DIRECTORSDear Members
Your Directors have pleasure in presenting the 18th Annual Report together with theaudited accounts for the financial year ended March 31, 2012.
| Financial Results | | (Rs. Lakhs) |
| Description | 2011-12 | 2010-11 |
| Revenue (net of duties & taxes) | 94136.65 | 141491.35 |
| Profit/(Loss) before depreciation & amortization, interest and exceptional items | 3229.37 | 29987.34 |
| Interest | 11895.25 | 9837.98 |
| Depreciation & Amortization | 2816.83 | 2787.68 |
| Exceptional items-Bad debts written off | 6842.58 | |
| Profit/(loss) before tax | (18325.29) | 17361.68 |
| Provision for tax | (518.60) | 4798.48 |
| Profit/(loss) after tax | (17806.69) | 12563.20 |
Review of operations
Performance during the financial year 2011-12
Your company has made a Revenue of Rs.94136.65 Lakhs during the year as compared to theprevious year Rs. 141491.35 Lakhs and incurred a net loss Rs. 17806.69 Lakhs as againstnet profit after tax of Rs. 12563.20 Lakhs during the previous year 2010-11. The revenuehas decreased on account of non-availability of timely funds for the completion of theprojects, due to bad collections from the State Electricity Boards. Also the decline inthe performance is on account of slowdown of the economy with respect to theinfrastructure sector. The detailed analysis of the performance, give at the management'sdiscussion and analysis section of the Annual Report.
Prospects for the financial year 2012-13
Company has projected an annual turnover of Rs.942 crores to the banks while approvingthe CDR package, the achievability of the same is depends on the energy sector performancein the country.
Corporate Debt Restructuring (CDR) Package
During the year under review the loan repayments and interest payments have beendelayed to the banks on account of mismatch of cashflows, due to downturn in the economy.The loans of the company have been restructured under the Corporate Debt Restructuring(CDR) System, where all the banks, who has extended financial assistance to the companyhas agreed for restructure of the loans. The CDR package was sanctioned by CDR EmpoweredGroup, at the meeting held on 16.03.2012 and approval letters has been given by the CDRCell on 31.03.2012. The letters from individual banks also has been issued by Banks.
Salient Features of the CDR package is given below:-
1. Cut-off date (COD) for loans has been considered as 1st October 2011. The loansoutstanding as on this date has been considered for restructuring.
2. Interest rate on the loans has been fixed at 11% p.a.
3. Term Loans has been restructured with a moratorium of 24 months from COD andrepayable in 26 quarterly ballooning installments starting from 1st October 2013.
4. The irregularity in the Cash Credit has been carved out as Working Capital Term Loanwith a moratorium of 24 months from COD and repayable in 26 quarterly ballooninginstallments starting from 1st October 2013.
5. The unpaid interest as on 30.09.2011 and interest from 01.10.2011 to 30.09.2012 onterm loans and interest from 01.10.2011 to 31.03.2012 on cash credit has been restructuredas Funded Interest Term Loan-1, repayable in 16 quarterly installments starting fromOctober 2013.
6. The interest on Cash Credit from April 2012 to June 2012 has been restructured asFunded Interest Term Loan-II, repayable in 3 quarterly installments by March 2013.
7. The loan of NBFC to be repaid from FY 2013 to FY 2016 without any interest.
8. Cash Credit and the Non-fund based limits as per the appraisal of the banks.
9. Promoters shall bring funds as per the applicable terms of CDR package.
The CDR package is has been implemented with State Bank of India, as the MonitoringInstitution to monitor the operations of the company.
New innovations and product improvements:
Your company made the new innovations and product improvements/additions to the productbase, during the previous years and the year under review as given below:-
Energy meter and derivatives:
1. Smart Trivector Meter LT/HT with built in load connection/disconnection
2. Smart Trivector Meter with Power Line Carrier communication
3. Smart Trivector Meter with DLMS communication
4. Smart Trivector Meter with tamper-detection features like (CTR, PTM, LPF, Magnet, CTshort, CT open/by pass, Neutral Disturbance, Cover Open)
5. Smart Energy Meter with all tamper feature like Reverse, Earth, Magnet, NeutralMissing, Cover Open, HSD (upto 35KV),
6. Smart Energy Meter with prepaid facility (Card Read, PLCC, Keyboard)
7. Pole top panel mountable Energy Meters (Phase 1)
8. Smart Trivector Meter LT with configurable Display Parameter, CT ratio, TOD, MD IP,Load Survey.
9. Smart Trivector Meter HT with configurable Display Parameter, CT/PT ratio, TOD, MDIP, Load Survey.
10. Equipment for billing:
• Spot -billing machine
• Common meter-reading instrument
• Ticket-issuing, machine
AMR:
• IAMR 6.2
• Data concentrator with in-built web server and RTOS (MODBUS/DLMS)
• IAMR with PLCC
• IAMR with transmission line fault detection
• IAMR with PLCC for theft detection
• IAMR with PLCC for prepaid through scratch card
• IAMR with RFID for LT/HT connection
• IAMR 7.0 with FOTA
• Smart adaptor
SCADA:
• Field Remote Terminal Unit 126
• Data Concentrator Unit 126
Smart Energy Meter manufacturing facility:
During the current year, your Company has entered into Smart Meter business segment bystarting a state-of-the-art Smart Energy Meter manufacturing facility near Hyderabad atPashyamylaram.
Changes in capital structure
Details of changes in equity structure during the year under review:
| Serial number | Date of allotment | Particulars | Number of shares allotted | Total number of equity shares post allotment |
| 1 | March 31, 2011 | Equity share capital as on March 31, 2011 | — | 4,77,50,985 shares of Rs. 2 each |
| 2 | April 18, 2011 | Allotment of equity shares representing 30% per cent of stock options granted under Employee Stock Option Scheme 2009, allotted at the discounted price of Rs. 25 per equity share of Rs. 2 each | 1,50,000 | 4,79,00,985 equity shares of Rs. 2/- each. |
| 3 | June 17, 2011 | Allotment of equity shares representing the final tranche of 25 per cent of stock options granted under Employee Stock Option Scheme 2006, allotted at the discounted price of Rs. 70 per equity share of Rs. 2 each | 62,515 | 4,79,63,500 equity shares of Rs. 2/- each |
| 4 | August 22, 2011 | Allotment of equity shares representing 35% per cent of stock options granted under Employee Stock Option Scheme 2008, allotted at the discounted price of Rs. 26 per equity share of Rs. 2 each | 1,75,000 | 4,81,38,500 equity shares of Rs. 2/- each |
| 5 | March 31, 2012 | Equity share capital as on March 31, 2012 | — | 4,81,38,500 equity shares of Rs. 2/- each |
FCCBs
Out of USD 46 million FCCBs issued by the Company, USD 25 million FCCBs were convertedinto equity upon exercise of conversion rights by bond holders in the earlier years and anamount of USD 21 million FCCBs were outstanding and due for redemption as on March 31,2012. The company has started the process of refinancing the outstanding FCCB for whichLRN application was made and the same may be wrapped up during the year 2012-13.
Subsidiary
Singapore: The financials of Singapore-based subsidiary - "1CSA InternationalPTE LTD" are included in this Annual Report.
The Company has floated a new India based subsidiary in the month of January, 2012named ICSA Infra Limited. Since it is into inception stage, there was no transaction inthe Company.
Dividend
In view of the losses incurred during the year under review, your directors regret todeclare any dividend for this year.
Fixed deposits
The Company did not invite any fixed deposits from the public during the year.
Insurance
The Company's properties and assets are adequately insured, wherever required.
Directors' responsibility statement
Pursuant to Section 217 (2AA) as incorporated by the Companies (Amendment) Act, 2000,in the Companies Act, 1956, your Directors confirm
1. That in the preparation of the annual accounts, the applicable accounting standardswere followed along with proper explanation relating to material departures
2. That the Directors selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and theprofit of the Company for the year under review
3. That the Directors took proper and sufficient care to maintain adequate accountingrecords in accordance with provisions of the Companies Act, 1956, for safeguarding theCompany's assets and for preventing and detecting fraud and other irregularities
4. That the Directors prepared the annual accounts on a going concern basis
Directors
Mr. V. Shyam Sunder Reddy retires by rotation and being eligible offers himself forreappointment. Mr. SS Dua and Mr. YV Ramana Reddy has resigned and the resignation hasbeen approved at the meeting of the board of directors held on 15th May 2012. At themeeting of board of directors held on 15th May 2012, Dr. Venkatasatya Prasad Tholada andMr. Mandra Sarveswar Reddy has been inducted as directors.
Auditors
M/S. VDNR & Associates, Chartered Accountants, Hyderabad, the retiring StatutoryAuditors, expressed the opinion to resign as auditors w.e.f. ensuing Annual GeneralMeeting. M/s.Rambabu & Co, Chartered Accountants is eligible to be appointed asStatutory Auditors have signified their willingness to accept the appointment as StatutoryAuditors and have confirmed their eligibility under section 224(1-B) of the Companies Act1956.
Response to Auditors Observations Para 5 on Trade receivables, Sundry Creditors, Loansand advances and other advances: Company is in the process of reconciliation of theaccounts and after completion of reconciliation, the confirmation will be obtained fromthe debtors, creditors and other parties.
Para 6 on the premium on redemption on FCCB Rs. 3902.25 Lakhs, neither charged toprofit and loss account nor adjusted to securities premium account
: Company is negotiating with the FCCB holders for refinancing the FCCB for furtherperiod of 3 years. After completion of the process, the premium arising at the time ofworkngout the amount to be refinanced, the premium if any will be accounted as per thestandards.
Employees
There are no employee in the company who are drawing prescribed salary under Section217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules,1975 as amended.
Listing of Securities
The Company's equity shares are listed with the Bombay Stock Exchange Ltd. and theNational Stock Exchange. The annual listing fee for the years 2010-12 and 2012-13 havebeen paid to these exchanges.
Report on Corporate Governance
Your Company has been practicing the principles of good Corporate Governance over theyears and it is a continuous and on-going process. A detailed Report on CorporateGovernance is given as Annexure 'A' to this Report. Report on Corporate Governanceincluding Auditor's Certificate on compliance with the code of Corporate Governance underClause 49 of the Listing Agreement is enclosed as Annexure to this Report.
Employee stock options
As required by Clause 12 of SEB1 (Employee Stock Option Scheme and Employee StockPurchase Scheme) Guidelines, 1999, the details of the options granted and otherdisclosures are furnished as Annexure - C.
Conservation of energy, technology absorption, foreign-exchange earnings and outgo
Information as required to be furnished under the provisions of the Companies(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are ashereunder:
Conservation of energy
Energy conservation measures taken up:
1CSA uses electrical energy for its equipment such as air-conditioners, computerterminals, lighting and utilities at work places. As an on-going process, we continue toundertake the following measures to conserve energy-
• Incorporating new technologies in the air-conditioning system of the upcomingfacilities to optimise power consumption
• Identifying and replacing low-efficient machinery (AC) in a phased manner
• Identifying and replacing outdated and low-efficient UPS systems in a phasedmanner
The Company also has in place the internal control procedures by which the cost of theelectricity will be identified with the project and thereby, there will be an incentivefor the concerned department to consume optimum power.
Additional investment and proposals for reduction of consumption of energy: Nil.
Total energy consumption requirement: Not applicable, as the Company is not engaged inany of the specified industries specified in Schedule 1 to the Companies (Disclosures ofParticulars in the Report of the Board of Directors) Rules, 1988.
Research and Development
The Company is committed to continue its efforts in Research and Development. OurResearch and Development activities will help us gear up for future opportunities. Weinvest and encourage continuous innovation.
Technology absorption, adoption and innovation
Efforts made in technology absorption : Enclosed - Form B'
Acknowledgements
Your Directors are thankful to all investors, customers, vendors, banks and serviceproviders as well as regulatory and government authorities and other business constituentsfor their assistance, co-operation, understanding, support and encouragement. YourDirectors also sincerely appreciate the high degree of professionalism, commitment anddedication displayed by the employees at all level in the initiatives of the Company.
| By the order of the Board of Directors |
| for ICSA (INDIA) Limited |
| Sd/- |
| Place: Hyderabad | G. Bala Reddy |
| Date:28.11.2012 | Chairman-cum Managing Director |
Annexure to Directors' Report
FORM 'B'
(See rule 2)
Form for disclosure of particulars with respect to absorption, Research and Development(R & D)
1. Specific areas in which R&D has been carried out by the Company: Embeddedsolutions and software for Energy Sector
2. Benefits derived as a result of the above R&D:
We believe that our R&D activities will help us gear up for future opportunitiesand enable us to provide state-of-the-art power automation solutions.
3. Future plans of action:
The Company will continue R & D in the embedded solutions.
4. Expenditure on R & D :
| a) Capital : | NIL |
| b) Recurring | NIL |
| c) Total : | NIL |
| d) Total R&D expenditure as a percentage of total turnover | NIL |
Technology absorption, adaptation and innovation
1. Efforts, in brief, made towards technology absorption: Adaptation and innovation
2. Benefits derived as a result of the above efforts:
Benefits like product development, product improvement, cost reduction among others.
3. In case of imported technology (imported during last five years reckoned from thebeginning of the financial year) following information:
| a) Technology imported : | NIL |
| b) Year of import : | NOT APPLICABLE |
| c) If not fully absorbed, areas where this did not take place, reasons therefore the same and future plan of action : | NOT APPLICABLE |
| 4. Foreign exchange earnings and outgo : | |
| 1) Activities relating to exports, initiatives taken to increase exports, developments of new export markets for products and services and export plans : | The power sector has been receiving special attention from the private and government sectors world over. Every country has been realising the need to improve the status of the grids, bring in efficiency in Transmission and Distribution and manage demand and supply equation effectively. It is also acknowledged that adopting technology is the only way to achieve these objectives. |
| Countries in which stakes are significant for the government are seeing reform initiatives either through funding programs or privatisation to fast-track development, and countries with private sector stakes are seeing technology deployments for efficiency building. Developed countries like the US and the UK are funding or incentivising utilities and co-operatives to deploy smart-grid technologies throughout the grid. While the developed world is a few years' advanced in initiating development, the Asian region is still lagging behind in these initiatives. Having said that, the Asian countries have also realised the need to make the grids smarter since the structure of power sector and the environment in which they operate are similar, viz. power losses by theft, inefficient commercial processes (metering, billing and collection), power deficit and resultant poor customer service. |
| The Company's efforts in the last year have shown that the southeast Asian region is a good target market which includes Indonesia, Malaysia, Thailand, Vietnam since the distribution inefficiencies are much similar to those in India. These countries are also experiencing either privatisation or government interference to better handle power distribution. Power theft and poor customer service are considered as important factors by utilities for considering technology deployment. Several multilateral organisations like ADB, World Bank and IMF are funding projects taken up by the utilities that have energy-efficiency objective. The Company has also studied the type of the solutions that are required in these countries, and it is understood that automation technologies that have the capabilities of integrating into smart grid, power theft technologies, grid management technologies are mostly preferred. |
| Having understood the landscape from a distance, the Company is now working towards approaching and explaining our capabilities to deploy through proper business development network to feel the pulse on the ground and the minds of the stakeholders in the utilities. Shortly, the Company plans to establish partner network to understand immediate and long-term opportunities. |
| All the efforts the Company is making are in line to develop the market for a profitable long-term benefit. |
2) Total foreign exchange used and earned
| a. Foreign exchange earnings : | NIL |
| b. Foreign exchange outgo : | Rs. 525.71 Lakhs |
Annexure - C to the Directors Report Details of ESOPs:
| SI. No. | Description | ESOP Scheme - 2006 | ESOP Scheme -2007 | ESOP Scheme -2008 | ESOP Scheme -2009 |
| 1 | Options granted | 2,50,000 options of Rs. 2 each | 5,00,000 options of Rs. 2 each | 5,00,000 options of Rs. 2 each | 5,00,000 options of Rs. 2 each |
| 2 | Pricing formula | The 'Exercise price' for conversion of each stock option into one equity share shall be the price, at a discount of 60% to 70% (at the discretion of compensation committee) of closing market price on the date of the grant, on the stock exchange which recorded the highest trading volume | 80 per cent to 95 per cent | 80 per cent to 95 per cent | 80 per cent to 95 per cent |
| 3 | Options vested | 250000 | 5,00,000 | 500000 | 1,50,000 |
| Options Exercised | 250000 | 5,00,000 | 325000 | 1,50,000 |
| 4 | Total number of shares arising as a result of exercise of options | 250000 | 5,00,000 | 325000 | 1,50,000 |
| 5 | Options lapsed | NIL | NIL | NIL | NIL |
| 6 | Variation of terms of options | NIL | NIL | NIL | NIL |
| 7 | Money realised by exercise of options | Rs. 17,50,00,000/- | Rs. 1,25,00,000/- | Rs.84,50,000/- | Rs.37,50,000/- |
| 8 | Total number of options in force as on 31.03.2012 | 0 | 0 | 1,75,000 | 3,50,000 |
| 9 | Employee-wise details of options granted to | | | | |
| i. Senior managerial personnel | | | | |
| ii. Any other employee who received a grant in any year of options amounting to 5 per cent or more of options granted during the year | Enclosure - 1 Nil | Enclosure - 1 Nil | Enclosure - 1 Nil | Enclosure -1 Nil |
| iii. Identified employees who were granted options, during any one year, equal to or exceeding 1 per cent of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. | Nil | Nil | Nil | Nil |
Enclosure - 1
Employee-wise details of options of Rs. 2 each granted to senior managerial personneland in force (i.e., options outstanding) as on the date of Report :
(Number of options of Rs. 2 each)
| Serial number | Name of the employee | Designation | ESOP 2008 | ESOP 2009 |
| 1 | Mr. P. Kodanda Ramaiah | Director (Technical) | 8,400 | 8,400 |
| 2 | Mr. S.S.Dua | Director | NIL | NIL |
| 3 | Mr. Y.V.R Amana Reddy | Director | 7,000 | NIL |
| 4 | Mr.Mohd Abdul Rub | CEO (Infra) | 7,700 | 7,000 |
| 5 | Mr. Pervez Younus | Executive Vice President (SCADA) | NIL | 7.00 |
| 6 | Mr. Sushil Tiwari | Business Head (Metering Division) | NIL | 3,500 |
| 7 | Mr. Ravi Jatavallabha | Head (Corporate Planning & Strategy) | 5,600 | 8,400 |
| 8 | Mr. A.Ravindranath Reddy | Sr.Vice President (Finance) | 2,800 | 4,900 |
| 9 | Mr. L.S.Karindikar | Chief Technical Officer | NIL | NIL |
| 10 | Mr. G.Vinaya Kumar | Chief Technical Advisor | 3,500 | 7,000 |
| 11 | Mr. G.Satyanarayana | GM (Project Monitoring) | 3,500 | 2,800 |
| 12 | Mr. K. Srinivasa Rao | GM (Corporate HR) | 3,500 | 3,500 |
| 13 | Mr. K. Arun Kumar | DGM (Company Secretary & Legal) | 2,800 | 4,200 |