not been in operation, due to high interest cost,
non-availability of raw material at a competitive price on a continuous
basis and to avoid further losses on these un-viable units.
Suryachakra Global Enviro Power Limited (SGEPL):
The plant presently is not operational. M/s. Indiabulls Financial
Services Limited (presently known as M/s. Indiabulls Housing Finance
Limited) has invoked the SARFAESI Act issuing auction notice for sale
of the plant. Several Civil/ Criminal petitions were also filed by them
against the Company in various Courts including Gurgoan, Hon''ble High
Court of Delhi and Hon''ble High Court of Andhra Pradesh etc., The
matters are pending in the above Courts.The Company has filed a
petition in DRT/ Hyderabad seeking for a stay on the auction
proceedings. M/s. Indiabulls Financial Services Limited contested on
the jurisdiction grounds that DRT/Hyderabad has no jurisdiction. The
matter is pending in the DRT. IDBI Bank also filed an application in
DRT for recovery of loan sanctioned under CERs for recovery of their
dues.
South Asian Agro Industries Limited (SAAIL):
The plant presently is not operational. M/s. Indiabulls Financial
Services Limited (presently known as M/s. Indiabulls Housing Finance
Limited) has invoked the SARFAESI Act issuing auction notice forsale of
the plant. Several Civil/ Criminal petitions were also filed by them
against the Company in various Courts including Gurgoan, Hon''ble High
Court of Delhi and Hon''ble High Court of Andhra Pradesh etc., The
matters are pending in the above Courts.The Company has filed a
petition in DRT/ Hyderabad seeking for a stay on the auction
proceedings. M/s. Indiabulls Financial Services Limited contested on
the jurisdiction grounds that DRT/Hyderabad has no jurisdiction. The
matter is pending in the DRT. IDBI Bank also filed an application in
DRT for recovery of loan sanctioned under CERs for recovery of their
dues.
M. S. M ENERGY LIMITED
There is no change in the status of the plants located at Parbhani and
Amravathi. All the three consortium Banks i.e. IDBI Bank, SBI and SBH,
State Bank Of India have issued demand notices u/s. 13(2) of SARFAESI
Act for recovery of their share of dues.IDBI Bank has issued possession
notice of plants at Parbhani and Amravathi on 02.04.2014.
Sri Panchajanya Power Private Limited
Syndicate Bank has issued notice u/s. 13(2) of SARFAESI Act and they
have taken action u/s. 13(4) of SARFAESI Act during the year 2012. We
have filed petition in Debt Recovery Tribunal (DRT) Hyderabad and the
case is pending before DRT.
FIXED DEPOSITS:
During the year under review, your Company has neither invited nor
accepted any deposits from the public. INSURANCE:
The properties of the SPCL including its buildings, plant and machinery
and stocks have been adequately insured as required.
CORPORATE GOVERNANCE:
A report on Corporate Governance, Management Discussion and Analysis
along with additional information for shareholders as prescribed under
Listing Agreement with the Stock Exchange, Mumbai is annexed as a part
of this report along with Practicing Company Secretary''s Certificate
confirming the compliance of Corporate Governance. As per SEBI
requirement, Secretarial audit is carried out at regular intervals. The
findings of the audit have been found to be satisfactory.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to section 134(5) of the Companies Act, 2013, the Directors
confirm that:
i] in the preparation of the annual accounts, the 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 at the end of the financial year and of the profit or
loss of the company for that period;
iii] the Directors have ensured that proper and sufficient care is
taken in the maintenance of adequate accounting records in accordance
with the provisions of the Companies Act for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities;
iv] theAnnual Accounts are prepared on a going concern basis.
DIRECTORS:
In accordance with the provisions of the Companies Act, 1956/2013 and
Articles of Association of the Company, Mr. P.V.Subba Rao,and Mr.V.S
Murthy Directors will retire by rotation at the ensuing Annual General
Meeting and are eligible for re-appointment as Directors of the
Company. Mrs.M.Mangatayaru has been appointed as Additional Director on
14.08.2014 and a notice has been received from a member for
regularization of her appointment as Director and the same is included
as Item No.5 of the Notice. Similarly Dr.S.M.Manepalli is getting
re-appointed as Managing Director for a term of 5 years as indicated
under Item No.6 of the Notice.
During the year, Mr. A. Ramesh Kumar, Mr. P.K. Bhattacharjee and Mrs.
B.N. Raja Kumari, Directors have resigned from the Board
w.e.f.7.03.2014, 10.03.2014 and 28.03.2014 respectively.
ADEQUACY OF INTERNAL CONTROLS:
The Company has proper and adequate system of internal controls to
ensure that all assets are safeguarded and protected against losses
from unauthorized use or disposition and that transactions are
authorized, recorded, and reported correctly. The internal control
system is supplemented by an extensive program of internal audits,
review by management and documented policies, guidelines and
procedures.
The internal control system is designed to ensure that the financial
and other records are reliable for preparing financial statements and
other data and for maintaining accountability of assets. The Audit
Committee reviews the internal control system on a regular basis.
STATUTORY AUDITORS:
The Statutory Auditors of the Company viz., M/s M. Bhaskara Rao & Co.,
Chartered Accountants, Hyderabad will retire at the conclusion of the
ensuing Annual General Meeting and are eligible for re-appointment, if
appointed at the Annual General Meeting by members.
COST AUDITORS
Pursuant to the provisions of Section 148 of the Companies Act, 2013
M/s. Bharathula& Associates (Fellow Membership No.13760) Practicing
Cost Accountant, has been appointed to conduct audit of cost records of
power (electricity) for the year 2014-15.
Cost Audit Report will be submitted to the Central Government within
the prescribed time.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
EARNINGS AND OUTGO:
The statement giving the particulars with respect to Conservation of
Energy, Technology absorption and Foreign Exchange Earnings and
outgoings as required under Section 217(1)(e)of the Companies Act, 1956
read with Companies (Disclosure of Particulars in the Report of Board
of Directors) Rules 1988 is annexed hereto and forms part of the
Report.
PARTICULARS OF EMPLOYEES:
The information as required in accordance with Section 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended is furnished here under:
None of the employees of the Company has drawn salary exceeding
Rs.60.00 Lakhs per annum or Rs.5.00 Lakhs per month during the period
in terms of section 217 (2A) of the Companies Act, 1956.
PERSONNEL & INDUSTRIAL RELATIONS:
Relations between employees and the management continued to be cordial
during the year. The Human Resource Department is committed in its
quest to improve and maintain employee morale and satisfaction at all
levels.
ACKNOWLEDGMENTS:
Your Directors would like to express their gratefulthanks for the
assistance and co-operation received from the Financial Institutions,
Banks, Government Authorities, Customers, Vendors and Members during
the year under review. Your Directors also wish to place on record
their deep sense of appreciation for the excellent services of the
executives, staff and workers of the company.
For and on behalf of the Board of Directors
Sd/- Sd/-
Dr. S.M. Manepalli Mr. K. Vijay Kumar
Managing Director Executive Director
Place: Hyderabad.
Date : 14.08.2014.
Jun 30, 2012
The Directors have pleasure in presenting the 17th Annual Report of
the company together with the audited Accounts for the 15months period
ended June 30, 2012.
FINANCIAL PERFORMANCE:
(Rs. in million)
Particulars 15 months Year Ended
Period ended 31.03.2011
30.06.2012
Income from sale of power 1838.41 1449.97
Other Income 0.09 1.69
1838.50 1451.66
Profit before interest and depreciation 43.52 181.18
Interest and Finance Charges 150.12 76.70
Depreciation 84.13 68.34
Profit after interest, but before
exceptional items (190.73) 36.14
Exceptional Items (net) -- --
Profit before Tax (190.73) 36.14
Current Tax -- 7.32
Mat Credit entitlement -- (0.85)
Profit after Tax (190.73) 29.67
Profit/(Loss)from continuing operations (190.73) 29.67
Profit/(Loss)from discontinuing operations (36.58) 10.71
Profit/(Loss) for the year (227.32) 40.38
REVIEW OF OPERATIONS:
During the period under review, your Company achieved the gross
turnover of Rs. 1838.50 millions for fifteen months period as against
Rs.1451.66 millions for twelve months period of the previous year. The
operating loss for the current period was Rs. (-) 227.32 millions for
fifteen months period as against the net profit of Rs. 40.38 millions
for twelve months period of the previous year.
The company's 20 MW plant at Bamboo flat, Port Blair has achieved the
Plant Load Factor (PLF) during the year 2011-12 at 80.23% against the
benchmark of 68.49%.
During the period under review three DG Sets were running continuously
to its full load at A&N plant, but the fourth one was shut down for
taking up overhaul, for which the spares required were expected
shortly.
Management Discussion and Analysis report for the year under review, as
stipulated in Clause 49 of the Listing Agreement entered with Bombay
Stock Exchange, forms part of this Annual Report. The Board of
Directors review the progress of the Company from time to time and
guide the Company towards its corporate goals.
DIVIDEND:
During the year under review, your Directors are unable to recommend
any dividend on the Equity Capital of the Company due to Losses.
SUBSIDIARY COMPANIES:
During the year under review, the performance of the subsidiaries viz.,
Suryachakra Global Enviro Power Limited, South Asian Agro Industries
Limited, M.S.M. Energy Limited and Sri Panchajanya Power Private
Limited, which operate biomass based power plants at Chhattisgarh and
Maharashtra has not been satisfactory due to non-availability of
quality raw materials at reasonable rates. The prices of biomass like
rice husk, cotton stalk etc., have been steeply increased which
resulted into high cost of production raising questions about their
commercial viability. The company therefore had to willy-nilly took to
alternatives like Napier grass for their raw material requirement and
have already finalized tie-up arrangements with some napier grass
supplying companies on lease/contract farming for energy plantation in
Chattisgarh and Maharashtra which was more or less completed. Thus with
this continuous feed supply at competitive price in place, the
subsidiaries are expected to improve their performance in near future.
Suryachakra Global Enviro Power Limited (SGEPL):
The unit has been shut down from August 2011. The plant has generated
14,19,000 units and exported 11,84,800 units during 2011-12.
Raw material was not available on continuous basis and in sufficient
quantities. The prices of raw materials have also shot up to
unreasonably high level. In view of this, it is not considered
economical to run the plant. Even if it is done it is likely to incur
heavy operational losses and lead to a perennial shortage of sufficient
working capital. As a result the company entered into an agreement with
M/s. Indiabulls who are the term loan providers for the project to ease
the financial burden by restructuring the loans. As per the terms, the
existing term loan would to be rescheduled by them who would also fully
meet the project's working capital requirement. Accordingly M/s
Indiabulls has sanctioned a fresh term loan of Rs. 50.00 Crores after
closing the existing term loan of Rs.35.00 Crores along with
accumulated interest thereon. AboutRs.9.50 Cr. has been made available
as working capital to the unit in question.
The tariff during 2010-11 was a measly amount of Rs.4.03/Kwh and
Rs.4.23/Kwh in 2011-12. Against that as per CSERC tariff orders dated
28.12.2011 and 27.03.2012 the tariff was increased to Rs.5.10 / Kwh
(Rs.1.77 Rs.3.33) for the year 2012-13 (effective from 01.04.2012).
In view of the availability of sufficient working capital coupled with
the hike in rate of tariff, the unit is expected to be a profitable
outfit soon.
With these initiatives to restart the plant, order was placed with M/s
Sumax Power and Energy Systems Private Limited (SPESPL) for
re-commissioning of the plant. Pre-commissioning checks commenced in
July 2012 and work is in progress. The company has plans to complete
all the connected activities early and take the unit into service by
last week of September, 2012.
South Asian Agro Industries Limited
The unit was shut down from 29.03.2011 due to blasting of "Y" &
"B" Phase CTs and consequential damage to Feeder Differential
Protection Relay. The lead time for supply of these items is about 5 to
6 months.
As the problems plaguing the company are analogues to those afflicting
SGEPL, identified steps have been initiated here too with M/s.
Indiabulls, the loan provider for this project as the operating agency.
Accordingly M/s. Indiabulls has sanctioned a fresh term loan of
Rs.50.00 Cr. and closed the existing term loan of Rs.35.00 Crores along
with accumulated interest thereon. An amount of Rs.9.50 Cr. has been
made available as working capital along with the availability of funds
and the similar increase in the rate of tariff, the company is likely
to be rehabilitated soon. The re-commissioning activities have been
completed in March 2012. The unit has generated 42,99,779 units till
June 2012. The unit is now running satisfactorily.
MSM Energy limited
During the year the 10MW Biomass based power plant at Parbhani has
generated 41,66,800 units. However since July 2011 the steep increase in
raw material costs and non-availability of the same on a continuous
basis had adversely affected the unit and incurred operational losses.
The Tariff applicable was Rs.4.98/kwh was not found adequate for the
unit's viability. Since MERC has increased the tarrif to Rs.5.41/
kwh for the year 2012-13 from 30.03.2012, it is expected that the plant
can be operated profitably. Accordingly, it is proposed to revive the
plant, generate and export power to the gridat the earliest. An order
was placed on M/s. Jasmine Power Engineering Private Limited (JPEPL)
for re-commissioning of the plant. M/s. JPEPL has already started
pre-commissioning checks during August 2012 and work is in progress. It
has plans to complete all the pre-commissioning activities and take the
unit into service by last week of September 2012.
Another 10MW biomass based power plant is under construction at
Kholapur Village, Amravati District, Maharashtra. The plant is
expected to commence operations during the year 2012-13.
The company has approached for corporate debt restructuring (CDR
Package) and it was admitted by central CDR Cell in its meeting held in
December 2011. The lenders were asked to prepare a suitable package.
Accordingly IDBI the consortium leader after getting a TEV Report from
a APITCO has prepared a package which consists of restructuring the
existing limits additional funding, interest concessions and the said
package is being submitted to EGCDR Cell, Mumbai for taking a decision.
It is expected that a suitable decision in this regard will be taken in
the meeting to be held in the month of September 2012.
Sri Panchajanya Power Private Limited
During the year the 10MW Biomass based power plant at Hingoli has
generated 28,27,400 units. For the identical reasons as described under
the MSM Energy Limited, the Company's operations stopped from July
2011. Hence the unit incurred operational losses. With the recent hike
in Tariff rate from Rs.4.98/KWH to Rs. 5.41/Per KWH with effect from
30.03.2012 the operational viability has been found to have affordable
and has been decided to revive the plant, generate and export power to
the grid.
M/s. Jasmine Power Engineering Private Limited (JPEPL) has been pressed
into service for re-commissioning of the plant and the company is
expected to take the unit into service by last week of September 2012.
The company approached Syndicate Bank for restructuring and additional
funding for cultivation of napier grass. The bank was approached for
issue of holding on operations to enable the company to re-start
operations. After series of meetings the bank has agreed to issue
holding on operations with a condition to recover 5% of the monthly
bill for three months and 10% of the bill for next three months and
review the position thereafter. The permission in writing is expected
shortly. Bank will take up restructuring of the account after observing
the operations for six months.
Consolidated Financial Statements:
The Consolidated Accounts presented by the Company for the period
2011-12 include the financials of its subsidiary companies. In
accordance with the General Circular issued by the Ministry of
Corporate Affairs, Govt. of India dated 8th February 2011, the Balance
Sheet, Profit and Loss Account and other documents of the subsidiary
companies are not attached to the Balance sheet of the Company. The
Company will make available the Annual Accounts of the subsidiary
companies to any member of the Company or its subsidiaries, upon
receiving a request for the same. Further, the annual accounts of the
subsidiary companies including the consolidated annual accounts of the
Company will be kept open for inspection at the Registered Office of
the Company and that of the subsidiaries, during the office hours. A
summary of financial information of the subsidiary companies is
provided in the Annual Report of the Company.
FIXED DEPOSITS:
Your Company has neither accepted nor renewed any deposits from the
shareholders / public under Section 58A of the Companies Act, 1956,
during the year under review.
INSURANCE:
The properties of the Company including its buildings, plant and
machinery and stocks have been adequately insured as required.
CORPORATE GOVERNANCE:
A report on Management Discussion and Analysis, Corporate Governance,
along with additional information for shareholders as prescribed under
listing agreement with the stock exchange, Mumbai are annexed as a part
of this report along with requisite practicing company secretary's
certificate confirming the compliance of Corporate Governance. As per
SEBI requirement, Secretarial audit is carried out at regular
intervals. The findings of the audit have been found to be
satisfactory. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to section 217(2AA) of the Companies Act, 1956, the Directors
confirm that:
i] in the preparation of the annual accounts, the 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 at the end of the financial year and of the profit or
loss of the company for that period;
iii] the directors have ensured that proper and sufficient care is
taken in the maintenance of adequate accounting records in accordance
with the provisions of the Companies Act for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities;
iv] the annual accounts are prepared on a going concern basis.
DIRECTORS:
In accordance with the provisions of the Companies Act, 1956 and
Articles of Association of the Company, Mr. P K Bhattacharjee and
Mr.A.Ramesh Kumar, Directors will retire by rotation at the ensuing
Annual General Meeting and are eligible for re-appointment as Directors
of the Company.
During the year, Mr. P.V. Rao and Mr. M. Seshavatharam have resigned
from the Board as Directors.
Mr.Vijay Kumar and Mrs.B.N. Raja Kumari were appointed as Additional
Directors of the company pursuant to Section 260 of the Companies Act,
1956.
ADEQUACY OF INTERNAL CONTROLS:
The Company has a proper and adequate system of internal controls to
ensure that all assets are safeguarded and protected against loss from
unauthorized use or disposition and that transactions are authorized,
recorded, and reported correctly. The internal control system is
supplemented by an extensive program of internal audits, review by
management and documented policies, guidelines and procedures.
The internal control system is designed to ensure that the financial
and other records are reliable for preparing financial statements and
other data and for maintaining accountability of assets. The Audit
Committee reviews the internal control systems on a regular basis.
STATUTORY AUDITORS:
The Statutory Auditors of the Company viz., M/s M. BhaskaraRao& Co.,
Chartered Accountants, Hyderabad will retire at the conclusion of the
ensuing Annual General Meeting and are eligible for re-appointment, if
appointed in the Annual General Meeting by members.
EXPLANTIONS FOR THE QUALIFICATIONS MADE BY THE AUDITORS IN THEIR REPORT
Auditors Qualification Board's Explanation
Pending final agreement with A&N The company's revenue from sale of
Administration, we are unable to electricity is based on Power
comment on the extent of ultimate Purchase Agreement (PPA) entered
recoverability of Rs.10,13,89,890 into A & N Administration. The PPA
/- withheld by A & N Administra- is for a period of 15 years and
tion for the year ended June 30, contain certain Pre-defined formulae
2012 (31.03.2011: Rs.5,94,94,972) for calculation of revenue to be
and the total receivables as at billed on a monthly basis. Such
June, 30 2012 of Rs.17,76,78,168/ billings are as per PPA which
- (31.03.2011: Rs 8,59,04,780) include fixed charge payment,
which are subject to confirmation variable charge payment, incentive
by the A & N Administration. The payment, foreign exchange adjustment
total interest accrued on such and change in law adjustment.
disagreements which are subject Revenues for the period ended June
to confirmation by the A & N 30, 2012 includes an amount of
Administration is Rs 10,13,89,890/- (Previous Year
Rs. 12,75,74,349/- (31.03.2011: Rs. 5,94,94,972) billed by the
Rs. 12,75,74,239) company as charge under PPA which
Auditors Qualification Board's Explanation
has been rejected/withheld by A & N
Administration on the grounds of
technical interpretation of the
formulae for computation of such
charges. The company also has
receivables amounting to
Rs.17,76,78,168/- as at June 30,
2012 (Previous Year
Rs. 8,59,04,780/-) on account of
such rejections. Further the company
has accrued interest on unpaid
invoices amounting to Rs. Nil for
the year ended June 30, 2012
(Previous Year Rs. 4,37,21,965/-)
total interest accrued on such
disagreements and included in the
total receivables as at June 30,
2012 amount to Rs. 12,75,74,329/-
(Previous Year Rs. 12,75,74,329/-).
The company has(during the year
ended June 30, 2012) received an
amount of Rs.96,16,501/- and
Rs. 9,55,43,200/- on July 9, 2012
towards such receivables. The
company believes that the amount
billed including interest thereon
are recoverable based on the
interpretation that can be inferred
from the formulae contained in the
PPA. Further the company up to the
year ended March 31, 2011 has
accrued interest on such unpaid
invoices aggregating to
Rs.12,75,74,329/-. During the
current year ended June 30, 2012
the company reviewed the recognition
of interest and as a measure of
prudence has decided to discontinue
further recognition of interest.
The same will be recognized in the
year of receipt. Management is
confident of recovering of interest
recognized up to March 31, 2011. If
the company had continued to
recognize interest, the loss for the
year would have been lower and
retained earnings would have
increased.
Auditors Qualification Board's Explanation
Relating to coal trading receiva- Trade receivables include an amount
bles (discontinued operations) of Rs.18,32,54,512/- relating to
regarding which we are unable Coal Trading Activity which has been
to comment on the extent of discontinued. Subsequent to the
realisability of the dues. balance sheet date the company has
realized an amount of
Rs.8,91,00,000/- against the said
dues. The management has been
regularly pursuing the respective
debtors and confident of receiving
the balance amount. However as a
measure of prudence a provision of
Rs.3,78,50,636/- has been made
towards doubtful receivables.
No provision against the carrying The Company has the following
amount of its long term investment investments as at June 30, 2012
and loans extended to its including advances made to its
subsidiaries "Suryachakra subsidiaries Suryachakra Global
Global Enviro Power Limited" Enviro Power Limited investment in
Rs.116,93,13,308; Equity Limited" Rs. 891,116,884/-
and advance given of
Rs.278,196,424/-, Suryachakra Energy
"SuryachakraEnergy (Chhattisgarh) (Chhattisgarh) Private Limited
Private Limited" Rs.35,66,32,225 Investment In Equity Rs.
and "Suryachakra Global Ventures 356,600,000/- and Advance given of
Limited" Rs.85,01,25,548 is Rs.32,225/- and the Suryachakra
presently necessary, for the Global Ventures Limited Investment
reasons stated in the said note. in Equity Rs. 6/- and advance given
We are unable to comment on the of Rs.850,125,542/-
extent of the impairment of the
said investment/ advances.
Winding up petition filed by one During the year M/s. SBI Global
of the unsecured creditor which is Factors Limited an unsecured
pending for hearing before Creditor has filed a petition before
the Honorable High Count of the Honarable High Court of Andhra
Andhra Pradesh. Pradesh for winding up of the
Company u/s 433 (1) (e) of the
Companies Ac, 1956. The Honorable
High Court of Andhra Pradesh had
admitted the petition. Company has
appealed against the said petition
which is pending for hearing.
Company is confident of resolving
the matter amicpooably.
Auditors Qualification Board's Explanation
The scope and coverage of the The company has adequate internal
internal audit system needs to be audit mechanism in place. However
strengthened to make it commen- the internal audit team will be
surate with the size and the nat- strengthened further to commensurate
ure of its business. with the size of the company.
The company is not regular in The following amounts were in
depositing undisputed statutory arrears as at June 30, 2012 for
including Provident Fund, Investor a period of more than six months
Education and Protection Fund, from the date they became payable
Employees' State Insurance, Income (1) TDS amount Rs. 32,68,784/-
Tax, Sales Tax, Wealth Tax, (2) Provident Fund Rs. 1,316/-
Service tax, Custom Duty, Excise (3) VAT Rs.5,46,250/- and
Duty, Cess and other material (4) Professional Tax Rs.100/-.
Statutory dues applicable to it Efforts are being made to deposit
with the appropriate authorities. the above said amount at the earli-
est. There were no dues of Income
Tax, Sales authorities. Tax,
wealth Tax, Service tax, Custom
Duty, Excise Duty, Cess and other
material statutory dues.
Default in repayment of dues to The company has taken up with the
banks. banks for restructuring the loans
and also additional funding towards
working capital and project capital
expenses. The Banks are in the
process of considering the revival
packages and negotiations with the
Banks on these lines are in
progress. The entire process is
expected to be completed shortly.
COST AUDITORS
Pursuant to the provisions of Section 233B of the Companies Act, 1956
and with the prior approval of the Central Government, Mr.
B. Venkateswarlu (Fellow Membership No.13760) practicing Cost
Accountant, has been appointed to conduct audit of cost records of
power (electricity) for the year 2011-12.
Cost Audit Report would be submitted to the Central Government within
the prescribed time.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
EARNINGS AND OUTGO:
The statement giving the particulars with respect to Conservation of
Energy, Technology absorption and Foreign Exchange Earnings and
outgoings as required under Section 217(1)(e)of the Companies Act, 1956
read with Companies (Disclosure of Particulars in the Report of Board
of Directors) Rules 1988 is annexed hereto and forms part of the
Report.
PARTICULARS OF EMPLOYEES:
The information as required in accordance with Section 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended:
None of the employees of the Company has drawn salary exceeding
Rs.60.00 Lakhs per annum or Rs.5.00 Lakhs per month during the period
in terms of section 217 (2A) of the Companies Act, 1956.
HUMAN RELATIONS:
Your Company's industrial relations continued to be cordial
throughout the year under review at all the units.
ACKNOWLEDGMENT:
Your Directors gratefully acknowledge the valuable support, guidance
and assistance extended to the Company by various departments of the
Central and State Governments, different statutory authorities, State
Bank of India, State Bank of Hyderabad, IDBI, Syndicate Bank, First
Climate and SREI Equipment Finance Pvt. Limited etc.
Your Directors also express their gratitude to the Shareholders of the
company for the confidence reposed in the management. Your Directors
also take this opportunity to offer their sincere thanks to customers,
and other organizations, that have helped the company from time to time
through their continued support and co-operation. Your Directors wish
to place on record their appreciation to the employees of the Company
for their hard work, dedication, commitment and co-operation extended
in achieving the results.
For and on behalf of the Board of Directors
Place: Hyderabad. P K Bhattacharjee
Date: 16.07.2012. Chairman
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting the 16th Annual Report of
the company together with the audited Accounts for the financial year
ended March 31, 2011.
FINANCIAL PERFORMANCE:
(Rs. in million)
Particulars Year ended Year ended
31.03.2011 31.03.2010
Income from sale of power 1404.42 1179.88
Income from trading of goods 29.19 889.13
Other Income 47.25 31.88
1480.86 2100.90
Profit before interest and
depreciation 209.66 173.61
Interest and Finance Charges 91.48 72.42
Depreciation 68.66 73.09
Profit after interest, but
before exceptional items 49.52 28.11
Exceptional Items (net) - 24.50
Profit before Tax 49.52 52.61
Current Tax after Adjustments 9.14 (0.56)
Profit after Tax 40.38 52.05
Profit brought forward from
previous year 157.80 105.75
Profit and Loss A/c Balance
carried forward to Balance Sheet 198.18 157.80
REVIEW OF OPERATIONS:
During the year under review, your Company achieved the gross turnover
of Rs.1480.86 million as against Rs.2100.90 million in the previous
year. The turnover for the current year was lower than the previous
year, since the income from coal trading activity was considered on net
basis during the year, in accordance with AS 24 (Discontinuing
operations). The revenue from the sale of energy for the current year
increased to Rs.1404.42 million from Rs.1179.88 million in the previous
year. The Operating Profit (PBIDT) for the current year was Rs.209.66
million as against Rs.173.61 million for the previous year. The Profit
after Tax was Rs.40.38 million compared to Rs.52.05 million in the
previous year. The company's 20 MW plant at Bamboo flat, Port Blair
has achieved the Plant Load Factor (PLF) during the year 2010-11 at
81.60% against the benchmark of 68.49% and received the incentive of
Rs.15.60 million from Andaman & Nicobar Administration (A&N
Administration). Comparatively, during the previous year 2009-10, the
PLF was 76.49%, for which an incentive of Rs.9.85 million was received
by the company.
Management Discussion and Analysis report for the year under review, as
stipulated in Clause 49 of the Listing Agreement with the Stock
Exchange, forms part of the Annual Report. The Board of Directors and
the Management review the progress of the Company from time to time and
guide the Company towards its goals.
DIVIDEND:
With a view to conserve resources for the planned growth of the
organization and also due to inadequacy of profits, your Directors are
unable to recommend any Dividend on the Equity Capital of the Company.
INCREASE IN CAPITAL:
During the year, the Company has increased its Authorised Capital from
Rs.900 million to Rs.1500 million, after obtaining the consent of the
members through postal ballot, to enable the Company to issue Global
Depository Receipts (GDRs), Foreign Currency Convertible Bonds (FCCBs)
etc., up to US$ 100 Million.
Subsequently, your Company has opened the GDR issue for subscription to
the prospective investors on 19.04.2011 and closed the issue on
26.04.2011. The Company has received the subscription of US$ 22,995,000
(Rs. 1,025 million) and issued 3,650,000 GDRs to the investors @ US$
6.30 per GDR. The underlying shares were 20 shares per GDR, which means
73,000,000 new equity shares were issued for the GDRs. Accordingly, the
paid up capital of the Company has gone up to Rs.1496.33 million.The
GDRs were listed in the Euro MTF Market of Luxemburg Stock Exchange on
28th April 2011 and the underlying equity shares were listed on BSE on
19th May 2011.
SUBSIDIARY COMPANIES:
During the year under review, the performance of the subsidiaries viz.,
Suryachakra Global Enviro Power Limited, South Asian Agro Industries
Limited, M.S.M. Energy Limited and Sri Panchajanya Power Private
Limited, which operate biomass based power plants at Chhattisgarh and
Maharashtra has been severely affected due to non-availability of
quality raw material at reasonable rates. The prices of biomass like
rice husk, cotton stalk etc., have been steeply rising thereby
resulting into high cost of production.
As a long term strategy, the group has proposed to enter into buy-back
agreements with some companies in Chhattisgarh and Maharashtra, which
will endeavor to continuous supply of Napier grass catering to about
50% of total requirement of the plants. The cost of Napier grass is
much cheaper than other conventional biomass raw material, besides
having higher Gross Calorific Value (GCV). The Napier grass supplying
companies have finalized the land required for taking on lease /
contract farming for energy plantation in Chhattisgarh and Maharashtra.
With this continuous feed supply at competitive price, the subsidiaries
are expected to improve their performance in the forthcoming years.
1) Suryachakra Global Enviro Power Limited:
During the year, the 9.8 MW plant at Madwa village, ChampaÃJanjgir
District, Chhattisgarh had generated 33.166 million units achieving a
PLF of 38.63%. The generation was low due to the scarcity of quality
biomass fuel. As most of the paddy is grown as single crop, husk was
available for 6 to 7 months of the year. Further, the evacuation line
at 33 KV was connected to grid at about 20 KM from the plant. Because
of the long transmission line, the plant operation was effected due to
line faults during rainy season. The transmission line losses were
approximately 5% of the generation.
During the year under review, the Company had earned an amount of
Rs.28.52 million from 42950 CERS for the period from October 2008 to
December 2009 and Rs.20.99 million from 31604 CERs for the period from
January 2010 to March 2011.
2) South Asian Agro Industries Limited:
During the year, the 9.8 MW plant at Khajuri village, Baloda Bazar,
Raipur District, Chhattisgarh has generated 22.28 million units and
achieved a PLF of 25.96%. The plant faced the problem of fuel shortage
during rainy season as the rice husk is the main biomass fuel which is
available only during milling season lasting for 4 to 5 months in a
year since paddy is grown as a single crop in major cultivation
acreage.
During the year under review, the Company had earned an amount of
Rs.21.16 million from 31861 CERS for the period from January 2009 to
December 2009 and Rs.15.29 million from 23031 CERs for the period from
January 2010 to March 2011.
3) M.S.M. Energy Limited:
The 10 MW biomass based power plant at Parbhani, Maharashtra was
commissioned and synchronized with the grid of MSEDCL on 15th November,
2010. Total generation during the year was 5.23 million units. The
generation was low during the year due to scarcity and high price of
quality biomass fuel. Frequent grid interruptions have also contributed
for low generation.
Another 10 MW plant is under construction at Kholapur Village, Amravati
District, Maharashtra. The plant is expected to commence operations
during the year 2011-12.
4) Sri Panchajanya Power Private Limited:
The 10 MW power plant at Limbala MIDC, Hingoli, Maharashtra was
commissioned and synchronized with the grid of MSEDCL on 5th September,
2010. During the year, the total generation of the plant was 9.94
million units. The generation was low during the year due to scarcity
of quality biomass fuel and high price. Frequent grid interruptions
have also contributed for low generation.
The application for CDM Registration filed with United Nations
Framework Convention on Climate Change (UNFCC) for CERs got
registration on 13th January, 2011 and date of Registration action was
4th April, 2011. Crediting period is 01.04.2011 to 31.03.2018.
Other subsidiaries:
Your company had signed a Memorandum of Understanding with the Govt. of
Chhattisgarh in February 2008 and subsequently executed the
implementation agreement in May 2010 for setting up of coal based
thermal power plant in the state of Chhattisgarh. The company has
transferred the project under development to Suryachakra Energy
(Chhattisgarh) Private Ltd., a wholly owned subsidiary of your company
for a consideration of Rs.356.40 million being the carrying value of
the assets in the project during the last quarter of the year.
In January 2011, your company has incorporated a wholly owned
subsidiary viz., Suryachakra Global Venture Limited in Hong Kong to
pursue the activities of investment in coal mine and coal trading etc.
During the year, the Company had purchased 30,000 shares of Suryachakra
Power Venture Private Limited from it promoters to make it a subsidiary
of the Company for the purpose of making the bids for the solar
projects unde JNNSM Scheme. As the bids were not successful, the
Company had sold the above shares and SPVL ceased to be th subsidiary
of the Company.
Consolidated Financial Statements:
The Consolidated Accounts presented by the Company for the year 2010-11
include the financials of its subsidiary companies In accordance with
the General Circular issued by the Ministry of Corporate Affairs, Govt.
of India dated 8th Februar 2011, the Balance Sheet, Profit and Loss
Account and other documents of the subsidiary companies are not
attached to th Balance sheet of the Company. The Company will make
available the Annual Accounts of the subsidiary companies to an member
of the Company or its subsidiaries, upon receiving a request for the
same. Further, the annual accounts of th subsidiary companies including
the consolidated annual accounts of the Company will be kept open for
inspection at th Registered Office of the Company and that of the
subsidiaries, during the office hours. A summary of financial
informatio of the subsidiary companies is provided in the Annual Report
of the Company.
FIXED DEPOSITS:
Your Company has neither accepted nor renewed any deposits from the
shareholders / public under Section 58A of th Companies Act, 1956,
during the year under review.
INSURANCE:
The properties of the Company including its buildings, plant and
machinery and stocks have been adequately insured a required.
CORPORATE GOVERNANCE:
The Company is in conformity with the Code of Corporate Governance
enunciated in Clause 49 of the Listing Agreemen with Stock Exchanges. A
separate report on Corporate Governance forms part of Annual Report of
the company togethe with a Certificate from the Practicing Company
Secretary confirming the compliance of Corporate Governance. As pe SEBI
requirement, Secretarial audit is being carried out at specific
intervals by a Practicing Company Secretary. Th findings of the audit
have been satisfactory.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to section 217(2AA) of the Companies Act, 1956, the Directors
confirm that:
i] in the preparation of the annual accounts, the applicable accounting
standards have been followed along with prope explanation relating to
material departures;
ii] the directors have selected such accounting policies and applied
them consistently and made judgments and estimate that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the company at the end of th financial year and of the profit or
loss of the company for that period;
iii] the directors have ensured that proper and sufficient care is
taken in the maintenance of adequate accounting record in accordance
with the provisions of the Companies Act for safeguarding the assets of
the company and for preventin and detecting fraud and other
irregularities;
iv] the annual accounts are prepared on a going concern basis.
DIRECTORS:
In accordance with the provisions of the Companies Act, 1956 and
Articles of Association of the Company, Mr. K Satyanarayana and Mr.
V.S. Murthy, Directors will retire by rotation at the ensuing Annual
General Meeting and ar eligible for re-appointment as Directors of the
Company.
During the year, Mr. P.V. Rao has resigned from the Board as Director &
Chairman w.e.f 19th June 2010 due to persona reasons. The Board has
appointed him again as Additional Director and Chairman on 22nd
November 2010 pursuant t Section 260 of the Companies Act, 1956. The
Board has also appointed Mr. K B Trehan as an Additional Director of th
Company on 11th November 2010 pursuant to Section 260 of the Companies
Act, 1956. Mr. T. Venkata Raju has resigned from the Board w.e.f
28.02.2011 due to personal reasons.
ADEQUACY OF INTERNAL CONTROLS:
The Company has a proper and adequate system of internal controls to
ensure that all assets are safeguarded and protecte against loss from
unauthorized use or disposition, and that transactions are authorized,
recorded, and reported correctly The internal control system is
supplemented by an extensive program of internal audits, review by
management an documented policies, guidelines and procedures.
The internal control system is designed to ensure that the financial
and other records are reliable for preparing financial statements and
other data and for maintaining accountability of assets. The Audit
Committee reviews the internal control systems on a regular basis.
STATUTORY AUDITORS:
The Joint Statutory Auditors of the Company viz., M/s Visweswara Rao &
Associates, Chartered Accountants and M/s B S R and Co, Chartered
Accountants will retire at the conclusion of the ensuing Annual General
Meeting.
EXPLANATIONS FOR THE QUALIFICATIONS MADE BY THE AUDITORS IN THEIR
REPORT:
Auditors Qualifiction
In their report, the Auditors stated that, pending the final agreement
with the Andaman & Nicobar Administration (A&N Administration) they
were unable to comment on the extent of ultimate recoverability of the
amounts due from the A&N Administration.
There were significant delays in payment of Provident Fund and Income
Tax and repayment of dues.
Scope and coverage of the internal audit system needs to be
strengthened to make it commensurate with the size and nature of its
business.
The revenue from the sale of Certified Emission Reductions (CERs) and
sundry debtors balance is overstated by the subsidiaries, pending
necessary approvals for such CERs from regulatory authorities.
(Auditors Report on consolidated accounts).
Board Explanation
Adequate disclosure was made in Note 3 of Schedule 21 (Notes to the
Accounts) in this regard. The Company has taken up the matter with the
Andaman & Nicobar Administration and believes that the amounts billed
including interest thereon are recoverable based on the interpretation
that can be inferred from the formulae contained in the PPA.
After continuous and unstinted efforts, the A & N Administration has
agreed to pay monthly tariff invoices from April 2011 on the
provisional completed cost of the project of Rs. 75.60 crores instead
of the earlier provisional completed cost of Rs. 63.14 crores. The
company is hopeful of getting further increase in this.
The delay was due to the tight liquidity conditions faced by the
Company and steps would be taken by the management to ensure
non-recurrence of such events.
The adequate internal audit team is already in place. However, the team
will be further strengthened suitably.
The subsidiaries viz., Suryachakra Global Enviro Power Ltd., and South
Asian Agro Industries Ltd., have recognized the income from sale of
CERs during the year.The Project Design Documents (PDDs) were prepared
for above 2 projects and received the Host Country Approval. PDDs
havebeen validated by M/s. Det Norske Veritas (DNV), subsequently
monitoring report was done by Ernst & Young and finally verification of
the CERs receivables was completed by Designated Operational Entity
(DOE) i.e., DNV, Bangalore.The Verification Report for issuance of CERs
is submitted to United Nations Framework Convention on Climate Change,
Germany (UNFCCC) for its consent through DNV.Final issuance of CERs is
pending with UNFCCC.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
EARNINGS AND OUTGO:
The statement giving the particulars with respect to Conservation of
Energy, Technology absorption and Foreign Exchange Earnings and
outgoings as required under Section 217(1)(e) of the Companies Act,
1956 read with Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules 1988 is annexed hereto and forms part of the
Report.
PARTICULARS OF EMPLOYEES:
Information required under Section 217(2A) of the Companies Act, 1956
read with the Companies (Particulars of Employees) Rules, 1975 as
amended:
None of the employees of the Company has drawn salary exceeding
Rs.60.00 Lakhs per annum or Rs.5.00 Lakhs per month during the year in
terms of section 217 (2A) of the Companies Act, 1956.
HUMAN RELATIONS:
Your Company's industrial relations continued to be cordial throughout
the year under review at all the units.
ACKNOWLEDGMENT:
Your Directors gratefully acknowledge the valuable support, guidance
and assistance provided / extended to the Company by various
departments of the Central and State Governments, different statutory
authorities, State Bank of India, its group and SREI Equipment Finance
Pvt. Limited etc.
Your Directors also express their gratitude to the Shareholders of the
company for the confidence reposed in the management. Your Directors
also take this opportunity to offer their sincere thanks to customers,
and other organizations, that have helped the company from time to time
through their continued support and co-operation. Your Directors wish
to place on record their appreciation to the employees of the Company
for their hard work, dedication, commitment and co-operation extended
in achieving the results.
For and on behalf of the Board of Directors
Place: Hyderabad P.V. RAO
Date: 11.07.2011 CHAIRMAN
Mar 31, 2010
The Directors have pleasure in presenting the 15th Annual Report of
the Company together with the Audited Accounts for the financial year
ended March 31, 2010.
FINANCIAL PERFORMANCE:
(Rs. in Million)
Particulars Year ended Year ended
31.03.2010 31.03.2009
Sales and other Income 2100.90 1385.90
Profit before Interest
and Depreciation 173.61 137.83
Interest and Finance Charges 72.42 56.58
Depreciation 73.09 62.96
Profit after interest, but
before exceptional items 28.11 18.29
Exceptional Items (net) 24.50 -
Prior period items - (1.54)
Profit before Tax 52.61 16.75
Current Tax after Adjustments (0.56) (2.05)
Profit after Tax 52.05 14.70
Profit brought forward from
previous year 105.75 91.05
Profit and Loss A/c balance
carried forward to Balance Sheet 157.80 105.75
REVIEW OF OPERATIONS:
During the year under review, your Company achieved the gross turnover
of Rs. 2101 millions as against Rs. 1386 millions in the previous year.
The Profit after Tax for the current year was Rs. 52.05 millions as
against Rs. 14.70 millions for the previous year. The increase in
profit is mainly due to the profit on sale of investments in subsidiary
companies pursuant to the Restructure of subsidiaries undertaken during
the year.
The Company has achieved the Plant Load Factor (PLF) during the year
2009-10 at 76.49% against the benchmark of 68.49% and received the
incentive of Rs.9.85 millions from Andaman & Nicobar Administration
(A&N Administration). Comparatively, during the previous year 2008-09,
the PLF was 74.25% and an incentive of Rs. 7.09 millions was received
by the Company.
The Company is setting up 350 MW Super Critical coal based thermal
power plant in the state of Chhattisgarh with boiler from Burmeister &
Wain Energy A/S, Denmark (BWE), Steam Turbine Generator from Skoda
Power a.s., Czech Republic and the balance of plant from M/s. Punj
Lloyd Limited. The Company had signed Memorandum of Understanding (MOU)
with Government of Chhattisgarh in February 2008 and after complying
with the conditions of MOU, the Implementation Agreement was executed
on 11th May, 2010.
Management Discussion and Analysis report for the year under review, as
stipulated in Clause 49 of the Listing Agreement with the Stock
Exchanges, forms part of the Annual Report. The Board of Directors and
Management review the progress of the Company from time to time and
guide the Company towards its goals.
DIVIDEND:
With a view to conserve resources for the planned growth of the
organization as also due to inadequacy of profits, your Directors are
unable to recommend any Dividend on the Equity Capital of the Company.
SUBSIDIARY COMPANIES:
During the year, the Group enlisted the services of M/s. Ernst & Young
(E&Y) an internationally known consultancy firm, for restructuring the
subsidiary Companies of the Company. According to the scheme prepared
by E&Y, a Clean Energy Vertical was created with Suryachakra Global
Enviro Power Limited (ÃSGEPLÃ, formerly Lahari Power & Steels Ltd), as
the second level holding Company and all the existing renewable energy
(Biomass) Power Projects were brought under one roof. The other three
subsidiaries of the Company viz., M.S.M. Energy Limited, South Asian
Agro Industries Limited, Sri Panchajanya Power Private Limited have
become wholly owned subsidiaries of SGEPL. In consideration of the
divestment of its shares in three subsidiaries, your Company was
allotted 24,820,150 equity shares of Rs. 10 each of SGEPL at a premium
of Rs.12.94 per share. The Company also acquired 6,251,205 equity
shares of SGEPL for cash at Rs.22.94 per share.
The development of energy plantation and Biomass as a renewable source
of energy is gaining importance. Hence, it is proposed to undertake the
energy plantation through the subsidiaries in order to ensure
continuous supply of feedstock for the biomass plants. A nursery for
beema bamboo plantation has already been set up in more than 5 acres in
each of Champa and Baloda bazaar sites. With continuous research,
observation and monitoring, the units will enhance the acreage, success
rate of plantation and output.
Income from sale of CERs (Certified Emission Reductions), generated by
the biomass plants, was not considered in the Accounts for the year
ended 31st March 2010.
Suryachakra Global Enviro Power Limited:
Suryachakra Global Enviro Power Limited had set up a 9.8 MW Biomass
based power plant at Madwa Village, Champa- Janjgir District,
Chhattisgarh State. During the year under review, the plant generated
6,32,76,100 kwh and exported 5,71,90,334 kwh of power respectively. The
Company has achieved a total turnover of Rs. 240.60 Millions and profit
after tax was Rs.4.03 Millions.
During the year (upto 31.12.2009), the Company is likely to earn Rs.
14.88 Millions from 23,620 CERs (Certified Emission Reductions) and
estimates to earn Rs. 66.15 Millions through generation of another
1,05,000 CERs by the year ending 31.03.2012.
Climate Change Investment II, Luxembourg (CCI) entered into an
agreement with the Group on 8th December 2009 for acquiring 26.1% stake
in SGEPL, post group restructure at Rs. 28.98 per share. Out of the
total investment of Rs. 500.50 Million, the first tranche of Rs. 400
Million was received by SGEPL during the year and 13,802,622 equity
shares (22.01% of present equity) were allotted to CCI. CCI has also
committed to take part in the future Renewable Energy Projects of the
group.
South Asian Agro Industries Limited:
South Asian Agro Industries Limited had set up a 9.8 MW Biomass power
project at Khajuri Village, Baloda Bazar Taluk, Raipur District,
Chhattisgarh State, where the rice husk and other biomass fuels are
abundantly available. The Company has generated 6,06,86,359 kwh and
exported 5,47,04,010 kwh of power during the year. For the year
2009-10, the Company has achieved a total turnover of Rs. 209.51
Millions and the profit after tax was Rs. 3.04 Millions.
During the year (upto 31.12.2009), the Company is likely to earn
Rs.18.20 Millions from 29882 CERs (Certified Emission Reductions) and
estimates to earn Rs.63.28 Millions through generation of another
1,03,918 CERs by the year ending 31.03.2012.
In addition to the existing 9.8 MW plant, the Company is setting up 20
MW Biomass based Power plant at Baloda Bazaar, Raipur Dist., for which
the required approvals are in place.
M.S.M. Energy Limited:
M.S.M. Energy Limited is setting up of two biomass power projects of 10
MW each at Borawand Village, Parbhani Taluk, Parbhani District and
Kholapur Village, Bhatkuli Taluk, Amaravathi Districts in the state of
Maharashtra. Both the plants are expected to commence operations by
August / September, 2010.
The expected CERs (Certified Emission Reductions) to be generated by
year ending 2012 are 1,80,950 and estimated revenue is Rs.110.20
Millions. Post 2012 year 4,65,503 CERs are expected to be generated
till 2018.
Sri Panchajanya Power Private Limited:
Sri Panchajanya Power Private Limited is presently setting up a 10 MW
Bio-mass based power plant at Limbala MIDC, Hingoli, Maharashtra. The
plant is expected to commence operations in the month of August, 2010.
The application filed by the Company for registration with UNFCCC in
respect of the expected CERs (Certified Emission Reductions) is in
advanced stage.
Consolidated Financial Statements:
In terms of section 212 of the Companies Act, 1956, the Company is
required to attach the Balance Sheet, Profit and Loss account of the
subsidiary companies to its Annual Report. The Company has sought the
approval of the Ministry of Corporate Affairs (MCA), Government of
India for the exemption u/s 212(8) of the Companies Act, from attaching
the above documents of subsidiaries to the Annual Report for the
Financial Year 2009-10.
Accordingly, this annual report will not contain the reports and other
statements of the subsidiary companies, subject to the approval from
the Government. The company will make available the annual audited
accounts and related information of the subsidiary companies upon
request by any member of the Company. These documents will also be
available for inspection during business hours at the registered office
of the company and the subsidiary companies. A summary of financial
information of the subsidiary companies is provided in the Annual
Report of the Company.
FIXED DEPOSITS:
Your Company has neither accepted nor renewed any deposits from the
shareholders /public under Section 58A of the Companies Act, 1956,
during the year under review.
INSURANCE:
The properties of the Company including its buildings, plant and
machinery and stocks have been adequately insured as required.
CORPORATE GOVERNANCE:
The Company is in conformity with the code of Corporate Governance
enunciated in clause 49 of the listing agreement with Stock Exchanges.
A separate report on Corporate Governance forms part of the Annual
Report of the Company together with a certificate from the Practising
Company Secretary confirming the compliance of Corporate Governance.
As per SEBI requirement, Secretarial audit is being carried out at
specific intervals by a Practicing Company Secretary. The findings of
the audit have been satisfactory.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to section 217(2AA) of the Companies Act, 1956, Directors
confirm that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation 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 at the end of the financial year and of the profit or
loss of the company for that period;
iii) the directors have ensured that proper and sufficient care is
taken in the maintenance of adequate accounting records in accordance
with the provisions of the Companies Act for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities;
iv) the annual accounts are prepared on a going concern basis.
DIRECTORS:
In accordance with the provisions of the Companies Act, 1956 and
Articles of Association of the Company, Mr. P.V. Rao and Mr. Mahesh
Chand, Directors will retire by rotation at the ensuing Annual General
Meeting and are eligible for re- appointment as Directors of the
Company. The Board appointed Mr. Venkata Raju Thontepu on 28th May,
2010 as Additional Director of the Company pursuant to Section 260 of
the Companies Act, 1956.
ADEQUACY OF INTERNAL CONTROLS:
The Company has a proper and adequate system of internal controls to
ensure that all assets are safeguarded, and protected against loss from
unauthorized use or disposition, and that transactions are authorized,
recorded, and reported correctly. The internal control system is
supplemented by an extensive programme of internal audits, review by
management and documented policies, guidelines and procedures.
The internal control system is designed to ensure that the financial
and other records are reliable for preparing financial statements and
other data and for maintaining accountability of assets. The Audit
Committee comprising of independent Directors review the internal
control systems on regular basis.
STATUTORY AUDITORS:
M/s. Visweswara Rao & Associates, Chartered Accountants and M/s. B S R
and Associates, Chartered Accountants, the Statutory Auditors of the
Company will retire at the conclusion of the ensuing Annual General
Meeting.
M/s. B S R and Associates vide their letter dated May 28, 2010 advised
not to consider the firm for reappointment as Auditor for the year
ending March 31, 2011. It is proposed to appoint M/s. B S R and Co.,
Chartered Accountants as Joint Statutory Auditors in place of M/s. B S
R and Associates.
M/s. Visweswara Rao & Associates and M/s. B S R and Co., conveyed their
willingness and confirmed their appointment will be within the limits
specified in Section 224(1-B) of the Companies Act, 1956.
EXPLANATION FOR THE QUALIFICATION MADE BY AUDITORS IN THEIR REPORT:
The Auditors in para 4 (vi) of their Report stated that pending the
final agreement with the A & N Administration, they were unable to
comment on the extent of ultimate recoverability of the amounts due
from the A&N Administration.
Adequate disclosure was made in Note 2 of Schedule 21 (Notes to the
Accounts) in this regard. The Company believes that the amounts billed
including interest thereon are recoverable from the A & N
Administration based on the interpretation that can be inferred from
the formulae contained in the Power Purchase Agreement. The Company
filed a petition with the Joint Electricity Regulatory Commission
(JERC) in October 2009 claiming the long pending dues for the
unresolved issues.
On March 3, 2010 the A&N Administration after making a detailed
analysis of the case and the unresolved issues, has determined that the
matter being highly technical, these disputes cannot be resolved on
long term basis until and unless the completed project cost is
finalized and requested the Central Electricity Authority (CEA) to
re-examine the complete cost document of the Company to proceed further
in the matter.
With regard to the remarks made by the Auditors on the delay in
repayment of dues to SREI Equipment Finance Pvt. Ltd., and payment of
Income Tax and Sales Tax etc., it may be stated that the delay was due
to the tight liquidity conditions faced by the Company and that steps
would be taken by the management to ensure non-recurrence of such
events in future.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
EARNINGS AND OUTGO:
The statement giving the particulars with respect to Conservation of
Energy, Technology absorption and Foreign Exchange Earnings and
outgoings as required under Section 217(1)(e) of the Companies Act,
1956 read with Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules 1988 is annexed hereto and forms part of the
Report.
PARTICULARS OF EMPLOYEES:
Information required under Section 217 (2A) of the Companies Act, 1956
read with the Companies (Particulars of Employees) Rules, 1975: None of
the employees of the Company has drawn salary exceeding Rs.24.00 Lakhs
p.a., or Rs.2.00 Lakhs per month during the year in terms of Section
217 (2A) of the Companies Act, 1956, other than Dr. S.M. Manepalli,
Managing Director.
HUMAN RELATIONS:
Your Companys industrial relations continued to be cordial throughout
the year under review at all the units.
ACKNOWLEDGMENT:
Your Directors gratefully acknowledge the valuable support, guidance
and assistance provided / extended to the Company by various
Departments of the Central and State Governments, different statutory
authorities, State Bank of India, Syndicate Bank, Allahabad Bank and
SREI Equipment Finance Pvt. Limited.
Your Directors also express their gratitude to the Shareholders of the
company for the confidence reposed in the management. Your Directors
also take this opportunity to offer their sincere thanks to customers,
and other organizations, that have helped the Company from time to time
through their continued support and cooperation. Your Directors wish to
place on record their appreciation to the employees of the Company for
their hard work, dedication, commitment and co-operation extended in
achieving the results.
For and on behalf of the Board of Directors
Place: Hyderabad P.V. RAO
Date: May 28, 2010 CHAIRMAN
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