Home  »  Company  »  Suryachakra Power Co  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Suryachakra Power Corporation Ltd.

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

 
Subscribe now to get personal finance updates in your inbox!