Indosolar Ltd Directors Report.
The Board has pleasure in presenting the (13th) Thirteen Annual Report on business and operations of the Company for the year ended 31st March 2018.
1. FINANCIAL HIGHLIGHTS
|PARTICULARS||YEAR ENDED 31-03-2018||YEAR ENDED 31-03-2017|
|Revenue from operations (A)||31,412.37||44,231.09|
|Other Income (B)||431.15||297.44|
|Operating expenditure (C)||33,551.24||36,779.91|
|Earnings before interest, tax, depreciation and amortisation (EBITDA) [D=A+B-C]||(1,707.72)||7,748.62|
|Finance Cost (E)||5,351.94||10,614.91|
|Depreciation and amortization expense (F)||2,810.58||2,912.50|
|Profit / (Loss) before exceptional items and tax [G=D-E-F]||(9,870.24)||(5,778.79)|
|Exceptional Items [Profit/(Loss)] (H)||(6,410.96)|||
|Profit / ( Loss) before tax [l=G-H]||(16,281.20)||(5,778.79)|
|Provision for Taxation (J)||2.32||14.23|
|Profit / (Loss) after tax [K=l-J]||(16,283.52)||(5,793.02)|
2. PERFORMANCE REVIEW
During the year under review, the Company achieved turnover of Rs. 31,412.37 lakhs as compared to Rs. 44,231.09 lakhs in the previous year. The Earnings before interest, tax, depreciation and amortisation ("EBITDA") of Rs. (1,707.72) lakhs in the financial year 2017-18 as compared to Rs. 7,748.62 lakhs in the previous year.
Your Directors feel that the Company will be seeing a turnaround in the financial year 2018-19 keeping in view the certain measures taken or expected to be taken by the Government to support of the domestic manufacturers in India viz. Central Public Sector Undertakings "CPSU" Scheme to replace the Domestic Content Requirement "DCR" Policy, viability gap funding policy etc.
3. RESERVES AND SURPLUS
During the year under review, the Company has not transferred any amount to general reserves due to losses incurred.
Due to non-availability of profit, the Board does not recommend any dividend for the year ended 31st March 2018.
Your Company has implemented International Quality Management System based on the requirement of ISO 9001:2015. The Company has established, implemented and maintaining a Quality Management System. During this year, ISO 14001 surveillance was carried out by TUV Nord and the auditors recommended the continuation of the ISO 9001:2015. Apart from the above, your Company is also OHSAS-18001:2007 and ISO-14001:2015 certified.
Your Company had also taken various initiatives during the year for ISO awareness like ISO Audits, ISO Awareness sessions, specially week observations(POI) point of improvement, NCRs (NON Conformities) safety week which enhances the three values viz., Integrity, Quality and Safety.
6. FIXED DEPOSITS
During the year under review, the Company has not accepted any fixed deposit within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and no amount of principal or interest is outstanding as on the balance sheet closure date.
7. STATUS OF PRESENT CAPACFTY UTILIZATION
In view of the market viability over Solar Industry, the Company is expected that the full utilization of capacity will be used by end of the financial year 2018-19.
8. NUMBER OF MEETINGS OF THE BOARD
Six (6) meetings of the board were held during the year. For details of the meetings of the board, please refer to the point no. 2 of the Corporate Governance Report, which forms part of this Report. The intervening gap between any two consecutive Board Meetings did not exceed 120 days.
9. DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors
The Independent Directors of the Company have given a declaration confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 ("the Act") and the SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015.
Mr. Hulas Rahul Gupta [DIN: 00297722], Managing Director liable to retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for the re-appointment. The Board of Directors recommended his reappointment for the consideration of the shareholders in ensuring Annual General Meeting. A brief profile and other details as required under Regulation 36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are provided in the Notice of 13th Annual General Meeting of the Company. However, there was no change in the board of the company during the financial year.
Key Managerial Personnel
During the year, there was no change in Key Managerial Personnel. Pursuant to the provision of Companies Act, 2013, the key managerial personnel of the Company are Mr. Hulas Rahul Gupta, Managing Director and Mr. Anand Kumar Agarwal, Chief Financial Officer. However, Mr. Manish Gupta, Company Secretary of the Company has resigned with effect from 14th May 2018 after close of financial year.
10. 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 Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ("Listing Regulations").
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 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 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 directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the concerned independent director being evaluated.
11. REMUNERATION POLICY
The Nomination and Remuneration Committee of the Company leads the process for Board Appointment in accordance with the requirements of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other applicable regulations or policy guidelines.
The policy for determining the remuneration for Directors, Key Managerial Personnel & other employees is available on website of the Company i.e. http://www.indosolar.co.in/images/pdf file NOMINATION % 20 AND % 20 REMUNERATION %20 POLICY.pdf.
12. EXTRACT OF THE ANNUAL RETURN
The extract of Annual Return in Form MGT -9 as required under Section 134(3)(a) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is given in Annexure - I to this Report.
13. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH THE RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT, 2013
None of the transactions entered into by the company with related parties during the financial year 2017-18 falls under the scope of section 188(1) of the Companies Act, 2013. Information on transactions with related parties pursuant to section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure II in Form AOC-2 and the same forms part of this Report.
However, omnibus approval is obtained from the Audit Committee for the related party transactions which are unforeseen and repetitive in nature.
14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the financial year 2017-18, the Company has not given loans, guarantees/surety or investment as described under Section 186 of the Companies Act, 2013.
15. DETAIL OF SUBSIDARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
There is no subsidiary, joint venture or associate of the Company during the Financial Year 2017-18.
16. AUDIT COMMrTTEE
The details pertaining to composition of audit committee are included in the point no. 3 of the Corporate Governance Report, which forms part of this Report. The intervening gap between any two consecutive Audit Committee Meetings did not exceed 120 days.
17. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Due to the continued losses incurred by the Company, the CSR provisions of Companies Act, 2013 are not applicable.
18. CHANGES IN CAPITAL STRUCTURE
During the year ended 31st March, 2018, the Company has increased its authorised share capital from Rs. 500,00,00,000 (Rupees Five Hundred Crores) divided into 40,00,00,000 (Forty Crores) Equity Shares of Rs. 10/- (Rupees Ten) each and 10,00,00,000 (Ten Crores) Preference Shares of Rs. 10/- (Rupees Ten) each to Rs. 1000,00,00,000 (Rupees One Thousand Crores) divided into 50,00,00,000 (Fifty Crores) Equity Shares of Rs. 10/- (Rupees Ten) each and 50,00,00,000 (Fifty Crores) Preference Shares of Rs. 10/- (Rupees Ten) each.
During the year ended 31st March, 2018 the Company has allotted 87,31,617 (Eighty Seven Lakhs Thirty One Thousand Six Hundred Seventeen) equity shares of face value of Rs. 10/- each (the "Equity Shares") at a price of Rs. 10.88 per share upon conversion of 9,500,000 compulsorily convertible preference shares CCPS1.
During the year ended 31st March, 2018 the Company has allotted 52,05,499 (Fifty Two Lakhs Five Thousand Four Hundred Ninety Nine) equity shares of face value of Rs. 10/- each (the "Equity Shares"), at a price of Rs. 10/- (Rupees Ten only) to M/s Greenlite Lighting Corporation (the "Investor"), Promoter Group on a preferential basis, against conversion of unsecured loan of Rs. 5,20,54,995 (Rupees Five Crore Twenty Lakhs Fifty Four Thousand Nine Hundred Ninety Five Only) taken by the Company from M/s Greenlite Lighting Corporation in lieu of equity shares invoked by lender.
During the year ended 31st March, 2018 the Company has allotted 1% Optionally Convertible Cumulative Redeemable Preference Shares of the Company of face value of Rs. 10/- each ("OCCRPS") as per the OTS Scheme to its Lenders (Union Bank of India) on preferential basis of Rs. 207,00,00,000 (Two Hundred Seven Crores Only), pursuant to conversion of the relevant portion of the outstanding debt ("Converted Debt") owned to the lenders.
19. UN-CLAIMED SHARES
In terms of Para F of Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), the details of Un-claimed Shares are as under:
|Particulars||No. of holders whose shares are marked as un-claimed||No. of shares marked as un-claimed|
|A Status of un-claimed shares at the beginning of the year i.e. 1 st April, 2017||05||3,385|
|B. No. of claims received by the Company during the year under review for release of shares||02||637|
|C. No. of claims settled and shares released to the rightful claimants during the year under review||02||637|
|D. Transferred to I EPF pursuant to Section 124(6) of the Companies Act, 2013||NIL||NIL|
|Balance un-claimed shares as at the end of the year i.e. 31st March, 2018 [A-(C+D)]||03||2,748|
20. PROMOTERS/PROMOTERS GROUP
The Company is controlled by Mr. Hulas Rahul Gupta in the capacity as Director and shareholder and by Mr. Bhushan Kumar Gupta, Ms. Priya Desh Gupta, Ms. Abha Gupta and M/S Greenlite Lighting Corporation in the capacity as shareholder.
21. RISK MANAGEMENT
The Board of Directors is overall responsible for identifying, evaluating and managing all the significant risks faced by the Company. The Board has approved the Risk Management Policy, which acts as the guideline by which the key risks are managed across the organization.
The Risk Management Policy is available on the Companys Website www.indosolar.co.in.
22. INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY
The details in respect of internal financial control and their adequacy are included in the point no. 6 of the Management Discussion & Analysis Report, which forms part of this report.
23. VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company promotes ethical behaviour in all its business activities and has put in place a vigil mechanism for Directors, Employees and other person dealing with the Company for reporting illegal or unethical behaviour, actual or suspected fraud or violation of the companys Code of Conduct. The mechanism provides for adequate safeguards against victimization of Directors, employees or other persons who avail the mechanism. In exceptional cases, Directors and employees have direct access to the Chairman of the Audit Committee.
The Vigil Mechanism (Whistle Blower Policy) is available on the Companys website www.indosolar.co.in.
24. AUDITORS STATUTORY AUDITORS
M/s. Arun K. Gupta and Associates, Chartered Accountants (Firm Registration No.0006051N),
New Delhi (Firm Registration Number: 000605N) was appointed as Statutory Auditors of the Company (subject to ratification of the appointment by the members at every intervening Annual General Meeting) for a period of 5 years in the 12th Annual General Meeting to hold office from the conclusion of that meeting till the conclusion of the 17th Annual General Meeting of the Company.
The annual ratification of appointment of statutory auditors at every Annual General Meeting for their remaining terms as aforesaid, shall be done, if so required under the Companies Act 2013.
The Board has duly examined the auditors report for the Financial year ended 31st March 2018, which contain Observation, for which Management need to give Clarification/explanation on the observation.
Clarification/explanation on remarks in Independent Auditors Report
Management is unable to estimate the impact: Considering the delay in release of domestic content requirement and impassion of safeguard duty on imports ,delay in processing of claim in respect to the companys eligibility for certain capital incentive even after receipt of favorable decision of Supreme court , management believes that a sum of Rs.30,700.00 Lakhs, to be provided as impairment in respect of the carrying value of its property, plant and equipments including capital work in progress as at 31st March 2018.
In view of forthcoming safe guard duty and possible release of CPSU Policy for domestic content, possible sanction of Capital Subsidy and ongoing process of Loan Settlement with Other Banks and ARCIL, it is appropriate to prepare the accounts on a going concern basis.
Being EOU, Company is required to meet positive NFE as per foreign Trade policy on the basis of which companys imported certain Raw material and machineries without payment of custom Duty. As on 31 st march 2018 the Companys NFE is positive by Rs. 23,913.25 Lakhs without considering the amortization of import value of Line-C (Commercial Production yet to start). Incase company amortize the value of Line-C, NFE as on 31st March 2018 would be negative by Rs.5494.01 Lakhs. The Company believe that it will achieve Positive NFE within the stipulated time.
Managements estimation on the impact of audit qualification: (i) In view of the ongoing negotiations with ARCIL for restructuring of debts, the company has decided not to provide interest of Rs.1,242.72 lakhs and Rs.4,934.74 lakhs for the quarter and Year ended 31st March, 2018 respectively, (ii) Company decided not to provide claim of Rs.2,323.88 Lakhs of Corporation bank as additional interest/penal interest as on 31st March 2018, pending OTS (One Time Settlement) proposal with the bank.
Pursuant to the provisions of the Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s Chandrasekaran Associates a firm of Company Secretaries in Practice to undertake the secretarial audit of the company for the Financial Year 2017-18. The report of Secretarial Audit is annexed to this report as Annexure III.
The Secretarial Auditors Report contain some observations, which are self explanatory and same has been well explained by management in statutory Auditors observations.
Pursuant to the provision of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, the Board of Directors at their meeting held on 27th May, 2017 has appointed M/s Kabra & Associates Cost Accountants (Firm Registration Number: 000075) as the Cost Auditors to conduct audit of cost records relating to the products manufactured by your Company for the financial year 2017-18.
During the year under review, Mr. Lakhan Singh, General Manager of Integrated Management System of the Company, the internal auditors of the Company conducted periodic audits of the Company. The Audit Committee reviews the detailed Internal Audit reports submitted by the Internal Auditors and takes stock of the actions taken on the observations of and recommendations made by them.
Your Directors are confident that there are adequate internal control systems and procedures which are being followed and complied with.
25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORFITON, FOREIGN EXCHANGE EARNING AND OUTGO
Information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required to be furnished under the provisions of section 134(3)(m)of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 given as Annexure IV to this Report.
26. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, the Directors confirmed that:
a. in the preparation of the annual accounts for the year ended 31st March, 2018, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;
b. they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the year ended 31st March 2018;
c. they had 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;
d. they had prepared the annual accounts on a going concern basis;
e. they had laid down Internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and
f. they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
27. PARTICULARS OF EMPLOYEES & DISCLOSURES UNDER SECTION 197(12) OF ACT READ WITH RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014
The information required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 given as Annexure V forming integral part of the Annual Report.
28. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report for the year under review, in terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 given as Annexure VI forming integral part of the Annual Report.
29. CORPORATE GOVERNANCE REPORT
Your Company strives to ensure that best Corporate Governance Practices are identified, adopted and consistently followed.
The Report on the Corporate Governance forms an integral part of this report and is set out as Annexure VII to this Report. The Certificate from the practicing Company Secretary M/s Chandrasekaran Associates, Company Secretaries, certifying compliance with the conditions of the Corporate Governance as stipulated under Regulation 15(2) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 is annexed with the Report on Corporate Governance.
30. MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
No material changes have occurred and commitments made, affecting the financial position of the Company between the end of the financial year of the Company i.e. 31st March, 2018 and the date of this Report i.e. 10th August 2018.
31. DETAILS OF SIGNIFICANT AND MATERIAL ORDER
No significant and material order have been passed by any regulator or court or tribunal impacting the going concern status or future operations of the Company.
32. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company is committed to provide a protective environment at workplace for all its women employees. To ensure that every woman employee is treated with dignity and respect and as mandate under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013" the Company has in place a formal policy for prevention of sexual harassment of its women employees.
The Company has an Anti Sexual Harassment Policy in line with the requirement of The Sexual Harassment of Women
at Workplace (Prevention, Prohibition and Redressal) Act, 2013".
Further, the Company has constituted Internal Complaints Committee to redress Complaints received regarding sexual harassment during the period 2017-18. The following is a summary of sexual harassment complaints received and disposed off during the period:
|Number of Complaints received||Nil|
|Number of Complaints disposed off||Nil|
33. COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is in compliance with the applicable Secretarial Standards issued by Institute of Company Secretaries of India.
Your Directors wish to place on record their sincere appreciation of the efforts and dedicated services of all the employees which have contributed by staying with the Company in the tough period.
The Board of Directors places on record its appreciation for the support, assistance and co-operation received from Government, Regulators and the bankers to the Company, i.e. Union Bank of India, Bank of Baroda, Corporation Bank and Asset Reconstruction Company (India) Limited (ARCIL).The Board is thankful to the shareholders for their support to the Company.
The Board is also thankful to the employees of the Company for their co-operation and unstinted dedication to duty leading to cordial industrial relations during the year under review.
|On behalf of the Board of Directors|
|For INDOSOLAR LIMITED|
|H.R. GUPTA||GAUTAM SINGH KUTHARI|
|DIN: 00297722||DIN: 00945195|
|Place: Greater Noida|