The Directors have pleasure in presenting the Seventh Annual Report on
business and operations of the Company for the year ended 31st March,
1. FINANCIAL RESULTS (Rs. in Crores)
PARTICULARS YEAR ENDED YEAR ENDED
31ST MARCH, 2012 31ST MARCH, 2011
TOTAL INCOME 97.19 591.03
PROFIT / (LOSS) BEFORE INTEREST,
DEPRECIATION AND TAX (110.86) 57.92
INTEREST 57.28 63.52
CASH PROFIT / (LOSS) (168.14) (5.60)
DEPRECIATION 34.22 51.83
PROFIT / (LOSS) BEFORE TAX (202.36) (57.43)
PROFIT / (LOSS) AFTER TAX (202.36) (57.44)
PROFIT / (LOSS) BROUGHT FORWARD (137.69) (80.25)
PROFIT / (LOSS) TO BE CARRIED
FORWARD TO BALANCE SHEET (340.05) (137.69)
2. PERFORMANCE REVIEW
During the year under review, the Company has been severally impacted
due to sudden demand downturn in SPV cell segment resulting from
liquidity crisis in Europe, lower sales realization without
commensurate fall in raw material prices and underutilization of
capacity due to industry downturn.
Germany reduced Feed-in-Tariff from January 2011 and this gave farm
developers time to wait for better pricing. Many countries reduced
subsidy support to solar sector, in order to combat their fiscal
deficit. This resulted in lower off take of solar products globally
leading to reduced demand. This downturn was entirely unanticipated and
had taken the industry by surprise.
The demand had suddenly eroded while the supply chain was in full ramp.
This created an artificially high inventory pile-up in Asia as well as
at European ports and the same resulted in over 60% price erosion
worldwide. These factors also caused halt in operations of solar
Indosolar also got affected severely and its operations showed heavy
losses. Since beginning of the year, the plant was operating at a very
low capacity and it remained totally closed from September 2011
onwards. The liquidity had dried-up and the Company was not in a
position to service its debt till revival of the market. So, the
Company approached its bankers for restructuring of debts under CDR
During the year under review, your Company reported total income of Rs.
97.19 Crores as against Rs. 591.03 Crores last year. After making a
provision of Rs. 57.28 Crores towards interest and Rs. 34.22 Crores
towards depreciation, the current financial year closed with a loss of
Rs. 202.36 Crores as against loss of Rs. 57.44 Crores last year.
3. CORPORATE DEBT RESTRUCTURING
In order to address the above situation, the Company applied to the
Corporate Debt Restructuring (CDR) Forum set up under Reserve Bank of
India for debt restructuring during September 2011 with an intention
that the debt re-alignment under CDR aegis would help the Company and
the lenders to address the situation quickly and in a scientific
manner. The Company has been sanctioned CDR package by CDR Forum vide
its letter dated 07.03.2012. The package is effective from 01.07.2011
and includes, inter-alia, reduction in rate of interest on loans,
rescheduling of the loan repayment period with an initial moratorium of
24 months from effective date, sanction of additional CAPEX of Rs. 100
Crores for completing the expansion of 200 MW solar cell project,
interest on loans during the moratorium period will be funded by
additional Funded Interest Term Loan (FITL).
After getting approval form CDR Forum, the Company has entered into
Master Restructuring Agreement, alongwith other security documents,
with the consortium of banks and CDR package has been implemented.
4. STATUS OF IMPLEMENTATION OF 200 MW PROJECT
The Company is in the process of setting-up 200 MW solar cell
manufacturing line to be financed through a mix of debt and equity.
Union Bank of India had appraised the project and established LC of Rs.
228 Crores for import of 200 MW line against its debt underwriting of
Rs. 275 Crores. The Company had also spent Rs. 179.66 Crores for the
said expansion as equity contribution. The solar cell manufacturing
line has already arrived, however, Company requires additional funding
to the extent of Rs. 147 Crores to complete the project. In view of
declining financial performance of the Company as well as weak outlook
of solar sector in the short run, the bankers were reluctant to provide
balance funding. However, CDR Forum has considered setting-up of 200 MW
line as an integral component for success of the Company and approved
additional CAPEX of Rs. 100 Crores for completing the expansion over
and above Rs. 47 Crores already sanctioned by Union Bank of India.
Due to non availability of profit, your Directors do not recommend any
dividend for the year ended 31st March, 2012.
6. PAYMENT OF ANNUAL LISTING FEES
Annual listing fee for financial year 2012-2013 has been paid to
National Stock Exchange of India Limited and BSE Limited.
Mr. Gautam Singh Kuthari, Director will retire by rotation at the
forthcoming Annual General Meeting and being eligible offer himself for
re-appointment. Board recommends the same for your approval.
Mr. Ravinder Khanna has resigned from the Board with effect from 11th
November, 2011 and Mr. Aditya Jain has resigned from the Board with
effect from 14th February, 2012.
Mr. Arun Kumar Gupta and Mr. Gurbaksh Singh Vohra have been appointed
as additional directors of the Company with effect from 14th February,
2012 to hold the office of director upto the date of forthcoming annual
general meeting. The Board has received letters from shareholders
alongwith deposit of Rs. 500/- for each of them for appointment as
directors of the Company. The Board recommends the same for your
The tenure of Mr. Bhushan Kumar Gupta, Chairman, Mr. Hulas Rahul Gupta,
Managing Director and Mr. Anand Kumar Agarwal, Whole Time Director is
upto 25th September, 2012. The management decided to re-appoint them
for a further period of three years, i.e. from 26th September, 2012 to
25th September, 2015. The Board recommends the same for your approval.
8. STATUTORY AUDITORS
The statutory auditors of your Company, M/s B S R and Associates,
Chartered Accountants, retire at the ensuing Annual General Meeting and
have confirmed their eligibility for re-appointment at the forthcoming
Annual General Meeting under section 224(1B) of the Companies Act,
The Board of Directors recommends their re-appointment for your
9. STATUTORY AUDITORS'' REPORT
On the Auditors'' observations, reply from the management is as under:
(i) As regards delay in payment of service tax and work contract tax
mentioned in para (ix)(a) of the Annexure to the Auditors'' Report, the
same was due to adverse financial condition of the Company as well as
non-realization of its dues in time. However, the same have since been
paid alongwith interest and rectified.
(ii) As regards accumulated losses becoming more than fifty percent of
net worth and cash losses mentioned in para (x) of the Annexure to the
Auditors'' Report, the same were due to sudden demand downturn in SPV
cell segment resulting from liquidity crisis in Europe, lower sales
realization without commensurate fall in raw material prices and
underutilization of capacity due to industry downturn. The demand had
suddenly eroded while the supply chain was in full ramp. This created
an artificially high inventory pile-up in Asia as well as at European
ports and the same resulted in over 60% price erosion worldwide. These
factors also caused halt in operations of solar industry globally.
Indosolar also got affected severely and its operations showed heavy
losses. As regards erosion of net worth by more than fifty percent, the
Company is taking required necessary steps.
(iii) As regards delay in repayment of principal sums and interest
thereon to banks mentioned in para (xi) of the Annexure to the
Auditors'' Report, the same was due to non-availability of funds as the
operations were at very low level during the year resulting into heavy
cash losses. Accordingly, the Company approached CDR cell of RBI for
approval of restructuring package seeking relief which was approved by
the empowered group committee and the delays were condoned and
(iv) As regards funds raised on short term basis being used for long
term investment mentioned in para (xvii) of the Annexure to the
Auditors'' Report, the significant losses incurred by the Company were
being financed out of short term funds as there were no alternate funds
with the Company.
10. COST AUDITORS
In view of recent circular issued by the Ministry of Corporate Affairs,
the cost audit is now applicable on the Company with effect from 1st
April, 2012. The Company has appointed M/s Kabra & Associates, Cost
Accountants to conduct audit of cost accounting records being
maintained by the Company for the manufacture of solar cells for the
financial year ending 31st March, 2013.
The Company has not accepted any deposits from public during the
financial year under review.
12. PARTICULARS OF THE EMPLOYEES
The employees drawing remuneration as specified in section 217(2A) of
the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975 and details are as per Annexure-I to this
13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNING AND OUTGO
Information relating to conservation of energy, technology absorption
and foreign exchange earnings and outgo as required to be furnished
under the provisions of 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 given as Annexure - II to this report.
14. REPORT ON MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE
GOVERNANCE ALONGWITH GENERAL SHAREHOLDER INFORMATION
In terms of Clause 49(VI) of Listing Agreement entered into by the
Company with the Stock Exchanges, a detailed report on Corporate
Governance along with Management Discussion and Analysis Report has
been attached with this Report. A Certificate from Practicing Company
Secretary on compliance with the conditions of corporate governance
requirements by the Company is attached to the Corporate Governance
Report and forms part of this Report.
15. DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Director''s Responsibility Statement, it is
i. That in preparation of the accounts for financial year ended 31st
March, 2012 the applicable accounting standards have been followed;
ii. That the directors have selected such accounting policies and
applied them consistently and made judgments and estimates that were
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
loss of the Company for the year under review;
iii. That the Directors have taken proper and sufficient care for
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
iv. That the Directors have prepared the accounts for the financial
year ended on 31st March, 2012 on a going concern basis.
The Board of Directors places on record its appreciation for the
support, assistance and co-operation received from Government,
Regulators and the bankers to the Company, i.e. Union Bank of India,
Corporation Bank, Bank of Baroda, Andhra Bank and Indian Bank.
The Board is thankful to the shareholders for their support to the
The Board is also thankful to the employees of the Company for their
co-operation and unstinted dedication to duty leading to cordial
industrial relations during the year under review.
On behalf of the Board of Directors
For INDOSOLAR LIMITED
Place : Greater Noida H.R. GUPTA A.K. AGARWAL
Date : 11.08.2012 (Managing Director) (Whole Time Director)