Tecpro Systems Ltd Directors Report

Dear Members,

Your Directors have immense pleasure in presenting the Twenty Fifth Annual Report together with the Audited Accounts for the financial year ended on 31 March, 2015.

1. FINANCIAL HIGHLIGHTS

The Financial Results for the year under report are summarized as under:

FINANCIAL RESULTS

	2014-15	2013-14
	(Rs. in Lac)	(Rs. in Lac)
Net Sales and other Income	27,397.88	86,298.57
Gross Operating Profit / (Loss)	(33,840.74)	(5,657.51)
Less: Interest & Bank Charges	72,251.68	48,917.07
Profit / (Loss) before Depreciation and amortization expenses and tax	(1,06,092.42)	(54,574.58)
Less: Depreciation and amortization expenses	1,907.55	2,024.70
profit / (Loss) Before Tax	(1,07,999.97)	(56,599.28)
Less: Tax expense
-Deferred Tax charge/ (credit)	-	193.11
profit / (Loss) After Tax	(1,07,999.97)	(56,792.39)

2. Business operations AND FINANCIAL performance

Due to prolonged recession and shortage of funds, the Company approached for corporate debt restructuring ("CDR"). However the CDR package could not be implemented due to the fact that the promoters could not arrange their contribution in liquid form within the stipulated time. However they were willing to bring their contribution in the form of assets which was not accepted by the bankers. After some time, some bankers sold their debt to M/s Edelweiss Assets Reconstruction Limited and thereafter in a Joint lenders meeting, it was agreed

that some lenders will bring fresh money by way of fund based and non fund based limits to support the Company. In the meantime the Company, due to erosion of entire networth the Company made a reference to the Board for Industrial and Financial Reconstruction ("the Board") in terms of the provisions of Sick Industrial Companies (Special Provisions) Act, 1985. The reference was duly accepted by the Board. In view of the aforementioned developments, it is expected that the Company would be on the path of revival in coming years.

2.1 standalone financial statement

In the financial year 2014-15, the Income from operations of the Company has come down from Rs. 862.98 crore in the financial year 2013-14 to Rs. 273.98 crore and the Company has incurred a loss of Rs. 1080 crore as against a loss of Rs. 568 crore in the financial year 2013-14. The financial position of your Company has weakened due to slow pace/stoppage of work at various sites due to paucity of funds. The Company is in discussion with its debtors so that funds can be collected and ploughed back in the business operations.

2.2 CONSOLIDATED FINANCIAL STATEMENT

In accordance with the Companies Act, 2013 and Accounting Standard (AS)-21 on Consolidated financial statement read with other applicable accounting standards, the audited Consolidated Financial statement is provided in the Annual Report.

3. DIVIDEND

As the Company has incurred losses, your Board of Directors do not recommend any dividend for the financial year under review.

4. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

At present, your Company has six subsidiaries, out of which four are incorporated in India namely, Tecpro Energy Limited, Ajmer Waste Processing Company Private Limited, Bikaner Waste Processing Company Private Limited and Eversun Energy Private Limited and two subsidiaries are incorporated outside India namely, Tecpro Systems (Singapore) Pte. Limited in Singapore and PT. Tecpro Systems Indonesia, in Indonesia. However out of them none is material subsidiary Company.

Apart from above, the Company does not have any joint venture and associate in accordance with the provisions of Companies Act, 2013.

Report on the performance and financial position of each of the subsidiaries is given in Annexure-I in the prescribed Form AOC-1 which forms a part of this report.

5. RISK MANAGEMENT POLICY

The Company has devised and implemented a mechanism for risk management and has developed a Risk Management Policy. The mechanism involves

creating a Risk Register, identifying internal and external risks and implementing risk mitigation steps. The updates regarding the same are placed before the meeting of the Board of Directors of the Company on quarterly basis.

6. DIRECTOR AND KEY MANAGERIAL PERSONNEL

In terms of the provisions of Section 149 of the Act, the members at their meeting held on 21st November 2014, appointed the following Independent Directors of the Company who gave declarations and confirmations that they meet the criteria of independence as prescribed under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges.:

• Mr. Anunay Kumar

• Mr. Brij Bhushan Kathuria

• Mr. Sakti Kumar Banerjee

• Mr. Satvinder Jeet Singh Sodhi

• Mr. Suresh Kumar Goenka

However, during the period under review, Mr. Amar Banarjee, Managing Director and Mr. Brij Bhushan Kathuria, Mr. Satvinder Jeet Singh Sodhi, Mr. Anunay Kumar, Mr. Suresh Kumar Goenka, Director resigned from their offices w.e.f 10 July, 2015, 13 January, 2015, 17 December, 2014, 29 June, 2015, 30 October, 2014 respectively. Apart from that State Bank of India has withdrawn nomination of Mr. Narayanan Krishnan w.e.f. 21 July, 2015. However during the period, Mr. Sanjeet Kumar was appointed as director w.e.f. 4 March, 2015 to fill the casual vacancy caused by the resignation of Mr. BrijBhushan Kathuria. Since the term of Mr. Brij Bhushan Kathuria was expiring on March 31, 2015, the appointment of Mr. Sanjeet Kumar as an Independent Director in accordance with Section 149 of the Act is proposed to be passed in the forthcoming Annual General Meeting.

In accordance with provisions of the Act and the Articles of Association of the Company, Mr. Ajay Kumar Bishnoi, Chairman and Managing Director of the company retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

The resolution for appointment and re-appointment of the aforesaid director has been incorporated in the notice of the forthcoming Annual General Meeting of the company.

7. ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, performance of the Directors individually as well as the evaluation of the working of its Committees.

The following process was adopted for Board Evaluation: Feedback was sought from each Director about their views on the performance of the Board covering various criteria such as degree of fulfilment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning, Board culture and dynamics, quality of relationship between the Board and the Management and efficacy of communication with external stakeholders. Feedback was also taken from every director on his assessment of the performance of each of the other Directors.

The Nomination and Remuneration Committee (NRC) then discussed the above feedback received from all the Directors.

Based on the inputs received, the Chairman of the NRC also made a presentation to the Independent Directors at their meeting, summarizing the inputs received from the Directors as regards Board performance as a whole, and of the Chairman.

Post the meeting of the Independent Directors, their collective feedback on the performance of the Board was discussed by the Chairman of the NRC with the Chairman of the Board. It was also presented to the Board and a plan for improvements was agreed upon.

Every statutorily mandated committee of the Board conducted a self-assessment of its performance and these assessments were presented to the Board for consideration. Areas on which the Committees of the Board were assessed included degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

Feedback was provided to the Directors, as appropriate. Significant highlights, learning and action points arising out of the evaluation were presented to the Board.

8. REMUNERATION POLICY FOR THE DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In terms of the provisions of Section 178(3) of the Act and Clause 49(IV)(B)(1) of the Listing Agreement, the NRC is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees.

In line with this requirement, the Board has adopted the Policy on Board Diversity and Director Attributes, which is reproduced in Annexure-II and Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company, which is reproduced in Annexure-III.

9. COMMITTEES OF THE BOARD

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority. The following substantive Committees constituted by the Board function according to their respective roles and defined scope:

(a) Audit Committee

(b) Nomination and remuneration committee

(c) Stakeholders Relationship committee

(d) Executive Committee (Recognized as Committee of Directors by the Board)

The details pertaining to composition of committees, terms of reference and number of meetings held are included in the Corporate Governance Report which forms a part of this report.

10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to Sub Section (3)(m) of Section 134 of Companies Act, 2013 read with rule 8(3) of Company (Accounts) Rules 2014, particulars of energy conservation, technology absorption, foreign exchange earnings and outgo are annexed as Annexure-IV and form part of the Directors Report.

11. particulars of employees

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, none of the employee of the Company is drawing remuneration in excess of the limits set out in the said Rules.

12. RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered into during the financial year were on arms length basis and were in the ordinary course of business. All Related Party Transactions were placed before the Audit Committee of the Board of Directors for their approval. The Audit Committee has granted omnibus approval for Related Party Transactions as per the provisions and restrictions contained in the Listing Agreement. The details of related party transactions are given in note no. 45 of the financial statements.

The Company has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions. The policy is available on the Companys website www.tecprosystems.com.

13. FIXED DEPOSITS

The Company has not invited/accepted any Fixed Deposits during the year, as such, no amount of principal or interest on fixed deposits was outstanding on the date of the Balance Sheet.

14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the schedules to the financial statements.

15. EXTRACT OF ANNUAL RETURN

As provided under section 92(3) of the Act, the extract of Annual Return is given in Annexure-V in the prescribed form MGT-9, which forms a part of this report.

16. AUDITORS

(i) STATUTORY AUDITOR

The members are aware that M/s Krishnaswami & Rajan, Chartered Accountants had resigned from the office of the Statutory Auditors w.e.f. 10th May 2015 and the Company in accordance with the provisions of Section 139(8) of the Act read with the applicable provisions of Companies (Audit and Auditors ) Rules, 2014, filled the casual vacancy thus caused by appointment of M/s. C.S. Hariharan & Co., Chartered Accountants in the Extra-ordinary General Meeting held on 5th August 2015 to hold office till the conclusion of the ensuing Annual General Meeting.

A requisite consent and certificate as prescribed under second and third proviso of Section 139(1) of the Companies Act, 2013 ("the Act") read with Section 141 of the Act together with the rules prescribed thereunder and furnished by the auditors have already been received by the Company.

The Auditors report and notes to the financial statements are self explanatory and do not call for any further comments except on the qualifications highlighted by the auditors under the basis for qualified opinion in their auditors report. The explanations to the auditors qualifications are given below:

1. The net worth of the Company was eroded and hence reference was made to the Board for Industrial and Financial Reconstruction. The net worth was eroded on account of huge interest cost which the company could not service. However, the Company is working on many of its sites and it is expected that the work would also start on many other sites and the Company is continuing its operations as a going concern.

2. Since the CDR package of the Company could not be implemented, the banks have declared the Company as a non performing asset and hence they are not supporting the company for release of bank statements.

3. Due to heavy losses most of the employees of the Company left the Company at a short notice or without notice and hence the Company did not have the right kind of resources to extract the information for the auditors.

4. Due to acute slowdown in the business activities, the factories are not working, the labour have not been paid, many key individuals left the company and therefore the information for fixed assets could not be provided.

5. Due to the reasons given in the above point the information on inventory could also not be provided.

6. The encashment of bank guarantees have been shown in trade receivables due to fact that the Company is under discussion with these clients and there is likelihood of revival of the contracts.

(ii) 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, your Company engaged the services of M/s Anjani Kumar & Associates, Company Secretaries, New Delhi to conduct the Secretarial Audit of the Company for the financial year ended March 31,2015.

The Secretarial Audit Report (in Form MR-3) is attached as Annexure-VI to this Report. The non compliances as reported are due to shortage of funds as well as staff.

17. CORPORATE GOVERNANCE REPORT

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges and relevant sections of the Act, a Management Discussion and Analysis Statement, Report on Corporate Governance and Auditors Certificate, are included in the Annual Report.

18. VIGIL MECHAMSM/ 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 Clause 49 of the Listing Agreement, 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 the Audit Committee.

Your Company hereby affirms that no Director/ employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

Brief details about the policy are provided in the Corporate Governance Report attached with this Report.

19. management analysis and discussion

Management analysis and discussion for the year under review as stipulated under Clause 49 of Listing agreement is presented in a separate section forming a part of annual report.

20. DIRECTORS RESpONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of Companies Act, 2013, with respect to the Directors Responsibility Statement, it is hereby confirmed:-

(i) that in the preparation of the annual accounts for the financial year ended 31 March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended 31 March, 2015 and of the profit or loss of the Company for that period;

(iii) that the directors 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 frauds and other irregularities;

(iv) that the directors had prepared the annual accounts for the financial year ended 31 March, 2013 on a going concern basis.

(v) that the directors have laid down internal financial control to be followed by the company and that such internal financial control are adequate and are operating effectively.

(vi) that the directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

21. HUMAN RESOURCES

During the period under review the dedicated employees of the Company supported the company despite of the tough circumstances. The regular interaction with the employees at all levels helps the Company in maintaining cordial and harmonious industrial relations.

ACKNOWLEDGEMENT

We thank our bankers for their continued support during the year. We also thank Government of India, State Governments and concerned Government Authorities/Departments for their co-operation. We appreciate and value the support of our customers, vendors, employees and investors and place on record our appreciation for the contribution made by them.

	By Order of the Board
	For Tecpro Systems Limited
	Sd/-
	Ajay Kumar Bishnoi
Place : Chennai	Chairman & Managing Director
Date : 27 October 2015	DIN: 00013917