Eon Electric Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenting the 30th Annual Report on the business and operations of your Company along with the Audited Financial Statements for the Financial Year ended March 31, 2019.

FINANCIAL RESULTS

The financial performance of your Company for the Financial Year ended March 31, 2019 is summarized below

(Rs. In Crores)

Particulars Standalone Consolidated
Financial Year ended 31.03.2019 Financial Year ended 31.03.2018 Financial Year ended 31.03.2019 Financial Year ended 31.03.2018
Revenue from operations 77.32 158.68 77.32 158.68
Other Income 6.66 5.14 6.66 5.14
Operating Profit (EBITDA) (13.08) 14.31 (13.08) 14.31
Finance Costs 10.31 11.37 10.31 11.37
Depreciation and Amortisation Expense 1.99 2.16 1.99 2.16
Profit / (Loss) before Exceptional items and Tax (25.38) 0.88 (25.38) 0.88
Exceptional Items - - - -
Profit/(Loss) before Tax (25.38) 0.88 (25.38) 0.88
Less: Tax Expense (1.39) 0.44 (1.39) 0.44
Profit/(Loss) after Tax (23.99) 0.44 (23.99) 0.44
Profit/(Loss) for the year (23.99) 0.44 (23.99) 0.44
Other Comprehensive Income 0.20 0.09 0.20 0.09
Total Comprehensive Income (23.79) 0.53 (23.79) 0.53
Earnings per Share (In Rupees) (14.19) 0.27 (14.19) 0.27
(Face Value of Rs.5/- per Equity Share)

FINANCIAL HIGHLIGHTS

During the financial year under review, your Company has achieved Sales and Other Income of Rs.83.98 Crores as against Rs.163.82 Crores in the previous financial year 2017-18 The Loss before Interest Taxes and Depreciation for the year ended March 31, 2019 stood at Rs. 13.08 Crores as against an EBITDA of Rs. 14.31 Crores during the previous year.

The Loss before Tax for the financial year ended March 31, 2019 stood at Rs. 25.38 Crore as against a profit of Rs.0.88 Crores earned during the previous financial year ended March 31, 2018. The Loss after Tax for the current year stood at Rs. 23.99 Crore against a Profit after Tax Rs. 0.44 Crores earned during the previous year ended 31st March, 2018. The decline in the operations of the Company during the year under review has been due to the liquidity crunch being experienced by your Company during the past one year or so on account of delay in realization of receivables from one of its major customers for whom the Company has executed orders during the previous year. As the payments from the customers was considerably delayed beyond the expected realization period this resulted in an acute pressure on the Companys cash flows which affected the operations of the Company resulting in shortfall in turnover and operating loss during 2018-19.

Your Directors are fully seized of the Companys performance related issues and have also initiated proactive measures by initiating steps in the following directions:-

(a) Consolidation of operations and implementation of cost control measures to reduce fixed costs and thereby curtail losses

(b) Disposal of Investments in Mutual Funds and Bonds and thereby repaying loans raised against these investments from Standard Chartered Bank and RBL Bank Limited leading to reduction in interest and thereby improving the profitability and cash flows of the Company.

(c) Strengthening Relationship Management with all stake holders including potential customers.

Efforts are also afoot to further strengthen the Companys internal Management in areas of Marketing, Sales and Recoveries.

Consolidated financial statements

The Consolidated Financial Statements of your Company for the financial year 2018-19, have been prepared in compliance with the applicable provisions of the Companies Act, 2013, Indian Accounting Standards and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Dividend and reserves

In light of the loss incurred by the Company during the year, your Directors do not recommend any Dividend for the year under review.

The Company has not transferred any amount to General Reserve during the financial year 2018-19.

Directors and key managerial personnel

Appointments / resignations

In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Vinay Mahendru, Joint Managing Director is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Appropriate resolution seeking your approval to his re-appointment as Director is included in the Notice. The Board recommends his re-appointment.

Mr. Ashish Bansal was appointed as an additional Non-Executive Independent Director on 1st April, 2019 and is proposed to be appointed as Non-Executive Independent Director of the Company at the ensuing Annual General Meeting (AGM). His details as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are contained in the accompanying Notice convening the ensuing AGM of your Company. Appropriate resolution seeking your approval to his appointment as Independent Director is included in the Notice.

Mr. Ashok Kumar Gupta was appointed as an additional Non-Executive Independent Director on 1st April, 2019 and is proposed to be appointed as Non-Executive Independent Director of the Company at the ensuing Annual General Meeting (AGM). His details as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are contained in the accompanying Notice convening the ensuing AGM of your Company. Appropriate resolution seeking your approval to his appointment as Independent Director is included in the Notice.

During the year Mr. Ajoy Kumar Ghosh, Independent Director resigned from the Board and all committees w.e.f. January 25, 2019 due to his ill health. Mr. Ramesh Chander Bansal amd Mr. Ranjan Sarkar on having attained the age of 75 years resigned from the Board w.e.f 1st April, 2019. Dr (Mrs.) Rashmi Vij resigned from the Company w.e.f 30th May, 2019 due to her preoccupation. There was no material reason for resignation of the Directors other than the one mentioned in their Resignation letters.

Key Managerial Personnel

Mr. Ved Prakash Mahendru, Chairman & Managing Director, Mr. Vivek Mahendru and Mr. Vinay Mahendru, Joint Managing Directors, Mr. K B Satija, Chief Financial Officer and Mr. Shiv Kumar Jha, Company Secretary & Compliance Officer are the Key Managerial Personnel of your Company in accordance with the provisions of Section 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Board evaluation

The Companies Act, 2013 mandates formal annual evaluation of the performance of the Board, its Committees and individual Directors. Schedule IV to the Companies Act, 2013 provides that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the Directors being evaluated.

Pursuant to the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out annual evaluation of performance of Directors individually, Committees of the Board and the Board as a Whole.

The manner in which the evaluation has been carried out is explained in the Corporate Governance Report.

Meetings of the board and committees

Four meetings of the Board of Directors were held during the Financial Year 2018-19. The details of number of Meetings of the Board and various Committees of your Company are set out in the Corporate Governance Report. Besides in term of requirements of Schedule IV to the Companies Act, 2013 and Regulation 25 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was heldon March 02, 2019 for the Financial Year 2018-19.

Declaration BY independent directors

All the independent directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provision of Companies Act, 2013 and the relevant regulations.

Remuneration policy

In accordance with the provisions of Section 178 of the Companies Act, 2013 read with rules made there under and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Companys Policy on Nomination and Remuneration of Directors, kmps and Senior Management of your Company is uploaded on the website of the Company: http://www.eonelectric.com/investor10.php

AUDIT committee

As at 31st March, 2019, the Audit Committee of the Board of Directors of the Company comprised of 3 members namely Shri Ramesh Chander Bansal, Independent Director, Shri Ranjan Sarkar, Independent Director and Shri Vivek Mahendru, Joint Managing Director. Shri Ramesh Chander Bansal is Chairman of the Audit Committee.

The Board accepted the recommendations of the Audit Committee whenever made by the Committee during the year.

Auditors and auditors report statutory auditors

On recommendation of the Audit Committee, the Board, in its meeting held on August 31, 2017 and approval of the shareholders in the Annual General Meeting held on 27th September 2017, M/s Bansal and Co LLP., Chartered Accountants, (Firm Registration Number 001113N/N500079), have been appointed as the Statutory Auditors of the Company for a term of five consecutive years i.e. From conclusion of the 28th AGM till the conclusion of 33rd AGM to be convened in the year 2022.

Statutory auditors report

The Board has duly examined the Statutory Auditors Report on the Standalone and Consolidated Financial Statements of the Company for the financial year ended March 31, 2019 by M/s Bansal and Co. LLP, Chartered Accountants. The Company has already initiated steps to deposit the undisputed statutory dues as mentioned in the Auditors Report with the respective authorities.

Further no fraud has been reported by the Statutory Auditors in terms of Section 143(12) of the Companies Act, 2013 during the year.

Cost auditors

Pursuant to the provisions of Section 141 read with Section 148 of the Companies Act, 2013 and Rules made there under, Mr. Krishan Singh Berk, Cost Accountant (FRN: 102044 & Membership No. 2724), 365, Sector 15, Faridabad 121 007 Haryana, was appointed as the Cost Auditor of the Company for the financial year ended March 31, 2019. Your Company is required to maintain cost records as specified under Section 148(1) of the Companies Act, 2013 and accordingly such accounts and records are made and maintained in the prescribed manner.

Mr. Krishan Singh Berk, Cost Accountant (FRN: 102044 & Membership No. 2724), carried out the cost audit during the year. The Board of Directors have appointed Mr. Krishan Singh Berk, Cost Accountants as Cost Auditors for the financial year 2019-20. The remuneration proposed to be paid to the cost auditors for 2019-20 is subject to ratification by members at the ensuing Annual General Meeting.

Secretarial auditors & their report

The Company had appointed M/s Navneet K Arora & Co LLP, Company Secretaries, New Delhi, to conduct its Secretarial Audit for the financial year ended March 31, 2019. The Secretarial Auditor has submitted its Report, confirming compliance by the Company of all the provisions of applicable corporate laws except delay in deposit of monthly statutory dues under Employee Provident Fund and Miscellaneous Provisions Act, 1952 and Employees State Insurance Act, 1948 and applicable rule made thereunder, which have since been deposited by the Company. The Secretarial Audit Report for FY 2018-19 is annexed as Annexure - A to this report.

A Secretarial Compliance Report for the financial year ended 31st March, 2019 on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder, was obtained from M/s Navneet Arora & Co. LLP Secretarial Auditors, and submitted to both the stock exchanges.

The Board has re-appointed M/s Navneet K Arora & Co. LLP Company Secretaries, New Delhi as Secretarial Auditors of the Company for Financial Year 2019-20.

Extract of the annual return

The extract of the Annual Return in Form MGT 9 as stipulated under Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, is annexed herewith as ‘Annexure-B, to this Report and is posted on the website of the Company at www.eonelectric.com

Related PARTY transactions

In terms of Section 134(3)(h), there is no information to be provided regarding the particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013, except the transactions as stated in Note No. 43 of the Financial Statements. Accordingly, no transactions are being reported in Form No. AOC-2 in terms of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014.

All related party transactions that were entered into during the year under review were in the ordinary course of business and on an arms length basis and were in compliance with the applicable provisions of the Companies Act, 2013.

Material changes and commitments, IF any, affecting the financial position of the company WHICH have occured between the end of the financial year of the company To WHICH the financial statements relate and the date of the report

There are no material changes and commitments affecting the financial position of the Company that have occurred between the end of financial year on March 31, 2019 to which these Financial Statements relate and the date of this Report.

Change In the nature of business

There was no change in the nature of business of the Company during the financial year ended March 31, 2019.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as ‘Annexure - C to this Report.

RISK management

Pursuant to the provisions of Section 134(3)(n) of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has adopted a Risk Management Policy and established a risk management framework to identify, mitigate and control the risks, which may threaten the existence of the Company.

In ternal financial controls

The Company has a comprehensive Internal Financial Controls system with reference to Financial Statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed.

The report on the Internal Financial Control issued by the M/s. Bansal & Co. LLP Chartered Accountants, (FRN: 001113N/N500079), the Statutory Auditors of the Company, forms part of the Annual Report. In the opinion of the Board, the existing Internal Financial Control framework is adequate and commensurate with the size and nature of the business of the Company.

Whistle blower and VIGIL mechanism

The Company has adopted a Whistle Blower Policy, to provide a formal vigil mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairperson of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.

PARTICULARS of employees and related disclosures

Disclosures pertaining to remuneration and other details 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 as amended by the Companies (Appointment and Remuneration of Managerial Personnel) amended Rules, 2016 are provided in the ‘Annexure - D to this Report

Subsidiaries, associates and joint ventures

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 Joint Ventures / Associates (in form AOC-1) is attached to this Report as ‘Annexure - E.

Significant and material orders passed BY the regulators or courts

There was no significant and material order passed by the Regulators or Courts or Tribunals impacting the going concern status and the companys operations in future.

PARTICULARS of loans, guarantees or investments

During the Financial Year 2018-19, the provisions of Section 186 of the Companies Act, 2013 were not applicable on the Company

Corporate social responsibility (CSR)

The provisions of 135 of the Companies Act, 2013 read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are not applicable to the Company during the Financial year ended on 31st March, 2019.

Deposits

The Company has not accepted/received any deposits during the year under report falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

Directors responsibility statement

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, with respect to Directors Responsibility Statement, it is hereby confirmed:

(a) that in the preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards and Schedule III to the Companies Act, 2013, have been followed and there are no material departures from the same;

(b) that 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 March 31, 2019 and of the loss of the Company for the year ended on that date;

(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) that the annual accounts have been prepared on a going concern basis;

(e) that proper internal financial controls to be followed by the Company were laid down and that such internal financial controls were adequate and operating effectively; and

(f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and such systems were adequate and operating effectively.

Other information Management Discussion and Analysis Report

Management Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed herewith as ‘Annexure - F to this Report.

Certificate on Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by Securities and Exchange Board of India. The report on Corporate Governance as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Report and annexed herewith as ‘Annexure - G to this Report. The requisite certificate from M/s. Bansal & Co. LLP, Chartered Accountants, (FRN: 001113N/N500079), Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance is annexed herewith to this Report.

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 the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted Internal Committees at all its locations, known as the Prevention of Sexual Harassment (POSH) Committees, to inquire into complaints of sexual harassment and recommend appropriate action.

The Company has not received any complaint of sexual harassment during the financial year 2018-19.

Transfer to Investor education and Protection Fund

Pursuant to Section 124 and 125 and other applicable provisions, if any, of the Companies Act, 2013, read with the Investor Education and protection Fund Authority (Accounting, Audit, Transfer, and Refund) Rules, 2016 (‘IEPF Rules) all unclaimed and/ unpaid dividend, application money, debentures interest and interest on deposits, as applicable, remaining unclaimed / unpaid for a period of seven years from the date they became due for payment, were required to be transferred to the IEPF. Accordingly, all unclaimed and unpaid dividend for a period of seven years from the date they became due for payment, in relation to the Company have been transferred to the IEPF established by the Central Government. No claim shall be entertained against the Company for the amounts so transferred.

As per Section 124(6) of the Act read with the IEPF Rules as amended, all the shares in respect of which dividend has remained unpaid/unclaimed for seven consecutive years or more are required to be transferred to an IEPF Demat Account. The Company has sent notice to all the Members whose dividends are lying unpaid / unclaimed against their name for seven consecutive years or more. Necessary steps will be initiated by the Company to transfer shares held by the members to IEPF as per applicable regulations. Please note that no claim shall lie against the Company in respect of the shares so transferred to IEPF. In the event of transfer of shares and the unclaimed dividends to IEPF, members are entitled to claim the same from IEPF by submitting an online application in the prescribed Form IEPF-5 available on the website www. Iepf.gov.in and sending a physical copy of the same duly signed to the Company along with the requisite documents enumerated in the Form IEPF- 5. Members can file only one consolidated claim in a financial year as per the IEPF Rules.

Listing of Shares

The Shares of the Company are listed on the BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company has paid annual Listing fee for the Financial Year 2019-20 to the BSE Limited and the National Stock Exchange of India Limited.

Acknowledgements

Your Companys organizational culture upholds professionalism, integrity and continuous improvement across all functions, as well as efficient utilization of the Companys resources for sustainable and profitable growth. The Directors wish to place on record their appreciation for the valuable co-operation and support received from the Government of India, various State Governments, the Banks and other stakeholders such as, shareholders, customers and suppliers, among others. The Directors also commend the continuing commitment and dedication of the employees at all levels, which has been critical for the Companys success. The Directors look forward to their continued support in future.

For and on behalf of the Board of Directors
Ved Prakash Mahendru
Place: new Delhi Chairman & Managing Director
Dated: August 13, 2019 DIN: 00005338