DIRECTORS' REPORT TO THE MEMBERS, Your Directors take pleasure in presenting the 20th Annual Report on the business and operations of your Company along with the standalone and consolidated summary financial statements for the year ended on 31st March, 2015. DIVIDEND Your Directors recommend payment of dividend @ 5% on the paid up share capital of the Company, i.e. Rs. 0.50/- per equity share of Rs. 10/- each. RESERVES The Company did not transfer any amount to reserves during the year. STATE OF COMPANY'S AFFAIR The Company is primarily engaged in power generation, infrastructure development, such as construction of bridges, hydro projects including operation and maintenance thereof, supply of materials etc. Financial position of the Company is given in the previous paragraphs. A detailed information on the operation of different business segments of the Company, future expectations and business environment is provided in the Management Discussion and Analysis Report which is made an integral part of this Report and marked as Annexure "A". CORPORATE GOVERNANCE Pursuant to Clause 49 of the Listing agreement, Management Discussion and Analysis Report, the Report on Corporate Governance, Declaration of Whole-Time Director on Code of Conduct, CEO / CFO Certification and Auditors Certificate on compliance of conditions of Corporate Governance form an integral part of this Report and are annexed to this Report as Annexure "A", "B", "C", "D" and "E" respectively. SUBSIDIARY AND ASSOCIATE COMPANIES The Company is developing several hydro power projects in the States of Arunachal Pradesh, Uttarakhand and Kerala through its various subsidiaries. The Company has total 18 subsidiaries as on 31st March, 2015 including 5 wholly owned subsidiaries and 13 subsidiaries held through Arunachal Hydro Power Limited, a wholly owned subsidiary of the Company. Wholly-owned subsidiaries : i) Ayyappa Hydro Power Limited One of the two material non- listed subsidiary, this Company is executing a 15 MW Karikkayam Hydel Power Project, in the State of Kerala. The Project is scheduled to be completed in two phases. Entire generation from this unit is being sold to the Kerala State Electricity Board (KSEB) under a Long term Power Purchase Agreement (PPA), which was signed on 14.07.2014. The first phase of the project has become operational and the second phase is likely to be operational in the current financial year. Two of the Independent Directors of the Company are on the Board of Directors of this Subsidiary, namely Mr. Tarun Chaturvedi (DIN: 02309045) and Mr. Vi oy Kumar (DIN: 02970626). ii) EDCL Power Projects Limited Another material non- listed subsidiary, this Company is operating the 7 MW Ullunkal Hydro Electric Project. Mr. Tarun Chaturvedi (DIN: 02309045) an Independent Director of the Company is on the Board of Directors of this subsidiary. iii) Eastern Ramganga Valley Hydel Projects Co. Private Limited The Company is executing 6.5 MW Burthing Small Hydro Electric Project and 5 MW Phuliabagar Small Hydro Electric Project, in the State of Uttarakhand. DPR for both the projects have been approved. iv) Sarju Valley Hydel Projects Co. Private Limited The Company is executing 5.5 MW Balighat Small Hydro Electric Project in the State of Uttarakhand. DPR for the project has been approved. v) Arunachal Hydro Power Limited The Company is executing 12 hydro electric projects in the State of Arunachal Pradesh through its following subsidiaries having aggregate capacity of 555 MW (approx.), which may vary on finalization of Detailed Project Report (DPR DPR is at various stages of preparation / approval. The total expenses for these projects in the State of Arunachal Pradesh as on 31.03.2015 is Rs. 2,030,928,570/- Besides these, Arunachal Hydro Power Limited is also having one more wholly owned subsidiary viz. EDCL - Arunachal Hydro Projects Private Limited, which is yet to take up any project. There has been no material change in the nature of the business of the subsidiaries. The Company has also formulated a Policy for Determining 'Material' Subsidiaries in line with the requirement of Listing Agreement. The said Policy may be accessed at <http://www.edclgroup.com/codes_policies/policy_determining_> subsidiary.pdf. The Consolidated Financial Statements (CFS) of the Company and its subsidiaries, prepared in accordance with Accounting standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, form part of this Annual Report. Pursuant to provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is attached with this Report and annexed as Annexure "F". Pursuant to the provisions of section 136 of the Companies Act, 2013, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company. Further, Shareholders desirous of obtaining the report and accounts of the Company's subsidiaries may obtain the same upon request. DIRECTORS The Board of Directors comprises of eight Non-Executive Directors having experience in varied fields and a Whole-14 time Director. Out of eight Non-Executive Directors, five of them are Independent Directors. Detailed information on Directors is provided in the Report on Corporate Governance marked as Annexure "B". None of the Independent Directors are due for re-appointment except Mr. Bi ay Kumar Garodia (DIN : 00044379) who had been appointed as an Additional Director (Independent) on 13.11.2014. In pursuance of Section 161 of the Companies Act, 2013, he shall cease to be a Director of the Company from the conclusion of the ensuing Annual General Meeting. Notice under section 160 of the Companies Act, 2013 has been received from a shareholder signifying his intention to propose the name of Mr. Bi ay Kumar Garodia, as Director of the Company. Mr. Amar Singh (DIN : 00165567), Director, retires by rotation and being eligible offers himself for re-appointment. The brief resume and other details relating to Mr. Amar Singh and Mr. Bi ay Kumar Garodia are provided in the Notice of Annual General Meeting forming part of this Annual Report. Your Board has also received Form 'DIR-8' pursuant to Section 164(2) of the Companies Act, 2013 read with the Companies (Appointment & Disqualification of Directors) Rules, 2014 from the aforementioned Directors confirming that they have not incurred any disqualification under Section 164(2) of the Companies Act, 2013. Your Board recommends their appointment / re-appointment. Nomination and Remuneration Policy The Nomination and Remuneration Committee works with the Board to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members with the objective of having a Board with diverse backgrounds and experience in business, government, education and public service. The Board has approved the Nomination and Remuneration Policy for Directors, Key Managerial Personnel and Senior Management Personnel of the Company. The Nomination and Remuneration Policy is annexed to the Directors' Report as Annexure "G" and may be accessed at <http://www.edclgroup.com/codes_policies/nomination_remuneration_policy.pdf>. Declaration by Independent Directors The Company has received necessary declaration from all Independent Directors under section 149(7) of the Companies Act, 2013, confirming that they meet the criteria of independence as prescribed in section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Familiarisation Programme for Independent Directors Every new Independent Director of the Board attends an orientation program. The Executive Director / senior managerial personnel make presentations to the inductees about the Company's strategy, projects, operations, organizational structure, finance, human resources, technology, facility and risk management etc. Further, at the time of appointment, the Company issues a formal letter of appointment outlining his role, functions, duties, responsibilities as a Director. The Policy on the Company's Familiarisation Programme for Independent Directors may be accessed at <http://www>. edclgroup.com/ codes_policies/ familiarization_programme_ independent_directors.pdf. Performance Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and Stakeholders Relationship Committees. A discussion was done considering the inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. The performance evaluation of the board and committees are usually carried out on the basis of questionnaires devised in house. A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on the basis of questionnaire, devised for this purpose. The performance evaluation of the Independent Directors was carried out by the entire Board (excluding the Director being evaluated). The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Non - executive Directors. The Directors expressed their satisfaction with the evaluation process. Criteria for Performance Evaluation of Independent Directors The Nomination and Remuneration Committee has laid down the criteria for performance evaluation of Independent Non-Executive Directors, which is given in the Nomination and Remuneration Policy marked as Annexure "G". BOARD AND COMMITTEE MEETINGS The Board met 6 times during the financial year under review. For further details of Board and Committee meetings, kindly refer the Report on Corporate Governance Report marked as Annexure "B". DIRECTORS' RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134(5) of the Companies Act, 2013 with regard to the Directors' Responsibility Statement, your Board confirms that : a) in the preparation of the annual accounts for the financial year ended on 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; 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 31st March, 2015 and of the profit / loss of the Company for that period; c) the Directors have 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) the Directors have prepared the annual accounts on a going concern basis; e) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; f) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively. KEY MANAGERIAL PERSONNEL The following persons are Key Managerial Personnel : Whole-time Director : Mr. Sanjeev Saraf - designated as "Executive Director". Chief Financial Officer : Mr. Amit Damani. Mr. Nathmal Modi was Chief Financial Officer (CFO) of the Company from 01.04.2014 till 30.09.2014. Upon his resignation, the Board appointed Mr. Amit Damani as CFO w.e.f. 01.03.2015. Company Secretary : Ms. Vijayshree Binnani - designated as Deputy Company Secretary. Mr. Prem Chand Kankaria resigned from the office of Company secretary (CS) w.e.f. 30.09.2014. Upon his resignation, the Board appointed Mr. Vivek Mishra as CS w.e.f. 01.10.2014. Mr. Vivek Mishra has resigned from the office of Company Secretary with effect from 12.05.2015. Ms. Vijayshree Binnani has been appointed as Deputy Company Secretary w.e.f. 28.05.2015. ADEQUACY OF INTERNAL FINANCIAL CONTROL The Company has in place adequate internal financial control System commensurate with the size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operation were observed. RISK MANAGEMENT The Company has formulated a Risk Management Policy (Risk Management Procedure) in consultation with Senior Management to identify various kinds of risk in business of the Company and its process to minimize the same. The details of various risks and its mitigation are provided in the Management Discussion and Analysis Report. At present the Company has not identified any element of risk which may threaten the existence of the Company. ESTABLISHMENT OF VIGIL MECHANISM The Company has formulated a Whistle Blower Mechanism and a Policy namely, Whistle Blower Policy that lays down the process for raising concern about unethical behavior, actual or suspected fraud or violation of Company's Code of Conduct. The said Policy may be accessed at <http://www.edclgroup.com/codes_policies/whistle_blower_> policy.pdf. CORPORATE SOCIAL RESPONSIBILITY The Board of Directors has constituted a 'Corporate Social Responsibility Committee'. For composition and other details kindly refer to Corporate Governance Report. Due to non-identification of appropriate projects and shortage of cash flow, the Company though having profits, could not spent requisite amount under Corporate Social Responsibility, as required under Section 135 of the Companies Act, 2013 read with Rules made thereunder. Therefore, annual report on CSR activities is annexed herewith as Annexure "H". However, the Company has significantly contributed towards the Corporate Social Responsibility for the financial year 2015-16. The Corporate Social Responsibility (CSR) Policy can be accessed at www.edclgroup.com <http://www.edclgroup.com> under the 'Investor Information' section. LOAN, GUARANTEES AND INVESTMENTS Particulars of loans, investments and guarantees have been disclosed in the financial statements. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated Persons which may have a potential conflict with the interest of the Company at large. Accordingly, no transaction are being reported in Form AOC- 2 in terms of Section 134 of the Company Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014. All related party transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen in repetitive nature. The Company has developed a Related Party Transactions Policy for purpose of identification and monitoring of such transactions. AUDITORS AND AUDITORS' REPORT (i) Statutory Auditors At the 19th Annual General Meeting held on 18th September 2014, M/s. Lodha & Co., Chartered Accountants, were appointed as the Statutory Auditors of the Company to hold office till the conclusion of 22nd Annual General meeting to be held in the year 2017, subject to ratification of their appointment at 20th and 21st Annual General Meeting. In this regard, the Company has received a certificate from the Auditors to the effect that if they are re-appointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013 The Auditors' Report to the members on the Accounts of the Company for the financial year ended on 31st March, 2015 does not contain any qualification. (ii) Cost Auditors The Board of Directors has re-appointed M/s. N. Radhakrishnan & Co., Cost Accountant, of 11A, Dover Lane, Flat B1/34, Kolkata - 700 029 as the Cost Auditors of the Company to conduct Cost Audit for the financial year 2014 - 2015. The Cost Audit Report for the financial year 2013-14 has been filed with the Ministry of Corporate Affairs within due time. (iii) Secretarial Auditor The Board of Directors has appointed CS Ashok Kumar Daga, Practicing Company Secretary to conduct the secretarial audit of the Company for the financial year 2014-15. The Secretarial Audit Report for the financial year ended on 31st March, 2015 is annexed herewith as Annexure "I" to the Board's Report and forms part of this Annual Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure "J" and forms an integral part of this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Particulars in respect of conservation of energy and technology absorption etc. are given in Annexure "K", attached hereto and forms an integral part of this Report. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT - 9 is annexed herewith as Annexure "L". GENERAL The Directors state that no disclosure or reporting is required in respect of the following items during the year under review as : 1. No Deposits covered under Chapter V of the Companies Act, 2013 were accepted; 2. No equity shares with differential rights as to dividend, voting or otherwise; or shares (including sweat equity shares) to employees of the Company under any scheme were issued; 3. No remuneration or commission to the Whole-time Director of the Company were paid from any of its subsidiaries; 4. No significant and material orders were passed by any regulatory authority or courts or tribunals impacting the going concern status and Company's operation in future; 5. No material changes and commitments occurred after the close of the year till the date of this Report, which affect the financial position of the Company ACKNOWLEDGEMENTS Your Directors express their sincere appreciation to the Central and State Governments, Banks, customers, vendors and the Company's valued investors for their continued co-operation and support. Your Directors also wish to acknowledge the support and valuable contributions made by the employees, at all levels. For and on behalf of the Board For Energy Development Company Limited Sd/- Amar Singh (Chairman) Place : New Delhi . , Dated : 14th August, 2015 |