Easun Reyrolle Ltd Directors Report.

To the Members

Your Directors are pleased to present the 43rd Annual Report, with the statement of the audited accounts for the financial year ended 31st March, 2018.

1. Financial Performance

The standalone and consolidated audited financial results for the year ended 31st March, 2019 are as follows:

 

[Rupees in lacs]

Particulars

Standalone

Consolidated

2018-19 2017-18 2018-19 2017-18
Sales and Other Income 2,061 2,123 8,810 7,904
Earnings before interest, Depreciation and Tax (EBIDTA) (716) (1,467) 1,526 362
Depreciation 447 475 1,885 1,682
Interest 638 204 675 240
Profit / (Loss) before tax & Exceptional Items (1,801) (2,146) (1,034) (1,560)
Exceptional Items - - - -
Profit / (Loss) before Tax (1,801) (2,146) (1,034) (1,560)
Provision for Taxation - - 2 -
Net Profit / (Loss) (1,801) (2,146) (1,036) (1,560)
Other Comprehensive Income, Net of Income Tax 11 2,145 513 2,145
Total Comprehensive Income for the year (1,790) (1.33) (523) 585

2. Companys Performance:

Your Company has been facing losses for the last five years which is mainly due to its operating cycle getting affected. However, the Company is mainly focusing on products business and taking necessary steps to improve the productivity and profitability in forthcoming years.

3. Share Capital

The paid up equity share capital of the Company as at 31st March, 2019 stood at Rs.615.88 lakhs comprising of 30,794,141 equity shares of Rs.2 each. The Company has neither issued any shares with differential rights as to dividend, voting or otherwise nor issued any sweat equity shares during the year under review.

4. Dividend

Your Directors do not recommend payment of dividend for the year under review on equity shares in view of the loss incurred.

5. Management Discussions and Analysis:

a. Industry Overview and Developments.

The year 2018-19 continued to be quite difficult like the preceding three to four years due to low investment, slow execution of project and poor cash flow. Owing to the economic slowdown in the past years, the ratio of bad loans or NPAs in Indian market has increased exponentially, forcing RBI to tighten the liquidity and funding norms of banks limiting their exposure to industry and infrastructure projects.

While the financial year 2018-19 witnessed a slowdown in growth in the power sector, now the Government is moving forward and taken several steps to reform and strengthen the power sector as a whole including power generation, transmission and distribution. These also include not only achievements in capacity addition but also important reforms being undertaken on increasing energy efficiency and increasing accountability and transparency by launching application like PRAAPTI (Payment Ratification and Analysis in Power procurement for bringing Transparency in Invoicing of generators), Ash Track etc.

The focus is now shifted to new and renewable energy systems at the grid level from Conventional Power by Ministry of Power and Central Electricity Authority slack-up the conventional power generation market. The expansion of old power generation plants and their upgrades have encouraged new opportunities in the transmission sector.

b. Opportunities and threats, Segment wise or Product wise performance

Government of India has now set a stage to achieve overall economic growth and has an ambition of $5 trillion economy within the next ten years. Therefore, the demand for electricity is likely to grow steadily at a rate of 6.5% CAGR to 1630 Billion Units till 2023. It opens extensive opportunities in the transmission and distribution sector.

Under Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) Government scheme, 100 per cent village electrification has been achieved. This will accelerate demand for T&D Products and Systems in the coming years.

State Electricity Board, DISCOMs are still facing financial problems which will indirectly affect the business environment.

c. Risks and Concerns

The economic environment, pricing competition and foreign exchange fluctuations negatively impact the business growth and operating results.

d. Internal control systems and their adequacy.

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Audit Committee.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

The Company has in place adequate internal financial controls with reference to financial statements and other matters.

e. Discussion on financial performance with respect to operational performance.

On a standalone basis, the Company achieved revenue from operations of Rs.2,061 lacs and EBIDTA of (Rs.716) as against (Rs.2,123 Lacs) and (Rs.1,467 Lacs) respectively in the previous year. Net loss before other Comprehensive Income for the year is (Rs.1,801 lacs) as compared to net loss of (Rs.2146 Lacs) in the previous year.

Company is unable to meet out its target due to slow collection from the Government sector undertakings, the working capital cycle got affected due to the lack of working capital, the existing orders got backlog and delayed in executions.

On consolidated basis, the Group achieved revenue from operations of Rs.8,810 lakhs and EBIDTA of Rs.1,526 lakhs as against Rs.7,904 lakhs and Rs.362 lakhs respectively in the previous year. Net loss before other comprehensive income for the year is (Rs.1,036 lakhs) as compared to net loss of (Rs.1,560 lacs) in the previous year.

f. Material developments in Human Resources / Industrial Relations front, including number of people employed.

There is no increase in number of people except replacement of any resignation/ retirements. During the year no strikes or lock-outs and the industrial relations is cordial.

6. Human Resource Development

During the year, employee relations at all the Units remained cordial. This has helped your Company to build robust and motivated workforce in spite of adversities. The Company is continuously striving to improve employees skill sets through adequate training and development programs.

7. Material changes and commitments affecting the financial position of the Company which have occurred between 31st March, 2019 and 26th October, 2019 (date of the Report).

There were no material changes and commitments affecting the financial position of the Company between the end of financial year (31st March, 2019) and the date of the Report (26th October 2019).

8. Internal Control Systems and their Adequacy

The Company has an Internal Control Framework which is commensurate with the size, scale and complexity of its operations. This framework ensures adequate safeguards and processes to address the evolving business requirements. Key controls have been identified along with risks and mitigation processes covering major areas. The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

9. Subsidiary Companies and Consolidated Financial Statements

The Company has 8 subsidiaries, which includes 6 step-down subsidiaries as on 31st March, 2019. There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). There has been no material change in the nature of the business of the subsidiaries.

In accordance with the provisions of the Companies Act, 2013 (‘the Act), Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘the Regulations) and applicable Accounting Standards, the audited consolidated financial statements of the Company for the financial year 2018-19, together with Auditors Report thereon forms part of the Annual Report.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Companys Subsidiaries, (in Form AOC-1) is attached to the financial statements as Annexure - D.

Pursuant to the provisions of section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.

10. Deposits from public

The Company did not invite or accept any fixed deposit pursuant to provisions of Section 76 of the Companies Act, 2013. During the year no amount either on interest or principal, remained outstanding as on the date of the Balance Sheet.

11. Corporate Governance Report

As has been the ethos of the Company, it strives to maintain high standards of Corporate Governance practices.

Pursuant to regulation 34 (3) read with Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Reports on Management Discussion and Analysis and Corporate Governance have been included elsewhere in this Report as separate sections.

A Certificate from MD and CFO of the Company in terms of Listing Regulations, inter alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee, is also annexed.

A certificate from Statutory Auditors regarding compliance of conditions of Corporate Governance as stipulated in regulation 34 (3) read with Schedule V of SEBI (LODR) Regulations, 2015 is attached to the report on Corporate Governance.

The report on corporate governance for the year ended March31, 2019 pursuant to Regulation 34 of the SEBI LODR Regulations is annexed hereto as Annexure - A.

12.Statutory Auditors and their Report.

M/s. K.S. Rao & Co., Chartered Accountants, (Firm Registration Number 003109S) Chennai, Statutory Auditors of the Company hold office till the conclusion of 47th Annual General Meeting of the Company. Pursuant to amendments to Section 139 of the Act, the requirements to place the matter relating to such appointment for ratification by members at every annual general meeting has been omitted with effect from May 7, 2018.

The Auditors Report given by M/s. K S Rao & Co., Chartered Accountants on the financial statements of the Company for the year ended March 31, 2019 forms part of the Annual Report.

13. Secretarial Auditor

Pursuant to provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and pursuant to the Regulation 24A of SEBI LODR Regulations, 2015 your Company engaged the services of Mr. S. Viswanathan, Company Secretary in Practice, Bangalore to conduct the Secretarial Audit of the Company for the financial year ended 31st March, 2019. The Secretarial Audit Report (in Form MR-3) is attached as Annexure - C to this Report.

14. Management reply to the Statutory Auditors & Secretarial Auditors Report

The explanations and comments by the Board on Qualifications made by Statutory Auditor is attached as Annexure - G to this Report.

15. Extract of Annual Return

The extract of the Annual Return pursuant to Section 134(3)(a) and Section 92(3) of the Act read with Companies (Management and Administration) Rules, 2014 in the prescribed form MGT-9 as on 31st March, 2019 is annexed herewith as Annexure - F to this Report. The complete annual return is available on the Companys website, under the web link: (URL: www.easunreyrolle.com/investors).

16. Directors and Key Managerial Personnel

(a) As on 1st April 2018, the Board of Directors of the Company comprises of 5 Directors. During the year, Dr William Stanly Jones, (DIN No. 00196064) Independent Director stepped down from the Board and its Committees with effect from 29th August, 2018 due to advancing age. The Board wishes to place on record its appreciation for the valuable contributions made by him to the Board and the Company.

Subsequent to the resignation of Dr William Stanley Jones, the Board comprises of 4 Directors of which One Non-Executive Promoter Director, Chairman of the Board and One Promoter, Managing Director and two Independent Directors (including a Woman Director). The constitution of the Board of Directors of the Company is in accordance with Section 149 of the Companies Act, 2013 and Regulation 17 of SEBI (LODR) Regulations, 2015, as amended from time to time.

(b) Mr Hariharan Eswaran, Director retires by rotation and being eligible and has offered himself for re-appointment. A brief background of Mr Hariharan Eswaran, Director is given in the Corporate Governance Report.

(c) Members in their 41st Annual General Meeting held on 30th September, 2016 approved the Appointment of Mr Raj Hari Eswaran as Managing Director from 1st April, 2017 upto 31st March, 2020 with remuneration. His term of appointment will expire by efflux of time on 31st March, 2020 and your directors recommended to re-appoint him as Managing Director for a further period of 3 (Three) years with effect from 1st April, 2020 to 31st March, 2023. The necessary special resolution seeking your approval for appointment of Managing Director is included in the notice of the ensuing annual general meeting along with brief details about him.

(d) Pursuant to provisions of Section 149 of the Act, read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the erstwhile Clause 49 of the Listing Agreement entered with the Stock Exchanges, and as per SEBI LODR Regulations, 2015, Mr Rakesh Garg was appointed as Independent Directors on the Board of the Company for a period of 5 (five) years w.e.f. 29th September, 2014 and Ms Sweta Mandora Prajapati was appointed as Independent Director on the Board of the Company for a period of 3 years w.e.f. 30th September, 2016.

Mr Rakesh Garg and Ms Sweta Mandora Prajapati have submitted a declaration that each of them meet the criteria of independence as provided in Section 149(6) of the Act and the Regulations. There has been no change in the circumstances which may affect their status appointed as Independent Directors during the year. Both had given their consent for re-appointment. Based on the evaluation of the performance of the independent directors, your directors recommend their re-appointment for another term of 5 consecutive years.

The Company has received notice(s) in writing under Section 160 of the Act proposing the appointment(s) of Mr Rakesh Garg and Ms Swetha Mandora Prajapati as Independent Directors. The necessary special resolution(s) seeking your approval for appointment of the above directors as Independent Directors are included in the notice of the ensuing annual general meeting along with brief details about them.

(e) During the year under review, Mr P S Srinivasaraghavan has been appointed and Company Secretary cum Compliance Office, and KMP w.e.f. 28th August, 2018.

17. Declaration by Independent Directors

All the Independent Directors of your Company have made declaration to the Company that they meet all the criteria of independence laid down under section 149(6) of Companies Act, 2013 and regulation 16(1) (b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

18. Familarisation Programme for Independent Directors

Your Company, during the year under review has taken steps to apprise the Independent Directors on macro-economic environment, market scenario, regulatory updates, business operations, operations, financial statements, update on statutory and legal compliances for Board members, etc. The details of the familiarization programme are available on the Companys website www.easunreyrolle.com

19. Policy on Directors appointment and remuneration and other details

The Companys policy on Directors appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which forms part of the Directors Report.

A statement containing the details of the Remuneration of Key Management Personnels as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in the Corporate Governance report, which forms part of the Directors Report.

20. Number of Meetings of the Board

During the year, five (5) meetings of the Board of Directors of the Company were convened and held in accordance with the provisions of the Act. The date(s) of the Board Meeting, attendance by the directors are given in the Corporate Governance Report forming an integral part of this report.

21. Board evaluation

The Board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI (Listing Obligations and Disclosure Requirements) LODR Regulations, 2015 under Regulation No.17(10).

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

In addition, the Chairman was also evaluated on the key aspects of his role. In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive and non-executive directors.

22. Directors Responsibility Statement

As required under Section 134(5) of the Companies Act, 2013, the Directors of the Company hereby state and confirm that:

(i) in the preparation of Annual Accounts for the year, applicable Accounting Standards have been followed along with proper explanations relating to material departures;

(ii) the Directors have 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 as at the end of the financial year and of the profit and loss of the Company for the year under review;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) The Directors have prepared the Annual Accounts on a going concern basis.

(v) That proper internal financial control was followed by the Company and that such internal financial control are adequate and were operating effectively.

(vi) 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.

23. Committees of the Board

In compliance with the provisions of Sections 177, 178 of the Act, the Board constituted Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee (Committees). The details of composition of the Committees, their meeting and attendance of the members are given in the Corporate Governance Report forming an integral part of this report.

24. Particulars of Loans, Guarantees and Investments

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

25. Particulars of Employees

There are no employees whose remuneration exceeds the limits specified under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules.

26. Vigil Mechanism / Whistle Blower Policy

Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of SEBI LODR Regulations, 2015, the Board of Directors had approved the Policy on Vigil Mechanism / Whistle Blower and the same was hosted on the website of the Company. This Policy inter-alia provides a direct access to the Chairman of Audit Committee. Your Company hereby affirms that no Director/ employee has been denied access to the Chairman of Audit Committee and that no complaints were received during the year. The policies have been uploaded on the Companys website, under the web link: (URL: www.easunreyrolle.com/investors).

27. Related Party Transactions

In terms of Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has a Related Party Transactions Policy on dealing with Related Party Transactions. The policy may be accessed under the Corporate Governance section of the website (URL: www.easunreyrolle.com/ investors). All related party transactions during the year under review were on arms length basis and in the ordinary course of business. There were no materially significant transactions with related party which could be considered material in accordance with Related Party Transactions Policy of the Company.

The details of related party transactions are set out in the notes to the financial statements as well as Form AOC-2 is attached as Annexure - E to this Report.

28. Risk Management Policy

In compliance with the requirement of the Companies Act, 2013, the Company has put in place Risk Minimization and Assessment Procedures. In order to effectively and efficiently manage risk and address challenges, the Company has formulated Risk Management Policy. The Board is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of this report.

29. Environment, Health and Safety

The Company follows all the laws on Environment, Health, Safety (EHS) in all its operations. Occupational injury frequency rate remained almost NIL during the year under review. No severe accident was recorded for your Company employees.

30. Corporate Social Responsibility

Your Company is not under the purview of Section 135 of the Companies Act, 2013 as Company having less Net worth or Turnover or Net profit as specified in the Section.

31. Policy on prevention of Sexual Harassment

The Company has in place a Policy for prevention of sexual harassment at workplace. This inter alia provides a mechanism for the resolution, settlement or prosecution of acts or instances of Sexual Harassment at work and ensures that all employees are treated with respect and dignity. During the year under review, there were no complaints received by the Company.

32. Disclosure requirements

As per Regulation 15(2) of SEBI (LODR) Regulations, 2015 Corporate Governance Report with auditors certificate thereon and management discussion and analysis are attached, which form part of this report.

Policy on dealing with related party transactions is available on the website of the Company (URL: www.easunreyrolle.com/investors).

The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of Section 177(9) of the Act and Regulation 22 of SEBI LODR, Regulations, 2015 with stock exchanges (URL: :www.easunreyrolle.com/investors).

Due to some unforeseen reasons your Company could not hold the Annual General Meeting within the stipulated time. Therefore your Company has obtained approval from ROC, Minister of Corporate Affairs, Chennai for extension of time to conduct the Annual General Meeting on or before 30th November 2019. Accordingly Companys Annual General Meeting is scheduled to be held on 29th November 2019.

33. Particulars of Research and Development, Conservation of Energy, Technology Absorption, and Foreign Exchange Earnings / Outgo:

Information required under Section 134 of the Companies Act, 2013 read with Rule

8 (3) of the Companies (Accounts) Rules, 2014, is attached as Annexure - B and forms part of this Report.

34. Cautionary Statement

Statements in this report, particularly those which relate to Management Discussion & Analysis, describing the Companys objectives, projections, estimates and expectations may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

35. Change in nature of Business of the Company

There is no change in nature of Business during the year compared to previous year.

36. Reporting of Frauds

There was no instance of fraud during the year under review, which required the Auditors to report to the Audit Committee and / or Board under Section 143(12) of the Act and the rules made there under.

37. Significant and Material Orders passed by Regulators or Courts

There were no significant material orders passed by the Regulators or Courts which would impact the going concern status of the Company and its future operations.

38. Compliance of Secretarial Standards

The Company has complied with the Secretarial Standards with respect to Meetings of the Board of the Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India and approved by the Central Government.

39. Investor Education And Protection Fund (IEPF)

In terms of Section 124 (5) of the Act, an amount of Rs.3,90,947 being unclaimed final dividend(s) pertaining to the financial year 2010-11 was transferred to IEPF on 25th October, 2018.

40. Concluding Remarks

The Directors wish to sincerely express their appreciation to all employees of the Company for their dedicated services during the year amidst tough times. The Directors take this opportunity to express their gratitude to all Shareholders, Bankers, Vendors and other Stakeholders who have reposed trust and extended their constant support.

For and on behalf of Board of Directors
Place: Chennai Hariharan Eswaran
Chairman
Date: 26th October, 2019 (DIN No. 00196760)