Directors' Report Dear Members, Your Directors are pleased to present the 23 rd Annual Report together with the audited financial statement of the Company for the financial year ended March 31,2015. REVIEW OF FINANCIAL PERFORMANCE AND THE STATE OF COMPANY'SAFFAIRS Your Company has continued to deliver a strong financial performance in the financial year 2014-15 recording the highest ever made turnover and operating profit in the history of Company. The key factors of the financial performance of the Company, during the year under review, are as under • Revenue from operations grew by 18% to Rs. 92,393.53 Lacs in 2014-15 from Rs. 78,438.54 Lacs in the previous year as a result of continued trust of power utilities on smart metering solutions and smart power infrastructures to improve their financial health, mainly through stoppage of power transmission and distribution losses. • Operating profit (EBITDA) mounted to Rs. 13,515.45 Lacs in FY 2014-15 from Rs. 10,749.78 Lacs in previous year, as results of the increased sales at reasonable margins, optimum procurement & utilization of raw materials with lean manufacturing techniques and effective execution of cost lowering measures/techniques such as Kaizen, Lean Manufacturing and more, across all levels & functions in Company. • In accordance with the provisions of Schedule II of the Companies Act, 2013, the Company has revised the estimated useful lives of fixed assets with effect from April 01,2014. Accordingly, the net-book value of the fixed assets as on April 01, 2014, is depreciated on a prospective basis over the remaining useful life, wherever applicable. This change in accounting estimate has resulted in increase in depreciation and amortization expenses for the year ended March 31, 2015 by Rs. 93.17 Lacs with a corresponding decrease in the net book value of the fixed assets and reserves and surplus of the Company. In addition, as per the provision of Schedule II read with notification dated August 29, 2014 issued by the Ministry of Corporate Affairs, the Company has opted to charge off to statement of profit and loss the carrying amount of certain fixed assets, amounting to Rs. 84.46 Lacs, where remaining useful life was "Nil" as on April 01,2014. Finance cost decreased to Rs. 3,323.93 Lacs from Rs. 3,563.22 Lacs in the previous year. This decrease was mainly attributable to low cost borrowings and effective utilization of available funds. Profit before exceptional and extraordinary items increased by 40% to Rs. 8,582.16 Lacs from Rs. 6,129.72 Lacs in previousyear. Exceptional items of Rs. 1,743.58 Lacs for the year ended March 31,2015 pertains to provision for diminution in value of investment in Genus SA BraziL During the year under review, the Board has decided to write-off the investment in the said JV after the due/necessary compliances and approvals. The Board opinioned that the financial scenario and sales were worsened in the Joint Venture "Genus SA, Brazil" and thus the Board had to take the tough decision of writing off the investments in the Joint Venture. Though this has adversely impacted the bottom line of the Company but in longer perspective it will help the Company. Extraordinary items amounting to Rs. 190.37 Lacs (net of tax Rs. 50.49 Lacs) relates to relief received from Indian Oil Corporation Limited (I0CL) through RIICO Limited against damages claimed by the Company towards lOCL's fire accident in the year 2009. Net profit reduced by 12% to Rs. 5,312.34 Lacs from Rs. 6,046.79 Lacs in the previous year mainly due to provision for diminution in value of investment in Genus SA Brazil and non availability of MAT credit in 2014-15 as available in previousyear. • Earnings per share (Basic) (after extraordinary items) for the year ended March 31,2015 stood at Rs. 2.07. • Net worth of the Company increased to Rs. 48,431.25 Lacs from Rs. 43,112.75 Lacs as at March 31,2014. • The Company has written-off liquidated damages and bad debts of Rs. 3,199.77 Lacs, which mainly represented liquidated damages and deductions by indenting agencies as perthe terms of the contracts of supplies. For narrowing our focus on core areas of greatest potentials, the Company has entered into an agreement with Genus Innovation Limited on February 17, 2015, for disposal/transfer of its power backup solution business with effect from April 1,2015. The Company has started commercial production at its new manufacturing unit at SP-1-2317, Ramchandrapura, RIICO Industrial Area, Sitapura Extension, Jaipur with effect from February 11, 2015. The commencement of manufacturing operations at the new unit, aims to expand and modernize the manufacturing process including strengthening the process of backward integration. This would also ensure the higher level of efficiency and better control over operations. This Ramchandrapura unit is an integrated manufacturing unit, spread over 15000 sq. mtrs., vastly focusing on exports to ensure future growth in overseas markets. The unit has a facility of manufacturing of Electronic Communication Measurement System/Electronic Energy Meter, Meter Reading Instrument, Modem, Printed Circuit Board Assemblies, Meter Box, Diaphragm Gas Meter, etc. OPERATIONS AND BUSINESS PERFORMANCE Kindly refer to 'Management Discussion & Analysis' and 'Corporate Governance Report', which form part of this Report. DIVIDEND Considering the excellent financial performance of your Company and with a view to rewarding our shareholders by way of higher cash dividend, your Directors have recommended a dividend of Re.0.20 (i.e. 20%) per equity share on equity shares of the face value of Re.1 /- each (tax free in the hands of the shareholders) for the financial year ended March 31, 2015 (Last Year: 10% i.e. Re.0.10 per equity share of face value of Re.1/- each). The proposed dividend of 20%, if approved by the members at the forthcoming Annual General Meeting, will result in the outflow of Rs. 513.32 Lacs in addition to Rs. 104.50 Lacs by way dividend distribution tax. SHARE CAPITAL The paid up equity share capital as on March 31,2015 was Rs. 2,566.61 Lacs consisting of 25,66,60,921 equity shares of Re 1/- each. During the year under review, the Company issued 34,981 equity shares of Re 1/- per equity share upon exercise of stock options under the Employees' Stock Option Scheme-2012 (ESOS-2012) of the Company. The Company has neither issued shares with differential voting rights nor sweat equity shares. TRANSFER TO RESERVES The Company has not proposed to transfer any amount to the general reserve out of the amount available for appropriation. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are given in the notes to the financial statements. FIXED DEPOSITS During the year under review, your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. EMPLOYEES' STOCK OPTION SCHEME The Nomination and Remuneration Committee ('the Committee1) of the Board of Directors of the Company, inter alia, implements, supervises and administers the employee stock option schemes of the Company in accordance with the applicable SEBI Guidelines. During the year under review, the Committee has approved in its meeting held on November 04, 2014, the grant of 4,42,700 stock options to the eligible employees of the Company under the Employees' Stock Option Scheme-2012 (ESOS-2012) of the Company at an exercise price of Rs.27.10/- per share. The said exercise prices was the latest available closing price, prior to the date of the meeting of the Committee, in which options were granted, on the stock exchange having higher trading volume. The options would vest over a maximum period of 6 years or such other period as may be decided by the Committee from the date of grant based on specified criteria. Upon vesting, employees are eligible to apply and secure allotment of Company's shares at a price determined on the date of grant of options. The Options can be exercised during a period of three years from the date of vesting. The applicable disclosures as stipulated under the SEBI Guidelines as on March 31,2015 (cumulative position) with regard to the ESOS-2012 are provided in 'Annexure A' to this Report. The issue of equity shares pursuant to exercise of options does not affect the Statement of Profit and Loss of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes as applicable. The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the members. The certificate would be placed at the forthcoming Annual General Meeting for inspection by members. Voting rights on the shares issued to employees under the ESOS are either exercised by them directly or through their appointed proxy. LISTING OF EQUITY SHARES OF GENUS PAPER & BOARDS LIMITED (A RESULTING COMPANY) ISSUED UNDER THE SCHEME OFARRANGEMENT During the year under review, 25,66,25,940 equity shares of Genus Paper & Boards Limited (a resulting company upon demerger under the Scheme of Arrangement among Genus Paper Products Limited, Genus Power Infrastructures Limited and Genus Paper & Boards Limited) have been listed and admitted to dealing on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE) with effect from February 16,2015. We hope that listing of the above shares would unlock the potential value of the Company and result in enhancement of shareholders' value. MATERIAL CHANGES AND COMMITMENTS, AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OFTHIS REPORT No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES During the financial year 2014-15, no company has become or ceased to be a joint venture or subsidiary of the Company. During the year under review, the following companies have ceased to be Company's associate companies: (a) Virtuous infra Limited (b) Virtuous Urja Limited As the Company does not have a subsidiary as on March 31, 2015, it has not opted for the consolidation of financial statement in respect of associate companies or joint ventures for the financial year commencing from the 1 st day of April, 2014 and ending on the March 31, 2015 pursuant to the Companies (Accounts) Amendment Rules, 2014 issued vide notification dated October 14,2014. The Policy for determining material subsidiaries as approved may be accessed on the Company's website at the link - "http://genus.in/pdf /Material%20Subsidiaries%20Policy_1.pdf". CONTRACTS ANDARRANGEMENTS WITH RELATED PARTIES All contracts / arrangements / transactions entered into by the Company during the financial year under review with related parties were in the ordinary course of business and on an arm's length basis. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons, which may have potential conflict with interest of the Company at large. Since all related party transactions entered into by the Company were in the ordinary course of business and on an arm's length basis, form AOC-2 is not applicable to the Company. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board can be accessed on the Company's website at the link - "http://genus.in/pdf/Related %20Party%20Transaction%20Policy_0.pdf". For further details, please refer to Note 40 to the financial statements, which set out related party disclosures. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy), which indicates the activities to be undertaken by the Company in line with the activities specified in Schedule VII of the Companies Act, 2013. The Board has approved the CSR Policy. The CSR Policy is uploaded on the Company's website and the link is "http://genus.in/pdf/CSR%20Policy_Genus.pdf''. During the year, the Company has spent Rs. 94.21 Lacs (which is more than 2% of the average net profits of last three financial years, adjusted for merger and demerger under the scheme of arrangement duly approved by Hon'ble High Court on 29.10.2013, effective from the Appointed Date of April 01,2011) on CSR activities. The Annual Report on CSR activities forms part of this Report as 'Annexure B1. RISK MANAGEMENT AND INTERNAL CONTROL SYSTEMS Pursuant to section 134(3)(n) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has formed a Risk Management Committee. The Committee has reviewed and approved a 'Risk Management Policy1, which lays down procedures about the risk assessment and risk minimization. The details of the Committee and Risk Management Policy are set out in the 'Management Discussion & Analysis' and the 'Corporate Governance Report' forming part of this report. INSURANCE In 2014-15, the Company's assets and projects were adequately insured against various risks such as fire, earthquake, storm, etc. Further, the Company has taken the following insurance policies to protect the employees' interest against inescapable incidences and to maintain financial stability in the Company when something unanticipated happens: • Consequential Loss (Fire) Policy' to insure the profit affected during the interruption/cessation of the business operations due to exigency. • Group Gratuity Insurance Scheme, under which a sum equal to gratuity payable in respect of the entire service (actual and future) is paid in the event of premature/ unfortunate death of employee. • Group Mediclaim Policy for its permanent employees covering their spouse and dependent children. • Personal Accident Policy (Group)1 for insuring its employees and giving benefits like disability cover, permanent disability cover and death cover due to accident. CREDIT RATING During year under review, Indian Ratings & Research Private Limited (A Fitch Group Company) has affirmed and upgraded the Company ratings with a Stable Outlook, as follows: • National - Long-term issuer rating: IND A; Outlook - Stable • National- Fund-based working capital facility: IND A/ IND A1 • National-Non-fund-based working capital facility: IND A/IND A1 • CommercialPaper:INDA1 MANAGEMENT DISCUSSION ANDANALYSIS REPORT As stipulated under Clause 49 of the Listing Agreement, a detailed report on 'Management Discussion and Analysis' is annexed herewith as 'Annexure C'. CODE OF CONDUCT All board members and senior management personnel have affirmed compliance with the provisions of Code of Conduct of the Company on annual basis, pursuant to revised Clause 49(II)(E) of Listing Agreement. The Code of Conduct is also placed on Company's website 'www.genus.in'. CORPORATE GOVERNANCE Your Company is fully committed to achieve and maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI or other applicable laws. The Corporate Governance Report, which forms part of this Report, is set out as 'Annexure D', together with the Certificate from the Auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Clause 49 of the Listing Agreement. WHISTLE BLOWER AND VIGILANCE MECHANISM Your Company has formulated and implemented a 'Whistleblower and Vigilance Policy' with a view to provide a mechanism for directors and employees of the Company to approach the Vigilance Officer / Chairperson of the Audit Committee of the Company. Under this mechanism, Whistleblower can report the concerns of unethical behaviour, actual or suspected, fraud or violation of the Company's code of conduct or ethics policy. Any actual or potential fraud or violation of the Company's Codes/Policies, howsoever insignificant or perceived as such, remains a matter of serious concern for the Company. The Company takes appropriate action against any Officer whose actions are found to violate the Code or any other policy of the Company, after giving him a reasonable opportunity of being heard. The Whistleblower and Vigilance Policy can be accessed on the Company's website at the link - "http://genus.in/pdf/Whistle% 20Blower%20Policy%20and%20Vigil%20Mechanism_0.pdf". PREVENTION OF INSIDERTRADING Pursuant to the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and to prevent Insiders from procuring, communicating, providing or allowing access to unpublished price sensitive information unless required for discharge of duties, the Company has formulated and adopted the code of conduct ("the Code") for regulating, monitoring and reporting of trading by insiders, with effect from May 15,2015. The Company has received an affirmation for compliance with the Code, from all the designated persons as defined in the Code. EXTRACT OF ANNUAL RETURN As provided under Section 92(3) of the Companies Act, 2013, the extract of annual return is given in 'Annexure E' in the prescribed Form MGT-9, which forms part of this report. DIRECTORS In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ishwar Chand Agarwal and Mr. Kailash Chandra Agarwal, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and they being eligible, have offered themselves for re-appointment. During the year under review, Mr. Bhairon Singh Solanki, Mr. Indraj Mai Bhutoria, Mr. Rameshwar Pareek, Mr. Dharam Chand Agarwal, Mr. Udit Agarwal and Mr. Naveen Gupta, were appointed as Independent Directors by the shareholders for a term of five (5) years, pursuant to the provisions of Section 149 of the Companies Act, 2013. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed u/s 149(6) of the Companies Act, 2013. Mr. Satya Narayan Vijayvergiya was appointed as an Additional Director with effect from November 14,2014 to hold the office as such till the date of ensuing Annual General Meeting. The Board has also appointed him as Executive Director of the Company with effect from the same date for a period of one year. He being eligible is seeking appointment as Director and Executive Director of the Company at the ensuing Annual General Meeting. Smt. Sharmila Agarwal was appointed as an Additional Director of the Company at the Board meeting held on March 30, 2015 to hold the office as such till the date of ensuing Annual General Meeting. She being eligible is seeking appointment as Director of the Company at the ensuing Annual General Meeting. She will be a Non-independent and Non-Executive Director on the Board of the Company. The Company has received a notice under Section 160 of the Companies Act, 2013 along with the requisite deposit proposing the appointment of Mr. Satya Narayan Vijayvergiya and Smt. Sharmila AgarwaL BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance and that of its Committees and individual Directors. The Board evaluated the performance of the Board after taking inputs and recommendations from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information, functioning, governance, level of engagement, contribution of time & efforts, independence of judgment etc. The performance of the Committees was evaluated by the Board after taking inputs and recommendations from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, functioning, governance, level of engagement, contribution of time & efforts, independence of judgment etc. The Nomination and Remuneration Committee also reviewed the performance of the individual directors on the basis of the criteria such as the performance of specific duties, obligations and governance, level of engagement, independence of judgment and contribution of the individual director to the Board and committee meetings. The performance of the Independent Directors and Non-independent Directors was evaluated separately. In a separate meeting of independent Directors, performance of non independent directors, performance of the board as a whole and performance of the Chairman were evaluated, taking into account the views of executive directors and non-executive directors. The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are uploaded on the website of the Company at the link - "http://genus.in/pdf/Familarisation% 20Programme.pdf". The following policies of the Company are attached herewith as 'Annexure F' and 'Annexure G': (a) Policy for selection of Directors and determining Directors independence; and (b) Remuneration Policy for Directors, Key Managerial Personnel and other employees. KEY MANAGERIAL PERSONNEL Mr. Rajendra Kumar Agarwal, MD & CEO, Mr. Rakesh Kumar Agarwal, CFO and Mr. Ankit Jhanjhari, Company Secretary of the Company are the Key Managerial Personnel as per the provisions of the Companies Act, 2013. MEETINGS OFTHE BOARD During the year under review, eight meetings of the Board of Directors were held. For further details, please refer report on Corporate Governance, which forms part of this Report. COMMITTEES OFTHE BOARD The Board has constituted various committees to manage the work of the Board in effective manner, especially to deal with urgent or special issues/matters and in compliance with the requirements of the relevant provisions of applicable laws and statutes. At present, the Board has eight committees, as follows: (a) Audit Committee (b) Corporate Social Responsibility Committee (c) Finance Committee (d) Nomination and Remuneration Committee (e) Restructuring Committee (f) Risk Management Committee (g) Sales Committee (h) Stakeholders' Relationship Committee The details with respect to the compositions, powers, roles, terms of reference, etc. of these committees are given in the 'Corporate Governance Report' of the Company, which forms part of this Report DIRECTORS' RESPONSIBILITY STATEMENT In terms of Section 134(5) of the Companies Act, 2013 (the "Act"), your Directors, confirm that: (a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; (b) 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, 2015 and of the profit of the Company for the year ended on that date; (c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) the Directors have prepared the annual accounts on a 'going concern' basis; (e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and (f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. AUDITORS ANDAUDITORS' REPORT (a) Statutory Auditors M/s. S.R.Batliboi & Associates LLP, Chartered Accountants and M/s. D. Khanna & Associates, Chartered Accountants were appointed as Statutory Auditors of the Company at the last Annual General Meeting held on September 29,2014 for a term of five consecutive years. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors is required to be ratified by Members at every Annual General Meeting. Accordingly the appointment of M/s. S.R.Batliboi & Associates LLP, Chartered Accountants and M/s. D. Khanna & Associates, Chartered Accountants as Statutory Auditors of the Company is placed for ratification by the Members of the Company. The Company has received a letter from them to the effect that if their appointment is ratified, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. The Auditors' Report does not contain any qualification, reservation or adverse remark. (b) Cost Auditors The Board of Directors had appointed M/s. K. G. Goyal & Associates, Cost Accountants, as the Cost Auditors for conducting cost audit of cost records of the Company for the financialyear 2014-2015. (c) Secretarial Auditor and Secretarial Audit Report Pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Board has appointed M/s. C. M. Bindal & Company, Company Secretaries & Corporate Consultant, to conduct the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith as 'Annexure H'. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Pursuant to Section 134(3)(m) of the Companies Act, 2013, read with Rule (8X3) of the Companies (Accounts) Rules, 2014, disclosures in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are provided in 'Annexure I' to this Report. PARTICULARS OF EMPLOYEES AND OTHER RELATED DISCLOSURES The information as required pursuant to Section 197 of the Companies Act, 2013 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be furnished upon request. As per the provisions of the first proviso to Section 136(1) of the Companies Act 2013, the Annual Report excluding the information on employees' particulars is being sent to the Members and others entitled thereto. The said employees' particulars are available for inspection by the Members at the Registered Office of the company during business hours on working days of the Company up to the date of ensuing Annual General Meeting. OTHER DISCLOSURES (a) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. (b) During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Genus, through a permanent committee (which includes a woman member also) and its defined policy and guideline, constantly monitors and controls the behavior of all employees to combat against sexual harassment and violence with female employees at work places. Genus is further intended to be proactive by developing a favorable atmosphere on the campus, where female employees get due respect and equality. However, no such complaint was received during the year. ACKNOWLEDGEMENTS Your Directors would like to express their sincere appreciation for the support and assistance received from the financial institutions, banks, government authorities, customers, vendors, business associates and members during the year under review. Your Directors would also take this opportunity to place on record their deep sense of appreciation for the committed services by the Company's employees. For and on behalf of the Board of Directors Ishwar Chand Agarwal Chairman Jaipur, August 12, 2015 |