Directors Report Dear Shareholders, 1.Your Directors have pleasure in presenting their 16th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March, 2015. 2. The State of Affairs of the Company In the financial year 2014-15 your Company continued its growth momentum on key parameters. During the year, your company recorded healthy order intake which helped your Company to close the year with a strong order book of Rs.340,627 lakhs as on 31st March, 2015. The standalone revenue stood at Rs.136,152 lakhs, an increase of 14%, compared to previous year's revenue of Rs.119,878 lakhs. The PAT stood at Rs.7,070 lakhs as against Rs. 6,831 lakhs in the previous year. The EPS was at Rs.56.94 for the year ended 31st March, 2015. During the year under review there is no change in the nature of business of the company. 3. Management Discussion & Analysis The Management's discussion and analysis is set out in this Annual Report. 4. Dividend The Directors are pleased to recommend 10% dividend (i.e Rs.1/- for Equity share of Rs.10/- each) for the approval of the members for the FY 2014-15. 5. Transfer to Reserves The board has not proposed to transfer any profits to the reserves for this fiscal 2015. 6. Changes in Share Capital (i) Bonus Issue The Company on June 26, 2014 had allotted bonus shares in the ratio of 10:1.2 and consequently the paid-up capital has increased by Rs.1,08,00,000 divided in 10,80,000 equity shares of Rs.10/- each. (ii) Conversion of CCDS The Company during the year had issued and allotted 562,500 equity shares of Rs.10/- each at a premium of Rs.190/- per share on July 16, 2014 to India Business Excellence Fund I pursuant to the exercise of conversion option vide their notice for conversion of 1125 Compulsorily Convertible Debentures of face value of Rs.100,000/ 7. Material Changes and Commitments Affecting Financial Position Between the End of the Financial Year and Date of Report Public Issue of the Company Your Company during the FY 2014-15 filed its Draft Red Herring Prospectus (DRHP) with Securities and Exchange Board of India (SEBI) for public issue of 4,269,000 equity shares of face value Rs.10 each, comprising of a fresh issue of 2,128,000 equity shares and an offer for sale of 2,141,000 equity shares. The Company has received final comments from SEBI on DRHP and shall plan for Issue opening at an opportune time. 8. Particulars of Loans, Guarantees or Investments There are no transactions of Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013. 9. Deposits The Company has neither accepted nor renewed any deposits from public as defined under the provisions of Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014. 10. Particulars of Contracts or Arrangements Made with Related Parties Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is appended as Annexure I to this report. 11. Explanation / Comments on Every Qualification / Reservation / Adverse Remarks / Disclaimer Made by Statutory Auditors / Secretarial Auditor There are no qualifications/reservations/adverse remarks made by statutory auditors Reply to the observations in the Secretarial Audit Report: • The Company has sent a reply dated 31st March, 2015 stating that Form INV 5 for the FY 2012-13 was filed on 27th March, 2015 and that the relevant investor wise details of unclaimed amounts have been uploaded on the Investor Education and Protection Fund Portal on the same day, further stating that the delay was due to oversight and was not intentional. • The Company has responded as appropriate to each such notices related to the labour employed and related matters stated therein and made necessary compliances wherever applicable. In respect of certain matters the company has been levied penalty and the same is paid by the company. 12. Meetings of the Board During the year under review the board of directors has met five times on May 13, 2014, June 26, 2014, July 16, 2014, September 11, 2014 and January 9, 2015 and the gap between two meetings did not exceed 120 days. 14. Alteration to Memorandum and articles of Association of the Company Your Company has altered the Main Objects of the Memorandum of Association pursuant to the resolution passed by the members through postal ballot on September 30, 2014. Your Company has altered the Articles of Association pursuant to a special resolution passed by the members on October 16, 2014 in order to align the Articles of Association with the Companies Act, 2013 and Listing Agreement. 15. Extract of Annual Return Extract of Annual Return of the Company pursuant to Section 134(3)(a) of the Companies Act, 2013 in Form MGT 9 is annexed herewith as Annexure III to this Report. 16. Corporate Governance Your Company is committed to maintain the highest standards of Corporate Governance and is voluntarily complying various provisions of clause 49 of the listing agreement. 17. Significant and Material Orders There are no significant material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. 18. Sexual Harassment There were no cases reported during the year under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 19. The Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure IV to this Report. 20. Risk Management Policy During the year, your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company's enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. There are no material risks which threaten the very existence of the company. 21. Vigil Mechanism A Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at <http://www.powermechprojects.in/investors.html> 22. Corporate Social Responsibility The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company's website at the link: <http://www>. powermechprojects.in/investors.html The Annual Report on CSR activities is annexed herewith marked as Annexure V 23. Subsidiaries, Associates & Joint Ventures As on 31st March, 2015, company has two subsidiaries, i.e Hydro Magus Private Limited(HMPL) and Power Mech Industri Private Limited(PMIPL). • Hydro Magus Private Limited (HMPL): Your Company holds 75% equity in HMPL. HMPL is providing O&M and AMC services to hydro power plants. HMPL has some inherent advantages being a subsidiary of Power Mech Projects Limited (PMPL) in getting projects as well as in completion with the support of PMPL. • Power Mech Industri Private Limited (PMIPL): PMIPL which is 100% subsidiary of PMPL is yet to start its commercial operations. The proposed factory for manufacture, fabricate, re-fabricate, overhauling of spares, machinery parts relating to various power generation plants is coming up at the companies facility at Noida. PMIPL is expected to start its commercial operations in this financial year FY 2015-16. • Power Mech CPNED Services (Hongkong) Holding Co., Limited: In order to provide comprehensive O&M solutions, your company has entered into a joint venture agreement dated December 1, 2014, with Chengdu Pengrun New Energy Development Company Limited ('CPNED'), a company registered under PRC laws for manufacturing and distribution of equipment and spare parts, including boilers, turbines and generators, for O&M projects in India. Your company has received approval from Reserve Bank of India (RBI) to remit funds for acquisition of 5000 Ordinary Shares (50% stake) in M/s Power Mech - CPNED Services (Hongkong) Holding Co., Limited. Your Company is in the process of making the remittance and acquiring the stake in the Company • MAS Power Mech Arabia: In order to have a strong presence in Saudi Arabia, the company entered into a MOU with local partners in Kingdom of Saudi Arabia (KSA) for the purpose of incorporating a 51% subsidiary in the name & style 'Mas Power Mech Arabia'. Your company has made an application to RBI seeking approval for remitting funds towards initial subscription of shares. During the year, the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013 financial statements of the subsidiaries were consolidated. Further, a statement containing the salient features of the financial statement of our subsidiaries in the prescribed Form AOC-1 is appended as Annexure VI to the Board's report. The statement also provides the details of performance, financial positions of each of the subsidiaries. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on our website www.powermechprojects.in . There are no companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the financial year 2014-2015. 24. Internal Financial Control The Board has adopted policies and procedures for ensuring orderly and efficient conduct of its business, including adherence to the Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial disclosures. 25. Auditors Statutory Auditors M/s. Brahmayya & Co, Chartered Accountants who were appointed as Statutory Auditors of the Company for a period of 5 years at the 15th AGM and whose appointment is subject to the ratification of members at every AGM, has confirmed their eligibility in terms of provisions of Section 141 of the Companies Act, 2013. Pursuant to the recommendation of the Audit Committee, your board recommends to ratify the appointment of M/s. Brahmayya & Co, Chartered Accountants as statutory auditors of the company for the financial year 2015-2016. Secretarial Auditors Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules thereunder, M/s. P.S. Rao & Associates, Practicing Company Secretaries was appointed to conduct the Secretarial Audit of the Company for the FY 2014-15. The Secretarial Audit Report for FY 2014-15 forms part of the Annual report as Annexure VII to the Board's report. Internal Auditors Your board based on the recommendation of the Audit Committee have re-appointed M/s. Ramesh & Co., Chartered Accountants, Hyderabad, as Internal Auditors of the Company. 26. Particulars of Employees Pursuant to the Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement of particulars of employees is annexed as Annexure VIII 27. Directors' Responsibility Statement Pursuant to Section 134 (5) of the Companies Act, 2013, your Directors confirm that to the best of their knowledge and belief and according to the information and explanation obtained by them, a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the directors 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 that period; c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) the directors had prepared the annual accounts on a going concern basis; and e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Acknowledgement Your Directors acknowledge the tremendous services rendered by the employees of the company at all the levels toward its overall success. Your Directors also express their grateful appreciation for the support and co-operation received from Banks, Government authorities, Customers, Vendors and members. The Board also acknowledges with thanks the contribution of contractors and consultants in the implementation of various projects of the company and also wishes to place on record their appreciation for the valuable and constructive suggestions received from the auditors. For and on behalf of the Board of Directors S. Kishore Babu Chairman & Managing Director DIN: 00971313 Place : Hyderabad Date : July 7, 2015 |