SURYACHAKRA POWER CORPORATION LIMITED

Transcription

1 SURYACHAKRA POWER CORPORATION LIMITED TH 18 ANNUAL REPORT

2 Board of Directors : Mr. P. K. Bhattacharjee Mr. V. S. Murthy Mr. K. Vijay Kumar Mr. A. Ramesh Kumar Mr. K. Satyanarayana (upto ) Mrs. B.N. Raja Kumari Mr. P.V. Subba Rao (wef ) Mr. Mahesh Chand (upto ) Dr. S. M. Manepalli, Managing Director Company Secretary : Mr. P. Satish Chandra Mouli Audit Committee : Mr. P. K. Bhattacharjee Mr. K. Vijay Kumar Mr. V. S. Murthy Mrs. B.N. Raja Kumari Mr. P.V. SubbaRao Statutory Auditors : M/s. M Bhaskara Rao & Co Chartered Accounts , 5th Floor, Kautilya, Somajiguda, Hyderabad Bankers : State Bank of India Regd. Office : Suryachakra House, Plot No.304-L-III, Road No.78, Jubilee Hills, Hyderabad Plant : Bamboo flat, Near Fire Brigade, South Andaman, Polrt Blair ANNUAL REPORT

3 NOTICE Notice is hereby given that the 18 th Annual General Meeting of the Members of Suryachakra Power Corporation Limited will be held on Monday, the 30 th day of September, 2013 at A.M at ADDA Function Hall, IV Floor, Padmavathi Plaza, Bhagyanagar Colony, Opp. KPHB, Kukatpally, Hyderabad to transact the following business: ORDINARY BUSINESS: 1. To receive, consider and adopt the Audited Balance Sheet as at March 31, 2013 and the Profit and Loss account for the period ended as on that date and the reports of the Directors and Auditors thereon. 2. To appoint a Director in place of Mr. V.S. Murthy, who retires by rotation and being eligible offers himself for reappointment. 3. To appoint a Director in place of Mr. K. Vijay Kumar, who retires by rotation and being eligible offers himself for reappointment 4. To appoint Statutory Auditors and to fix their remuneration and in this regard, to consider and if thought fit,to pass with or without modification(s), the following resolution as an ordinary resolution: RESOLVED THAT M/s. M. BhaskaraRao& Co., Chartered Accountants,Hyderabad, (bearing firm Regn No S) be and are hereby appointed as Statutory Auditors of the Company and to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting on such remuneration as shall be fixed by the Board of Directors of the Company. SPECIAL BUSINESS: 5. To consider and if thought fit to pass with or without modification(s) the following resolution as a Special Resolution. Alteration of other objects clause (C) of the Memorandum of Association of the company by inserting new clause 12 after the existing clause 11: RESOLVED THAT pursuant to the provisions of Section 17 and all other applicable provisions, if any, of the Companies Act, 1956, the other objects clause of the Memorandum of Association of the Company be altered by inserting the following new sub-clause 12 immediately after the existing sub-clause 11 under Clause III (C) of the MOA: To carry on the business of manufacturing and trading of Biomass pellets like Bio coal, Briquettes, Fly ash bricks, Biofuels,bamboo,khajuria and other similar botanical plants including Napier grass to revive renewable energy business as backward integration for the renewable energy i.e., cultivation of Napier grass and other species and such other related products. 6. To consider and if thought fit to pass with or without modification(s) the following resolution as an Ordinary Resolution. Appointment of Mr. P.V. Subba Rao, Additional Director, as Director (Independent Director) RESOLVED THAT Mr. P.V. Subba Rao, who was appointed as an Additional Director of the company under Section 260 of the Companies Act, 1956 read with Article No. 169 of the Articles of Association of the company and who holds office till commencement of this Annual General Meeting and in respect of whom the company has received a notice from a member proposing his candidature for the office of Director, be and is hereby appointed as Director of the Company liable to retire by rotation. 7. To Consider and if thought fit to pass with or without modification the following resolution as a Special Resolution: Appointment and remuneration payable to Mr. K. Vijay Kumar, Executive Director: RESOLVED THATpursuant to the provisions of Sections 198, 269, 309, 310, 311, Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956and subject to such other approvals/consents as may be required, the approval and consent of the Company be and is hereby accorded to the appointment of Mr. K. Vijay Kumar, as Executive Director,for a period of three years with effect from 12 th August, 2013 on the remuneration and other allowances as mentioned below: ANNUAL REPORT

4 Salary: Salary is Rs.99,000/- per month plus Conveyance of Rs.15,000/- per month with effect from 12 th August, 2013subject to such annual increments as may be decided by Board from time to time over a period of three years, during the existence of this period of contract. RESOLVED FURTHER THAT the remuneration aforesaid including other allowances shall be allowed and paid to Mr. K. Vijay Kumar, Executive Director, as minimum remuneration during the currency of his tenure, in the event of loss or inadequacy of profits in any financial year for a period not exceeding three years. 8. Appointment and remuneration payable to Mrs. B.N. Raja Kumari, Executive Director: To Consider and if thought fit to pass with or without modification the following resolution as a Special Resolution: RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309, 310, 311, Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956 and subject to such other approvals/consents as may be required, the approval and consent of the Company be and is hereby accorded to the appointment of Mrs. B.N. Raja Kumari, as Executive Director, for a period of three years with effect from 12 th August, 2013 on the remuneration and other allowances as mentioned below: Salary:Rs.40,859/- per monthincluding perquisites and other allowances with effect from 12 th August, 2013 subject to such annual increments as may be decided by Board from time to time over a period of three years, during the existence of this period of contract. RESOLVED FURTHER THAT the remuneration aforesaid including perquisites and other allowances shall be allowed and paid to Mrs. B.N. Raja Kumari, Executive Director, as minimum remuneration during the currency of her tenure, in the event of loss or inadequacy of profits in any financial year for a period not exceeding three years. By Order of the Board of Directors For Place: Hyderabad Date: Sd/- P. SATISH CHANDRA MOULI COMPANY SECRETARY ANNUAL REPORT

5 NOTES: 1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON A POLL INSTEAD OF HIMSELF/HERSELF AND SUCH PROXY NEED NOT BE A MEMBER OF THE COMPANY. The proxy form(s) in order to be effective must be received by the company at the registered office of the Company not less than 48 hours before the commencement of the meeting. 2. Explanatory statement pursuant to section 173(2) of the Companies Act, 1956, relating to the special business to be transacted at the meeting is annexed hereto. 3. Brief Particulars of the Directors seeking re-appointment at this Annual General Meeting are annexed to the notice. 4. The Register of Members and Share Transfer Books of the Company will remain closed from to (both days inclusive). 5. Members holding shares in physical form are requested to intimate any change in their address quoting their registered folio number to the Registrars and Share Transfer Agents namely M/s. Karvy Computershare Private Limited, Plot No.17 to 24, Vittalrao Nagar, Madhapur, Hyderabad Ph. No Members holding shares in electronic form are requested to intimate any change in their address to the depository participant (DP) with whom the demat account is maintained. 7. Members are requested to bring admission slip duly filled in along with a copy of Annual Report to the Meeting. 8. Corporate members intending to send their authorized representatives to attend the meeting are requested to send a certified copy of the Board Resolution authorizing their representative to attend and vote on their behalf at the meeting. 9. Important Communication to Members: The Ministry of Corporate Affairs has introduced a Green Initiative in the Corporate Governance vide its various circulars issued till date allowing the companies to service the notice / documents including Annual Report by way of to its members. This initiative is a step towards protection of environment and enabling faster communication with the members. Accordingly, the Company has proposed to serve all the documents to the addresses of the members. The members are requested to support this green initiative of the Government by registering / updating their addresses with their concerned Depository Participants (DP) to get the Annual Report and other documents on such address. Members holding shares in physical form are also requested to intimate their address to the Company either by at suryachakra.power@gmail.com or by sending a communication to the Registered Office of the Company. If any member is interested to receive such document in physical form, a communication in this regard may be made to the Company. 10. Annual Report of the company has been uploaded on website of the company EXPLANATORY STATEMENT PURSUANT TO SECTION 173 (2) OF THE COMPANIES ACT, 1956 ITEM NO.2 Mr. V.S. Murthy Mr. V.S. Murthy is a graduate in Engineering and having vast experience in Electrical and Power projects. He started his career with Heavy Electrical Corporation (HEC), Ranchi and worked for a period of 26 years. He also worked in ITC Bhadrachalam Paper Board over a period of 10 years and held various positions. He has expertise in the field of Erection, Operation and Maintenance of Transformers, Power Cables, Distribution network etc. He is on the Board of the Company since August 29, ITEM NO. 3 Mr. K. Vijay Kumar Mr. K. Vijay Kumar is an Engineering Graduate with 43 years of Experience in various Engineering and Power Projects. Earlier he worked as Chief Engineer/Superintendent Engineer in Andhra Pradesh State Electricity Board for a period of more than 30 years in various capacities looking after the power generating stations of AP GENCO. He Joined the Company as General Manager (Technical)w.e.f 27 th April, 2005 and is elevated to the position of Executive Director ANNUAL REPORT

6 recognizing his meritorious services rendered to the organization. As per Articles he retires by rotation and is eligible for re-appointment.none of the Directors except Mr.K.Vijay Kumar is interested or concerned in the resolution.(also refer item No.7) ITEM NO. 5 ALTERATION OF OTHER OBJECTS CLAUSE IN MOA It is proposed to diversify the activities of the company with the experience gained and the knowhow acquired from other various companies of power generation over the years. At present your company is carrying out the business of generation of power through diesel. In order to enhance the production of power through other sources, the company identified Bio-mass as an alternate source of energy. In pursuit of this objective it is now proposed to enhance the other sources for constant supply of raw material required for Bio-mass plants and renewable energy plants and decided to venture in to the business of manufacturing and trading of biomass pellets such as Bio coal, Briquettes, Fly ash bricks, Biofuels, Bamboo, Khajuria and other botanical plants as well as to revive renewable business energy plantation as backward integration for the renewable energy i.e., by cultivation of Napier grass and other botanical species including such other related products which would reduce the shortage of raw material and the cost of production for bio-mass power plants. Hence this resolution for insertion of new sub clause in Memorandum of Association. Accordingly, it has been found desirable that, the other objects clause of the Memorandum of Association of the company be amended suitably as cited supra so as to include the other objects therein, with the approval of shareholders by passing a Special Resolution. Further, pursuant to Section 149(2A) of the Act, prior approval of shareholders is required for commencement of any business covered under Other Objects Clause of the Memorandum of Association by passing a Special Resolution. The Board recommends the Special Resolution for members approval. None of the directors is interested in the above resolution. ITEM NO.6 Mr. P.V. SubbaRao Mr. P.V. SubbaRao is a Post Graduate in Arts and also holding a degree in Law, besides holding a PG (Dip.) in Public Administration and Management and also a PG (Dip.) in Personnel Management. He has about 30 years of experience in Personnel & Administrationin various reputed corporate entities. The Company received a notice in writing from a member along with a deposit of Rs.500/- proposing the candidature of Mr. P.V. Subba Rao for the office of the Director of the company under section 257 of the Companies Act, Mr. P.V. SubbaRao is not disqualified from being appointed as Director under section 274(1)(g) of the Companies Act, 1956 and has complied with the provisions of section 266A of the Companies Act, The Board, accordingly, recommends the Resolution for approval of the members of the Company.None of the Directors except Mr. P.V. Subba Rao is interested or concerned in the resolution. ITEM NO.7 Mr. K. Vijay Kumar is an Engineering Graduate with 43 years of Experience in various Engineering and Power Projects. Earlier he worked as Chief Engineer/Superintendent Engineer in Andhra Pradesh State Electricity Board for a period of more than 30 years in various capacities looking after the power generating stations of AP GENCO. He Joined the Company as General Manager (Technical) w.e.f 27 th April, 2005 and is elevated to the position of Executive Director recognizing his meritorious services rendered to the organization. As per Articles he retires by rotation and is eligible for re-appointment.none of the Directors except Mr.K.Vijay Kumar is interested or concerned in the resolution. The Board, on the recommendations of the Remuneration Committee at its meeting held on 3 rd August, 2013, considered and approved the appointment and the remuneration payable to the Executive Director in appreciation of his contribution,for a period of 3 years w.e.f from 12 th August, 2013 as set out in the Resolution, subject to approval of members at the ensuing Annual General Meeting of the company. The resolution as set out at Item No.7 together with this Explanatory Statement constitute the abstract of terms of the appointment and remuneration payable to the Executive Director and Memorandum of Interest of Mr. K. Vijay Kumar under Section 302 of the Companies Act, ANNUAL REPORT

7 The Board accordingly recommends the Special Resolution for members approval. None of the Directors except Mr. K.Vijay Kumar is interested in the above resolution. ITEM NO.8 Mrs. B.N. Raja Kumari is a Post Graduate in Economics with 17 years of experience in Finance and Administration. She is on the Board of the Company representing the employees of the company. Her meticulous work and performance has won the laurels of management and Employees and is elevated to the level of an Executive Director. The Board, on the recommendations of the Remuneration Committee at its meeting held on 3 rd August, 2013, considered and approved the remuneration payable to the Executive Director in appreciation of herservices,for a period of 3 years w.e.f from 12 th August, 2013 as set out in the Resolution, subject to the approval of members at the ensuing Annual General Meeting of the company. The resolution as set out at Item No.8 together with Explanatory Statement constitute the abstract of terms of the appointment and remuneration payable to the Executive Director and Memorandum of Interest of Mrs. B.N. Raja Kumari undersection 302 of the Companies Act, The Board recommends the Special Resolution for members approval. None of the Directors except Mrs. B.N. Raja Kumari is interested in the above resolution. By Order of the Board of Directors For Place: Hyderabad Date: Sd/- P. SATISH CHANDRA MOULI COMPANY SECRETARY ANNUAL REPORT

8 DIRECTORS REPORT Dear Members, Your Directors have pleasure in presenting the 18 th Annual Report of the Company together with the Audited Accounts for the 9 Months period ended March 31, FINANCIAL PERFORMANCE: (Rs. in millions) Particulars 9 months 15 months Period ended period ended Income from sale of power Other Income Profit before interest and depreciation Interest and Finance Charges Depreciation Profit after interest, but before exceptional items (93.17) (190.73) Exceptional Items (net) Profit before Tax (93.17) (190.73) Current Tax Mat credit entitlement Profit after Tax (93.17) (190.73) Profit / (Loss) from continuing operations (93.17) (190.73) Profit / (Loss) from discontinuing operations -- (36.58) Profit / (Loss) for the year. (93.17) (227.32) REVIEW OF OPERATIONS: During the period under review, your Company achieved a gross turnover of Rs millions as against Rs millions of the previous year. The turnover for the current year (9 months period) was lower than the previous year (15 months period) as the company sustained losses due to non-operation of one of the gen-set and also non-operation of most of the subsidiaries with the exception of one unit viz: SAAIL, Khajuri, Baloda Bazar, Raipur, Chhattisgarh. The operating net loss for the current period was Rs. (-)93.17millions as against the net loss of Rs. (-) millions of the previous year. The Company s 20 MW plant at Bamboo flat, Port Blair has achieved the required availability during the year at 69.25% as against the benchmark of 68.49%for getting full fixed charges. Management Discussion and Analysis report for the year under review, as stipulated in Clause 49 of the Listing Agreement entered with Bombay Stock Exchange Ltd, forms part of this Annual Report. The Board of Directors review the progress of the Company from time to time and guide the Company towards its corporate goals. JOINT ELECTRICITY REGULATORY COMMISSION (JERC) PETITION: During the year under review the Company has filed a Petition bearing No.89/2012 before JERC, Gurgaon making Superintending Engineer / Electricity Department and Chief Secretary / A&N Administration are Respondents to the said petition on JERC heard the Petition from both the Parties at length to fix the actual completed capital cost of the project and the tariff under regulation 3(2A), 3(4), 12 and 36 of the JERC read with appropriate sections of the Electricity Act, 2003 and directed both the parties to submit compliance Report by The commission after hearing both the parties at length over a period of 6 months observed during various hearings and opined that the company should be in a position to revamp its entire operational performance once the revised tariff and the arrears of the amount of the PPA of about Rs.100 to Rs.110 Crores are received form the A&N Administration. This would immensely help the company to reduce the debt and can restructure all the units for higher performance of SPCL as well as subsidiary Companies. ANNUAL REPORT

9 As such JERC while disposing the Petition vide its Order dated July 03, 2013 has passed orders in favour of the Company with directions to the Respondents (A&N Administration) fixing the Project Cost of SPCL at Rs Crores and certain other issues like waiver of liquidated damages and payment of interest on delayed payment etc. The Hon ble Commission has also directed both the parties for complying its order dated and to submit the compliance report in this regard to the Commission within a fortnight. However, in order to get certain issues of the Petition which were not fully recommended by the Commission, the Company has filed an Appeal in the Appellate Tribunal for Electricity (APTEL) on The A&N administration has also filed a Review Petition on with JERC against the Commission s order dated The same are yet to come up for hearing before APTEL. DIVIDEND: During the year under review, your Directors are unable to recommend any dividend on the Equity Capital of the Company due to losses. SUBSIDIARY COMPANIES: During the period under review, the performance of the subsidiaries viz., Suryachakra Global Enviro Power Limited, South Asian Agro Industries Limited, M.S.M. Energy Limited and Sri Panchajanya Power Private Limited, biomass based power plants located at Chhattisgarh and Maharashtra have not been functioning on account of non-availability of raw material at reasonable prices. The management has been striving hard to try alternatives like Napier grass and tie up with Farmers Growers Associations in respective areas to ensure continuous feed supply is put in place and improve the performance of all the plants in near future. Suryachakra Global Enviro Power Limited (SGEPL): As per the understanding between the Company and Indiabulls during the year ,Indiabulls were to restructure the loan and to provide additional funds for the working capital. Indiabulls agreed to sanction additional finance with a condition that the operations of the plant will be controlled jointly by them (Indiabulls) and the company. Further, the Bank account opened at Axis Bank, Raipur was operated solely by the officials of India bulls. Accordingly Indiabulls sanctioned a term loan of Rs Crores on which was utilized after the adjustment of the original loan of Rs Crores along with interest which amounted to Rs Crores and balance loan amount instead of making available to operations of the plant as per the understanding, was utilized for servicing the interest from April 2012 to December 2012 and part of the amount was adjusted towards the interest in South Asian Agro Industries Limited (SAAIL). The matter has been pending with Indiabulls and company s operations are yet to restart once again on further negotiations with them. South Asian Agro Industries Limited (SAAIL): As per the understanding between the company and Indiabulls during the year , Indiabulls were to restructure the loan and to provide additional funds for the working capital. Accordingly,Indiabulls sanctioned a loan amount of Rs.50 crores, out of which the existing loan of Rs.35 crores along with interest amounting to Rs crores was adjusted. The plant was under joint control with Indiabulls and the company. The Bank Account with Axis Bank, Raipur was operated solely by the officials of Indiabulls. The Plant was in operation since April/May Contrary to the understanding, Indiabulls has not provided timely working capital resulting in non-availability of Raw material on a continuous basis. The operations were closed during April 2013.The company during the current FY has exported 1,81,54,200 units amounting about Rs.9.30 crores. The receipts from CSPDCL were not completely utilized for recycling towards working capital as part of it was utilized for payment of interest. Similarly the additional funds which were meant for working capital were utilized to service the interest and a small portion was used towards working of the plant. The interest on the loan was serviced from April 2012 to December Due to delay in payment to raw material suppliers and O & M, the production was not up to the mark. Indiabulls as a strategy filed the following cases against SGEPL, SAAIL and its Directors 1. Demand Notice u/s.13 (2) of SARFAESI Act, 2002 to SGEPL & SAAIL was issued. Reply to the notice was sent suitably. 2. Filed petition in High Court of Delhi u/s.9 of Arbitration and Conciliation Act, 1996 against SGEPL restraining from creating any third party interest in the Power Project and further receivables related to the power project will be deposited with the court along with a complete statement of account and obtained an ex-parte interim order. The case is posted for The matter has been under active consideration of our legal counsel. ANNUAL REPORT

10 3. Filed cases u/s.138 of N.I. Act and with Economic Offenses Wing (EOW), Gurgaon against SGEPL, SAAIL, SPPPL and its Directors. Reply to the notice received from the Inspector, EOW, Gurgaon was submitted through proper channel. A letter was sent addressing the Chairman, India bulls Group requesting for his intervention in resolving the issues. MSM Energy Limited During the period under review there was no change in the status of the plants located at Parbhani and Amaravathi. A proposal evincing interest to take over the Amaravathi plants was received from M/s Virtuous Energies Private Ltd (Promoter- Mr. Bharat Chowdary).The information sought by them was furnished suitably. Out of the three consortium Banks i.e. SBI and SBH, have issued a demand notice u/s. 13(2) of SARFAESI Act for recovery of their share of dues, whereas IDBI Bank has issued a recall notice for payment of their dues. Sri Panchajanya Power Private Limited During the year under review the company received a notice from Syndicate Bank u/s. 13(2) of SARFAESI Act and they took action u/s. 13(4) of SARFAESI Act, The company filed a petition with Debt Recovery Tribunal (DRT) and the matter is posted for hearing on The company has been negotiating through Financial Consultants, Mumbai for one time settlement (OTS) and also to arrange the funds to meet the said commitment through ARCIL and Reliance ARC. Consolidated Financial Statements: The Consolidated Accounts presented by the Company for the period include the financials of its subsidiary companies. In accordance with the General Circular issued by the Ministry of Corporate Affairs, Govt. of India dated 8th February 2011, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not attached to the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary Companies to any member of the Company or its subsidiaries, upon receiving a request for the same. Further, the Annual Accounts of the subsidiary companies including the consolidated annual accounts of the Company will be kept open for inspection at the Registered Office of the Company and that of the subsidiaries, during the office hours. A summary of financial information of the subsidiary companies is provided in the Annual Report of the Company. FIXED DEPOSITS: Your Company has neither accepted nor renewed any deposits from the shareholders / public under Section 58A of the Companies Act, 1956, during the year under review. INSURANCE: The properties of the Company including its buildings, plant and machinery and stocks have been adequately insured as required. CORPORATE GOVERNANCE: A report on Corporate Governance, Management Discussion and Analysis along with additional information for shareholders as prescribed under Listing Agreement with the Stock Exchange, Mumbai are annexed as a part of this report along with Practicing Company Secretary s Certificate confirming the compliance of Corporate Governance. As per SEBI requirement, Secretarial audit is carried out at regular intervals. The findings of the audit have been found to be satisfactory. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to section 217(2AA) of the Companies Act, 1956, the Directors confirm that: i] in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanations relating to material departures; ii] 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 at the end of the financial year and of the profit or loss of the company for that period; iii] the Directors have ensured that proper and sufficient care is taken in the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; iv] the Annual Accounts are prepared on a going concern basis. ANNUAL REPORT

11 DIRECTORS: In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Mr. V.S. Murthy and Mr. K. Vijay Kumar, Directors will retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment as Directors of the Company. During the year, Mr. K. Satyanarayana and Mr. Mahesh Chand, Directors resigned from the Board w.e.f and respectively. Mr. P.V. Subba Rao was appointed as Additional Director of the company pursuant to Section 260 of the Companies Act, 1956 w.e.f ADEQUACY OF INTERNAL CONTROLS: The Company has proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that transactions are authorized, recorded, and reported correctly. The internal control system is supplemented by an extensive program of internal audits, review by management and documented policies, guidelines and procedures. The internal control system is designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of assets. The Audit Committee reviews the internal control system on a regular basis. STATUTORY AUDITORS: The Statutory Auditors of the Company viz., M/s M. Bhaskara Rao & Co., Chartered Accountants, Hyderabad will retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment, if appointed at the Annual General Meeting by members. EXPLANATIONS FOR THE QUALIFICATIONS MADE BY THE AUDITORS IN THEIR REPORT Auditors Qualification Board s explanation Regarding revenue from Andaman & Nicobar Administration (A&N Administration) - pending final agreement with A&N Administration, we are unable to comment on the extent of ultimate recoverability of Rs.5,25,87,325/- withheld by A&N Administration for the year ended March 31, 2013 (year ended : Rs.10,13,89,890) and the total receivables including interest as at March 31, 2013 of Rs.25,40,07,355/- ( : Rs.30,52,52,497) on account of amounts withheld which are subject to confirmation by the A&N Administration. The PPA with A&N Government is for a period of 15 years and contains a set of pre-determined formulae for calculation of revenue on monthly billings etc., pending final confirmation of actual capital expenditure no adjustment has been made in the revenues. Revenues for the year ended 31 st March, 2013 includes an amount of Rs.5,25,87,325/- (for the year ended as against Rs.10,13,89,890/-) billed by the company has variable charge payment under the PPA has been rejected/withheld by A&N Administration on the grounds of technical interpretation of the formulae for computation of such charges. The total receivables on account of such rejections /interest thereon as at amounted to Rs.25,40,07,355/- (as against Rs.30,52,52,497/- of ) total interest accrued. The total interest accrued on such rejections in the total receivables as at amounts to Rs.12,75,74,329/- and there is no change in the corresponding previous year s figure of the same amount. The company believes that the amount billed including interest there on are recoverable on the interpretation of PPA. ANNUAL REPORT

12 Regarding the financial statements, relating to coal trading receivables (discontinued operation) regarding which we are unable to comment on the extent of realisability of the dues. Relating to the company s assessment that no provisioning is required against the carrying amounts of its long term investments and loans extended to its subsidiary Suryachakra Global Enviro Power Limited Rs. 103,02,15,096/- is presently necessary, for the reasons stated in the said note. We are unable to comment on the recoverability of the carrying amounts of the said investment or advances. Regarding its investment in Suryachakra Energy (Chhattisgarh) Private Limited, a wholly owned subsidiary of the company - Rs. 35,67,30,725/-. Completion and implementation of the power project of Suryachakra Energy (Chhattisgarh) Private Limited depends on the ability of the management to infuse the requisite funds. Hence, we are unable to comment on the recoverability of the carrying amounts of the said investment. Regarding advances to Suryachakra Global Ventures Limited (SGVL), a wholly owned subsidiary of the company incorporated in Hong Kong Rs. 85,01,25,542/ - which in turn has advanced the said amount to M/s Symphony Trading and Investment Limited (STIL), Hong Management is vigorously and regularly following up with the respective debtors and is confident of recovering the balance amount of Rs.8.36 Crores. However as a measure of prudence and abundant caution a provision of Rs.3,78,50,636/- has been made towards doubtful receivables During March 12, the electricity distribution companies of respective power plants had increased the tariff for the power generated and exported. In view of such upward revision in the tariff, the management expected that the plants can be operated profitably and commenced the process of recommissioning the plants. However, due to liquidity crunch, the recommissioning process could not be completed. Management is making efforts to resolve the liquidity crunch and commence the operations at the earliest. The management is confident that all these companies will be revived and generate adequate profits and cash flows to meet the respective financial obligations. Management is also of the opinion that there would not be any impairment and all the plants would realise more than the carrying value of the assets as at the reporting period.the diminution in the value of these investments is considered to be of temporary in nature and hence no provision for diminution is considered necessary at present. However as a measure of prudence, the company, during the year ended June 30, 2012 made a provision of Rs.13,90,98,212/- towards doubtful advances. SECPL is a 100% subsidiary of the company and is engaged in setting upto a 350MW coal based power project at Sapos Village, Janjgir-Champa District in the State of Chhattisgarh at an estimated project cost of Rs Crores. SECPL has obtained most of the requisite licenses for setting up the project; signed a Memorandum of Understanding (MOU) with Chhattisgarh State Electricity Board; and entered into an implementation Agreement with Chhattisgarh State Power Distribution Company Limited, for setting up the said power project. SECPL has spent an amount of Rs. 45,59,27,070/- towards advances to suppliers of capital equipment and other incidental expenses for setting up the project. Management is confident of mobilizing the requisite funds to execute the project and recover the investment made in the project. Hence, no provision for diminution in the value of investment is considered necessary at this stage. SGVL is a wholly owned subsidiary of the company incorporated in Honkong under Companies Ordinance. The Company has decided to acquire coal mines through SGVL for captive use by other subsidiaries. During the year ended June 30, 2012, the company advanced an ANNUAL REPORT

13 Kong for acquiring coal mines for the company/sgvl during the quarter ended June In the absence of information regarding financial worthiness of STIL / securities in favour of the company, we are unable to comment on the extent of recoverability of the advance. Regarding review/reconciliation/confirmation of balances relating to borrowings (other than those from banks), receivables, loans and advances, advances on capital accounts and payables. In the absence of completion of such review/reconciliation/confirmation, we are unable to comment on the impact of the same on the financials Regarding winding up petition filed by one of the unsecured creditors which is pending for hearing before the Hon ble High Court of Andhra Pradesh. Our opinion is not qualified in respect of this matter The scope and coverage of the internal audit system needs to be strengthened to make it commensurate with the size and the nature of its business. The company is not regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. amount of Rs.85,01,25,542/- (USD 1,90,00,000) to SGVL, out of the proceeds of the GDRs issue. SGVL has entered into an MOU with Symphony Trading and Investments Limited (STIL) having offices in Singapore, Hongkong etc., for acquiring interests in coal mines in Indonesia. STIL is having experience in identifying and acquiring suitable coal mines for its clients. Pursuant to the said MOU, SGVL on 28th April 2011, has paid USD 1,90,00,000 as advance to STIL for acquiring interests in two coal mines from M/S. Surajaya Indelberg in Indonesia. As per MOU, STIL has agreed to return the advance, if transaction of coal mine acquisition is not successful within the timelines mutually agreed / extended. Due to change in the Indonesian policy, the transaction could not be completed.in view of the prevailing uncertain conditions relating to coal mining activities in Indonesia, the company has called back the advance given to STIL and is making all efforts to recover the advance. During the year, management has intensified the efforts for recovery and has commenced the negotiations and is also in the process of initiating legal remedies for recovering the advance.shortfall if any, in recovery will be adjusted in the year of final settlement. Hence no provision towards doubtful advance has been made. The A&N receivables cannot be quantifiable since the matter is sub-judice before the appropriate commissions. Hence no comments could be made. Similarly, for other receivables, loans and advancesand other payments to be made, the management is confident of taking such care as the situation may warrant from time to time as no confirmations were received from the parties in spite of best efforts put in by the Accounts Department. During the year ended June 30, 2012, M/s. SBI Global Factors Limited an unsecured creditor had filed a petition before the Hon ble High Court of Andhra Pradesh for winding up of the company u/s 443 (1) (c) of the Companies Act, The Hon ble High Court of Andhra Pradesh, had admitted the petition. Company has appealed against the said petition which is pending for hearing. Company is confident of resolving the matter amicably. The company has already appointed a qualified Chartered Accountant to look into the internal audit mechanism and accordingly the internal audit team will be strengthened to commensurate with the size of the company. The following amounts were in arrears as at March 31, 2013 for a period of more than six months from the date they became payable (1)TDS amount Rs.58,83,851/-(2) Provident Fund Rs.3,20,180/- (3)VAT Rs.5,46,250/- (4) Professional Tax Rs.100/- and (5) Service Tax Rs.1,19,425/ -. Out of the above Provident Fund and Professional Tax have been paid subsequently. Efforts are being made to deposit the balance dues at the earliest. There were no dues of Income Tax, Sales Tax, wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other material statutory dues on account of any dispute. ANNUAL REPORT

14 Default in repayment of dues to banks. The company has taken up with State Bank of India to enhance the limits for Working Capital, LC Limits, and project capital expenses etc., The said Bank is actively considering the view points of the company and have appointed an expert consultant to look into the matter and report back to SBI for which requisite information has already been furnished to the said consultant for onward transmission to State Bank and if required with the help of the company s legal advisers. The management is hopeful of resolving all the issues which were hither to pending with SBI. COST AUDITORS Pursuant to the provisions of Section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, Mr. B.Venkateswarlu (Fellow Membership No practicing Cost Accountant, has been appointed to conduct audit of cost records of power(electricity) for the year Cost Audit Report will be submitted to the Central Government within the prescribed time. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO: The statement giving the particulars with respect to Conservation of Energy, Technology absorption and Foreign Exchange Earnings and outgoings as required under Section 217(1)(e)of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 is annexed hereto and forms part of the Report. PARTICULARS OF EMPLOYEES: The Information as required in accordance with Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended: None of the employees of the Company has drawn salary exceeding Rs Lakhs per annum or Rs.5.00 Lakhs per month during the period in terms of section 217 (2A) of the Companies Act, PERSONNEL & INDUSTRIAL RELATIONS: Relations between employees and the management continued to be cordial during the year. The Human Resource Department is committed in its quest to improve and maintain employee morale and satisfaction at all levels. ACKNOWLEDGMENTS: Your Directors would like to express their grateful thanks for the assistance and co-operation received from the Financial Institutions, Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the excellent services of the executives, staff and the workers of the company. For and on behalf of the Board of Directors Place: Hyderabad. Date: Sd/- Dr. S.M. Manepalli Managing Director Sd/- Mr. K. Vijay Kumar Executive Director ANNUAL REPORT

15 Annexure: A) CONSERVATION OF ENERGY: (a) Energy conservation measures taken. Your Company continues to implement various programs taken up in the previous years such as (1) power factor improvement (2) recycling of effluent water, etc. (b) To revive renewable business, successful trial runs were conducted with the energy plantation as backward integration for the renewable energy i.e., cultivation of Napier grass and other species. (c) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: NIL B) TECHNOLOGY ABSORPTION: Your Company uses state of art technology for improving the productivity and quality of services. To create adequate infrastructure, the Company continues to invest in the latest technology and innovations. The efforts helped the company to remain in business on a competitive basis, with continuous improvement. The technologies have been fully absorbed and the Company s production rate has exceeded the design criteria of the plant. The quality and yields are comparable to the World Leaders in the Industry. The Indian Technicians are fully trained in all operations. C) FOREIGN EXCHANGE EARNED AND OUTGO / USED: Foreign exchange outgo for the year (for 9 months period ended ) was NIL as against the previous year (for 15 months period ended) outgo of Rs.5,042,021/- CORPORATE GOVERNANCE Corporate Governance refers to sound management, transparency and disclosures. It is the technique by which companies are directed and managed. Corporate Governance encompassesses not only the way in which the Company is managed and deals with its shareholders but also addresses all aspects of its relationship with society as well. Hence, it has always been an integral part of company s philosophy. Your Company strongly believes the good corporate governance germinates from the mindset of management and cannot be regulated by legislation all alone. The Company s philosophy on corporate Governance envisages the attainment of highest levels of transparency, professionalism and accountability in all areas of its operations and in its interactions with its stake holders, Employees, the Government and the lenders. Your Company follows all the norms as set by SEBI and Stock Exchange(s) on corporate governance. 1. Board of Directors: As on 31 st March 2013, the Company has optimum number of Executive (three) and non- Executive & Independent Board of Directors (Five) and has Non-Executive and Independent Director as Chairman. The ratio of Non-Executive Directors and Executive Directors is 5:3. As on date the following members are the Board of Directors. 1. Mr. P.K. Bhattacharjee Non-Executive & Independent Director 2. Mr. V.S. Murthy Non-Executive & Independent Director 3. * Mr. Mahesh Chand Non-Executive & Independent Director 4. Mr. A. Ramesh Kumar Non-Executive & Independent Director 5. Mr. P.V. Subba Rao Non-Executive & Independent Director 6. Dr. S.M. Manepalli Managing Director (Executive Independent Director) 7. Mr. K. Vijay Kumar Executive Director - (Technical) - (Non - Independent Director) 8. Mrs. B.N. Raja Kumari Executive Director (Non-Independent Director) * Resigned on account of super annuation w.e.f Further, the Board shall meet at least four times in a year with a maximum time gap of three months between any two meetings. The Committees shall also meet periodically and review compliance reports of all laws as may be applicable from time to time to meet the requirements of clause 49 of the Listing Agreement. ANNUAL REPORT

16 Attendance of each Director at the Board meetings from last AGM and Committee meetings and chairmanships in other companies is as follows: Name of the # Committee Director & Attendance Particulars * Director in ships Positions held Category in other Companies in other companies Mr/Mrs Board Audit Last Meetings Commitee AGM P.K. Bhattacharjee 3 3 No 9 Chairman - 1 Member -1 V.S. Murthy 4 4 Yes Nil Nil **Mahesh Chand 1 - No 1 Nil **K. Satyanarayana 1 - Yes 2 Nil A. Ramesh Kumar 1 - No Nil Nil Dr. S.M. Manepalli 4 - Yes 3 Nil K. Vijay Kumar 3 3 No 3 Nil B.N. Raja Kumari 2 2 Yes 2 Nil ***P.V. Subbar Rao Nil Nil * Excludes Directorships held in foreign companies, private companies and alternate Directorships. # only Audit Committee and Shareholders Grievance Committee are considered for its purpose. ** Mr. K. Satyanarayana and Mr. Mahesh Chand, Directors resigned on & respectively. ***Mr. P.V. SubbaRao appointed as an additional director on Number of Board Meetings: During the year the Board met 4 (four) times under review on the following dates i.e., on , , & The Company placed before the Board the audited and unaudited results, project expansion plans and performance of the Company and its subsidiaries from time to time. Information, which is materially important, was placed before the Board. Leave of absence was granted to those who expressed their inability to attend the Board Meeting(s). 3. Committees of the Board: The Committees appointed by the Board focus on specific areas and inform the Board on decisions within the authority delegated. Each committee of the Board defines its constitution, scope and powers and has to act within the given parameters and report back to Board in the form of minutes. The committees also make specific recommendations to the Board on various matters from time to time and all observations, recommendations and decisions of the Committees are placed before Board for information and approval. The company has the following four Board level committees namely: Audit Committee Shareholders/ Investors Grievances Committee Remuneration Committee Management Committee A. AUDIT COMMITTEE The Audit Committee is responsible for the company s internal controls and financial reporting process while the statutory auditors are responsible for performing independent audit of the company s financial statements in accordance with generally accepted auditing practices and for issuing reports based on such audits. The Board of Directors have entrusted the Audit Committee to supervise these processes and thus ensure accurate and timely disclosures that maintain the transparency integrity and quality of financial reporting. ANNUAL REPORT

17 The terms of reference, role and scope of the audit Committee are in line with those prescribed by clause 49 of the Listing Agreement with the Stock Exchanges read section 292A of the Companies Act, of Composition, meetings and attendance particulars of the Audit Committee during the year is as follows: The Audit Committee met four times during the financial year i.e., 16 th July, 2012, 14 th November, 2012, 14 th February, 2013 and 24 th May, No. of Meetings No. of Meetings S.No. Name of the Director Category Held Attended 1. Mr. P.K. Bhattacharjee Chairman Mr. V.S. Murthy Member Mr. K. Vijay Kumar Member Mrs. B.N. Raja Kumari Member 4 3 B. SHAREHOLDERS/ INVESTORS GRIEVANCE COMMITTEE The Shareholders Grievance Committee is empowered to perform all the functions of the Board in relation to handling of Shareholders Grievances. It primarily focuses on: Review of investor complaints and their redressal; Review of the queries received from investors; Review of the work done by share transfer agent; and Review of corporate actions related work. The Shareholders Grievance Committee consists of three Directors viz. Mr. V.S. Murthy, Chairman, Mr. K. Vijay Kumar and Mrs. B.N. Raja Kumari as Members of the committee. During the year no Shareholder s Grievance Committee meetings were held as there were no complaints to be decided at committee s level except one compliant from a shareholder and the same was resolved at office/registrars level. C. REMUNERATION COMMITTEE: The remuneration Committee is responsible to determine on behalf of the Board and on behalf of the Shareholders with agreed terms of reference, the Company s policy on specific remuneration packages for executive directors including pension rights and any compensation payment. Composition: Remuneration Committee consists of the following Directors viz. Mr. V.S. Murthy, Mr. K. Vijay Kumar and Mrs. B.N. Raja Kumari. Mr. V.S. Murthy is the Chairman of the Committee Non-Executive Independent Director. During the year under review only one meeting was held on 3 rd August, 2013 to consider the salary and perquisites of Executive Directors. Remuneration policy: Whole-time Directors are appointed by shareholder s resolution. No severance fees is payable to the Whole-time Directors. All components of remuneration to the Whole-time Directors are fixed in line with the Company s policies. The Non-Executive and Independent Directors receive sitting fee for attending the Board and Audit Committee meetings. The remuneration paid to the Directors during the year under review was in conformity with the applicable provisions of the Companies Act, 1956 duly considered and approved by the Board and the Shareholders. ANNUAL REPORT