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CG Power and Industrial Solutions

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Directors Report Year End : Mar '17    Mar 16

To,

The Members

The Directors are pleased to present their Eightieth Annual Report on the business and operations of the Company along with the Audited Financial Statements, both Standalone and Consolidated, for the financial year ended31 March2017.

THE YEAR IN RETROSPECT

The Stand-alone and Consolidated Financial Statements of the Company represent the continuing operations for the year ended 31 March 2017. The discontinued operations have been presented under a separate head.

FY2017 has been a steady and an encouraging one. The Company achieved a stand-alone gross turnover from continued operations of 14,761 crore, during the year under review, as compared to 14,225 crore during the previous year, recording a growth of 12.7%. The consolidated net revenue of the Company during FY2017 from continued operations recorded a growth of 9.4% and stood at 16,120 crore, as compared with 15,595 crore in the last year.

The stand-alone profit before tax from continuing operations of the Company for the year under review amounted to 1157 crore as compared to a loss of 1(1,139) crore for the previous year, recording an increase of 113.8%. The consolidated profit before tax from continuing operations for the year under review amounted to 1127 crore as compared to 1180 crore in the previous year, recording a decrease of 29.7% over last year.

Consolidated loss before tax from discontinued operations increased to 1(612) crore from 1(492) crore, in the previous year, an increase of 24.4%.

The tax expense for the year under review amounted to 1(1) crore on stand-alone basis and 117 crore on consolidated basis.

The Company recorded a stand-alone profit after tax from continuing operations of 1158 crore, an increase of 113.3% from loss of 1(1,184) crore in the last year.

Consolidated profit after tax from continuing operations for the year under review stood at 1110 crore as compared with 1115 crore in the last year, a decrease of 4.3%.

Details of Sales and Profit Before Interest and Tax of the respective Business Units in comparison with the previous financial year are given in Table 1. Further, Table 2 highlights details of the Financial Performance of the Company for the continuing operations for the year ended 31 March 2017.

A detailed review of the operations and performance of the Company and each of

BUSINESS UNIT SALES PBIT

2016-17

2015-16

2016-17

2015-16

Power Systems

Stand-alone

2,684

2,425

208

117

Consolidated

3,739

3,474

384

329

Industrial Systems

Stand-alone

2,078

1,801

190

174

Consolidated

2,361

2,119

156

139

the Businesses including its international operations is contained in the section titled ‘Management Discussion and Analysis’, of this Annual Report.

DIVESTMENTS AND OTHER DEVELOPMENTS

The Share Purchase Agreement (SPA) for sale of CG’s Power Businesses in Europe, North America and Indonesia was terminated due to certain conditions precedent, the fulfillment of which was beyond the reasonable control of the parties to the SPA. The Company continues to explore alternative geography / product wise options for sale of its international power businesses excluding Indonesia while continuing with strategic initiatives for improving the overall operational efficiency of its international power businesses.

During the year under review, the Company completed sale of its Automation business comprising of ZIV Applications y Technologic S.L, its subsidiaries and Automation businesses in UK, Ireland, France and India at an Enterprise Value of Euro 120 Million.

The sale is part of the Company’s strategy to focus on its core operations in Power and Industrial Systems businesses in their respective markets. The Automation business sale has significantly contributed to the reduction of Company’s international debts.

In line with the Shareholders approval at the previous Annual General Meeting held on 30 August 2016 for sale of its overseas Transmission and Distribution businesses, the Company is actively pursuing divestment of its power business in United States of America (USA) comprised in its overseas step-down subsidiary—CG Power USA Inc.

Additionally, CG Power Systems Belgium NV (PSBE), the Company’s overseas step down subsidiary has signed an SPA for exiting from the Joint Venture in Saudi Arabia-Saudi Power Transformer Co Ltd, in which it holds 49% equity shareholding, subject to completion of conditions precedent. The completion of the SPA is expected by 31 October 2017. The SPA also envisages liquidation of CG Power Solutions Saudi Arabia Ltd, in which CG Holdings Belgium NV, a step-down overseas subsidiary of the Company, holds 51% equity shareholding.

Further, the Solutions businesses in USA and UK upon completion of its existing contracts are in the Anal stage of being phased out. The Company’s branch office in Poland i.e. Crompton Greaves Ltd SA and overseas step-down subsidiaries CG Power Systems Brazil Ltda and Microsol Limited were liquidated on 8 December 2016, 21 December2016and26April2017, respectively.

The above divestments are part of the Company’s stated strategy of debt reduction and focusing on its core operations and core markets in India which provides significant growth opportunities, besides enhancing shareholder’s value.

NAME CHANGE

Pursuant to the Scheme of Arrangement between the Company and Crompton Greaves Consumer Electricals Limited (CGCEL) as sanctioned by the Hon’ble High Court of Bombay on 20 November 2015, inter-alia, the trademarks associated with the Company’s erstwhile consumer products business viz ‘Crompton’ and ‘Crompton Greaves’ were transferred to CGCEL. Since the Company, consequent to demerger of its erstwhile consumer products business, operates in a fully integrated B2B segment comprising of Power Transmission, Distribution and Industrial Businesses, the registered trademark ‘CG’ associated with the B2B business has been retained by the Company.

As a consequence of the above and pursuant to approval of the Members of the Company vide Special Resolution dated 25 January 2017 and the Central Government / Registrar of Companies, Mumbai on 27 February 2017, the Company changed its name from ‘Crompton Greaves Limited’ to ‘CG Power and Industrial Solutions Limited’ effective 27 February 2017.

The new name ‘CG Power and Industrial Solutions Limited’ appropriately represents and reflects the business in which the Company is presently engaged and the existing registered trademark / logo used by the Company. The change of Company name does not result in change of the legal status, constitution, operations, activities of the Company, nor does it affect any rights, liabilities or obligations of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

BOARD OF DIRECTORS

COMPOSITION

As on the date of this report, the Company’s Board of Directors consists of nine Directors comprising of two Executive Directors and seven Non-Executive Directors of which four are Independent Directors. The Chairman, Mr Gautam Thapar is a Non-Executive Director and represents the Promoter Group. MrKN Neelkant is the CEO and Managing Director. Mr Madhav Acharya is the Executive Director—Finance and CFO. Four other Non-Executive Directors—MrSanjay Labroo, DrValentin von Massow, Ms Ramni Nirula and Mr Jitender Balakrishnan are Independent in terms of Regulation 16 of the Listing Regulations and Section 149 of the Act. Two other Directors—Mr B Hariharan and Dr Omkar Goswami are Non-Executive Directors. The Board consists of reputed professionals with diverse functional expertise, industry experience, educational qualifications, ethnicity and gender mix relevant to fulfilling the Company’s objectives and strategic goals.

CHANGE IN COMPOSITION OF THE BOARD On recommendation of the Nomination and Remuneration Committee of the Board,

Mr Jitender Balakrishnan was appointed as an Additional Director in capacity of NonExecutive Independent Director on the Board of Directors of the Company with effect from 2 May 2017. In accordance with Section 161 of the Act, Mr Jitender Balakrishnan holds office upto the date of the ensuing Annual General Meeting and being eligible, offers himself for appointment as an independent Director. Attention of Members is invited to relevant disclosure made in Notice of the ensuing Annual General Meeting and Explanatory statement thereto, with respect to his appointment.

Ms Meher Pudumjee and Mr Shirish Apte, Non-Executive Independent Directors resigned from the Board, effective from 28 May2016 and 1 April 2017, respectively.

The Board places on record its gratitude and appreciation for the valuable contributions made by Ms Pudumjee and Mr Apte during their respective tenures.

RETIREMENT BY ROTATION In terms of the provisions of Section 152 of the Act and the rules made thereunder and Article 114 of the Articles of Association of the Company, Mr Gautam Thapar and Dr Omkar Goswami retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, seek re-appointment. As per Regulation 36 of the Listing Regulations and Secretarial Standard-2 on General Meetings issued by the Institute of Company Secretaries of India (SS-2), the brief profile and other relevant details regarding re-appointment of Mr Gautam Thapar and Dr Omkar Goswami are contained in the Annexure accompanying the Explanatory Statement to the Notice of the ensuing Annual General Meeting.

The Board recommends their reappointment as Directors of the Company, liable to retire by rotation.

INDEPENDENT DIRECTORS'' DECLARATION

The Company has received declarations from all its Independent Directors confirming that they meet the criteria of independence as laid down under Section 149 of the Act and Regulation 16 of the Listing Regulations.

BOARD MEETINGS

During FY2017, the Board of Directors met four times to discuss and decide the business strategies and performance in addition to the items reported to the Board in accordance with the provisions of the Act, Listing Regulations and other statutory provisions. The intervening gap between the meetings was within the period prescribed under the Act, Listing Regulations and Secretarial Standard-1 on Board Meetings issued by the Institute of Company Secretaries of India (SS-1). The details of the Board Meetings held and the attendance of the Directors thereat are given in the section titled ‘Report on Corporate Governance’ which forms part of this Annual Report.

BOARD COMMITTEES The Board has established statutory and non-statutory Committees in compliance with the requirements of the Act and Listing Regulations viz. Risk and Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders’ Relationship Committee and

Securities Transfer Committee. The details of composition of the said Committees, its terms of reference, number of meetings held and attendance of the Committee Members thereat during the financial year is given in the section titled ‘Report on Corporate Governance’ which forms part of this Annual Report.

During the year under review, the Board constituted ZIV Business Divestment Committee to evaluate, determine and review the proposals for divestment of Automation Business of the Company in India and overseas locations. The Committee comprised of Mr Shirish Apte,

Dr Omkar Goswami, Mr B Hariharan,

MrKN Neelkant and Mr Madhav Acharya. The Committee held two meetings during the year under review on 4 November 2016 and 7 November 2016.

All recommendations made by the Risk and Audit Committee during the year under review were accepted by the Board of Directors.

KEY MANAGERIAL PERSONNEL

Pursuant to Section 203 of the Act, the Key Managerial Personnel of the Company as on the date of this report are:

- MrKN Neelkant, CEO and Managing Director

- Mr Madhav Acharya, Executive Director— Finance and CFO

- MrManojKoul,CompanySecretary

During the year under review, there has been no change in the Key Managerial Personnel of the Company.

REMUNERATION POLICY AND CRITERIA FOR DETERMINING ATTRIBUTES, QUALIFICATION, INDEPENDENCE AND APPOINTMENT OF DIRECTORS

The Company has formulated a Remuneration Policy governing the appointment and remuneration of Directors, Key Managerial Personnel, Senior Management and other employees of the Company. The Remuneration Policy also contains the criteria for determining qualifications, positive attributes, independence of Directors, provisions relating to loans and advances to the employees of the Company and also aims at attracting and retaining high calibre personnel

from diverse educational fields and with varied experience to serve on the Board of the Company for guiding the Management team to enhance organizational performance. The Remuneration Policy of the Company is provided in Annexure 6 to this Report.

The Company believes that diversity at Board level is a critical ingredient in maintaining competitive advantage, understanding customers and stakeholders from different perspectives and broad experience leading to better decision making. With this objective, the Company has adopted the Board Diversity Policy which sets out the approach for diversity on the Board of Directors of the Company.

PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS

Pursuant to the provisions of Section 178 of the Act and Regulation 17 of the Listing Regulations, the Board has carried out the annual evaluation of the performance of the Board, as well as the evaluation of the working of its Committees and individual Directors including Chairman of the Board during the year under review. A detailed questionnaire on various facets such as role of the Board, composition, effectiveness of Board processes, relationships with external stakeholders, strategy and risk management, ethics and compliance of the Board, Committees and individual Directors (Executive, Non-Executive and Independent Director) self assessment form was circulated to all the Directors of the Company.

Evaluation of Committees was carried out based on its composition, adequacy of information / material for effective discussion, mandate of the Committees, adequate time allocation for fulfilling its mandate and recommendations to the Board.

The individual and peer assessment of Directors contains facets such as relationship with Board and Senior Management, knowledge, competency and contribution to the Board including ‘Start-Continue-Stop’ approach based evaluation of individual Directors. The Chairman provides feedback on the individual and peer assessment.

Based on the feedback received from each Director and the Chairman, the Nomination and Remuneration Committee and the Board of Directors of the Company discussed the outcome of the annual evaluation and identified Director’s commitment, size of the Board, Board competencies, strong Committee constitution and Chairman’s leadership as robust areas.

Pursuant to the provisions of Schedule IV of the Act and Regulation 25 of the Listing Regulations, the Independent Directors of the Company at their meeting held on 10 February 2017 carried out evaluation of the performance of Non-Independent Directors and the Board as a whole, performance of the Chairman and also assessed the quality, quantity and timeline of flow of information between the Management and the Board.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

Pursuant to Regulation 25 of the Listing Regulations, the Company familiarizes it’s Independent Directors with their roles, rights, responsibilities as well as the Company’s business and operations. Moreover, the Directors are regularly updated on the business strategies and performance, management structure and key initiatives of businesses at every Board Meeting.

The details of the programme can be viewed under the following link available on the Company’s website http://www. cgglobal.com/frontend/finalnonproduct. aspx?cnl2=yrnPqECUvhk=

PROMOTER GROUP

The Company is a part of the Avantha Group, one of India’s leading business conglomerates. Led by Chairman Mr Gautam Thapar, the Avantha Group has global footprint and presence in 90 countries with more than 25,000 employees worldwide. As required under the Listing Regulations,

CG periodically discloses the details of its promoter group and person acting in concert in the shareholding pattern and other filings with the Stock Exchanges.

SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES

As on 31 March 2017, the Company has three Indian subsidiaries, 25 foreign subsidiaries, one joint venture and three associate companies. Details of the subsidiary, joint venture and associate companies existing as of 31 March 2017 and formed or ceased during the year under review are provided in Annexure 5 to this Report in Form MGT-9 (Extract of Annual Return).

The Company has adopted the Indian Accounting Standards (Ind AS), voluntarily, as stated in the Companies (Indian Accounting Standards) Rules, 2015 with effect from 1 April 2015 and thereafter. Pursuant to the Companies (Indian Accounting Standards) Rules, 2015 and Regulation 33 of Listing Regulations, the Financial Statements of the Company reflect the consolidation of accounts of the Company, its subsidiaries, associates and joint venture companies.

Pursuant to Section 136 of the Act, the audited annual accounts of each of the Company’s subsidiaries, associates and joint venture entities are placed on the website of the Company and not enclosed in this Annual Report. If any Member of the Company so desires, the Company will be happy to make available the said audited annual accounts, on written request. The physical copies of the aforesaid documents will also be available at the Company’s Registered Office for inspection during normal business hours on all working days, excluding Saturdays, up to the date of the ensuing Annual General Meeting and at the venue of the Annual General Meeting.

In terms of Section 129 of the Act, statement containing salient features of the Financial Statements of the Company’s subsidiaries / associates / joint ventures / companies in Form AOC-1 is given in the notes to the Financial Statements in this Annual Report.

Pursuant to Regulation 16 of the Listing Regulations, a Policy for determining Material Subsidiary of the Company as approved by the Board of Directors of the Company is available on the website of the Company.

The we blink to download the policy is as under http://www. cgglobal.com/frontend/ finalnonproduct.aspx?cnl2=yrnPqECUvhk=

RELATED PARTY TRANSACTIONS

During the year, related party transactions that were entered into by the Company were on an arm’s length basis and in the ordinary course of business. In terms of the India Related Party Transaction Policy of the Company, there are no material related party contracts, arrangements or transactions undertaken by the Company during the year under review. Hence, disclosure of particulars of contracts / arrangements entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Act in Form AOC-2 is not applicable to the Company for the year under review.

An omnibus approval has been granted by the Risk and Audit Committee of the Board, based on the criteria determined and approved by the Board of Directors of the Company and by the Risk and Audit Committee, for transactions which are of foreseen and repetitive nature with related parties. Such omnibus approvals are subjected to renewal by the Risk and Audit Committee every year and are monitored by the Risk and Audit Committee on a quarterly basis. All related party transactions entered into by the Company are presented and reviewed by the Risk and Audit Committee every quarter.

The Company’s India Related Party Transactions Policy can be downloaded from the website of the Company. The we blink of the same is as under http://www.cgglobal. com/pdfs/policies /India%20Related%20 Party%20Transactions%20Policy.pdf

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Particulars of loans, guarantees given and investments made by the Company during FY2017, pursuant to the provisions of Section 186 of the Act and Schedule V of the Listing Regulations are given in the notes to the Financial Statements in this Annual Report.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34 of the Listing Regulations, the Business Responsibility Report highlighting the initiatives taken by the Company in the areas of environment, social, economical and governance, is available on the website of the Company. The weblink to download the report is as under http://www.cgglobal.com/frontend/ finalnonproduct.aspx?cnl2=Nu/tTrrPlMI=

ENTERPRISE RISK MANAGEMENT FRAMEWORK

Integrating the process for managing risks across the Company’s business and operations is the Company’s philosophy for Enterprise Risk Management. In this regard, the Company has developed a comprehensive ‘Enterprise Risk Management (ERM) framework’ for identification of elements of risk, conducting risk assessment and suggesting mitigation procedure to the Board of Directors of the Company to ensure that management controls the risks through a properly defined framework.

ERM framework aims to imbibe a ‘risk culture’ throughout the organization, facilitate risk based decision making, improve governance and accountability, protect and enhance stakeholder value.

The ERM framework enables the Company to identify elements of risk based on the risk identification techniques, analyze and comprehend the nature of risk, escalate and consolidate risks at Unit level to Business Unit level, monitor and review risks and implement action plans to mitigate risk. Quarterly meetings at Unit level and Business Unit level are held for overseeing existing risk portfolio, monitor effectiveness of the risk management framework including mitigation plans identified by the Management, through the risk management exercise. The Risk and Audit Committee reviews the adequacy of the ERM framework of the Company, key risks associated with the businesses of the Company, measures and steps in place to mitigate the same, from time to time.

The assessment of the risks covers Strategy, Technology, Financial, Operations & Systems, Legal & Regulatory and Human Resources risks.

During the year under review, none of the risks identified threaten the existence of the Company.

INTERNAL FINANCIAL CONTROLS

The Company has in place an effective and efficient internal controls testing and monitoring system which enables the Company to ensure that these controls are operating effectively. CG’s controls have been designed to provide reasonable assurance with regard to maintaining of proper internal controls, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations for ensuring reliability of financial reporting.

RESEARCH AND DEVELOPMENT (R&D)

During the year under review, the Company’s R&D activities continued to focus on development of indigenous and energy efficient products.

Power Transformers Division developed 4.5MVA 33 / 4*380 (4LV IN ONE core coil assembly) inverter duty for solar application and amorphous transformers. Research was carried out for 315MVA 765kV GT & 85MVA 765kV short circuit job and ANSI Standard BH10587 143MVA500kV. All rating from 315KVA to 2500KVA 11kV& 33kV as per IS 1180 level 1 were successfully type tested.

Switchgear Division indigenously designed and developed composite insulators to cater to the changing requirements of utilities for switchgear products and to reduce dependence on imported materials. Switchgear Division also developed Arc assist double motion interrupters that will result in approximately 40% reduction of mechanism energy requirement, algorithms for controlled switching of reactor & transformer and CG’s Arista GIS which will achieve the requirements of global market for the ratings 36kV, 31.5kA, 2500A, 50 / 60Hz.

CG is also in process of developing high voltage vacuum circuit breakers for the rating of 72.5kV, 31.5kA, 2500A which will become a platform technology for future development of 145kV VCB ratings. CG focused on research in SPAR drive for GT01, GAI3S 245kV GIS with spring drive, pole mounted auto-reclosed, oil immersed vacuum breaker for completely self protected transformer, Self Powered Pole Mounted Outdoor Capacitor Switches, Compact 245kV and 145kV GIS, 245kV DTB, CLASS 5ZNO blocks with 16kJ / kV energy and external gapped transmission line arrestor.

Industrial Systems business focused on development of electronic excitation system for 1200KW alternator and 1600HP AC-AC DEMU and 550KW inverter for DEMU. New range of 480Vac ‘stacked drives’ (including AFE) from 250kW to 2MW in smaller footprint, AFE drives, next generation control platform, TSA range of Normal Duty soft starters with integrated bypass up to 1100A and next generation IP2X, IP54 (and possibly IP65) variable speed drives were developed during the year. CG also developed CSA certified single phase motors up to 5HP-4P and 6P.

During FY2017, CG registered designs of Compact Series 160C frame Alternator, 450 frame Alternator, Solid Yoke DC Motor-AFS / AUS315, Amply dine for T90 Stabilizer-BEL Chennai, Solid Yoke DC Motor in frame AUS / AFS250 (Locomotive) and Flameproof Brake Motors E90-160.

R&D efforts enables the Company to manufacture cost competitive products, offer improved and integrated product portfolio, increase its market share, shorten lead time, import substitution and offer high specification products as per requirements of international markets.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Details pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134 of the Act read with the Companies (Accounts) Rules, 2014, are given in the prescribed format as Annexure 1 to this Report.

ENVIRONMENT, HEALTH & SAFETY (EHS)

The Company propagates ‘Zero Harm Culture’ towards employees, environment and other stakeholders as reflected in our EHS Policy and guidelines. Through our EHS Policy, we aim at not only complying with legal requisites of safeguarding our employees, environment and the society at large but also setting high internal standards for compliance.

All CG manufacturing units in Asia,

EMEA and Americas have maintained their IS014001 and OSHAS18001 certifications. Regular trainings on safety awareness and sustainable growth are conducted at all manufacturing locations. Fire safety week is also observed across all locations in India under the guidance of the Fire Adviser, Ministry of Home Affairs, Government of India.

EHS Key Performance Indicators (KPIs) are linked with SMART goals of all units and individuals for their Annual Performance Management process. Quarterly audits are conducted to review the EHS implementation and process compliances across all locations of the Company. Corrective actions generated from these audits and various EHS events are captured and tracked for closure in an Online Event Reporting System Portal, an EHS one stop shop.

During the year under review, CG Mandideep Unit was felicitated with Annual Outstanding Achievement Award 2016 in the EHS category of large industry sector from the Federation of Madhya Pradesh Chamber of Commerce and Industries (FMPCCI) for its best practices and processes adopted for EHS.

The Company also has EHS RECOGNIZE policy aligned with organizational RECOGNIZE drive with the objective of rewarding individual and teams for collective efforts towards EHS. Two units were awarded as Best EHS Unit under the category of CEO Annual Award.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company believes that business sustainability is closely connected to the sustainable development of the communities and hence it uses CSR to integrate economic, environment and social objectives with the Company’s operations and growth. During the year, the Company has undertaken various CSR projects in the areas of employability, education and health. The Company also supports Avantha Foundation on programs such as reduction of malnutrition and hunger, expansion of Avantha Urban Innovation Project and building capacities of stakeholders in small towns to ensure better delivery of services to citizens.

The details of the composition of CSR Committee, CSR Policy and projects undertaken by the Company during FY2017 are given in the section titled ‘Annual Report on CSR initiatives’ in Annexure 2 of this Report.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company i.e. 31 March 2017 and the date of this Report.

MATERIAL ORDERS OF REGULATORS / COURTS / TRIBUNALS

During the year under review, no significant or material orders were passed by the

Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.

REGISTRAR & SHARE TRANSFER AGENT

The Company has appointed Datamatics Financial Services Limited, (DFSL) as its Registrar & Share Transfer Agent. DFSL is a SEBI-registered Registrar & Share Transfer Agent. The contact details of DFSL are mentioned in the section titled ‘Report on Corporate Governance’ of this Annual Report.

DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of the Listing Regulations, the Company has formulated a Dividend Distribution Policy to help investors to get a clearer picture on returns from their investments in the Company and also identify the stocks matching their investment objectives. The policy includes the financial parameters, dividend pay-out circumstances, internal and external factors, dividend pay-out ratio and retained earnings utilization which will be considered at the time of declaration of Dividend. The Dividend Distribution Policy is provided in Annexure 7 which forms part of this report and is also available on the website of the Company.

The we blink to download the policy is http:// www.cgglobal.com/frontend/finalnonproduct. aspx?cnl2=yrnPqECUvhk=

PUBLIC DEPOSITS

The Company has not accepted any deposits from Public or its Members during FY2017 under Sections 73 and 76 of the Act and no deposits are subsisting as on date.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197 of the Act read with Rule5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure 3 of this Report.

In terms of the provisions of Section 197 of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is given in Annexure 8 which forms part of this Report. The said information is available for inspection at the Registered Office of the Company during working hours up to the date of the ensuing Annual General Meeting and any Member interested in obtaining a copy thereof may write to the Company Secretary / Compliance Officer in this regard.

COMPLAINTS RELATING TO SEXUAL HARASSMENT

In terms of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, it is mandatory to review status of sexual harassment related complaints in the Annual Report.

For protection against sexual harassment, the Company has adopted a Prevention of Sexual Harassment Policy which has formalized a free and fair enquiry process for dealing with such issues with clear timelines.

The Company has also constituted region wise Sexual Harassment Committees presided by a woman employee and comprising of four to six Company employees and an external member to which employees can address their complaints.

During the year under review, the Committee met once a year and conducted 43 workshops and programs covering 1,010 employees to spread awareness on sexual harassment related issues.

There were no incidents of sexual harassment reported during the year under review.

VIGIL MECHANISM

The Company has set up a vigil mechanism viz. Whistle Blower Policy as per the provisions of Section 177 of the Act and Regulation 18 of the Listing Regulations to enable its employees to report violations, genuine concerns, unethical behavior and irregularities, if any, noticed by them which could adversely affect the Company’s operations. The Policy also lays down the procedures to be followed by Senior Management for tracking of complaints, giving feedback, conducting investigations and taking disciplinary actions, if required.

The Head of Internal Audit submits a report to the Chairman of the Risk and Audit Committee on a quarterly basis, on all complaints referred to the Management Committee, nominated by the CEO and

Managing Director of the Company, with the status of investigations and actions taken by the Management Committee.

No material concerns or irregularities have been reported during the year under review and none of the Whistle Blowers were denied access to the Risk and Audit Committee of the Board.

AUDITORS AND AUDIT REPORTS STATUTORY AUDITORS

At the 79th Annual General Meeting of the Company, M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai (Firm Registration No. 101720W), were appointed as Statutory Auditors of the Company for a term of five years up to the conclusion of the 84th Annual General Meeting and also as Joint Statutory Auditors of the Company along with M/s. Sharp &Tannan, Chartered Accountants (Firm Registration No. 109982W) up to the conclusion of 80th Annual General Meeting.

The term of M/s. Sharp & Tannan as Joint Statutory Auditors of the Company expires at the ensuing 80th Annual General Meeting pursuant to Section 139 of the Act and Rules made there under. The Board places on record its appreciation for the services rendered by M/s. Sharp & Tannan as the Statutory Auditors of the Company.

M/s. Chaturvedi & Shah have provided their consent and confirmed that they meet the eligibility criteria prescribed under Section 141 of the Act read with Rule 4 of the Companies (Audit and Auditors) Rules, 2014 and that they are not disqualified to act as Statutory Auditors of the Company.

M/s. Chaturvedi &Shah have confirmed that the Arm holds a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. They have also furnished a declaration confirming their independence as well as their arm’s length relationship with the Company and declared that they have not taken up any prohibited non-audit assignments for the Company.

Accordingly the Risk and Audit Committee and the Board have recommended ratification of appointment of M/s. Chaturvedi & Shah as Statutory Auditors of the Company at the ensuing Annual General Meeting.

During the year under review, the Statutory Auditor have not reported any instances of offence or fraud committed by the officers or employees of the Company, to the Risk and Audit Committee of the Board or the Board of Directors of the Company.

COST AUDITOR

The Company had appointed M/s. Ashwin Solanki & Associates, Cost Accountants, Mumbai (Firm Registration No. 100392) to audit the cost records related to the Company’s products for FY2017. The cost audit reports for FY2016 were filed with the Registrar of Companies, Mumbai within the prescribed statutory deadline.

Upon recommendation of the Risk and Audit Committee, the Board has re-appointed M/s. Ashwin Solanki & Associates as Cost Auditor of the Company for FY2018 at a remuneration of 15 lakhs plus out of pocket expenses and taxes, as applicable. The remuneration payable to M/s. Ashwin Solanki & Associates for FY2018 is recommended for ratification by the Members at the ensuing Annual General Meeting.

SECRETARIAL AUDITOR

The Company had appointed M/s. Pramod S Shah & Associates, Practicing Company Secretaries, Mumbai (Firm Registration No. P2001MH010300) to undertake the Secretarial Audit of the Company for FY2017. Secretarial Audit Report for FY2017 in Form MR-3 is annexed as Annexure 4 to this Report.

There are no qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditor or the Secretarial Auditor in their reports and hence do not call for any further comments.

DIVIDEND

No dividend has been recommended or paid for the year ended 31 March 2017.

RESERVES

The Reserves, on stand-alone basis, at the beginning of the year amounted to 14,003 crore and at the end of the year stood at 14,074 crore.

SHARE CAPITAL

As at 31 March 2017, the authorized share capital of the Company was 14,076,000,000 (Rupees Four Hundred Seven Crore And Sixty Lakhs only) divided into 2,038,000,000 equity shares of 12 (Rupees two only) each.

As at 31 March 2017, the subscribed and paid-up share capital of the Company stood at 11,253,492,284 (Rupees One Hundred Twenty Five Crore Thirty Four Lakhs Ninety Two Thousand Two Hundred and Eighty Four only) consisting of 626,746,142 equity shares of 12 (Rupees two only) each.

The Company’s Equity Shares are listed and traded in compulsory dematerialized form on BSE Limited and National Stock Exchange of India Limited.

The Company has issued Global Depository Receipts (GDRs) in 1996 and the underlying shares for each GDR were issued in the name of The Bank of New York, the Depository. Each GDR of the Company is equivalent to five equity shares. As on 31 March 2017, 176,466 GDRs were outstanding, which represent 882,329 underlying equity shares of the Company.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 are given in Annexure 5 to this Report in accordance with Section 92 of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, as amended from time to time.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors would like to assure the Members that the Financial Statements both on stand-alone and consolidated basis, for the year under review conform, in their entirety, to the requirements of the Act.

The Directors confirm that:

- the Annual Accounts have been prepared in conformity with the applicable Accounting Standards along with proper explanations relating to material departures;

- the Accounting Policies selected and applied on a consistent basis and judgments and estimates made are reasonable and prudent to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the financial year;

- proper and sufficient care has been taken to maintain adequate accounting records for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- the Annual Accounts have been prepared on a going concern basis;

- the internal financial controls laid down in the Company were adequate and operating effectively;

- the systems devised to ensure compliance with the provisions of all applicable laws were adequate and operating effectively.

ACKNOWLEDGEMENTS

The Board of Directors wish to convey their gratitude and appreciation to all the employees of the Company globally, for their tremendous efforts as well as their exemplary dedication and contribution to the 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

GAUTAM THAPAR

Chairman

(DIN:00012289)

New Delhi, 26 May 2017

Source : Dion Global Solutions Limited
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