Techno Electric & Engineering Company Ltd merged Directors Report

To,

The Members of

Techno Electric & Engineering Company Limited

Your Directors take pleasure in presenting the 9th Annual Report, along with the audited accounts of the Company, for the year ended March 31, 2014.

FINANCIAL RESULTS

Your Company’s operations during the financial year ended March 31, 2014 which comprises the EPC business and Power Generation business resulting in:

( Rs. In lakhs)

	Year ended March 31, 2014	Year ended March 31, 2013
Profit before finance cost and depreciation	10,443.79	11,218.17
Less : Finance cost	1,559.16	2,145.06
Depreciation	1,513.84	1,502.52
Profit before tax	7,370.79	7,570.59
Provision for taxation (Including deferred income tax, fringe benefit tax and security transaction tax)	376.22	1,510.10
Profit after taxation	6,994.57	6,060.49
Balance brought forward from previous year	31.77	75.10
	7,026.34	6,135.59
Appropriations
Transfer to general reserve	5,200.00	1,600.00
Transfer to Debenture Redemption Reserve	-	2,500.00
Interim dividend paid during the year	1,427.28	-
Proposed final dividend	285.46	1,712.74
Provision for tax on proposed dividend	48.51	291.08
Surplus carried to balance sheet	65.09	31.77
	7,026.34	6,135.59

DIVIDEND

Your Directors recommended a final dividend of Rs. 0.50 per equity share of nominal value of Rs. 2 each for the financial year ended March 31, 2014 in addition to the interim dividend of Rs. 2.50 paid for the year on February 20, 2014.

REVIEW OF OPERATIONS

During the year, the Company has registered a turnover of Rs. 59,412.00 lakhs and profit after tax of Rs. 6,994.57 lakhs from EPC Business. In spite of stiff competition and adverse economic and business conditions, the Company could register marginal increase in turnover and profit. During the year, the Company adopted a very cautious and conservative approach to the market conditions and was selective in bidding for the projects without compromising with the margin. Better cash management has also played an important role for this stable performance. The EPC Business was stagnant in the first half of the year under review, but there was remarkable improvement in the second half of the year in which the Company has succeeded in bagging many prestigious Orders. Energy Sale (Power) business has suffered during the year. The main reason for this is non-availability of Grid for evacuation of power generated by the wind mills. The policy paralysis and passive attitude of the Government towards wind energy sector has added to the poor performance. We are confident that the new Government will push forward the renewable energy sector in days to come and we expect positive growth in future.

ENERGY SALE (POWER)

The Company is engaged in power-generation through wind turbine generators (WTGs) at various locations in Tamil Nadu and Karnataka with a total aggregate-rated generating capacity of 45 MW. The Company sold 69.93 million units of energy (power) during 2013-14, earning a revenue of Rs. 2361.37 lakhs.

EPC BUSINESS

During the year 2013-14, the following projects were completed successfully:

1. Fuel oil unloading and storage system, station piping package for Barh Super Thermal Power project (3x660 MW) for NTPC Ltd.

2. EPC of 765 kV switchyard for 6x660 MW Sasan Ultra Mega Power Plant at Singrauli of Reliance Infrastructure Ltd.

3. Engineering, procurement of materials, proto making, fabrication, erection, alignment, orientation, inspection, testing etc of 360KA busbar system meeting Aluminium Pachiney’s specifications and norms for Mahan Smelter Project of Hindalco Industries Ltd in Madhya Pradesh in technical collaboration with CANMAC, Canada.

4. Turnkey contract for 765 kV Raigarh pooling station (Near Kotra), extension of 765 kV (Near Kotra) and extension of 400 kV Raigarh (existing) sub-station associated with establishing pooling stations at Raigarh (Near Kotra) and Raipur for IPP Generation Projects in Chhattisgarh for PGCIL.

5. Turnkey execution of 220/66/11 kV, 1x100 MVA substation at mandhala in Solan Dist. (H.P.) on Turnkey basis for Himachal Pradesh State Electricity Board Ltd, Simla.

6. Turnkey execution of 400 kV Extension Bays at Bina and Jabalpur (Pooling) sub-station under Transmission System for MB Power (M.P.) for PGCIL.

7. Supply, fabrication and erection of Busbar System at Hindalco Industries Ltd., Hirakud for BEROA-UNISEVEN Refractory Services Pvt. Ltd., Kolkata.

8. Construction of new 132 kV sub-station under Assam Power Sector Enhancement Investment Programme of Assam Electricity Grid Corporation Ltd. funded by ADB.

9. Turnkey execution of 765/400 kV Extension Bays at Indore Sub-Station and Pirana Sub-Station under Transmission System of IPP Generation Projects in MP & Gujarat for PGCIL.

10. Turnkey contract for sub-station Package P325 SS001 for construction of 765/400 kV Kurnool (New) substation under Transmission System Associated with Krishnapatnam UMPP from M/S PGCIL.

11. Turnkey contract for construction of 132/11/0.415 kV pooling sub-station with 2x50 MVA, 132/11 kV power transformers at Rajgarh Solar Power Project of NTPC Ltd in the state of Madhya Pradesh.

12. Contract for extension of 400 kV Jabalpur (Pooling) substation under Transmission System for MB Power (M.P.).

The following projects are on-going and are in advance stage of completion and are expected to be completed as per schedule:

1. Turnkey execution of 400/132 kV switchyard for Kameng Hydroelectric Project (Package-VI), Arunachal Pradesh for NEEPCO Ltd, Shillong.

2. Turnkey contract for Extension of 765 kV Bays at 765/400 kV Gwalior Sub-Station, Extension of 765 kV Bina SubStation, Extension of 765 kV Jabalpur pooling Sub-Station & Extension of 765/400 kV Indore Sub-Station associated with Transmission System for Phase - I generation project in Odisha Part-C for PGCIL.

3. Supply, erection, testing and commissioning Handling System Package for Prayagraj Thermal Power Project (3x660 MW) at Tehsil-Bara Dist. allahabad, Uttar Pradesh.

4. Fuel Oil Handling System for 1 x 500 MW Unit at Bokaro-a TPS, Jharkhand for BHEL.

5. Turnkey contract for Procurement and Construction of 132/33 kV sub-station at Dhanaha & Gangwara, Construction of 132 kV Bays One each at Bettia, Sasaram, Mohania, Dinara, Lakhisarai and Sheikpura and Construction of four 33 kV bays at Remote end 33/11 kV PSS for downlinking of 132/33 kV GSS at Dhanaha & Gangwara ICB No 5/Package-G-BSEB/aDB/2010 from BSEB. (aDB funded).

6. Turnkey contract for Supply & Erection of 400/220 kV GIS sub-station at Magarwada in of Daman & Diu in association with M/S Xian XD Switchgear Electric Co. Ltd. China from M/S PGCIL. (aDB funded).

7. Turnkey contract for Construction of 160 km 132 kV Double Circuit Mbarara-Nkenda Transmission and associated sub-station UETCL/WORKS/2011/00003 from Uganda Electricity Transmission Company Limited, Uganda in Joint Venture with M/S Kalpataru Power Transmission Limited.

8. Turnkey contract for construction of 400 kV S/S at Julwania from M/S MP Power Transmission Co. Ltd.

9. Turnkey contract for establishment of 400 kV & 220 kV Transformer Bay at existing 400 kV GSS akal (Jaisalmer).

10. Turnkey contract for Construction of 400/220/66 kV Switchyard at 2x660 MW Kudgi TPS in Bijapur District of Karnataka from NTPC.

11. Turnkey contract for supply, erection, testing, commissioning works of 400/220/132 kV Sub station at Jammalamadugu (Kondapuran) with two 400 kV Bay extension at Narnoor (Kurnool) from aPTRaNSCO.

12. Turnkey contract for supply, civil, erection, testing and commissioning of 400/220 kV S/Stn at Urvakonda in ananthpur District of andharapradesh from aPTRaNSCO.

13. Turnkey contract for Construction of 400 kV Switchyard at Vindhyachal Super Thermal Power Project, Stage-V (1x500MW) from NTPC.

During the year, the Company was successful in bagging of Fuel Oil many prestigious Orders, the major amongst them are:

1. Contract for Supply, Inland transportation, Insurance, Installation, testing, commissioning of Switchyard Package for Meja TPP (2x660 MW) of Meja Urga Nigam Pvt. Ltd.

2. Turnkey contract for sub-station Package for - i) Extension of 765 kV angul Substation, 765 kV Jharsuguda substation and 765 kV Dharamjaigarh sub-station under Transmission System associated with East Coast and NCC Power Projects in Srikakulam area, andhra Pradesh – Part-B (Under Project ID 159), ii) Construction of 400 kV Srikakulam (New) S/S and extension of 765 kV angul substation under Transmission System associated with East Coast and NCC Power Projects in Srikakulam area, andhra Pradesh – Part-C (under Project ID 160), iii) Extension of 400 kV Srikakulam Pooling station under consultancy to East Coast Energy Pvt. Ltd. (Under project ID 353), iv) Extension of 400/220 kV (aIS) Melakottaiyur sub-station under SRSS-XVIII (under Project ID278), v) Extension of Kota sub-station under RaPP 7&8, Part a (under Project ID 295) for PGCIL.

3. Turnkey contract for establishing of 400 kV & 220 kV transformer bays to commission 4th 400/220 kV auto transformer capacity 500 MVa at existing 400 kV GSS-akal (Jaisalmer) of Rajasthan Rajya Vidyut Prasaran Nigam Ltd.

4. Turnkey contract for supply, erection, testing and commissioning of 400/220 kV sub-station at asupaka and Extension of 400 kV & 220 kV Power supply to Indira Sagar Rudramkota Lift Irrigation Project at asupaka, Khammam District for Transmission Corporation of andhra Pradesh Ltd.

5. Turnkey contract for construction of (2x160+2x50) MVa, 220/132/33 kV Grid sub-station Sonenagar (new) with 2 nos. 132 kV bays extension at remote end with SaS under BRGF Phase-III of Bihar State Power Transmission Co. Ltd.

6. Turnkey contract for construction of (2x160+2x50) MVa, 220/132/33 kV Grid sub-station Samastipur (new) with 2 nos. 132 kV bays extension at remote end with SaS under BRGF Phase-III of Bihar State Power Transmission Co. Ltd.

7. Contract for sub-station Package for S3 for extension of 400 kV Sagardighi s/s and 400 kV Behrampur sub-station under Eastern Region Strengthening Scheme-X for PGCIL.

SUBSIDIARY

Simran Wind Project Limited (Simran), a subsidiary of the Company is a green power generator with a capacity of 162.35 MW spreading across Tamil Nadu and Karnataka. During 2013-14, it has generated 274.85 million units. International Finance Corporation, Washington continues with its 3.38% stake in Simran and the balance 96.62% stake is held by the Company.

Pursuant to general circular by Ministry of Corporate affairs, the Company is not required to annex the annual Reports of the subsidiary company, however, the same shall be made available to any member for inspection at the Registered Office / Corporate Office of the Company and of its Subsidiary, during working hours. Relevant financial information of the Subsidiary/s have been disclosed in this annual Report in compliance with the said circular.

FUTURE OUTLOOK

Even though India ranks 5th in the world in electricity generation and is placed at 6th when it comes to net electricity consumption, the per capita annual consumption of electricity in India is one of the lowest in the world at approximately 818.9 KWh when compared to the world average of 2600 KWh, which can majorly be attributed to the population growth and the inability of the sector to achieve its target capacity addition.

For a country considered to be a rising economic power, more than 300 million people still have no access to electricity. There is a worrying demand supply mismatch. The crippling hindrances for this are delays in target capacity addition, distribution losses, raw material shortages, excessive dependence on domestic equipment manufacturers and non-conducive Government policies. The stakes involved and the severity of these issues may be disastrous for the industry at large and all other stakeholders if ignored for long and may affect India’s economic growth prospects adversely.

In spite of the hurdles plaguing the Power sector certain developments have been inspiring confidence in the sector as Coal India Ltd has agreed on ensuring a minimum supply of 80% of contracted quantity of the coal to thermal power plants. The shale gas exploration in the Gangetic plain has also been encouraging which will enhance the prospects of domestic sourcing for gas based plants. Government is also aiming at enlarging public sectors involvement in mega hydro projects and multipurpose projects involving inter-state issues and those with rehabilitation and resettlement issues. Ministry of renewable energy is providing financial incentives to private players for setting up of small hydro projects. International civil nuclear co-operation agreement with major developed countries on supply of nuclear fuel can make significant contribution to capacity addition.

The power transmission and distribution sector is now receiving its due attention with investments from the Government in the form of higher share of allocated expenditure in the 12th plan. With the proposed initiatives like Restructured accelerated Power Development and Reforms Program, opportunities for transmission equipment players appear to be significantly improving. Power Grid Corporation is on the threshold of taking a giant stride forward in its quest to set up a 1,200 kV transmission test station through collaborative efforts with 35 leading Indian manufacturers under the public-private partnership model. additional transmission capacity is also required to evacuate power from surplus region to deficit region and to enable electricity trading.

Wind energy is the largest renewable energy source in India, is facing the Power evacuation problem due to non-availability of Grid to evacuate power which is a major bottle-neck in wind energy segment.

The country offers unlimited growth potential for solar photovoltaic (PV) industry as well. India is endowed with vast potential of solar energy and is quickly developing itself as a major manufacturing hub for solar power plants.

With proactive Government involvement in undertaking favorable policy amendments and increasing participation of private players the future of the Indian power sector looks slightly more assured. These developments though are not enough but can definitely help bridge the demand-supply gap, which is a daunting task going forward.

Techno has put itself in a much better position in the industry and intended to tap the opportunities in other segments in the power sector for a sustained future. The recent change of Government at Center has also given rise to new hopes for the Industry and for the Company.

BOARD MEETING

During the financial year 2013-14 the directors were met four times to review the operation of the company and discuss the financial results as well as the future business strategy of the company in the board meetings held on May 18, 2013; august 03, 2013; October 28, 2013 and February 08, 2014.

DIRECTORS

At present, the Board has Five Non-Executive (Independent) Directors, One Managing Director and One Non-Executive Director.

As per the requirement of the Companies act, 2013 all the independent directors on the board as on 1st April, 2014 shall be re-appointed for a tenure of 5 years.

In view of the said provision all the Non-Executive (Independent) Directors on the board as on 1st april, 2014, namely Mr. K Vasudevan, Mr. K. K. Rai, Mr. V. D. Mohile, Mr. K. M. Poddar and Mr. S. N. Roy shall be re-appointed for a tenure of 5 years and the same shall be confirmed in the ensuing annual General Meeting.

Mr. Ankit Saraiya, who was appointed as additional director by the board on 08th February, 2014 seeking confirmation at the ensuing annual General Meeting. He is a Non-Executive Director.

Mr. Ankit Saraiya aged about 28 years residing at Flat - D, Block – C, 2B, Hastings Park Road, Kolkata – 700027 is a Bachelor of Science (Corporate Finance & accounting) with Minor in Computer Information Systems from Bentley University in Waltham, Massachusetts, U.S.a with sound financial and commercial knowledge and experience of more than 4 years in the related field.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors confirm:

i) That in the preparation of the annual accounts, the applicable accounting Standards were followed, along with proper explanation relating to material departures;

ii) That the selected accounting policies are reasonable and prudent so as to give a true and fair view of the Company’s state of affairs and profit at the end of the financial year, and applied them consistently;

iii) That proper and sufficient care was taken for maintenance of adequate accounting records in accordance with the provisions of the Companies act, 1956, for safeguarding the Company’s assets and for preventing and detecting fraud and other irregularities;

iv) That the accounts for the period ended March 31, 2014 are on a going-concern basis.

STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

A Statement On Declaration By Independent Directors Under Sub-Section (6) Of Section 149 Of The Companies act, 2013 is attached with the report as a separate annexure.

COMPANY’S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

a Remuneration Committee of the Board was already in place comprising three independent directors which recommends the appointment and remuneration of Directors and the same shall be renamed as Nomination & Remuneration Committee which shall formulate the policy for appointment of Directors and Remuneration including criteria for determining qualification, positive attributes independence of a director and other matters as provided under sub-section (3) of section 178 of the Companies act, 2013 and necessary disclosure to this effect shall be made in the next Report of the Directors.

AUDITORS REPORT

The Directors believe that there is no qualification, reservation or adverse remarks or disclaimer made by the Statutory auditors.

The Company shall carry out the Secretarial audit in the Current Financial year in compliance with the Companies act, 2013 and the qualification, reservation, adverse remark or disclaimer, if any made by the Secretarial auditor and the explanation or comments by the Board thereon shall appear in the next Directors Report.

RISK MANAGEMENT

The Company manages its risks by instituting processes and controls and provides the details in the Management Discussion & analysis Report in the annual Report every year. The Board will formulate a Risk Management Policy as per the requirement of the Companies act, 2013.

CORPORATE SOCIAL RESPONSIBILITY

The Company is engaged in social activities and contributes for the cause of the society on various areas. However, a Corporate Social Responsibility Committee of the Board is being constituted for formulating and implementing Corporate Social Responsibility Policy as per the requirement of the Companies act, 2013 and necessary disclosure in this regard shall be made in the next Directors Report.

EVALUATION OF BOARD MEMBERS

The Board comprises Members having expertise in Technical, Banking and Finance. The formal annual evaluation by the Board of its own performance and of its committees and individual directors be done at the end of the year ending March 31, 2015.

STAKEHOLDERS RELATION

a committee of the Board was already in place to look after the grievances of Stakeholders. as per the requirement of the Companies act, 2013 a Stakeholders Relationship Committee is being constituted comprising three Non-executive Directors with majority of them Independent. Necessary disclosure in this regard shall be made in the next Directors Report.

LISTING OF SHARES

The equity shares of the Company continue to be listed with BSE Ltd., and the National Stock Exchange of India Ltd (NSE).

AUDITORS

The auditors, M/s. S. S. Kothari & Co., Chartered accountants, hold office till the conclusion of the ensuing annual General Meeting and have confirmed their eligibility and willingness for re-appointment. as per the provisions of the Companies act, 2013, the auditor can hold office till the conclusion of the 6th annual General Meeting from the conclusion of the ensuing annual General Meeting subject to ratification at every annual General Meeting.

COST AUDITORS

The Board of Directors has reappointed Mr. Saibal Sekhar Kundu, Cost accountant, of E7/7 Karunamoyee Housing Estate, Salt Lake City, Kolkata - 700 091 bearing Membership No. 9379, as the cost auditors of the Company under section 148 of the Companies act, 2013 for 2014-15.

The Cost audit Report for the year ended March 31, 2014 will be forwarded to the Central Government within the statutory time limit.

PARTICULARS OF EMPLOYEES

The relation between the employees and the management continued to be cordial and stable at all levels. Your Directors wish to place on record their appreciation for the devoted services of all the Company’s executives and staff.

During the year, no employee was in receipt of remuneration of or in excess of the amount prescribed under Section 217 (2a) of the Companies act, 1956.

CORPORATE GOVERNANCE

As stipulated under clause 49 of the listing agreement a report on corporate governance and a certificate from m/S S.S.Kothari & co., practicing chartered accountants, confirming compliance with the requirements of the corporate governance are attached to this report.

MANAGEMENT DISCUSSION AND ANALYSIS

A management discussion and analysis report is annexed and forms an integral part of the annual report.

ACKNOWLEDGEMENTS

Your directors wish to express their gratitude to the shareholders, various customers and their consultants, different government departments and the company’s bankers for their continued support to the company. The directors look forward to their support in future.

For and on behalf of the Board of Directors

P. P. GUPTA

Chairman

Place : Kolkata,

Date: May 24, 2014

ANNEXURES TO THE DIRECTORS’ REPORT

ANNEXURE I

Particulars pursuant to companies (disclosure of particulars in the report of the board of directors) rules, 1988

A. Conservation of energy

As the company’s activities do not involve, by and large, any significant level of energy consumption, no comments are necessary in respect of energy conservation and reduction of energy consumption. In any event, continuous efforts are made to conserve energy to the extent possible.

B. Technology absorption

As per form b given as hereafter

Form – B

Disclosure of particulars with respect to technology absorption forming part of the directors’ report for the year ended march 31, 2014

Technologies absorbed:

1. Specific areas in which R&D was carried out by the Company	NIL
2. Benefit derived as a result of the above R&D	N.a.
3. Future plan of action	None
4. Expenditure on R & D	N.a.
5. Technology absorption, adaptation	Constant efforts are Made by the Company To develop costeffective Newproduct/systems.

 

C. Foreign exchange earning and outgo
Foreign exchange earning	Nil
Foreign exchange outgo	Rs. 107.45 lakhs

For and on behalf of the board of directors

P. P. Gupta

Chairman

Place : kolkata,

Date: may 24, 2014

ANNEXURE II

Statement on declaration given by the independent director under sub-section (6) of section 149 of the companies act, 2013

The board comprises five independent directors who have submitted declaration in individual capacity as follows:

(a) he is an independent director and a person of integrity and possesses relevant expertise and experience;

(b) (i) he is or was not a promoter of the company or its holding, subsidiary or associate company;

(ii) he is not related to promoters or directors in the company, its holding, subsidiary or associate company;

(c) he has or had no pecuniary relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;

(d) none of his relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;

(e) he neither himself nor any of his relatives—

(i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the current financial year;

(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the current financial year of—

(a) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or

(b) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent or more of the gross turnover of such firm;

(iii) holds together with his relatives two per cent or more of the total voting power of the company; or

(iv) is a chief executive or director, by whatever name called, of any non-profit organisation that receives twenty-five per cent or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent. Or more of the total voting power of the company.