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S E Power Ltd.

BSE: 534598 | NSE: SEPOWER |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE735M01018 | SECTOR: Power - Generation & Distribution

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Annual Report

For Year :
2016 2015 2014 2013

Director’s Report

Dear Members

The Directors are pleased to present 6th Annual Report of the Company along with the Audited Financial Statements of the Company for the financial year ended 31st March, 2016.

Financial Results

The financial results of the Company for the year 2015-16 is summarized in the following table as compared to that of previous year:

(Rs. in Lakhs)

Particulars

Year Ended on 31st March, 2016

Year Ended on 31st March, 2015

Revenue from Operations

949.01

552.79

Other Income

10.53

11.84

Total Revenue

959.54

564.63

Less: Expenditure

889.10

476.81

Profit before Financial Cost, Depreciation and Tax

70.44

87.82

Less: Financial Cost

44.21

46.72

Less: Depreciation and amortization

395.58

383.48

Profit before Tax (PBT)

(369.35)

(342.38)

Less: Tax Expenses

(122.12)

5.91

Profit after Tax(PAT)

(247.23)

(348.29)

Balance carried to Balance Sheet

702.99

455.75

Summary of Performance

During the year 2015-16 the Company has reported growth of 71.67 % in revenue from operations as compared to the previous financial year 2014-15. During the financial year the total revenue of the Company stood at Rs. 959.54 Lakhs. However, due to challenging business environment for reclaim rubber industry and increase in cost of operations, the Company has suffered Loss of Rs. 247.23 Lakhs during financial year 2015-16.

Management of the Company believes that business environment will change and the Company will come with better and positive results in upcoming years.

Dividend

In the financial year under review, Company has not earned profit, therefore, the Board of Directors regret their inability to recommend any dividend for the year.

Fixed Deposits

Company has not accepted any public deposits within the meaning of Section 73 of Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and as such no amount of principal or interest on public deposits was outstanding as on the date of balance sheet.

Board of Directors and Key Managerial Personnel

In accordance with the provisions of Companies Act, 2013 and as per Articles of Association of the Company Dr. Arun Gopal Agarwal, Director retire by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for reappointment.

On 27th May, 2016 Mr. Diwan Chand Arya has been appointed as Additional Independent Director of the Company. Regularization of Mr. Diwan Chand Arya as Independent Director is proposed in forthcoming Annual General Meeting.

None of the Directors of the Company is disqualified under Section 164 of the Companies Act, 2013.

Details of Directors seeking appointment/re-appointment at the forthcoming Annual General Meeting, as required under clause 36 of SEBI (LODR) Regulations, 2015, is enclosed with the notice of Annual General Meeting.

Criteria for Board Membership of the Company

For the appointment of Directors, the Company take into account following points:

Director must have relevant experience in Finance/ Law/ Management/ Sales/ Marketing/Administration/ Research/ Corporate Governance/ Technical Operations or the other disciplines related to Company’s business.

- Director should possess the highest personal and professional ethics, integrity and values.

- Director must be willing to devote sufficient time and energy in carrying out their duties and responsibilities.

- Director must be fit and proper person.

Independent Director

Independent Director is a Non-Executive Director, who does not have any direct or indirect material pecuniary relationship with the Company or any of its officers, other than as a Director or Shareholder of Company. Independent Director shall abide by the Code of Conduct as prescribed under Schedule IV of the Companies Act, 2013.

Independent Director shall meet all criteria specified in Section 149(6) of the Companies Act, 2013 and rules made there under and Regulation 25 of SEBI (LODR) Regulations, 2015.

Mr. Dharam Vir Gupta, Mrs. Anshu Gupta and Mr. Diwan Chand Arya are Independent Directors on the Board of the Company. In the opinion of the Board and as declaration submitted by these Directors under Section 149 (7) of Companies Act, 2015, they comply with all the criteria of Independent Director as envisaged in Section 149(6) the Companies Act, 2013 and Regulation 25 SEBI (LODR) Regulations, 2015.

Familiarization Programme for Independent Directors

Every new Independent Director of the Board attends an orientation program, which is to familiarize the new Non-Executive Director with the strategy, operations and functions of the Company. The Executive Directors / Senior Managerial Personnel conduct meetings with the Non-Executive Directors to make them understand the Company’s strategy, operations, product and organization structure, human resources, facilities and risk management. Through meetings and interaction among Senior Managements and Nonexecutive Directors and Independent Directors, Company has made its best effort to ensure that the Nonexecutive Directors understand their roles, rights, responsibilities in the Company.

Further, at the time of appointment of an Independent Director, the Company issues a formal letter of appointment outlining his/her role, function, duties and responsibilities as an Independent Director. The format of the letter of appointment is available on Company’s website.

Company’s Policy on Directors’ Appointment and Remuneration

Company has constituted Nomination and Remuneration Committee as required under Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI (LODR) Regulations, 2015, which inter-alia has recommended and formulated a Remuneration Policy (“the policy”).

The Policy is framed in accordance with the provisions of Companies Act, 2013 and listing Regulations. In case of any subsequent changes in the provisions of Companies Act, 2013 and Listing Regulations which makes any of the provisions of the policy inconsistent with the Act or regulations, the provisions of the Act or regulation shall prevail over the policy.

The objective of the policy is to provide criteria for appointment of Directors viz. experience, qualification, positive attributes understanding of the Company’s business and social perspective, personal achievements and Board diversity. The Policy also contained the provisions to ensure that Executive Directors, KMP and other employees are sufficiently compensated for their performance. Under the Policy, Nomination and Remuneration Committee is entrusted with the responsibility to evaluate the various aspects relating to recommend the appointment and remuneration of the Directors of the Company.

Independent Non-Executive Directors are appointed for their professional expertise in their individual capacity as independent professionals. Independent Non-Executive Directors shall be entitled for sitting fees, reimbursement of expenses, paid for attending the meeting of the Board and Board Committees and commission as approved by the Board or/and shareholders.

The remuneration of employees largely consists of basic salary, perquisites, allowances and performance incentives. Perquisites and other benefits are paid according to the Company policy, subject to prescribed statutory ceiling. The components of the total remuneration vary for different grades and are governed by the industry pattern, qualification & experience /merits, performance of each employee.

Board Evaluation

The Companies Act, 2013 states that formal annual evaluation required to be made by Board of its own performance and that of its Committees and individual Directors and Schedule IV of the Companies Act, 2013 states that the performance of Independent Directors shall be evaluated by the entire Board of Directors, excluding the Director being evaluated. Further, listing regulations also mandates that the Board shall monitor and review the Board evaluation framework.

Accordingly, the Board in consultation with the Nomination and Remuneration Committee, has set the criteria for evaluation of performance of Executive/Non-Executive/Independent Directors. Such criteria provides that the evaluation of performance of Board as whole, its Committees and Directors shall be carried out on annual basis and the Board may avail services of independent consultant to facilitate it for evaluating the performance of directors individually or collectively.

During the year, evaluation of performance of all the Directors and the Board as a whole and its Committees was conducted based on criteria set in this regard. The Evaluation process focused on various aspect of the Board and Committees functioning such as composition of the Board and Committees, competencies and experiences, performance of duties and obligation assigned etc. A separate process was also carried out to evaluate the performance of individual Director on the criteria such as contribution in decision making, governance issue, independent judgment, experience and presence in the meetings of Board and Committees. The results of evaluations were satisfactory. In addition to above evaluation, the performance of Non-Independent Directors, performance of Board as a Whole, performance of Chairman of the Company have also been reviewed by Independent Directors in their separate meeting held on 14th March, 2016 in terms of provisions of Schedule IV of the Companies Act, 2013 and Listing Regulations.

Directors’ Responsibility Statement

Pursuant to the requirement of Section 134(3)(c) read with Section 134(5) of the Companies Act,2013 (the Act), your Directors confirm that:

a) in the preparation of the annual accounts for the financial year 2015-16, the applicable accounting standards had been followed and there are no material departure from the same;

b) the Directors has 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 and 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 Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and

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.

Subsidiary Company

The Company owned hundred percent shares of M/s Shubham Electrochem Limited (Wholly Owned Subsidiary Company). At the year ended 31st March, 2016, the net worth of M/s Shubham Electrochem Limited stood at Rs. 279.25 Lakhs. During the reporting period Subsidiary Company reported profit before tax of Rs. 4.80 Lakhs.

Statutory Auditor and Audit Report

In terms of Section 139 of the Companies Act, 2013, M/s P M S & Co., Chartered Accountants, has been appointed as Statutory Auditor of the Company in 4th Annual General Meeting up to the conclusion of 6th Annual General Meeting. Accordingly, term of P M S & Co., to hold office of Statutory Auditors of the Company, being ended at the conclusion of ensuing Annual General Meeting. Therefore, pursuant to Section 139 of the Companies Act, 2013 the Company is required to appoint Statutory Auditors of the Company in the 6th Annual General Meeting to hold office from conclusion of 6th Annual General Meeting till the conclusion of 11th Annual General Meeting, subject to ratification by members at every Annual General Meeting.

Retiring Statutory Auditor M/s P M S & Co. have shown their unwillingness to be re-appointed for the further term of Five years. Therefore, Board has approached M/s R. Lal & Company, Chartered Accountants (Firm Registration No 000926C) to be appointed as the Statutory Auditor of the Company for a term of Five years and has received their consent for the appointment. Further, Company has also obtained a written confirmation from M/s R. Lal & Company, proposed to be appointed, to the effect that their appointment, if made, would be within the limits prescribed.

The Statutory Auditor’s observation in their report read with notes to the accounts are self-explanatory and do not call for any further explanation. The Auditors of the Company have not given any adverse remark or disclaimer in their reports.

Secretarial Auditor and Secretarial Audit Report

As stipulated in the Section 204 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Secretarial Audit for the financial year 2015-16 has been carried out by a qualified Practicing Company Secretary and submitted Secretarial Audit Report on the compliance of applicable Acts, Rules, Regulations, Guidelines, Standards etc. The Secretarial Audit Report is enclosed to this Annual Report as an integral part of this report. The findings of Secretarial Audit are satisfactory and do not call for any further explanation.

Risk Management

In terms of provisions of Listing Agreement, during financial year 2014-15 Company has constituted Risk Management Committee to facilitate the Board of Directors to address the risk associate with the business of the Company and to develop and implement Risk Management Policy. The Committee has developed and implemented the policy to assists the Board in its oversight of the Company’s management of key risks, including strategic and operational risks, as well as the guidelines, policies and processes for monitoring and mitigating such risks under the aegis of the overall business risk management framework.

However, due to amendments in Listing Agreement followed by effectiveness of new Listing Regulation, SEBI (LODR) Regulations, 2015, it is not mandate for Company to constitute the Risk Management Committee, therefore the Board of Directors in its meeting held on 27th May, 2016, has dissolved Risk Management Committee and Audit Committee has been entrusted with duty to assist Board for risk management.

Internal Financial Controls

Internal Financial Control System is an integral component of the Risk Management System of the Company. The internal financial control policies and internal audit program adopted by the Company plays an important role in safeguarding the Company’s assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.

The Board has adopted procedures for ensuring the orderly and efficient conduct of its business, including risk management feedback loop, in which the information generated in the internal control process is reported back to Board and Management.

A firm of Competent Chartered Accountants has been engaged by the Company for conducting internal audit, to examine and evaluate the adequacy and effectiveness of internal financial control system of the Company. The Audit Committee of Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken.

The Audit Committee of Board of Directors actively review the adequacy and effectiveness of internal financial control system and suggests improvements for strengthening them. Internal Financial Control System of the Company are adequate with the respect to the operations of the Company.

Particulars of Contracts or Arrangements with Related Parties

During the year under the review, there were no materially significant related party transactions which could have had a potential conflict with the interests of the Company. Transactions with related parties are in the ordinary course of business on arm’s length basis and do not attract the provisions of Section 188(1) of the Companies Act, 2013. The related party transactions were periodically placed before the Audit Committee and/or Board for its approvals or review as and when required. Only two related party transactions were taken place during the year under review with Mrs. Shilpa Agarwal (relative of Managing Director) and Dr. Arun Gopal Agarwal (Director) to avail professional services and the Company has paid Rs. 6,00,000/- and Rs. 2,46,000/respectively to them. The policy on Material Related Party Transactions is available on the Company’s website.

Credit Rating

CARE BB and CARE A4 rating has been assigned by Credit Analysis & Research Ltd. (CARE Ratings) to the Company for Long Term Bank Facilities and Short Term Bank Facilities respectively.

Particulars of Employees

In accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 information regarding employees is annexed as Annexure-A to this report.

Extracts of Annual Return

Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, Extracts of Annual Return in the prescribed form MGT-9 is annexed as an integral part of this report as Annexure-B.

Meetings of the Board of Directors

During the financial year under review Six (6) meetings of the Board of Directors were duly convened, details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013.

Particulars of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars pursuant to Section 134(3)(m) of Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 to the extent applicable are as under:

(A) Conservation of energy-

i. Company has been continually working on energy conservation and has taken and implemented various measures towards this in production, domestic lightning and cooling facilities. Company has installed significant numbers of powerless turbo ventilators in the entire working shed for ventilation using ‘zero’ power. Building have been designed for ingress of adequate natural light thus requiring no artificial lightning during the day time. Many provisions have been made in various machines for consuming energy, during processing line losses has been maintained close to ‘zero’ by adequate design of cables and other systems.

ii. No step has been taken by the Company for utilization of alternate source of energy. However, Company at its non-conventional energy division generate electricity by wind energy and transfer the same to power grids.

iii. Company has invested Rupees Three Lakhs, and on proposals for power generation for captive consumption at its reclaim rubber plant through solar route.

(B) Technology absorption-

i.

The efforts made towards technology absorption

-

It’s a continual process and the drive for reaching and adapting new technology is always under progress.

ii

The benefits derived like production improvement, cost reduction, product development or import substitution

-

Performance improvement is a continual process with respect to productivity, delivery, quantity cost and safety. Company is regularly following this and each department has set its own objective for performance improvement, which is closely monitored and regulated. With continued improvement in technology our production rate has been improved.

iii

In case imported technology (imported during last 3 years reckoned from the beginning of the financial year)-

a)

The details of technology imported

-

Company is using imported machines in its reclaimed rubber division.

b)

The year of import

-

2013

c)

Whether technology been fully absorbed

-

Yes

d)

Research and developments

-

The company seeks regular technical support from experts in this field and undertake appropriate R & D activities depending upon future requirements.

(C) Foreign exchange earnings and Outgo

The details of the foreign exchange exposure during the period under review are as under:

(Amount in Lakhs)

Particulars

Current year

Previous year

Total Foreign Exchange Earnings

Nil

Nil

Total Foreign Exchange Outgo

1.71

0.62

Vigil Mechanism/ Whistle Blower Policy

Pursuant to the requirement of the Companies Act, 2013, the Company has established vigil mechanism/ whistle blower policy. Section 177 of the Companies Act, 2013 which inter-alia provides for a requirement to establish a mechanism for all the Directors and employees to report to the management instances of unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy.

Accordingly, the Mechanism is established to provide adequate safeguards against victimization of persons who use such mechanisms. Whistle blower Policy is available on Company’s website.

Prevention of Sexual Harassment at Workplace

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules made there under. The Directors of the Company state that during the year under review there was no case filed pursuant to sexual harassment of woman at workplace (Prevention, Prohibition and Redressal) Act, 2013.

Material Changes and Commitments

No material changes and commitments, affecting the financial position of the Company has been occurred between the end of the financial year 2015-16 and till the date of this report.

Statutory Orders

No significant and material orders were passed by Courts, Tribunals and other Regulatory Authorities affecting the going concern status of the Company’s operations.

Management Discussion and Analysis Report

In terms of Regulation 34 of SEBI (LODR) Regulations, 2015, Management Discussions and Analysis Report is appended to this Board’s Report as Annexure-C.

Corporate Governance

The Company is committed to maintain the good standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company continues to benchmark its corporate governance policies in its true sense. The report on Corporate Governance as stipulated under the Listing Regulations forms an integral part of this report as Annexure-D. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is annexed to the report on Corporate Governance.

Acknowledgements

We place on record our appreciation to employees at all level for their contribution, dedication and commitment. The Board take this opportunity to thank all Investors, Clients, Vendors, Banks, Government and Regulatory Authorities for their support, and look forward for their continued support in the future.

Date: 13th August, 2016 For and on behalf of the Board of

Place: New Delhi S. E. Power Ltd.

Sd/-

Dr. Arun Gopal Agarwal

Chairman

(DIN 00374421)

Director’s Report