CG Power and Industrial Solutions Directors Report, CG Power Reports by Directors

CG Power and Industrial Solutions

BSE: 500093|NSE: CGPOWER|ISIN: INE067A01029|SECTOR: Electric Equipment
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Directors Report Year End : Mar '16    Mar 15
The Directors are pleased to present their Seventy Ninth Annual Report
 on the business and operations of the Company (or CG) along with the
 audited accounts for the financial year ended 31 March 2016.
 The Stand-alone and Consolidated financials of the Company represents
 the continuing operations for the year ended 31 March 2016. The
 operations, assets and liabilities of the discontinued operations have
 been presented under separate head.
 The continued consolidated net revenue of the Company during 20152016
 de-grew by 4.2% at Rs.5272 crore, as compared with Rs.5505 crore last
 year.  The Company has achieved a stand-alone net turnover from
 continued operations of Rs.3960 crore, during the year under review, as
 compared with Rs.4230 crore during the previous year, a decline of
 Consolidated profit before tax from continuing operations decreased to
 Rs.87 crore, as compared with Rs.356 crore in the previous year, a
 decrease of 75.4% over last year.  Stand-alone profit / (loss) before
 tax from continuing operations decreased from Rs.342 crore to Rs.(1150)
 crore, a decrease of 436.6%.
 Consolidated loss before tax from discontinued operations increased to
 Rs.(343) crore from Rs.(182) crore, in the previous year, an increase
 of 88.7%.
 Consolidated profit after tax from continuing operations is Rs.75 crore
 as compared with consolidated profit after tax of Rs.368 crore in the
 previous year, a decrease of 80%.  The Company recorded a stand-alone
 profit / (loss) after tax from continuing operations of Rs.(1188)
 crore, a decrease of 444.3% from Rs.345 crore last year.
 The Sales and Profit Before Interest and Tax (PBIT) of the respective
 Business Groups, compared with last year are given in Table 1.
 A detailed review of the operations and performance of the Company and
 each of the Businesses including its International operations is
 contained in the Management
                                                           IN RS. CRORE
 BU                               SALES                     PBIT
                          2015-2016   2014-2015   2015-2016   2014-2015
 Power Systems (CG 
 Stand-alone)                  2290        2696         117        200
 Industrial Systems 
 (CG Stand-alone)              1611        1497         174        151
 Automation Systems 
 (CG Stand-alone)                75          51         (10)        10
 Power Systems 
 (including Inter
 national operations)          2495        2786         188        402
 Industrial Systems 
 (including International 
 operations)                   1929        1834         139        110
 Automation Systems             864         900          (6)         7
 Discussion and Analysis Report, which is given as a separate chapter in
 this Annual Report.
 The financial performance of your Company for the continuing operations
 for the year ended 31 March 2016 is given in Table 2.
 Pursuant to the approval of shareholders of the Company accorded on 13
 August 2015, for the Scheme of Arrangement (Scheme) between the Company
 and Crompton Greaves Consumer Electricals Limited (CGCEL), the Company
 has completed with the demerger of its Consumer Products Business, with
 effect from 1 October 2015 upon sanction of the Scheme by the Hon''ble
 High Court, Bombay on 20 November 2015 and filing the same with the
 Registrar of Companies on 31 December 2015 by the Company.  Pursuant to
 the Scheme, the shareholders of the Company have been allotted one
 equity share of Rs.2/- in CGCEL for every equity share of Rs.2/- each
 held in the Company as on 16 March 2016 being the Record Date fixed for
 this purpose, which were listed on the BSE and NSE with effect from 13
 May 2016.
 With the strategic objective of debt reduction and focusing on its core
 operations in Power business in India and in its Industrial Systems
 business, the following divestments have been completed / undertaken by
 the Company:
 - The Company has sold the Power Assets held by its subsidiary CG Power
 Systems Canada Inc, thereby exiting from the Power business in Canada.
 - The Company has divested its entire stake in the Joint Venture CG
 Lucy Switchgear Limited (presently Lucy Electric India Private Limited)
 to W Lucy & Co Limited, UK-the Joint Venture Partner, while retaining
 its distribution and supply arrangements with Lucy Electric India
 Private Limited.
 - The Company has signed a Share Purchase Agreement (SPA) for sale of
 its Power Businesses in Europe, North America and Indonesia. The
 completion of the SPA is envisaged by 31 October 2016, subject to
 requisite consents and regulatory approvals.  Upon completion, the
 Company would exit completely from its overseas Power businesses.
 - The Company has also initiated the process of identifying investors
 for its other international B2B businesses including Automation
                              2016    2015     2016     2015   
 Revenue from Operations 
 (Net of Excise Duty)        3,960   4,230    5,272    5,505
 EBIDTA                        308     331      453      580
 Less: Finance Cost          (102)    (21)       56       82
 Less: Depreciation            108     113      256      245
 Profit Before 
 Exceptional Items & Tax       302     239      141      253
 Exchange gain                  57    (47)       57     (47)
 Exceptional Items          (1509)     150    (111)      150
 Profit /(loss) 
 Before Tax                 (1150)     342       87      356
 Less: Tax Expense             38      (3)       14     (10)
 Profit /(loss) 
 After Tax                 (1188)      345       73     366
 Share of profit /
 (loss) in associates          -         -        1       1
 Less: Minority 
 Interest                      -         -        1       1
 Profit / (loss) from 
 continuing operations     (1188)      345       75     368
 Profit / (loss) from 
 operations                  157       371      (343)  (182)
 Tax expense from 
 operations                   61       127       128    163
 Net Profit / (loss) 
 from discontinued 
 operations                   96       244     (471)   (345)
 Net Profit / (loss) 
 for the year attri
 butable to shareholders   (1092)      589     (396)     23
 The above steps will enable the Company to improve its Balance Sheet
 and enhance shareholders value by refocusing on operations and growth
 in India, considering the opportunities in India, in view of the
 emphasis of the Government on the Power sector and the growth in demand
 of the products in the Industrial Systems'' business in India and
 During the year, the Distribution Franchisee Agreement (DFA) of the
 Company with Maharashtra State Electricity Distribution Company Limited
 (MSEDCL) for power distribution at Jalgaon in Maharashtra was
 terminated by MSEDCL exercising its step- in rights consequent to
 certain unresolved disputes. The Company is confident of arriving at an
 amicable settlement with MSEDCL on all pending issues under the DFA.
 No dividend has been recommended or paid for the year ended 31 March
 The Reserves, on stand-alone basis, at the beginning of the year were
 Rs.4490 crore. The Reserves at the end of the year are Rs.4003 crore.
 As at 31 March 2016, the authorised share capital of the Company was
 Rs.407,60,00,000-(Rupees four hundred seven crore sixty lacs) divided
 into 203,80,00,000 equity shares of Rs.2/-(Rupees Two) each.
 As at 31 March 2016, the paid-up share capital of the Company stood at
 Rs.125,34,92,284 (Rupees one hundred twenty five crore thirty four lacs
 ninety two thousand two hundred eighty four only) consisting of
 626,746,142 equity shares of Rs.2/-(Rupees Two) each.
 As on the date of this report, the Company''s Board comprises of ten
 Directors. The Chairman, Mr Gautam Thapar is a Non- Executive Director
 and represents the Promoter Group. Mr K N Neelkant is the CEO and
 Managing Director.  Mr Madhav Acharya is the Executive Director 
 Finance and CFO. Five other Non-Executive Directors  Mr Shirish Apte,
 Mr Sanjay Labroo, Ms Meher Pudumjee,
 Dr Valentin Von Massow and Ms Ramni Nirula are independent in terms of
 Regulation 16 of the SEBI (Listing Obligations and Disclosure
 Requirements) Regulations, 2015 (''Listing Regulations'') and Companies
 Act, 2013.  Two other Directors  Mr B Hariharan and Dr Omkar Goswami
 are Non-Executive Directors. The Directors are reputed professionals
 with diverse functional expertise, industry experience, educational
 qualifications, ethnicity and gender mix relevant to fulfilling the
 Company''s objectives and strategic goals.
 Mr Laurent Demortier resigned from his role as a CEO and Managing
 Director of the Company with effect from 3 February 2016, thereafter,
 he continued to serve as a Whole-time Director up to 31 March 2016.
 Dr Colette Lewiner, Independent Director stepped down from her
 directorship of the Company, with effect from 14 March 2016.
 The Board places on record its gratitude and appreciation for Mr Demo
 tier and Dr Lewiner for their guidance to the Company during their
 tenure as Directors.
 Mr K N Neelkant was appointed as the CEO and Managing Director with
 effect from 3 February 2016.
 Mr Madhav Acharya was appointed as Executive Director  Finance with
 effect from 1 April 2016, in addition to his role as the CFO of the
 Ms Ramni Nirula was appointed on the Board as an Independent
 Non-Executive Director with effect from 6 April 2016.
 Retirement by Rotation
 In terms of the provisions of Section 152 of the Companies Act, 2013
 and the rules made there under and Article 114 of the Articles of
 Association of the Company, Dr Omkar Goswami and Mr B Hariharan, retire
 by rotation at the ensuing Annual General Meeting of the Company and
 being eligible, have offered themselves for the re-appointment. The
 profile details of Dr Omkar Goswami and Mr B Hariharan are contained in
 the accompanying Notice of the forthcoming Annual General Meeting and
 in the Corporate Governance Report. The Board recommends their
 CG has signed a Share Purchase Agreement (SPA) for sale of its Power
 businesses in Europe, North America and Indonesia.
 Attributes, Qualification & Independence of Directors & their
 The appointment and remuneration of Directors is governed by the
 Remuneration Policy of the Company which also contains the criteria for
 determining qualifications, positive attributes and independence of
 Directors. The Policy along with the CG Board Diversity Policy aims at
 attracting and retaining high caliber personnel from diverse
 educational fields and with varied experience to serve on the Board for
 guiding the Management team to enhance organizational performance. The
 detailed Remuneration Policy is contained in the Corporate Governance
 section of this Annual Report.
 Independent Directors Declaration
 All Independent Directors have submitted declarations that they
 continue to meet the criteria of independence as laid down under
 Section 149(6) of the Companies Act, 2013 and Regulation 16 of the
 Listing Regulations.
 Board Meetings
 A calendar of meetings is prepared and circulated in advance to the
 Directors. The Board of Directors met 6 times during FY2016.  The
 intervening gap between the meetings was within the period prescribed
 under the Companies Act, 2013 and the Listing Regulations. The details
 of the meetings and the attendance of the Directors are mentioned in
 the Corporate Governance Report.
 The Board has established Committees as a matter of good corporate
 governance practice and as per the requirements of the Companies Act,
 2013. The Committees are Risk and Audit Committee, Nomination and
 Remuneration Committee, Corporate Social Responsibility Committee and
 Stakeholders'' Relationship Committee. The composition, terms of
 reference, number of meetings held and business transacted by the
 Committees is given in the Corporate Governance Report.
 Annual Board Evaluation
 During the year, the Board has carried out the annual evaluation of its
 own performance as well as the evaluation of the working of its
 Committees and individual Directors, including Chairman of the Board.
 This exercise was carried out through a structured questionnaire
 prepared separately for Board, Committee and individual Directors. The
 questionnaire for Board evaluation was prepared taking into
 consideration various aspects of the Board''s functioning such as
 adequacy of the composition and role of the Board, Board meeting and
 reporting process, effectiveness of strategies, risk management
 systems, external relationships, ethics and governance framework.
 Committee performance was evaluated on the basis of its composition,
 effectiveness in carrying out its mandate, relevance of its
 recommendations and allocation of adequate time to fulfil its mandate.
 Individual and peer assessment of Directors based on parameters such as
 knowledge, contribution, level of engagement, communication /
 relationship with Board and Senior Management were received by the
 Chairman for individual feedback. The Board acknowledged certain key
 improvement areas emerging through this exercise and action plans to
 address these are in progress. The performance evaluation of the
 Chairman was carried out by the Independent Directors.  The Directors
 expressed their satisfaction with the evaluation process and its
 Familiarization of Independent Directors
 The Company has in place the practice of familiarizing the Independent
 Directors which inter-alia seeks to update the Directors, while their
 induction, on their roles, responsibilities, rights and duties under
 the Companies Act, 2013 and other statutes. This process helps the
 Independent Directors to take well informed decisions in a timely
 manner. The details of this program can be viewed under the following
 link on company''s website:
 During the year under review Ms Minal Bhosale resigned from the
 position of Company Secretary w.e.f. 31 May 2015. The Board of
 Directors based on the recommendation of the Nomination and
 Remuneration Committee, appointed Mr Manoj Koul as the new Company
 Secretary of the Company w.e.f. 3 August 2015.
 The Company is a part of the Avantha Group, one of India''s leading
 diversified conglomerates. Led by Chairman Mr Gautam Thapar, the
 Avantha Group has a global footprint and operates in 90 countries with
 more than 25,000 employees worldwide.
 As required under the Listing Regulations, CG periodically discloses
 its promoter group and persons acting in concert in the shareholding
 pattern and other filings with the Stock Exchanges.
 As on 31 March 2016, the Company has three Indian subsidiaries and 31
 foreign subsidiaries. The particulars are mentioned in Annexure 6 to
 this Report in Form No.  MGT 9 (Extract of Annual Return).
 Pursuant to Section 136 of the Companies Act, 2013 the audited accounts
 of each of the Company''s subsidiaries are placed on the website of the
 Company and not enclosed in this Annual Report. If any Member of the
 Company so desires, the Company will be happy to make available the
 Annual Accounts of the subsidiaries to him / her, on request. The
 physical copies of the aforesaid documents will also be available at
 the Company''s Registered Office for inspection during normal business
 hours on all working days, excluding Saturdays, up to the date of the
 In terms of Section 129(3) of the Companies Act, 2013, statement
 containing salient features of the financial statement of Subsidiaries
 / Associate companies / Joint Ventures is given in this Annual Report.
 The Company''s branch office in Poland i.e. Crompton Greaves Ltd SA is
 under the process of liquidation.
 The Central Government in consultation with the National Advisory
 Committee on Accounting Standards (NACAS) under Sectio 133 read with
 Section 469 of the Companies Act, 2013 has notified the Indian
 Accounting Standards (''Ind AS'') vide G.S.R. 111(E) dated 16 February
 2015. The Company has decided for adoption of the aforesaid standards,
 voluntarily, as stated in the Companies (Indian Accounting Standards)
 Rules, 2015 with effect from 1 April 2015 and thereafter. The aforesaid
 Rules have been further amended by the Companies (Indian Accounting
 Standards) (Amendment) Rules, 2016 on 30 March 2016. In view of this
 notification / amendment and also as per the Regulation 33 of Listing
 Regulations, the Company has prepared the Financial Statements (both
 stand-alone and consolidated) for the year ended 31 March 2016 as per
 Ind AS, as amended.
 As on the date of this Report, the Risk and Audit Committee is
 comprised of three Non-Executive Directors, of whom two are
 independent. The composition is as under:
 - Mr Shirish Apte (Chairman, Independent Director)
 - Dr Omkar Goswami (Non-Executive Director)
 - Mr Sanjay Labroo (Independent Director)
 All recommendations made by the Risk and Audit Committee during the
 year were accepted by the Board of Directors.
 The Company''s Related Party Policy governs the norms for inter-company
 transaction pricing between the Company and its subsidiaries. Since the
 Company has a network of wholly-owned subsidiaries, manufacturing, as
 well as, engaged in sales of various products comprising the different
 businesses of CG, a substantial quantum of related party transactions
 comprise transactions with subsidiaries for purchase and sale of goods
 and services, in the ordinary course of business.
 An omnibus approval has been granted by the Risk and Audit Committee of
 the Board for transactions which are of a foreseen and repetitive
 nature with other related parties.  Such omnibus approvals are
 subjected to review by the Risk and Audit Committee every year and are
 monitored by the Risk and Audit Committee on a quarterly basis. All
 Related Party Transactions are presented to the Risk and Audit
 Committee every quarter.
 All related party transactions that were entered into during the
 financial year were on an arm''s length basis and were in the ordinary
 course of business. There are no material related party contracts,
 arrangements or transactions undertaken by the Company during the year
 in terms of its India Related Party Transaction Policy of the Company
 and hence the disclosure of particulars of contracts / arrangements
 entered into by the Company with related parties referred to in
 sub-section (1) of Section 188 of the Companies Act, 2013 in Form AOC-2
 (Annexure 1 to this Report) is nil.
 The Company''s India Related Party Transactions Policy is uploaded on
 the website of the Company and the we blink is as under: policies/India%20Related%20Party%20
 Details of loans, guarantees given and investments made by the Company
 during FY2016, pursuant to the provisions of Section 186 of the
 Companies Act, 2013 and Schedule V of the Listing Regulations are given
 in the notes to the Financial Statements.
 A risk management policy has been developed and implemented by the
 Company for identification of elements of risk, if any, which in the
 opinion of the Board may threaten the existence of the Company. In
 order to bring in more clarity on the objective, process and spell out
 the roles and responsibilities for an effective implementation of the
 Risk Management Process, the Board of Directors have adopted revised
 Risk Management Framework. The revised framework enables risk
 identification and its escalation and consolidation at unit level to
 business unit level, identification of risk mitigation process.
 In terms of the framework, the Risk and Audit Committee shall review
 the adequacy of the risk management framework of the Company, the key
 risks associated with the businesses of the Company and the measures
 and steps in place to mitigate the same, from time to time.  The
 assessment of the risks covers Strategy, Technology, Financial,
 Operations & Systems, Legal & Regulatory and Human Resources Risks.
 There is appropriate assurance and monitoring mechanism in place to
 monitor the effectiveness of the risk management framework including
 the mitigation plans identified by the Management for key risks
 identified through the risk management exercise.
 CG has in place, adequate systems and procedures for implementation of
 internal financial control across the organization which enables the
 Company to ensure that these controls are operating effectively.
 During the year, the Company''s R&D activities continued to focus on
 development of improved energy efficient and reliable products.  Power
 transformers focused on research in cost competitiveness, oil tightness
 and validation of hot spot calculation. Research was also carried out
 in GAI3S 245 kV GIS with spring drive, 170 kV mobile GIS, 420 kV CT
 with Casting Tank, Composite Insulator CVTS, digital interface (digital
 surge counter) to the lightning arrester for condition monitoring of
 products, which is a vital communication link for smart substations and
 study of external withstand and flashover characteristics of air
 insulations for development of new and niche products. Other areas of
 research in power products included Inverter Duty 12 Pulse Transformer
 3.2 MVA with foil winding,
 Four Inverter Feed 4.25 MVA Transformer with foil winding and 2X12
 Pulse Four Winding Transformers for solar application.
 Automation business R&D activities, led by the R&D Centre of
 Excellence, together with the R&D teams at different locations, are
 mainly focused on new products and features to maintain its
 technological leadership in Protections and Control as well as in
 metering and communications.
 Industrial systems business focused on control platform, new DSP
 technology for high performance DTC, SVPWN and FOC for AM, PMSM and
 SynRM and new UC technology for integrated connectivity and
 communication.  CSA certified single phase motors up to 5HP 4P and 6P
 were developed. In Railways Signalling Division, R&D activity was
 carried out to design and develop two key products for railway and one
 customized product for Honda Motors such as 110Volts AC Fan with
 specially designed SS guard having better aesthetics to suit advanced
 interior of EMUs., 230 Volts AC BLDC Fan with special feature of speed
 regulation having customized design for Honda Motors and 380 Volts AC 3
 Phase Point Machine for Metro rail.
 The above R&D efforts would result in extended product range, increase
 in operating income and expansion in new markets.
 As required by the Companies Act, 2013, read with the Companies
 (Accounts) Rules, 2014, the relevant data pertaining to conservation of
 energy, technology absorption and foreign exchange earnings and outgo
 is given in the prescribed format as Annexure 2 to this Report
 By and large, EHS Management system, programs and policies were
 enhanced and overhauled during the year. All CG manufacturing units in
 Asia, EMEA and Americas have maintained their ISO14001 and OSHAS18001
 CG''s EHS policy and guidelines are a reflection of CG''s strong EHS
 commitment.  The EHS Guidelines prescribe responsibilities
 and accountabilities of individual functions and the standards for
 adherence with the Guidelines. Behaviour Based Championship Model was
 introduced, resulting in increased overall EHS awareness. Additionally,
 bi- monthly regional EHS network conference calls were conducted for
 cross business and cross regional EHS knowledge sharing.
 Smart EHS goals now form a part of KPI''s of individual leaders. Monthly
 online EHS Balanced Score Card concept was introduced under which all
 units set their annual targets towards EHS KPI''s and individual unit''s
 EHS performance against the set targets were evaluated. Corporate EHS
 audit process was revamped with the inclusion of skip level meeting and
 interview process.  These audits were more focused on EHS
 implementation and performance, rather than EHS documentation, as a
 journey towards continuous improvement in EHS excellence.  Corrective
 actions generated from these audits and various EHS events are captured
 and tracked for closure in Online Event Reporting System portal (ERS)
 as EHS one stop shop.
 With the objective of rewarding individual and collective efforts
 towards EHS, EHS RECOGNIZE policy was introduced and aligned with
 organisational RECOGNIZE drive. Two units were awarded as Best EHS unit
 CEO annual award.
 The Company''s undeterred commitment towards CSR initiatives endeavor to
 embrace responsibility for its corporate actions and achieve fruitful
 impact of its business actions not only on its stakeholders, but also
 the society at large. As part of its CSR initiatives, CG has undertaken
 projects in the areas of education, employability and health. CG
 supports Avantha Foundation on programs such as reduction of
 Malnutrition and Hunger and building capacities of stakeholders in
 small towns to ensure better delivery of services to citizens. The
 Annual Report on CSR activities of CG for FY2016 is stated at Annexure
 3 to this Report.
 Electronic copies of the Annual Report and Notice of the 79th Annual
 General Meeting are sent to all members whose email addresses are
 registered with the Company / Depository Participant(s) for
 communication purposes.  For members who have not registered their
 email addresses, physical copies of the Notice and Annual Report are
 sent in the permitted mode. Members requiring physical copies can send
 a request to the Company. The physical copies of the aforesaid
 documents will also be available at the Company''s Registered Office for
 inspection during normal business hours on all working days, excluding
 Saturdays, up to the date of the Meeting.
 There are no material changes and commitments affecting the financial
 position of the Company which has occurred between the end of the
 financial year of the Company i.e., 31 March 2016 and the date of this
 Directors'' report.
 No significant or material orders were passed by the Regulators or
 Courts or Tribunals which impact the going concern status and Company''s
 operations in future.
 The Directors would like to assure the Members that the financial
 statements for the year under review conform in their entirety to the
 requirements of the Companies Act, 2013.  The Directors confirm that:
 - the Annual Accounts have been prepared in conformity with the
 applicable Accounting Standards;
 - the Accounting Policies selected and applied on a consistent basis,
 give a true and fair view of the affairs of the Company and of the
 profit for the financial year;
 - sufficient care has been taken that adequate accounting records have
 been maintained for safeguarding the assets of the Company; and for
 prevention and detection of fraud and other irregularities;
 - the Annual Accounts have been prepared on a going concern basis;
 - the internal financial controls laid down in the Company were
 adequate and operating effectively;
 - the systems devised to ensure compliance with the provisions of all
 applicable laws were adequate and operating effectively.
 The Company''s Registrar & Transfer Agents for shares is Datamatics
 Financial Services Ltd (DFSL). DFSL is a SEBI- registered Registrar &
 Transfer Agent. The contact details of DFSL are mentioned in the
 Corporate Governance Report.
 investors are requested to address their queries, if any to DFSL;
 however, in case of difficulties, as always, they are welcome to
 contact the Company''s Investor Services Department, the contact
 particulars of which are contained in the Corporate Governance Report.
 The Company has not accepted any deposits from public or its members
 during FY2016 under Section 73 of the Companies Act, 2013 and no
 deposits are subsisting as on date.
 In terms of the provisions of Section 197(12) of the Companies Act,
 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and
 Remuneration of Managerial Personnel) Rules, 2014, a statement showing
 the names and other particulars of the employees drawing remuneration
 in excess of the limits set out in the said rules forms part of this
 Report. However regard to the provisions of the first proviso to
 Section 136(1) of the Companies Act, 2013, the Annual Report excluding
 the aforesaid information is being sent to the members of the Company.
 The said information is available for inspection at the Registered
 Office of the Company during working hours and any member interested in
 obtaining such information may write to the Company Secretary and the
 same will be furnished on request. Disclosures pertaining to
 remuneration and other details as required under Section 197(12) of the
 Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment
 and Remuneration of Managerial Personnel) Rules, 2014, is given at
 Annexure 4 to this report.
 In terms of the Sexual Harassment of Women at Workplace (Prevention,
 Prohibition and Redressal) Act and Rules, 2013, it is mandatory to
 review status of sexual harassment related complaints in the Annual
 Report. There were no incidents of sexual harassment reported in the
 Company. For protection against sexual harassment, CG has formed an
 internal complaints committee to which employees can write in their
 complaints. The Company has a Prevention of Sexual Harassment Policy
 which has formalised a free and fair enquiry process for dealing with
 such issues, with clear timelines. During FY2016, a number of workshops
 and programs were conducted by the Company to spread awareness on
 sexual harassment related issues.
 The Company has formulated CG Whistle Blower Policy with a view to
 providing a mechanism for CG employees to report violations and assure
 them of the process that will be followed to address the reported
 violation. The Policy also lays down the procedures to be followed by
 Senior Management for tracking of complaints,
 giving feedback, conducting investigations and taking disciplinary
 actions. It also provides assurances and guidelines on confidentiality
 of the reporting process and protection from reprisal to complainants.
 A Management Committee as nominated by CEO and Managing Director is
 formed upon completion of the investigation and requiring action by the
 Committee. Decisions taken by the Management Committee and actions
 taken by the Company or exoneration cases are informed by the Head of
 Internal Audit to the Risk and Audit Committee on a quarterly basis.
 Actions taken by the Management Committee are implemented subject to
 applicable law(s).
 In view of the mandatory rotation of auditor requirement and to ensure
 smooth transition, it is proposed to appoint M/s Chaturvedi & Shah as
 Joint Statutory Auditors along with M/s Sharp & Tannan, the existing
 Statutory Auditors of the Company. Both the Auditors will be jointly
 and severally responsible during FY2017.
 M/s Chaturvedi & Shah are proposed to be appointed for a period of 5
 continuous years i.e. from the conclusion of 79th Annual General
 Meeting till the conclusion of 84th Annual General Meeting of the
 Company. M/s Sharp & Tannan and M/s Chaturvedi & Shah, have informed
 the Company vide letters both dated 24 May 2016 respectively that their
 appointment, if made, would be within the limits prescribed under
 Section 141 of the Companies Act, 2013.  M/s Sharp & Tannan and M/s
 Chaturvedi & Shah, have confirmed that they have subjected themselves
 to the peer review process of the Institute of Chartered Accountants of
 India (ICAI) and hold valid certificates issued by the Peer Review
 Board of the ICAI. M/s Sharp & Tannan and M/s Chaturvedi & Shah, have
 also furnished a declaration confirming their independence as well as
 their arm''s length relationship with the Company and declared that they
 have not taken up any prohibited non-audit assignments for the Company.
 The Company had appointed M/s Ashwin Solanki & Associates, Cost
 Accountants, to audit the cost accounts related to the Company''s
 products for 2015 2016. The cost audit reports were filed within the
 statutory deadline.
 Upon recommendation of the Risk & Audit Committee, the Board had
 appointed M/s Ashwin Solanki & Associates as Cost Auditors, for the
 financial year 2016-2017.  At the ensuing Annual General Meeting, their
 remuneration is proposed to be approved and ratified by the
 The Company has appointed Dr K R Chandratre, Practising Company
 Secretary to undertake the Secretarial Audit of the Company. The Report
 of the Secretarial Audit for FY2016 is annexed herewith as Annexure 5
 to this Report.
 There are no qualifications, reservations or adverse remarks or
 disclaimers made by the Statutory Auditor or the Secretarial Auditor in
 their reports and hence do not call for any further comments.
 During the year under review, neither the Statutory Auditor nor the
 Secretarial Auditor had reported any matter under Section 143(12) of
 the Companies Act, 2013, therefore no details are required to be
 disclosed under Section 134(3)(d) of the Companies Act, 2013.
 The details forming part of the extract of the Annual Return in Form
 MGT 9 is annexed herewith as Annexure 6.
 The Directors wish to convey their gratitude and appreciation to all of
 the Company''s employees at all its locations worldwide for their
 tremendous efforts as well as their collective dedication and
 contribution to the Company''s performance.
 The Directors would also like to thank the employee unions,
 shareholders, customers, dealers, suppliers, bankers, government and
 all other business associates for their continued support extended to
 the Company and the Management.
                                   On behalf of the Board of Directors
                                                             G THAPAR 
                                                       DIN (00012289) 
                                                  Mumbai, 27 May 2016
Source :
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