Genus Power Infrastructures Ltd

TO THE MEMBERS,

Your Directors are pleased to present the 18th Annual Report together with AuditedAccounts of your Company for the financial year ended March 31, 2010.

FINANCIAL PERFORMANCE

REVIEW OF PERFORMANCE

Despite the tough working conditions during the last six months due to fire/blast atIOCL’s depot adjoining the Jaipur manufacturing unit, Genus has been able to achievenew milestones in both its top and bottom lines. Income from operations shot up by 16% toRs.66322.97 lacs during the year 2009-10 from Rs. 57077.83 lacs in preceding year 2008-09.The profit before interest, tax, depreciation and amortization (PBITDA) for the year2009-10 registered a growth at 3% to Rs.9637.15 lacs from Rs.9356.39 lacs in 2008-09. Theprofit after tax (PAT) for the year 2009-10 surged by around 6% to Rs.5145.86 lacs fromRs.4863.09 lacs in previous year 2008-09. The earning per share (EPS) (before theextraordinary items) for the year ended March 31, 2010 amounted to Rs.34.48 againstRs.32.55 in previous year 2008-09.

During the year under review, the Company has written off book debts of aboutRs.2947.87 lacs, which represent various deductions made by indenting agencies, pursuantto the terms of supplies.

During the year under review, due to continuous massive fire for two weeks at IndianOil depot adjoining the Jaipur manufacturing unit, the Company suffered significant damageto its assets and inventories. The total loss of which came to Rs.2507.25 lacs disclosedunder extraordinary items. Production at Jaipur unit consequently suffered for almost 6months. The assets of the Company were insured except Loss of Profit (‘LOP’).The Company has filed a claim of Rs.3636.68 lacs for the said losses with the insurancecompany and it is expected to be settled very soon. The Company is also going to lodge aclaim for its Loss of Profit (‘LOP’) against Indian Oil Corporation Limitedunder their third party insurance coverage.

DIVIDEND

Having regard to the increased need of liquidity for timely and proper execution oforders in hand, your Directors have recommended a dividend of Re.1.00 per equity share(tax free in the hands of the shareholders) (Previous year Rs.1.00 per equity share) forthe year ended March 31, 2010. Total amount of dividend outgo will be Rs.187.50 lacs [Rs.147.91 lacs on Equity Shares and Rs.39.59 lacs on 10% Redeemable Preference Shares (uptothe date of redemption)].

REDEMPTION OF PREFERENCE SHARES

Under the provision of section 80(1) of the Companies Act, 1956, and at the option ofPreference Shareholder 5,00,000 (Nos.) 10% Redeemable Preference Shares of Rs.100 each foran aggregate face value of Rs. 500 Lacs were redeemed during the year. The said preferenceshares were redeemed out of the Preference Share Capital Redemption Reserve Accountcreated out of profits of the Company.

CONVERTIBLE WARRANTS

During the year under review, the Company issued & allotted 11,00,000 convertiblewarrants, each warrant convertible into and/or providing the holder the option tosubscribe to one fully paid-up equity share of Rs.10/- each (aggregating to 11,00,000equity shares) at a price of Rs.190/- per equity share (including a premium of Rs.180/-per share) to one of the promoters of the Company for cash on a preferential basis.

INSURANCE

The Company’s properties including buildings, plant & machinery, stocks, etc.are adequately insured against all predictable risks. Further, the Company has also taken‘Consequential Loss (Fire) Policy to insure the profit affected during the cessationof the business operation.

FIXED DEPOSITS

During the year under review, the Company has not accepted or renewed further, anyfixed deposits within the provisions of Section 58A and 58AA of the Companies Act, 1956.

CODE OF CONDUCT

All board members and senior management personnel have affirmed compliance with theprovision of Code of Conduct of the Company on annual basis pursuant to revised clause 49(I)(D) of Listing Agreement. The text of the Code of Conduct is displayed atCompany’s website ‘www.genus.in’.

GROWTH DRIVERS / EXPANSIONS

In our continuous endeavour to keep up the growth momentum, the Company has set up anew manufacturing unit at Haridwar, Uttarakhand (a tax free zone) with state-of-the-artmanufacturing facility for manufacturing of Electronic Energy Meters (‘EEM’),Inverters, UPS, Modem, etc. The commercial production commenced from 22.03.2010. Thisapart, the Company has already increased its Meter and Inverter/UPS manufacturing capacityat its existing manufacturing facilities. This would take its total installed capacity to65 lakhs meters and 6 lakhs Inverter/UPS units per annum. The expansion would not onlyincrease its market share but would also improve its revenues & profitability in theyears ahead.

Recently, Genus has been awarded with STS (Standard Transfer Specification)certification. The Standard Transfer Specification (STS) has become recognized as the onlyglobally accepted open standard for prepayment systems, ensuring inter-operability betweensystem components from different manufacturers of prepayment systems. The STS has foundwidespread application, initially in South Africa and subsequently in many developed anddeveloping countries. To date, over 10-million STS-compliant meters have been installed at400 utilities in 30 countries around the world. STS having been published as anInternational Standard by IEC in 2007 is internationally recognized.

Moreover, your Company during the year under review, continued to widen and also addvalue to its product portfolio meeting expectations of its Stake-owners. Genus launched arange of new/improved products such as web enabled keypad based STS-20 compliant PolyPhase Prepaid Energy Meter, complete Advanced Metering Infrastructure (AMI) solutions forenergy auditing, Group Meter Solution comprising smart meters, 19” Rack Mounted ABTCompliant Class 0.2S Meter for substation and grid metering with AMR and data analysissoftware for feeder management, DIN mounted meter for energy conservation, BOLT (Build,Operate, Lease and Transfer) solutions for Distribution Transformer Closed Loop Metering,Street Light Management Solution (SLMS), complete range of Solar Hybrid Inverters, DigitalInverters, complete range of Lift Inverters, Special Application Pump Inverter, enhancedHigh Voltage Distribution System (HVDS) / Low Voltage Distribution System (LVDS), SCADASystem, etc.

To drive and uphold industry leadership within a international framework, Genus is setto launch an array of new/improved products/services such as Poly Phase Meters of allcategories to meet the requirements under R-APDRP projects, Data Concentrator Unit forautomatic communication that would enable timely and error-free billing and also providereal time profile for energy conservation, Enhanced metering solutions for Substation andGrid Metering, In-Home Display with communication capability to facilitate the consumer toknow his/her consumption profile, new & improved Single and Three Phase Meters withseveral value added features, complete range of Transformers with several value addedfeatures, complete range of Solar Inverters with more value added features, Solar WaterHeater, Boat Inverters, triple or double conversion online UPS, with several value addedfeatures, complete range of Batteries to support its Inverters with best backup poweravailable, value engineering, aesthetic improvement and feature enhancement of allexisting products.

EXPORTS

During the year under review, export of the Company was at Rs. 605.14 lakhs.

As per worldwide market survey reports, there are around 1.7 Billion electricity metersinstalled in the world. It is estimated 75% of the installed base still consists ofElectromechanical meters, while only 25% of them are static (electronic) type. The growthof the Electricity Metering industry has traditionally been driven by new construction andreplacement of old meters. More and more countries are planning and enforcing regulationsto ensure replacement of all existing Electromechanical meters and new installation metersare Electronic in nature for reasons such as tamper prevention, data reading, inclusion ofcommunication features etc. As a result there lies a huge requirement of Electronicelectricity meters worldwide. As per an estimate, the demand of electronic electricitymeters will be for 125 Million or more every year. Our company is formulating an ExportStrategy to tap this vast opportunity thereby increasing its overseas customer base.

Today, the world is moving towards advanced metering such as AMR (Automated MeterReading), AMI (Automated Metering Infrastructure), AMM (Automated Meter Management). Theserequire meters based on advanced technology and usage of different types of communicationmodems that permit utilities to read electronic meters over long distance. You would behappy to know that the company has developed this capability and is geared up toparticipate in international tenders for such meters.

Our company through its overseas alliance is continuing its focus in Brazil for exportof its electronic meters. SAARC and Middle East Countries too are in the process ofbecoming large consumers of these electronic meters.

Our company has successfully developed STS compliant Keypad based prepaid meters, whichare in great demand in African countries. These meters have already been exported to anAfrican country. Majority of African countries are using Prepaid Meters and through thisnewly developed Keypad Prepaid Meters, the Company is confident of tapping the market inAfrican countries aggressively in near future.

Genus with a vision to truly go global in Power Backup Solutions ventured deeper intodeveloping nations last year by spreading its wings through Africa, Middle East, SAARCcountries and even USA. The power back up solutions comprising Inverters, UPS, and SolarProducts have been well accepted by most emerging nations as a cost effective solution totheir power crisis. With global warming triggering a growing demand for solar products,the company is also tapping US, UK and European markets. At present the majority ofInternational business is to Western, Eastern & Central Africa, SAARC nations and theUnited States of America. With continuous new developments and additions in its UPS /Inverter product portfolio, the company is expecting a high growth in this division in thecoming years.

CORPORATE GOVERNANCE

The Company is fully committed to maintain highest standards of corporate governanceand complies with the requirements of corporate governance as stipulated under Clause 49of the Listing Agreement. A Corporate Governance Report and a certificate from StatutoryAuditor of the Company regarding compliance of the requirement of Corporate Governance asstipulated under Clause 49 of the Listing Agreement are annexed hereto.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Listing Agreements withthe Stock Exchanges is annexed herewith.

CREDIT RATING

Fitch Ratings India Pvt. Limited (‘Fitch’) has affirmed the Company a ratingof “F1(ind)” to its INR1bn commercial paper/short term debts programme. Fitchhas also affirmed the Company National Long Term Rating of“A-(ind)/”Stable” Outlook.

‘F1’ indicates the strongest intrinsic capacity for timely payment offinancial commitments.

‘A’ National Ratings denote expectations of low default risk relative toother issuers or obligations in the same country. However, changes in circumstances oreconomic conditions may affect the capacity for timely repayment to a greater degree thanis the case for financial commitments denoted by a higher rated category.

DIRECTORS

During the year under review, Shri Udit Agarwal was appointed as additional director on24.10.2009 and his appointment was approved in the extraordinary general meeting held on02.01.2010. He is an independent and non-executive director on the Board.

In accordance with the provisions of the Companies Act, 1956 and Article 89 of Articlesof Association of the Company, Shri Dharam Chand Agarwal, Shri Rameshwar Pareek and ShriIndraj Mal Bhutoria, Directors, retire by rotation at the ensuing Annual General Meetingand, they being eligible, offer themselves for re-appointment.

AUDITORS

In terms of provision of Section 224 of the Companies Act, 1956, M/s. D. Khanna &Associates, Chartered Accountants, Jaipur, were appointed as Auditors of the Company tofill the casual vacancy caused by the demise of Mr. M.L. Agrawal, proprietor of M/s. M.L.Agrawal & Co., Chartered Accountants, Auditors of the Company, for auditing theaccounts for the year 2009-10 and to hold office until the conclusion of the next AnnualGeneral Meeting of the Company. They being eligible, offer themselves for reappointment.They have furnished us a certificate that their appointment, if made, will be within thelimit prescribed under section 224 (1B) of the Companies Act, 1956. The Audit Committeeand the Board of Directors of the Company have recommended the appointment of M/s. D.Khanna & Associates, Chartered Accountants, Jaipur, as the Auditors of the Company.

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

As required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988,disclosures in respect of Conservation of Energy, Technology Absorption and ForeignExchange Earnings & Outgo are given at Annexure-I to this Report.

PARTICULARS OF EMPLOYEES

In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 readwith the Companies (Particulars of Employees) Rules, 1975, the particulars of theemployees of the Company are given at Annexure-II to this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, your directors, on the basisof information made available to them, confirm that:

(a) in the preparation of Annual Accounts, the applicable accounting standards havebeen followed along with proper explanation relating to material departures, if any;

(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company as at 31st March, 2010 and of the profit of yourCompany for that period;

(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act, for safeguarding theassets of your Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts are prepared on a ‘going concern’ basis.

ACKNOWLEDGEMENT

Your Directors place on record their sincere appreciation for the efforts, dedicationand hard work shown by the employees and engineers/scientists of the Company and lookforward the same in future. Your Directors would also like to place on record theirsincere appreciation to the large family of Shareholders of the Company. The Directorsalso acknowledge the support and assistance extended to us by the Central and StateGovernments, Commercial Banks, Financial Institutions, Bombay Stock Exchange Limited,National Stock Exchange of India Limited, Depositories, Govt. or Semi Govt. Departments,Customers, Suppliers and Business Associates.

For and on behalf of the Board of Directors

I. C. AGARWAL

Chairman & Managing Director

Jaipur, August 06, 2010

Annexure I to the Board of Directors’ Report

The information required under Section 217(1)(e) of the Companies Act, 1956 read withthe Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988 and forming part of the Directors’ Report.

A. CONSERVATION OF ENERGY:

The Company’s business activities are not power demanding, thus consumption ofelectricity is not high. However, your Company is aware of scarcity of electricity in thecountry, and understands its duty towards society and the nation, for the growth of which,electricity is very imperative. Since inception, your Company has tried hard to saveelectricity, wherever possible. During the year under review, the following measures havebeen taken by your Company in this direction:

1. Converted our existing office building of 23000 sq feet into a modern greenbuilding.

2. Replaced all existing air-conditioning system with new energy efficient VRVair-conditioning system having tonnage capacity of 100 Tr.

3. Used all electric fitting with Energy efficient 4X14 Watt T5 lamp instead of 4X36Watt.

4. Used reflective glass at all outer periphery, which saves approx 70 % of heat loadinside the building.

5. Used electronic sensor fitted bath accessories which saves water in term of normalconsumption approx 25%.

6. Employees were given proper training to conserve energy in day-to-dayoperation/routine.

7. Regular appraisal measures taken to conserve energy by a team formed to review andguide for overall cost reduction including energy cost.

The following proposals are being considered / being implemented for reduction ofenergy consumption:

1. Replacement of old Central Air Conditioner with energy efficient system. One isreplaced and other two will be replaced in the current financial year.

2. Replacement of old machineries/systems with energy efficient machineries/systems,etc.

This industry having not fallen in Schedule given under the Rules, the information asper Form-A is not applicable to the Company.

1. Specific areas in which R&D was carried out by the Company:

(a) Developed a web enabled keypad based STS-20 compliant Poly Phase Pre Paid Energymeter.

(b) Developed complete Advanced Metering Infrastructure (AMI) solutions for energyauditing.

(c) Developed Group Meter Solution comprises of smart meters grouped together to shareone modem, meter data communication network and the web enabled meter data managementsoftware.

(d) Developed single phase auto calibrator with process variance reduced to less than0.1% from the current value of 0.2%.

(e) Developed 19” Rack Mounted ABT compliant Class 0.2S meter for substation andgrid metering with AMR and data analysis software for Feeder management.

(f) Developed new designs for single phase product lines with enhanced value addedfeatures which truly improve the realization of revenue of Power Utilities.

(g) Developed DIN mounted meter for energy conservation.

(h) Enhanced the features of single phase portable reference meter for field testing.

(i) Enhanced the stability of accurate power source for calibration on-line for leanmanufacturing using non-invasive current control technology.

(j) Developed complete BOLT (Build, Operate, Lease and Transfer) solutions forDistribution Transformer Closed Loop metering.

(k) Developed Street Light Management Solution (SLMS) for Automatic Control &Management of street light system with a proprietary astronomical clock to automaticallyconfigure the system to calculate the sunset and sunrise timings based on the latitude andlongitude of the installation location.

(l) Developed complete range of Solar Hybrid Inverters.

(m) Developed higher KVA static inverters.

(n) Developed digital inverters.

(o) Developed complete range of Lift inverters.

(p) Enhanced the features of current range of products.

(q) Developed special application pump inverters.

(r) Value engineering.

2. Benefits derived as a result of the above R&D:

(a) STS-20 compliance Poly Phase Prepayment Energy Meter line brings the organizationin the league of other international manufacturers having complete range of meters andendorses our commitment to secure the revenue related data.

(b) Development of complete AMI solution facilitates the Utilities to locate energyleakage within a day or less and improve their lost revenue due to pilferage.

(c) Development of group meter and DIN mounted meter facilitate the consumers forenergy conservation and make them aware of their consumption profile.

(d) The development of 19” Rack Mounted ABT compliant Class 0.2S meter forsubstation and grid metering is a key step for the organization to make inroads in thehigh revenue bulk metering sector.

(e) Portable reference meter is an invaluable tool for on field diagnostics andcalibration of energy meters.

(f) Lean manufacturing, enabled by our accurate and stable power source has given amajor fillip to our manufacturing capabilities.

(g) Distribution Transformer Closed loop Metering solution gives real time informationon T&D losses in the distribution system, thereby protecting the utilities’revenue.

(h) Enhanced features of SLMS ensures that the street lights are automatically turnedon and off at appropriate times, thereby conserving energy and remote communicationenables timely billing.

(i) Developed a complete range of solar hybrid and static inverters and 3P-3P onlineUPS.

(j) The company can now cater to the needs of the consumer segment as well as theindustrial segment of the market.

(k) The technology used has been developed indigenously, which eliminates thedependency on external agencies and at the same time gives the leverage to change / alter/ modify the design as per market dynamics.

(l) Reduction of BOM cost without compromising quality using DLS Techniques.

(m) The company can now cater to the needs of various export markets also.

3. Future plan of action:

(a) Development of Poly Phase Meters of all categories as per Indian Companion DLMSspecification to meet the requirements of Govt. of India’s initiatives under R-APDRPprojects.

(b) Development of Data Concentrator Unit for automatic communication, which enablestimely and error-free billing and provides real time profile for energy conservation.

(c) Development of Gas Meter.

(d) Development of new designs for our three phase product lines with several valueadditions.

(e) Development of In-Home Display with communication capability to facilitate theconsumer to know his consumption profile.

(f) Value engineering, aesthetic improvement and feature enhancement of all existingmodels.

(g) Developing boat inverters for application in fishing boats which will help inrunning communication equipment, fish tracking equipment, deep freezers and entertainmentequipment.

(h) Complete range of solar Inverters with MPPT charge controllers.

(i) Development of triple or double conversion online UPS with features like powerfactor control, static bypass and SNMP connectivity.

(j) Inverter with capability of charging and managing Lithium Ion batteries.

4. Expenditure on R&D:

1. Efforts, in brief, made towards technology absorption, adaptation andinnovation:

Your Company has in-house Research & Development (‘R&D’) labrecognized by the Ministry of Science & Technology, Government of India and accreditedwith ‘National Accreditation Body for Testing Labs’ (NABL), where our proficientand experienced scientists / engineers continue to focus on delivering high-tech,proactive and cost-effective metering solution & power backup/conversion technologies.With the avant-garde product design facilities along with world-class tool room, theCompany has fully absorbed andadopted the technologies/techniques offered by the R&Dlab, in manufacturing of products and execution of projects of the Company.

2. Benefits derived as a result of the above efforts:

Genus has emerged as an integrated power infrastructure company in India, completelyself-sufficient in technology development & manufacturing and also providing totalcustomized solutions at affordable price to its customers.

3. Information regarding Imported Technology:

In case of imported technology (imported during the last 5 years reckoned from thebeginning of the financial year): NIL

C. FOREIGN EXCHANGE EARNINGS & OUTGO

(A). Activities relating to export, initiatives taken to increase export, developmentof new export market for products and services, and export plans are given inDirectors’ Report.

(B). Total foreign exchange used and earned:

For and on behalf of the Board of Directors

I. C. AGARWAL

Chairman & Managing Director

Jaipur, August 06, 2010

STATEMENT OF PARTICULARS OF EMPLOYEES PURSUANT TO THE PROVISIONS OF SECTION 217(2A) OFTHE COMPANIES ACT, 1956 READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 ANDFORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2010.

(A) Employed throughout the financial year and was in receipt of remuneration inaggregate of not less than Rs.24,00,000/- per annum:

*Including arrears

B) Employed for a part of the financial year and was in receipt of remuneration inaggregate of not less than Rs.2,00,000/- per month: NIL

Notes:

1. Remuneration includes Salary, Allowances and Perquisites payable as per terms &conditions of the appointment.

2. Shri Ishwar Chand Agarwal, Shri Rajendra Kumar Agarwal and Shri Jitendra KumarAgarwal are related to each other.

3. None of the employees (except Shri Ishwar Chand Agarwal, CMD) owns 2% or more ofequity shares in the Company as on March 31, 2010.

4. These appointments are on contractual basis.

For and on behalf of the Board of Directors

I. C. AGARWAL

Chairman & Managing Director

Jaipur, August 06, 2010