Launch of Smart Meters National Programme in NMDC Area CONTENTS Company Information 6 Notice of 10th Annual General Meeting 7 Directors' Report 52 Extract of Annual Return 68 Secretarial Audit Report 74 Management Reply to Statutory Auditor's Report 76 Management Reply to Secretarial Auditor's Report 79 Management Discussion & Analysis Report 80 Statement of Disclosure of Remuneration under Section 197 of the Companies Act, 2013 and Rule 5(1) 82 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Comments of C&AG of India 84 Statutory Auditor's Report (Standalone) 89 Standalone Financial Statements 99 Statutory Auditor's Report (Consolidated) 153 Consolidated Financial Statements 160 Form AOC-1 223 EESL Annual Report 2018-19 5 COMPANY INFORMATION Chairman : Shri Rajeev Sharma Functional Directors : Shri Saurabh Kumar, Managing Director Shri S. Gopal, Director (Finance) (w.e.f. 07th February, 2019) Shri Venkatesh Dwivedi, Director (Projects & Business Development) (w.e.f. 07th February, 2019) Smt. Renu Narang, Director (Finance) (upto 23rd January, 2019) Nominee Directors : Shri Raj Pal Shri Mohit Bhargava Shri Abhay Bakre ( w.e.f. 08th May, 2018) Shri Sanjiv Garg (w.e.f 10th December, 2018) Shri V. K. Singh (upto 14th November, 2018) Independent Directors: Shri Seethapathy Chander Ms. Gauri Trivedi Chief Financial Officer : Shri S. Gopal (w.e.f. 07th February, 2019) Ms. Renu Narang (w.e.f. 06th April, 2018 to upto 23rd January, 2019) Shri S. Gopal (upto 05th April, 2018) Company Secretary : Ms. Pooja Shukla CIN : U40200DL2009PLC196789 Registered Office: NFL Building, 5th & 6th Floor, Core - III, Scope Complex, Lodhi Road, New Delhi - 110003 Internal Auditors : M/s Jain & Malhotra, Chartered Accountants, 42-B, Hanuman Lane, Near Hanuman Mandir, Connaught Place, New Delhi-110001 Statutory Auditors : M/s K.K. Soni & Co., Chartered Accountants, 130, (FF), Sarojini Market, New Delhi - 110023 Bankers : Axis Bank Canara Bank CTBC ICICI Bank HDFC Bank IDFC Bank Indusind Bank J&K Bank Punjab National Bank State Bank of India Union Bank Vijaya Bank Yes Bank Stock Exchange : BSE Limited Depositories : National Securities Depository Limited, 4th Floor, A Wing, Trade World, Kamla Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400013 Central Depository Services Limited, Phiroze Jeejeebhoy Towers, 17th Floor, Dalal Street, Fort, Mumbai - 4000001 Registrar and Share Transfer Agent : Karvy Fintech Private Limited (Formerly known as KCPL Advisory Services P Ltd), Karvy Selenium Tower B, Plot Nos. 31 & 32, Financial District, Nanakramguda, Serilingampally Mandal, Hyderabad - 500032 Debenture Trustee : Axis Trustee Services Limited, 2nd Floor E, Axis House, Bombay Dyeing Mills Compound, Pandurng Budhkar Marg, Worli, Mumbai - 400025 6 Company Information EESL Annual Report 2018-19 NOTICE OF 10TH ANNUAL GENERAL MEETING Notice is hereby given that 10th Annual General Meeting of the Development) and if thought fit, to pass with or without Shareholders of Energy Efficiency Services Limited will be held on modification, the following resolution as an Ordinary Monday, 30th day of September, 2019 at 04:00 P .M. at Power Finance Resolution: Corporation Ltd. 'URJANIDHI', 1, Barakhamba Lane, Connaught Place, "RESOLVED THAT pursuant to the recommendation of New Delhi -110001, to transact the following businesses:- Nomination and Remuneration Committee and approval of Board Ordinary Business:- of Directors and in accordance with the applicable provisions of Companies Act, 2013 ("the Act") read with Schedule V to the 1. To consider and adopt: Act and Rules made thereunder (including any statutory (a) the Audited Standalone Financial Statements of the modification(s) or re - enactment thereof, for the time being in Company for the financial year ended on 31st March 2019, force), relevant provisions of Articles of Association of the the reports of Board of Directors and Auditors thereon; Company and all applicable guidelines issued by the Central and Government from time to time, Shri Venkatesh Dwivedi (DIN: 07847265), in respect of whom the Company has received a (b) the Audited Consolidated Financial Statements of the notice in writing proposing his candidature for the office of Company for the financial year ended on 31st March 2019 Director pursuant to Section 160 of the Act, be and is hereby and the report of the Auditors thereon. appointed as the Whole - time Director, designated as Director 2. To declare final dividend for FY 2018-19 (Projects & Business Development), liable to retire by rotation, for the period and upon the following terms and conditions 3. To fix remuneration of Statutory Auditors for the year 2019 - 20. including remuneration as stated hereunder:- 4. To appoint a Director in place of Shri Rajeev Sharma • Period: 5 years w.e.f. 7th February, 2019 or upto the date (DIN: 00973413), who retires by rotation and being eligible, of superannuation, whichever is earlier, as per terms & offers himself for re - appointment. condition stated in Annexure - II. 5. To appoint a Director in place of Shri Mohit Bhargava (DIN: • Remuneration and Perquisites: As per terms & conditions 07941760), who retires by rotation and being eligible, offers stated in Annexure - II. himself for re - appointment. RESOLVED FURTHER THAT the Board of Directors of the Special Business:- Company be and is hereby authorized to do all such acts, deeds 6. To consider appointment of Shri Shankar Gopal (DIN: and things as may deem necessary, proper or desirable and to 08339439) as Whole - time Director (Commercial) and if sign and execute all necessary documents, applications and thought fit, to pass with or without modification, the following returns for the purpose of giving effect to the aforesaid resolution as an Ordinary Resolution: resolution." "RESOLVED THAT pursuant to the recommendation of 8. To consider alteration of Objects Clause of Memorandum of Nomination and Remuneration Committee and approval of Board Association of the Company and if thought fit, to pass with or of Directors and in accordance with the applicable provisions of without modification, the following resolution as a Special Companies Act, 2013 ("the Act") read with Schedule V to the Resolution: Act and Rules made thereunder (including any statutory "RESOLVED THAT pursuant to the provisions of section 13 and modification(s) or re - enactment thereof, for the time being in other applicable provisions, if any, of the Companies Act, 2013 force), relevant provisions of Articles of Association of the (the Act) and rules made thereunder (including any statutory Company and all applicable guidelines issued by the Central modification(s) or re - enactment thereof) for the time being in Government from time to time, Shri Shankar Gopal force, consent of the Company be and is hereby accorded to (DIN: 08339439), in respect of whom the Company has received amend Object Clause of the Memorandum of Association of the a notice in writing proposing his candidature for the office of Company (Clause III(A)) to include the following additional Director pursuant to Section 160 of the Act, be and is hereby objects: appointed as the Whole - time Director, designated as Director (Commercial), liable to retire by rotation, for the period and upon (5) To carry on, manage, supervise and control the business of the following terms and conditions including remuneration as establishing, commissioning, setting up, operating and stated hereunder:- maintaining non-conventional Grid Connected Solar Photo- Voltaic (PV) based Solar Power Plants with maximum capacity • Period: 5 years w.e.f. 7th February, 2019 or upto the date up to 10MW per plant for Government/Private entities primarily of superannuation, whichever is earlier, as per terms & for Solarisation of Agri. Feeders, Grid Connected Solar Photo- condition stated in Annexure - I. Voltaic (PV) based Roof top Programs, Grid Connected Solar • Remuneration and Perquisites: As per terms & conditions Photo-Voltaic (PV) based Agricultural Pump Sets Programs in stated in Annexure - I. any manner including build, own and transfer (BOT), and/or build, own and operate (BOO) and/or build, own, lease and RESOLVED FURTHER THAT the Board of Directors of the transfer (BOLT ) and/or build, own, operate and transfer (BOOT) Company be and is hereby authorized to do all such acts, deeds basis or otherwise and to design, develop and manufacture and things as may deem necessary, proper or desirable and to customized energy storage solutions in this connection and to sign and execute all necessary documents, applications and do all the ancillary, related or connected activities as may be returns for the purpose of giving effect to the aforesaid considered necessary or beneficial or desirable for or along resolution." with any or all of the aforesaid purposes which can be 7. To consider appointment of Shri Venkatesh Dwivedi (DIN: conveniently carried on these systems, networks or platforms. 07847265) as Whole - time Director (Projects & Business EESL Annual Report 2018-19 Notice 7 RESOLVED FURTHER THAT Board of Directors of the Company approved by the shareholders, in substitution to the regulations be and is hereby authorised to do all acts and take all such contained in existing Articles of Association of the Company. steps as may be necessary, proper or expedient to give effect to this resolution." RESOLVED FURTHER THAT Board of Directors of the Company be and are hereby severally authorised to do all necessary acts, 9. To consider alteration of Articles of Association of the dead and things, which may be usual, expedient or proper to Company and if thought fit, to pass with or without give effect to the above resolution." modification, the following resolution as a Special Resolution: By the order of Board of Directors "RESOLVED THAT pursuant to the provisions of Section 14 and For Energy Efficiency Services Limited all other applicable provisions of the Companies Act, 2013 (including any statutory modification(s) or re-enactment thereof, for the time being in force) and any other applicable laws/rules Pooja Shukla under any statute for the time being in force, the proposed Place: New Delhi Company Secretary amendments in Articles of Association of Energy Efficiency Date: 27.09.2019 M.No.: ACS 18008 Services Limited, as enclosed at Annexure-III be and are hereby Notes:- 1. Pursuant to Section 139 of Companies Act, 2013, Statutory Auditors of 3. The relevant Explanatory Statement pursuant to Section 102 of the company are appointed by the Comptroller and Auditor General of Companies Act, 2013 in respect of the Special Business in the notice is India (C & AG) and in terms of Section 142, their remuneration has to be annexed thereto. fixed by the Company in Annual General Meeting or in such manner as the Company in AGM may determine. C & AG in exercise of power 4. Corporate members intending to send their authorized representatives conferred under Section 139 of Companies Act, 2013 has appointed M/ to attend the Meeting are requested to send to the Company a certified s K K Soni & Co., Chartered Accountants (Firm Registration No. true copy of the Board resolution authorizing their representative to attend 000947N), New Delhi as Statutory Auditor of the Company for the and vote on their behalf at the Meeting. Financial Year 2019 - 20. The members may kindly authorise the Board 5. All relevant documents referred to in the Notice and accompanying of Directors to fix appropriate remuneration of Statutory Auditors for statement shall be available for inspection at the Registered / Corporate Financial Year 2019-20 after taking into consideration the volume of Office of the Company between 11.00 A.M. to 2.00 P .M. on all working work and prevailing inflation. days and will also be available for inspection at the meeting. 2. A member entitled to attend and vote at the meeting is entitled to appoint 6. The Notice of the AGM is being sent by electronic mode to all the a proxy to attend and vote on a poll instead of himself / herself and a Members, whose email addresses are available with the Company, unless proxy need not be a member of the company. Proxies in order to be any Member has requested for a physical copy of the same. effective, must be received by the company, duly filled, stamped and signed, at its Registered Office or at its Administrative Office not less 7. Route Map: Annexed than 48 hours before the Meeting. Blank Proxy form is enclosed. 8 Notice EESL Annual Report 2018-19 Explanatory Statement as required under Section 102 of the Companies Act, 2013 Item No. 6 & 7 The Board recommends the resolution for your approval as Special Resolution. Shri Venkatesh Dwivedi and Shri Shankar Gopal were selected as Director (Projects & Business Development) and Director (Commercial) Item No. 9 of EESL, respectively, by the Selection Committee constituted under Articles of Association (AoA) of a Company contain regulations for Article 102(iv) of Articles of Association of the Company (the AOA). management of the Company and is one of the most important Therefore, in terms of Section 161 of Companies Act, 2013 (the Act) documents of the Company. A Company is required to pursue all the and Article 103 of the AOA, they were appointed as Additional Directors actions/decisions to achieve its Objects, within the overall framework designated as Director (Projects & Business Development) and Director of its AoA. The provisions of AoA are binding on the Company and (Commercial), respectively, in the 71st Board Meeting held on 7th any action/decision beyond AoA is null and void. February, 2019 to hold office upto the date of next Annual General Meeting. Companies Act, 2013 (“the Act”), passed by the Parliament to replace erstwhile Companies Act, 1956, received assent of the President of Section 2(94) of the Act states that a director in the whole - time India on August 29, 2013 and was published in the Official Gazette on employment of the company is a whole - time director. As per Section August 30, 2013. 196 read with Schedule V to the Act, terms and conditions of appointment and remuneration payable to a whole - time director shall Present AoA of Energy Efficiency Services Limited (EESL) is in line be approved by the Board of Directors at a meeting which shall be with the provisions contained in erstwhile Companies Act, 1956 and subject to approval of shareholders by a resolution at next general the Rules made thereunder and the Joint Venture Agreement dated meeting of the Company. Section 178 of the Act requires Nomination 19th November, 2009. It is pertinent to mention that the last amendment and Remuneration Committee (NRC) to recommend appointment of in AoA was approved by shareholders of the Company in 9th Annual persons qualified to become directors. General Meeting held on 28.12.2018. With coming into force of the provisions of Companies Act, 2013 and Rules made thereunder it is In view of the same, Nomination and Remuneration Committee of the imperative that the entire Articles of Association of EESL may suitably company in its meeting held on 2nd July, 2019 recommended by changed in line with the changes in regulatory provisions. appointment of Shri S. Gopal and Shri Venkatesh Dwivedi as Whole - Time Directors in EESL designated as Director (Commercial) and In view of above, new set of Articles of Association of EESL, with Director (Projects & Business Development), respectively, on terms changes highlighted, is placed at Annexure-III. The aforementioned and conditions stated in the appointment letters, which was new set of Articles of Association has been prepared keeping the consequently approved by the Board in the Board Meeting held on following into consideration: 2nd July, 2019 and recommended to the shareholders for approval. a. To align the extant Articles of Association of EESL with the The company has also received a notice signifying their candidature provisions of Companies Act, 2013, Rules made thereunder and as directors pursuant to Section 160 of the Act. the provisions contained in Joint Venture Agreement dated 19th November, 2009; Their brief resume, inter - alia, giving their experience, shareholding in the Company, other Directorships and other particulars, forms part of b. For better clarity of the existing Articles and making them self- this notice. explanatory; None of the Directors, Key Managerial Personnel of the Company or Board of Directors in their 61st Board Meeting held on 16th February, their relatives except Shri Shankar Gopal and Shri Venkatesh Dwivedi, 2018 accorded approval to amend the Articles of Association of the is in any way, concerned or interested, financially or otherwise, in the company to align the extant Articles with the provisions of Companies resolution. Act, 2013 (the Act). Section 14 of the Companies Act, 2013 inter-alia prescribes that the Company can alter its Articles of Association by The Board recommends the resolution for your approval as an Ordinary obtaining approval of shareholders through a special resolution passed Resolution. in a general meeting. Item No. 8 None of the Directors, Key Managerial Personnel or their relatives is EESL has a strong pipeline of projects in the solar sector including concerned or interested in the resolution. Grid Connected Solar Photo - Voltaic (PV) based agriculture pump The Board recommends the resolution for your approval as Special sets, solarization of agriculture feeders, solar PV rooftop program and Resolution. Implementation of solar water pumping systems for International Solar Alliance (ISA) member countries. The objects clause of Memorandum of Association of the Company does not specifically deal with the projects in Solar Sector. Therefore, it is proposed that the Objects Clause may be altered accordingly. In By the order of Board of Directors terms of the provisions of Section 13 of Companies Act, 2013, For Energy Efficiency Services Limited alteration in Objects Clause of Memorandum of Association of a company is carried out with the approval of shareholders of the company by way of Special Resolution passed in a general meeting. None of the Directors and / or Key Managerial Personnel of the Pooja Shukla Company or their respective relatives are concerned or interested in Place: New Delhi Company Secretary the Resolution. Date: 27.09.2019 M.No.: ACS 18008 EESL Annual Report 2018-19 Notice 9 PROXY FORM (Form no. MGT-11) [Pursuant to Section 105(6) of the Companies Act, 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014] Name: ……………………………………… Folio No. ……………. Registered Address: ………………………………… No. of Shares held -………..Shares ………………………………… I, being the member(s) of …………. shares of the above named company, hereby appoint: 1. Name of the proxy Registered address Signature E-mail ID Or failing him 2. Name of the proxy Registered address Signature E-mail ID as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 10th Annual General Meeting of the company, to be held on Monday, 30th September, 2019 at 04:00 P .M. at Power Finance Corporation Ltd. 'URJANIDHI', 1, Barakhamba Lane, Connaught Place, New Delhi -110001 and at any adjournment thereof in respect of such resolutions as are indicated below: Sr. No. Resolution For Against Ordinary Business 1. To consider and adopt: a. the Audited Standalone Financial Statements of the Company for the financial year ended on 31st March 2019, the reports of Board of Directors and Auditors thereon; and b. the Audited Consolidated Financial Statements of the Company for the financial year ended on 31st March 2019 and the report of the Auditors thereon. 2. To declare final dividend for FY 2018-19 3. To fix remuneration of Statutory Auditors for the year 2019 - 20. 4. To appoint a Director in place of Shri Rajeev Sharma (DIN: 00973413), who retires by rotation and being eligible, offers himself for re - appointment. 5. To appoint a Director in place of Shri Mohit Bhargava (DIN: 07941760), who retires by rotation and being eligible, offers himself for re - appointment Special Business 6. To consider appointment of Shri Shankar Gopal (DIN: 08339439) as Whole - time Director (Commercial) 7. To consider appointment of Shri Venkatesh Dwivedi (DIN: 07847265) as Whole - time Director (Projects & Business Development) 8. To consider alteration of Objects Clause of Memorandum of Association of the Company 9. To consider alteration of Articles of Association of the Company Signed this…………day of ………20….. Signature of Shareholders ________________________ Affix Revenue Signature of proxy holder(s) Stamp of ` 1/0 Note: 1. This form of proxy in order to be effective should be duly completed and deposited at the registered office of the Company, not less than 48 hours before the commencement of the Meeting. 2. A Proxy need not be a member of the company. 3. Please put a √ in the appropriate column against the resolutions indicated in the Box. If you leave the 'For' or 'Against' column blank against any or all the resolutions, your Proxy will be entitled to vote in the manner as he/she thinks appropriate. ATTENDANCE SLIP Venue of the Meeting: Power Finance Corporation Ltd. 'URJANIDHI', 1, Barakhamba Lane, Connaught Place, New Delhi - 110001 Date and Time: 30th September, 2019 at 04:00 p.m. PLEASE FILL ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING VENUE I certify that I am a registered shareholder/proxy for the registered Shareholder of the Company and hereby record my presence at the 10th Annual General Meeting of the Company on Monday, 30th September, 2019 at 04:00 p.m. at Power Finance Corporation Ltd. 'URJANIDHI', 1, Barakhamba Lane, Connaught Place, New Delhi - 110001. Brief Resume of the Directors seeking Appointment / Re - appointment: Name DOB / Age Date of appointment Qualification Experience Shareholding in Number of Board Other Directorships the company Meetings attended during the year Shri Mohit Bhargava 2nd February, 1964 / 55 years 05/02/2018 Electrical Engineer by qualification and He has a rich experience of over 30 years in Nil 8 Meja Urja Nigam has undergone Leadership training at commissioning of power plants, maintenance Private Ltd Harvard Business School and S P Jain activities, procurement and planning. Institute in Singapore. He has also overseen the development of the EESL Annual Report 2018-19 company's long term Corporate Plans involving setting the annual targets, preparing and pushing through the various strategic and growth initiatives. Shri Rajeev Sharma 1st June, 1960 / 59 years 05/02/2018 B.Tech (Electrical) from G B Pant He has more than 32 years of varied power Nil 9 1. Power Finance University and Masters' Degree in sector experience. He has more than 20 years' Corporation Limited Engineering from IIT Roorkee and MBA experience of power sector policy making, 2. PFC Consulting Limited from FMS, Delhi University initiating & implementing reform measures and project implementation at premier organizations like Central Electricity Authority (CEA), Ministry of Power (MoP) and Power Grid. He is considered the architect of Government's flagship schemes like Deen Dayal Upadhyaya Gram Jyoti Yojana, Rajiv Gandhi Grameen Vidyutikaran Yojana and Restructured Accelerated Power Development and Reforms Programme (R-APDRP). Further, he has more than 12 years' experience of financing power sector and implementing key power sector reforms, which includes almost 8 years of Board level experience at leading Navratna Companies i.e. Power Finance Corporation Limited and REC Limited. Shri S. Gopal 8th July, 1967 / 52 years 07/02/2019 A Member of Institute of Cost and Work Mr. Shankar Gopal has a rich experience of Nil 1 1. EESL Energy Pro Accountant of India. more than 27 years in handling procurement Assets Limited, UK and contracting, Project Execution, 2. Edina Power Services implementation of financial procedures and Limited processes, resources mobilization through 3. EPSL Trigeneration equity, Bonds, Banks and multilateral Agencies. Private Limited Shri Venkatesh 26th May, 1969 / 50 years 07/02/2019 An Electrical Engineer from Faculty of With more than 26 years of rich experience, he Nil 1 NEESL Private Limited Dwivedi Engineering & Technology, Jamia Millia has been earlier in the Oil and Energy Sector in Islamia, New Delhi and Masters in India in various roles in Project Management, Business Administration from IIM Business Development, Liaison with Calcutta. He is also a BEE Certified Government with Exper tise in Business Energy Auditor. Strategy, Corporate Planning, Project Development, Business Liaisoning, Key Account Management, OEM Relations, Technical Services and Techno - commercial Notice bidding. 11 Annexure - I Ref No: EESL/0320/7844 14 January 2019 To, S GOPAL H.NO. 907, SECTOR 8, FARIDABAD HARYANA-121006 Sub: Offer of Appointment for the Post of Director (Commercial) Dear Sir, With reference to the interview you had with us, it gives us great pleasure to invite you to become a member of the EESL family. The terms and conditions of your offer of appointment are as under: 1. Scale of Pay - ` 150000-300000 2. Basic Pay - ` 150000 3. Variable DA - As per rules 4. Place of Posting - Corporate Office, Noida 5. Duration of Appointment - 5 (Five ) years or upto the date of superannuation whichever is earlier In addition, standard terms and conditions of appointment applicable to you and various benefits and allowances admissible are detailed in the annexure. You may please let us know within 05 days from the date of issue of this letter about acceptance of our offer(in the format enclosed) by email to recruitment@eesl.co.in. Thereafter, you may report at the HR Department for completion of joining formalities at Corporate Office EESL -Scope Complex, Core-3, 5th Floor, Lodhi Road- 110003 by 13th February, 2019. You will need to bring certain documents at the time of joining, which are also given in the annexure. We look forward to your joining us and sharing a mutually beneficial relationship. Thanking you, Yours faithfully, For and on behalf of EESL. (Tathagat Chaturvedi) Encl: As above. AGM(HR) Annexure 1. House Rent Allowance OR Company Leased Residential Accommodation The Executive can avail either HRA or Company Leased Accommodation as below:- - House Rent Allowance (HRA) The rate of HRA is @ 24%* of Basic Pay (applicable in Delhi/ NCR Region). - Company Leased Residential Accommodation The monthly rental ceilings for hiring of Company Leased Residential Accommodation shall be ` 36000* /- (applicable for Delhi/ NCR Region). House Rent Recovery (HRR) amounting to 10% of pre-revised basic pay i.e (` 62000-80000) or the Actual Rent, whichever is lower will be recovered from the Executive per month. *The rates for other locations would differ. 2. Other Perquisites and Allowances (i) "Cafeteria approach" shall be adopted for other perquisites and allowances allowing the Executives to choose from a given set or cafeteria of perquisites and allowances subject to the condition that the sum total of these perquisites and allowances shall not exceed 35% of basic pay. (ii) Medical Benefits: OPD expenses: Annual OPD expenses for medical treatment will be reimbursed to the Executive at actual subject to the maximum ceiling limit of the pre-revised scale i.e ` 80000 (` 62000-80000) on submission of bills/ vouchers / medical prescription. IPD expenses: Employees are allowed indoor medical treatments with an annual ceiling of ` 10 lac as per EESL Medical Policy. Additional Umbrella cover up to maximum ` 25 Lakhs. Group Accidental: - EESL employees are covered under accidental insurance upto ` 50 lacs. Insurance Group Insurance scheme: Coverage of ` 7,00,000/- 3. Other Benefits (i) Contributory Provident Fund (CPF) (i) EPF @ 12% of the Basic Pay + DA of the Executive will be deducted towards contribution for Provident Fund. (ii) EESL will contribute 12 % of the Basic Pay + DA of the Executive towards contribution for PF and Pension. (iii) Gratuity: Gratuity will be payable as per Gratuity Act 1972. (iii) Employees Group Superannuation defined Contribution scheme (i) A pension scheme on which EESL contributes about 9% of Basic + DA towards Group superannuation fund, (as decided on year to year basis) (i) Members can draw pension on superannuation/as described under the scheme. (iv) Mobile Handset /data card: Mobile Handset-Rs. 35000/- Data card- As per actual (v) Official Vehicle 12 Notice EESL Annual Report 2018-19 Annexure - II 14 January 2019 Ref No: EESL/0320/7845 To, VENKATESH DWIVEDI 002, ALEXANDRA D TWR, GRAND OMAXE APTTS, SECTOR 93B NOIDA-201304 Sub: Offer of Appointment for the Post of Director (Projects and Business Development) Dear Sir, With reference to the interview you had with us, it gives us great pleasure to invite you to become a member of the EESL family. The terms and conditions of your offer of appointment are as under: 1. Scale of Pay - ` 150000-300000 2. Basic Pay - ` 150000 3. Variable DA - As per rules 4. Place of Posting - Corporate Office, Noida 5. Duration of Appointment - 5(Five ) years or upto the date of superannuation whichever is earlier In addition, standard terms and conditions of appointment applicable to you and various benefits and allowances admissible are detailed in the annexure. You may please let us know within 05 days from the date of issue of this letter about acceptance of our offer (in the format enclosed) by email to recruitment@eesl.co.in. Thereafter, you may report at the HR Department for completion of joining formalities at Corporate Office EESL -Scope Complex, Core- 3, 5th Floor, Lodhi Road-110003 by 13th February, 2019. You will need to bring certain documents at the time of joining, which are also given in the annexure. We look forward to your joining us and sharing a mutually beneficial relationship. Thanking you, Yours faithfully, For and on behalf of EESL. (Tathagat Chaturvedi) Encl: As above. AGM(HR) Annexure 1. House Rent Allowance OR Company Leased Residential Accommodation The Executive can avail either HRA or Company Leased Accommodation as below:- - House Rent Allowance (HRA) The rate of HRA is @ 24%* of Basic Pay (applicable in Delhi/ NCR Region). - Company Leased Residential Accommodation The monthly rental ceilings for hiring of Company Leased Residential Accommodation shall be ` 36000* /- (applicable for Delhi/ NCR Region). House Rent Recovery (HRR) amounting to 10% of pre-revised basic pay i.e (` 62000-80000) or the Actual Rent, whichever is lower will be recovered from the Executive per month. *The rates for other locations would differ. 2. Other Perquisites and Allowances (i) "Cafeteria approach" shall be adopted for other perquisites and allowances allowing the Executives to choose from a given set or cafeteria of perquisites and allowances subject to the condition that the sum total of these perquisites and allowances shall not exceed 35% of basic pay. (ii) Medical Benefits: OPD expenses: Annual OPD expenses for medical treatment will be reimbursed to the Executive at actual subject to the maximum ceiling limit of the pre-revised scale i.e ` 80000 (` 62000-80000) on submission of bills/ vouchers / medical prescription. IPD expenses: Employees are allowed indoor medical treatments with an annual ceiling of ` 10 lac as per EESL Medical Policy. Additional Umbrella cover up to maximum ` 25 Lakhs. Group Accidental: - EESL employees are covered under accidental insurance upto ` 50 lacs. Insurance Group Insurance scheme: Coverage of ` 7,00,000/- 3. Other Benefits (i) Contributory Provident Fund (CPF) (i) EPF @ 12% of the Basic Pay + DA of the Executive will be deducted towards contribution for Provident Fund. (ii) EESL will contribute 12 % of the Basic Pay + DA of the Executive towards contribution for PF and Pension. (iii) Gratuity: Gratuity will be payable as per Gratuity Act 1972. (iii) Employees Group Superannuation defined Contribution scheme (i) A pension scheme on which EESL contributes about 9% of Basic + DA towards Group superannuation fund, (as decided on year to year basis) (i) Members can draw pension on superannuation/as described under the scheme. (iv) Mobile Handset /data card: Mobile Handset-Rs. 35000/- Data card- As per actual (v) Official Vehicle EESL Annual Report 2018-19 Notice 13 Annexure - III Comparison of Articles under Old and New Companies Act OLD PROVISIONS UNDER COMPANIES ACT, 1956 NEW PROVISIONS UNDER COMPANIES. ACT, 2013 [Column I] [Column II] 1. Interpretation clause: 1. Interpretation clause: In these Articles, the following expressions shall, unless No Change repugnant to the context or meaning thereof, have the meaning hereinafter assigned to them. Act 2 Act "Act" shall mean the Companies Act, 1956, or any statutory "Act" means the Companies Act, 2013, or any statutory modifications or re-enactment thereof for the time being in force. modifications or re - enactment thereof for the time being in force and Rules made thereunder and the term shall be deemed to refer to the applicable section thereof which is relatable to the relevant Article in which the said term appears in these articles and any previous company law, so far as may be applicable. Affiliates / Associates Affiliates / Associates "Affiliates" / "Associates" in relation to "NTPC", "PFC", No Change "POWERGRID" and "REC' respectively shall mean person(s) / body corporate of which "NTPC", "PFC", "POWERGRID" and "REC", as the case may be, is owner or beneficial owner of not less than 50% of the paid-up share capital voting rights. Agreement Agreement "Agreement" shall mean the Joint Venture Agreement among No Change the promoters executed on 19th day of November 2009 at New Delhi and shall include any supplement(s) or amendment(s) to the Agreement. Agreed Proportion Agreed Proportion "Agreed Proportion" shall mean the proportion in which the No Change Parties have agreed to subscribe to and hold the Shares in the Equity Share Capital of the Company. "Articles" "Articles" "These Articles" or "Articles" means the Article of Association No Change of the Company for the time being in force. Auditors Auditors "Auditors" means a firm or firms of Chartered Accountants as No Change may be appointed as statutory auditors of the Company by the Comptroller and Auditor General of India from time to time. Budget Budget "Budget" shall mean the budget of the Company as approved No Change in accordance with the provisions of Articles of the Company and the Agreement. Beneficial Owner Beneficial Owner "Beneficial-Owner" means a person whose name is recorded "Beneficial-Owner" means a person whose name is recorded as such with a Depository with respect to shares of the as such with a Depository with respect to shares of the Company or in respect of whom the owner of shares makes a Company or in respect of whom the owner of shares makes a declaration to the Company in accordance with section 187C declaration to the Company in accordance with section 89 of of the Act. the Act. Board Board "Board" or "Board of Directors' means the Board of Directors No Change of the Company as constituted from time to time. BEE BEE "BEE" shall mean Bureau of Energy Efficiency a quasi- No Change regulatory authority established by Govt. of India for implementing or promoting Energy Efficiency initiatives in India. Capital Capital "Capital" means the capital for the time being raised or No change authorized to be raised for the purpose of the Company. Chairman Chairman "The Chairman" means the Chairman of the Board of Directors No change of the Company for the time being. 14 Notice EESL Annual Report 2018-19 Company Company "The Company" shall mean Energy Efficiency Services Limited No change MD MD "MD" shall mean Managing Director of the Company No change Dematerialization Dematerialization "Dematerialization" is the process by which shareholder/ "Dematerialization" is the process by which shareholder/ debenture holder can get physical share/debenture certificates debenture holder or other security holder can get physical share/ converted into electronic balances in his account maintained debenture/ security certificates converted into electronic with the participant of a Depository. holdings in his account maintained with a Depository Participant. Depositories Act Depositories Act "Depositories Act" means Depositories Act. 1996 or any No Change statutory modification or re-enactment thereof. Depository Depository "Depository" means a company formed and registered under "Depository" shall mean a Depository as defined in clause (e) the Companies Act, 1956 and which has been granted a sub-section (1) of section 2 of the Depositories Act, 1996 and certificate of registration to act as a depository under the includes a company formed and registered under the Securities & Exchange Board of India Act, 1992 Companies Act, 1956 which has been granted a certificate of registration under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992. Directors Directors "Directors" mean the Directors for the time being of the No Change Company and include any person occupying the position of Director by whatever name called. Dividend Dividend "Dividend" includes interim dividend. No Change ESCOs ESCOs "ESCOs" shall mean Energy Service Companies engaged in No Change the business of Energy Efficiency Executor / Administrator Executor / Administrator "Executor" or "Administrator' means a person who has obtained No change probate or letter of administration, as the case may be, from the Competent Court. Financial Institution Financial Institution "Financial Institution" shall mean the institutions specified by No change the Central Government, as such from time to time under the provisions of the Act. Laws Laws "Laws" shall mean all central, national, foreign, state, provincial, No Change municipal and local laws, statutes and ordinances and all rules, regulations, directives, requirements (that have the force of law or regulation) and administrative codes of a governmental instrumentality. Member(s) Member(s) "Member" or "Members" shall mean the duly registered No change holder(s) from time to time of the shares of the Company and includes the subscribers of the Memorandum of Association and Beneficial Owner(s). MoA MoA "MoA" shall mean the Memorandum of Association of the No Change Company for the time being in force. MoP MoP "MoP" shall mean Ministry of Power, Govt. of India. No Change New investor(s) New investor(s) "New investor(s)" shall mean a person(s) other than Parties No Change who are inducted as a Shareholder with the approval of the Board other than in case of an IPO. NTPC NTPC "NTPC" shall mean NTPC Limited, a company incorporated No Change under the provisions of the Companies Act, 1956 having its EESL Annual Report 2018-19 Notice 15 registered office at NTPC Bhawan, SCOPE Complex 7, Institutional Area, Lodi Road New Delhi- 110003, which expression shall unless the context requires otherwise include its successors, authorized representatives and permitted assigns. Office Office "The Office" means the Registered office of the Company for No Change the time being. Person Person "Person" shall mean any individual, body corporate or other No Change business entity or any statutory corporation, society, authority, trust, partnership firm or any other entity whether acting in an individual, fiduciary or other capacity. Party or Parties Party or Parties "Party" or "Parties" shall mean Individually as NTPC, PFC No Change POWERGRID and REC and collectively as parties. Promoters or Promoter Shareholders Promoters or Promoter Shareholders "Promoters" or "Promoter Shareholders" shall mean the Parties No Change to the Agreement namely NTPC, PFC, POWERGRID and REC who have jointly undertaken to incorporate the Company under the Act and to be shareholders thereof. Proxy Proxy "Proxy" means an instrument whereby any person is authorized No Change to vote for a member at a General Meeting or poll. PFC PFC "PFC" shall mean Power Finance Corporation Limited, a No Change company incorporated under provisions of the Companies Act, 1956, having its Registered office at Urjanidhi, 1, Barakhamba Lane, Connaught Place, New Delhi-110001, which expression shall unless the context requires otherwise include its successors, authorized representatives and permitted assigns. POWERGRID POWERGRID "POWERGRID" shall mean Power Grid Corporation of India No Change Limited, a company incorporated under provisions of the Companies Act, 1956, having its Registered office at B-9, Qutab Institutional Area, Katwaria Sarai, New Delhi - 110016 which expression shall unless the context requires otherwise include its successors, authorized representatives and permitted assigns. REC REC "REC" shall mean Rural Electrification Corporation Limited, a No Change company incorporated under the Companies Act 1956 and having its Registered office at Core-IV, SCOPE Complex, 7 Institutional Area, Lodi Road, New Delhi-110003 which expression shall unless the context requires otherwise include its successors, authorized representatives and permitted assigns. The Register The Register "The Register" includes the Register of Members of the company No Change required to be kept pursuant to the provisions of the Act. Registered Owner Registered Owner "Registered Owner" means a Shareholder whose name is No Change entered as such in the records of the Company. Rematerialization Rematerialization "Rematerialization" is the process of conversion of electronic No Change holdings back into the physical form and issue of fresh share/ debenture certificate(s) in favour of share/debenture holder(s). Seal Seal "Seal" means the common seal of the Company for the time No Change being. 16 Notice EESL Annual Report 2018-19 Secretary Secretary "The Secretary" means the Secretary for the time being of the No Change Company appointed by the Board in accordance with the provisions of the Act. Shares Shares "Shares" shall mean the equity shares in the Equity Share Capital No Change of the Company. Shareholders Shareholders "Shareholders" shall mean persons holding Shares for the time No Change being in the Equity Share Capital of the Company. Transfer Transfer "Transfer" means an instrument of transfer duly stamped and No Change otherwise valid and does not include any instrument of transfer which the Company is for any reason entitled to refuse to Register and does not Register. Singular Number Singular Number "Singular Number" - words importing the singular number shall No Change include, where the context permits, the plural number and vice- versa, by the same token, words importing the masculine gender shall include where the context permits, the feminine gender and vice versa. Written or in Writing Written or in Writing "Written" or "in writing" shall include printing, lithographing and No Change other males of representing or reproducing words in a visible form. Other words or expressions contained in these Articles shall Other words or expressions contained in these Articles shall bear the same meaning as are assigned to them in the Act or bear the same meaning as are assigned to them in the Act or any statutory modification thereof. any statutory modification thereof. CONSTITUTION I Application of regulation in Table "A" I Application of regulation in Table "F" The regulations in Table 'A' in the first schedule to the Act, shall The regulations in Table 'F' in the First Schedule to the Act, not apply to the Company except so far as the same are shall not apply to the Company except so far as the same are repeated or contained in, or expressly made applicable by these repeated or contained in, or expressly made applicable by Articles or by the Act. these Articles or by the Act II Company to be governed by these Articles II Company to be governed by these Articles The regulations for the management of the Company and for No Change the observance of the members thereof and their representatives shall, subject as aforesaid and to any exercise of the statutory powers of the Company in reference to the repeal or alteration of or addition to its Articles of Association by Special Resolution, as prescribed or permitted by the Act, be such as are contained in these Articles III Company to be a Public Company III Company to be a Public Company The Company is a Public Company within the meaning of The Company is a Public Company within the meaning of Section 3 (1) (iv) of the Companies Act, 1956 and accordingly Section 2(71) of the Companies Act, 2013 and accordingly shall have a minimum paid-up Capital of ` 5,00,000 (Rupees shall have a minimum paid-up Capital of ` 5,00,000 (Rupees Five Lakh) or such higher paid-up Capital as may be prescribed Five Lakh) or such higher paid-up Capital as may be prescribed by the Act. by the Act. 1. Share Capital 1. Share Capital The Authorized Share Capital of the company is No Change ` 3500,00,00,000 (Rupees Three thousand and Five hundred Crores) divided into 350,00,00,000 (Three Hundred Fifty Crores) equity shares of face of ` 10/- each with the power to increase and reduce the capital of the Company (Amended by special resolution passed in the 11th Extraordinary General Meeting held on 17.07.2018 ) 2. Initial paid-up capital 2. Initial paid-up capital The initial paid-up share capital of the Company shall be ` No Change 250,00,000 (Rupees Two crore Fifty Lac only) consisting of 2500,000 (twenty five lac) equity shares of `10/- each, which shall be subscribed by the Parties in the following proportion: NTPC, PFC, POWERGRID and REC 25% each EESL Annual Report 2018-19 Notice 17 The Equity percentage as mentioned above shall also be inclusive of the Shares held by the Affiliates/ Associates of respective Parties. Unless otherwise mutually agreed Affiliates / Associates of respective Parties shall be regarded as single party for determining their rights under the Agreement. 3. Equity Shareholding in the Company 3. Equity Shareholding in the Company Unless otherwise mutually agreed among the parties, no party No Change or other shareholder, at any point of time, along with their respective Affiliates/Associates, shall hold more than 40% of the Paid up share Capital of the Company. 4. Issue of Additional Shares 4. Issue of Additional Shares If at any time the Company wishes to raise its subscribed share No Change capital by issue of additional shares the Company shall do the same in accordance with the provisions of the Act 5. Authorised Share Capital beyond ` 10 crore 5. Authorised Share Capital beyond ` 10 crore If at any time the Company decides to increase its Authorized No Change Share Capital beyond ` 10 Crore, in accordance with these Articles, the Parties shall be under contractual obligation to subscribe to such increased Authorized Share Capital in the Agreed Proportion. 6. Equity Shares shall be of the same class 6. Equity Shares shall be of the same class All equity Shares shall be of the same class and shall be identical No Change in all respects and subject to the provisions of the Act and the Agreement, the holders thereof shall be entitled to have identical rights and privileges including, without limitation, dividend, voting rights and distribution of assets in the event of voluntary or involuntary liquidation, dissolution or winding up of the Company. 7. Supplementary Agreement 7. Supplementary Agreement Any Shareholder, other than the Parties, entitled for and claiming No Change any rights under the Agreement shall be required to enter into a supplementary Agreement with the Parties and the Company will confirm acceptance of and compliance with the provisions of the Agreement including lock-in period. 8. Buy Back of Shares 8. Buy Back of Shares The company may buy back its own shares subject to Notwithstanding anything contained in these Articles but subject provisions of the sections 77A, 77AA and 77B of the Act as to the provisions of Section 68 to 70 and any other provisions amended. of the Act, as may applicable, the Company may purchase its own shares. 9. Financial Assistance to subscribe to shares 9. Financial Assistance to subscribe to shares Save as permitted by Section 77 of the Act, the funds of the Save as permitted by Section 67 of the Act, the funds of the company shall not be employed in the purchase of or lent on company shall not be employed in the purchase of or lent on security, the shares of the Company and the Company shall security, the shares of the Company and the Company shall not give directly or indirectly, any financial assistance, whether not give directly or indirectly, any financial assistance, whether by way of loan, guarantee, the provisions of security or by way of loan, guarantee, the provisions of security or otherwise, for the purpose of, or in connection with any otherwise, for the purpose of, or in connection with any purchase of or subscription for Shares in the Company. purchase of or subscription for Shares in the Company. 10. Acceptance of Shares 10. Acceptance of Shares Any application signed by or on behalf of an applicant for shares No Change in the Company, followed by an allotment of any shares therein, shall be an acceptance of shares within the meaning of these articles and every person who thus or otherwise accepts any shares and whose name is on the Register shall, for the purpose of these Articles, be a member. 11. Money due on allotment 11. Money due on allotment The money (if any) which the Board, on the allotment of any No Change shares being made by them, require or direct to be paid by way of deposit, call or otherwise, in respect of any shares allotted by them, shall, immediately on the insertion of the name of the allottee in the Register of Members as the name of the holder of such shares, become a debt due to and recoverable by the Company, from the allotted thereof and, shall be paid by him accordingly. 18 Notice EESL Annual Report 2018-19 12. Payment in Instalments 12. Payment in Instalments If by the conditions of allotment of any share the whole or part No Change of the amount or issue price thereof shall be payable by instalment, every such instalment shall, when due, be paid to the Company by the person who, for the time being and from time to lime, shall be the registered holder of the share or his legal representative. 13. Company not bound to recognize any interest in shares 13. Company not bound to recognize any interest in shares other than that of the registered holders other than that of the registered holders Save as herein otherwise provided, the Company shall be No Change entitled to treat the person whose name appears in the Register of Members as the holder of any shares as the absolute owner thereof and accordingly shall not (except as ordered by a Court of Competent jurisdiction or as by law required) be bound to recognize any benami, trust or equity or equitable, contingent or other claim to or interest in such shares on the part of any other person whether or not it shall have express or implied notice thereof. 14. Trust not recognized 14. Trust not recognized Except as ordered by a Court of Competent Jurisdiction or as No Change provided by the Act, no notice of any trust, expressed or implied or constructive, shall be entered on the Register of Members or of Debenture-holders of the Company. 15. Register and Index of Members/ Debenture holders 15. Register and Index of Members/ Debenture holders The Company shall cause to be kept at its Registered Office or The Company shall cause to be kept at its Registered Office or at such other place as may be decided by the Board of Directors, at such other place as may be decided by the Board of Directors, the Register and Index of Members /Debenture holders in the Register and Index of Members /Debenture holders in accordance with sections 150, 151 and 152 and other accordance with sections 88 and other applicable provisions applicable provisions of the Companies Act, 1956 and the of the Companies Act, 2013 and the Depositories Act, 1996 Depositories Act, 1996 with the details of Shares/Debentures with the details of Shares/Debentures held in physical and held in physical and dematerialized form in any medium as dematerialized form in any medium as may be permitted by may be permitted by law including in any form of electronic law including in any form of electronic medium. medium. The Register and Index of Beneficial Owner maintained by a The Register and Index of Beneficial Owner maintained by a Depository under section 11 of the Depositories Act, 1996 Depository under section 11 of the Depositories Act, 1996 shall shall also deemed to be the Register and Index of Members / also deemed to be the Register and Index of Members / Debenture holders for the purpose of the Companies Act, 2013 Debenture holders for the purpose of the Companies Act, 1956 and any amendment or re-enactment thereof. The Company and any amendment or re-enactment thereof. The Company shall have power to keep in any State or Country outside India, shall have power to keep in any State or Country outside India, Register of Members/Debenture holders for the resident in that Register of Members/Debenture holders for the resident in that State or Country. State or Country. 16. Register and Index of members open to inspection 16. Register and Index of members open to inspection The Register and the Index of Members shall be open to The Register and the Indices maintained pursuant to Section inspection of any members without any payment and to 88 and copies of returns prepared pursuant to Section 92 of inspection of any other persons on payment of Rupee Ten or the Act shall be open to inspection, during the business hours such lesser sum as the Company may prescribe for each on every working day for two hours or more as the board of inspection Any such member or person may take extracts there directors thinks reasonable, by any members, debenture from. holders, other security holder or beneficial owner without any payment and to inspection of any other persons on payment of Rupee Ten or such lesser sum as the Company may prescribe for each inspection. Any such member or person may take extracts there from. 17. Extracts of the Register 17. Extracts of the Register The Company shall send to any member on request extracts/ The Company shall provide to any members, debenture holders, copy of the Register or of the list and summary required under other security holder or beneficial owner, on request, extracts/ the Act on payment of such sum as specified in the Act from copy of the Register or of the list and summary required under time to time. the Act on payment of such sum as specified in the Act from time to time. DEMATERILIZATION OF SECURITIES 18(a) Company Dematerialize/ Rematerialize its Securities 18(a) Company Dematerialize/ Rematerialize its Securities Notwithstanding anything contained in these Articles, the No change Company shall be entitled to dematerialize or rematerialize its EESL Annual Report 2018-19 Notice 19 shares, debentures and other securities (both present and future) held by it with the Depository and to offer its shares, debentures and other securities for subscription in a dematerialized form pursuant to the Depositories Act, 1996 and the Rules framed there under, if any; 18 (b) Option for Investors 18 (b) Option for Investors Every person subscribing to securities offered by the Company No Change shall have the option to receive the security certificates or to hold the securities with a Depository. Such a person who is the beneficial owner of securities can at any time opt out of a Depository, if permitted by law, in respect of any security and the Company shall, in the manner and within the time prescribed provided by the Depositories Act, 1996 issue to the beneficial owner the required Certificates of Securities. If a person opts to hold his security with a depository, then notwithstanding anything to the contrary contained in the Act or in these Articles, the Company shall intimate such Depository the details of allotment of the security and on receipt of the information, the Depository shall enter in its record the name of the allottee as the beneficial owner of the security. 18 (c) Securities in Depositories to be in fungible form 18 (c) Securities in Depositories to be in fungible form All securities held by a Depository shall be dematerialized and All securities held by a Depository shall be dematerialized and shall be in fungible form. Nothing contained in Sections 153 of shall be in fungible form. Nothing contained in Sections 88 of the Act shall apply to a Depository in respect of securities held the Act shall apply to a Depository in respect of securities held by it on behalf of the beneficial owners. by it on behalf of the beneficial owners. 18 (d) Rights of Depositories and beneficial owners 18 (d) Rights of Depositories and beneficial owners (i) Notwithstanding anything to the contrary contained in the (i) No Change Act or in these Articles, a Depository shall be deemed to be the registered owner for the purposes of effecting transfer of ownership of security on behalf of the beneficial owner; (ii) Save as otherwise provided in (i) above, the Depository as (ii) No Change the registered owner of the securities shall not have any voting rights or any other rights in respect of the securities held by it, (iii) Every person holding securities of the company and whose (iii) Every person holding securities of the company and whose name is entered as the beneficial owner in the records of the name is entered as the beneficial owner in the records of the Depository shall be deemed to be a member/debenture holder, Depository shall be deemed to be a member / debenture holder as the case may be, of the Company. The beneficial owner of / security holder, as the case may be, of the Company. The securities shall be entitled to all the rights and benefits and be beneficial owner of securities shall be entitled to all the rights subject to all the liabilities in respect of his securities which and benefits and be subject to all the liabilities in respect of his are held by a Depository. securities which are held by a Depository. 18(e) Service of Documents 18(e) Service of Documents Notwithstanding anything to the contrary contained in the Act No Change or in these Articles to the contrary, where securities are held in a Depository, the records of the beneficial ownership may be served by such Depository on the Company by means of electronic mode or by delivery of floppies or, discs or such other modes as may be prescribed. 18(f) Transfer/ Transmission of Securities held in Demat form 18(f) Transfer/ Transmission of Securities held in Demat form Nothing contained in the Act or in these Articles, shall apply to No Change a transfer or transmission of Securities where the company has not issued any certificates and where such Shares or Debentures or Securities are being held in an electronic and fungible form in a Depository. In such cases the provisions of the Depositories Act, 1996 as amended from time to time shall apply. 18(g) Allotment of Securities Dealt with in a Depository 18(g) Allotment of Securities Dealt with in a Depository Notwithstanding anything to the contrary contained in the Act No Change or these Articles, after any issue where the securities are dealt with by a Depository, the company shall intimate the details thereof to the depository immediately on allotment of such securities. 18(h) Distinctive number of Securities held in Depository 18(h) Distinctive number of Securities held in Depository Nothing contained in the Act or in these Articles regarding the No change necessity of having distinctive numbers for securities issued by the Company shall apply to securities held by a Depository. 20 Notice EESL Annual Report 2018-19 CERTIFICATES 19. Share Certificates 19. Share Certificates Every person whose name is entered as a member or Debenture No Change holder in the Register of Members or Register of Debenture holders shall without payment, be entitled to a Certificate under the common seal of the Company specifying share(s) or debenture(s) held by him and the amount paid thereon. Share/ Debenture Cer tificates shall be issued on application in marketable lots and where shares/debenture certificates are issued for either more or less than the marketable lots sub- division or consolidation into marketable lots shall be done free of charge within one month from the date of lodgment thereof. Any two or more allottees of a share/debenture shall for the purpose of this Article be treated as a Single Member and the share/debenture Certificate which may be subject to joint ownership may be delivered to any one of such joint owners on behalf of all of them. Provided that in case of securities held by the member / Bond / Debenture holder in dematerialized form, no Share/ Bond/ Debenture Certificate(s) shall be issued. 20. Renewal of share Certificate 20. Renewal of share Certificate (a) No certificate of any share or shares shall be issued either (a) No certificate of any share or shares shall be issued either in exchange for those which are sub-divided or consolidated in exchange for those which are sub-divided or consolidated or in replacement of those which are defaced, torn or destroyed or in replacement of those which are defaced, mutilated, torn or where the pages on the reverse for recording transfers have or old, decrepit, worn out or where the pages on the reverse been duly utilized, unless the certificate in lieu of which it is for recording transfers have been duly utilized, unless the issued is surrendered to the Company and on payment of Rupee certificate in lieu of which it is issued is surrendered to the one per certificate. Company and on payment of Rupee One per Certificate. (b) When a new share certificate has been issued in pursuance (b) Where a new share certificate has been issued in pursuance of clause (a) of this Article, it shall state on the face of it and of clause (a) of the Article, it shall state on the face of it and against the stub or counterfoil to the effect that it is 'Issued in against the stub or counterfoil to the effect that it is "Issued in lieu of Share Certificate No_______ subdivided/ replaced/ on lieu of share certificate No. ………………… sub-divided/ consolidation of shares." replaced/ on consolidation" and also that no fee shall be payable pursuant to scheme of arrangement sanctioned by the High Court or Central Government. (c) If a Share/Debenture Certificate is defaced, lost or destroyed (c) If a Share/Debenture Certificate is defaced, lost or destroyed, it may be renewed on payment of such fee, if any, and on such it may be renewed with prior consent of the board of the terms, if any as to evidence and indemnity as the Board may Company and on payment of such fee, if any, not exceeding think fit. Rupees Fifty per Certificate and on such terms, if any as to evidence and indemnity as the Board may think fit and on the payment of out-of-pocket expenses incurred by the Company in investigating the evidence produced. (d) When a new share certificate has been issued in pursuance (d) No Change of clause (c) of this Article, it shall state on the face of it and against the stub or counterfoil to the effect that it is "Duplicate issued in lieu of Share Certificate No. ………..." The word "Duplicate" shall be stamped or punched in bold letters across the face of the share certificate. (e) Where a new share certificate has been issued in pursuance (e) No Change of clause (a) and clause (c) of this Article, particular of every such share certificate shall be entered in a Register of Renewed and Duplicate Certificate indicated against the name of the persons to whom the certificate is issued, the number and date of issue of the share certificate in lieu of which the new certificate is issued and necessary changes indicated in the Register of Members by suitable cross reference in the "Remarks" column. (f) All blank forms to be issued for issue of share certificates (f) No Change shall be printed and the printing shall be done only on the authority of a resolution of the Board. The blank forms shall be consecutively machine numbered and the forms and the blocks, engravings, facsimiles relating to the printing of such forms shall be kept in the custody of the Secretary or of such other person as the Board may appoint for the purpose and the EESL Annual Report 2018-19 Notice 21 Secretary or the other person aforesaid shall be responsible for rendering an account of these forms to the Board. (g) The Managing Director of the Company for the time being (g) The Register of Renewed and Duplicate Share Certificate or, if the Company has no Managing Director, every Director of shall be kept in the custody of the Company Secretary or any the Company shall be responsible for the maintenance, other person authorised by the Board for the purpose. preservation and safe custody of all books and documents relating to the issue of share certificate except the blank forms of share certificate referred to in sub-Article (f). (h) All books referred to in sub-Article (g) shall be preserved in (h) No Change good order permanently. CALLS 21. Call on Shares/ Debentures 21. Call on Shares/ Debentures The Board may from time to time make such calls as they No Change think fit upon the members or debenture holders in respect of all moneys unpaid on the Shares/debentures held by them respectively and not by the condition of allotment thereof made payable at fixed times and each member/debenture holder shall pay the amount of every call so made on him to the person and at the times and places appointed by the Board. A call may be made payable by instalments. Provided, however, that the Board may from time to time at the discretion extend the time fixed for the payment of any call. 22. When call made 22. When call made A call shall deem to have been made after the resolution No Change authorizing such call was passed at a meeting of the Board and demand notice is issued. 23. When Interest on calls payable 23. When Interest on calls payable If the sum payable in respect of any call be not paid on or No Change before the day appointed for payment thereof the holder for the time being or allottee of the Share/debenture in respect of which a call shall have been made shall pay interest on the same at such rate as the Board shall fix, from the day appointed for the payment thereof to the time of actual payment, but the Board may waive payment of such interest wholly or in part. 24. Joint-holders liability to pay 24. Joint-holders liability to pay The joint holder of Share/debentures shall be jointly and No Change severally liable to pay calls in respect thereof. 25. Payment of calls in advance 25. Payment of calls in advance The Board may, if they think fit, receive from any member willing No Change to advance the same, all or any part of the money due upon the Share held by him beyond the sums actually called for and upon the money so paid or satisfied in advance, or so much thereof as from time to time exceeds the amount of the calls then made upon the Share in respect of which such advance has been made, the company may pay interest at such rate not exceeding 4% or such other rate as may be approved by Central Government and the Board may at any time repay the amount so advanced upon giving to such member not less than three months' notice in writing. Provided that moneys paid in advance of calls or any shares may carry interest but shall not confer any right of voting, Dividend or participate in profits. 26. Application of money of Shareholder/Debenture holder 26. Application of money of Shareholder / Debenture holder Any money due from the company to a Shareholder/ debenture No Change holder may, without the consent of such Shareholder/debenture holder, be applied by the company in or towards payment of any money due from him to the company for calls or otherwise. 27. Revocation of call 27. Revocation of call A call may be revoked or postponed at the discretion of the No Change Board. 22 Notice EESL Annual Report 2018-19 LIEN 28. Company to have lien on shares 28. Company to have lien on shares The Company shall have a first and paramount lien on every No Change share or debentures (not being a fully paid share or debenture) for all moneys called or payable at affixed time in respect of that share but the Company shall have no general lien on such partly paid up shares/ debentures. The Board may at any time declare any share/ debenture to be wholly or in part exempt from the provisions of this Article. 29. As to enforcing lien by sale 29. As to enforcing lien by sale For the purpose of enforcing such lien the Board may sell the No Change shares/debentures subject thereto in such manner as it shall think fit, and for that purpose may cause to be issued a duplicate certificate in respect of such shares/debentures and may authorize one of its member to execute a transfer thereof on behalf of and in the name of such Member or debenture holders. No sale shall be made until such period as aforesaid shall have arrived, and until notice in writing of the intention to sell shall have been served on such Member/debenture holder or his representatives and default shall have been made by him or them in payment, fulfilment, or discharge of such debts, liabilities or engagements for fourteen days after such notice. 30. Application of proceeds of sale 30. Application of proceeds of sale The net proceeds of any such sale shall be received by the No Change Company and applied in or towards payment of such part of the amount in respect of which the lien exists as is presently payable and the residue, if any, shall (subject to a lien for sums not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale. FORFEITURE OF SHARES / DEBENTURES 31. If money payable on shares/ debentures not paid notice 31. If money payable on shares / debentures not paid notice to be given to members to be given to members If any member/debenture holder fails to pay any call or No Change instalment of a call on or before the day appointed for the payment of the same or any such extension thereof as aforesaid, the Board may at any time thereafter, during such time as the call or instalment remains unpaid, give notice to him to pay the same together with any interest that may have accrued and all expenses that may have been incurred by the company by reason of such non-payment. 32. Form of Notice 32. Form of Notice The notice shall name a day (not being less than fourteen days No Change from the date of the notice) and a place or places on and at which such call or instalment and such interest thereon at such rate not exceeding 10 percent per annum as the Board shall determine from the day on which such call or instalment ought to have been paid and expenses as aforesaid are to be paid. The notice shall also state that, in the event of non-payment of calls at or before the time and at the place appointed, the shares in respect of which the call was made or instalment is payable will be liable to be forfeited. 33. If default of payment, share to be forfeited 33. If default of payment, share to be forfeited If the requirement of any such notice as aforesaid shall not be No Change complied with, every or any share/debenture in respect of which such notice has been given may at any time thereafter before payment of all calls or instalments, interest and expenses due in respect thereof, be forfeited by a resolution of the Board. Such forfeiture shall include all dividends declared or any other moneys payable in respect of the forfeited share and not actually paid before the forfeiture. EESL Annual Report 2018-19 Notice 23 34. Notice of forfeiture to a member/ debenture holder 34. Notice of forfeiture to a member/ debenture holder When any share/debenture shall have been so forfeited, notice No Change of the forfeiture shall be given to the member/ debenture holder in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture with the date thereof, shall forthwith be made in the Register, but no forfeiture shall be in any manner be invalidated by any omission or neglect to give such notice or to make any such entry as aforesaid. 35. Forfeited shares to be property of the company and may 35. Forfeited shares to be property of the company and may be sold etc. be sold etc. Any share/debenture so forfeited shall be deemed to be the No Change property of the company, and may be sold, re-allotted, or otherwise disposed of; either to the original holder thereof or to any other person upon such terms and in such manner as the Board shall think fit. 36. Member still liable to pay money at the time of forfeiture 36. Member still liable to pay money at the time of forfeiture and interest and interest Any member/ debenture holder whose shares/debentures have No Change been forfeited shall, notwithstanding the forfeiture, be liable to pay and shall forthwith pay to the company on demand all calls, instalments, interest and expenses owing upon or in respect of such shares or debentures at the time of the forfeiture, together with interest thereon from the time of forfeiture, until payment at such rate not exceeding 10 percent per annum as the Board may determine and the Board may enforce the payment thereof as it thinks fit. 37. Effect of forfeiture 37. Effect of forfeiture The forfeiture of a share/debenture shall involve, extinction at No Change the time of forfeiture, of all interest in and all claims and demands against the company, in respect of the share and all other rights incidental to the share except only such of those rights as by these articles are expressly saved. 38. Evidence of forfeiture 38. Evidence of forfeiture A declaration in writing that the declarant is a Director or No Change Secretary of the company and that a share/ debenture in the company has been duly forfeited in accordance with these articles on a date stated in the declaration shall be conclusive evidence of the facts therein stated, as against all persons claiming to be entitled to the shares. 39. Validity of sale 39. Validity of sale Upon any sale after forfeiture or for enforcing a lien in purported No Change exercise of the powers herein before given, the Board may appoint some person to execute an instrument of transfer of the shares/debenture sold and cause the purchaser's name to be entered in the Register in respect of the shares/debenture sold, and the purchaser shall not be bound to see to the regularity of the proceedings or to the application of the purchase money, and after his name has been entered in the Register in respect of such shares/ debenture, the validity of the sale shall not be impeached by any person and the remedy of any person aggrieved by the sale shall be in damages only and against the company exclusively. 40. Cancellation of share certificate in respect of forfeited 40. Cancellation of share certificate in respect of forfeited shares /debenture shares / debenture Upon any sale, re-allotment or other disposal under the No Change provisions of the preceding Ar ticles, the cer tificate or certificates originally issued in respect of the relative share/ debenture shall (unless the same shall on demand by the company have been previously surrendered to it by the defaulting member) stand cancelled and become null and void and of no effect, and the Directors shall be entitled to issue a new certificate or certificates in respect of the said shares/ debenture to the person or persons entitled thereto. 24 Notice EESL Annual Report 2018-19 41. Power to annul forfeiture 41. Power to annul forfeiture The Board may at any time before any share / debenture so No Change forfeited shall have been sold, re-allotted or otherwise disposed of, annul the forfeiture thereof upon such conditions as it thinks fit. TRANSFER AND TRANSMISSION OF SHARES AND DEBENTURES 42. Register of Transfers 42. Register of Transfers The Company shall maintain a Register of Transfers and therein No Change shall be fairly and distinctively entered the particulars of every transfer or transmission of any share/ debenture. 43. Transfer of debentures 43. Transfer of debentures The provisions relating to transfer of shares shall apply mutatis No Change mutandis to transfer of debentures/bonds. 44. Form of transfer 44. Form of transfer The instrument of transfer shall be in writing and in such form The instrument of transfer shall be in writing and in such form as may be prescribed. All the provisions of Section 108 of the as may be prescribed. All the provisions of Section 56 of the Act shall be duly complied with in respect of all transfers and Act shall be duly complied with in respect of all transfers and of the registration thereof. The Company shall not charge any of the registration thereof. The Company shall not charge any fee for registration of a transfer of shares or debentures/bonds. fee for registration of a transfer of shares or debentures / bonds. 45.Instrument of transfer to be completed presented to the 45.Instrument of transfer to be completed presented to the company company The instrument of transfer duly stamped and executed by the No Change transferor and the transferee shall be delivered to the company in accordance with the provisions of the Act. The instrument of transfer shall be accompanied by the Share Certificate or such evidence as the Board may require to prove the title of transferor and his right to transfer the shares and every registered instrument of transfer shall remain in the custody of the company until destroyed by order of the Board. Any instrument of transfer which the Directors may decline to register shall be returned to the person depositing the same. 46. Lock-in period 46. Lock-in period Unless otherwise mutually agreed among Parties, none of the No Change Lock-in period Parties shall transfer, sell, assign, mortgage or otherwise encumber its Shareholdings/ voting rights in the Company for initial lock-in period of five years from the date of incorporation of the Company. The necessary endorsement with effect to lock-in-period shall be made on respective Share Certificates. In case of allotment of Shares in Demat mode, the Company shall inform the respective Depository Participant regarding restrictions on transferability of said shares of the Company held by Promoter Shareholders. The Parties recognize that if any Party is under the obligation of negative lien on all or any of its undertakings, assets present and future (including un-called capital) to its lenders, in the course of its business, the equity shareholding of the Parties in the Company pursuant to the provisions herein would necessarily be subject to such negative lien. This obligation of negative lien by the Par ties on the Equity Shares to be subscribed pursuant to the provisions herein shall not be interpreted or construed as violation of this Article. 47. No Party shall sell or otherwise transfer 47. No Party shall sell or otherwise transfer After the lock-in period as provided under Article 46 and subject After the lock-in period as provided under Article 46 and subject to Article 2 to 8, no Party shall sell or otherwise transfer either to Article 2 to 8, no Party shall sell or otherwise transfer either all or any part of the Shares owned by it in the Company to any all or any part of the Shares owned by it in the Company to any Person(s), not being their Affiliates/Associates, unless the said Person(s), not being their Affiliates/Associates, unless the said Shares have first been offered to remaining Parties hereto in Shares have first been offered to remaining Parties hereto in proportion to their Shareholding, at the book value or fair value, proportion to their Shareholding, at the book value or fair value, whichever is higher, as certified by an independent and reputed whichever is higher, as certified by an independent and reputed Chartered Accountant as mutually agreed between the Parties, Chartered Accountant / Registered Valuer as mutually agreed whichever is higher. Parties shall have eight weeks' time after between the Parties, whichever is higher. Parties shall have EESL Annual Report 2018-19 Notice 25 the receipt of the notice, to accept such offer or to request the eight weeks' time after the receipt of the notice, to accept such Party making offer to sell the Shares so offered to any other offer or to request the Party making offer to sell the Shares so Person(s) which are legally authorized and willing to acquire offered to any other Person(s) which are legally authorized and the said Shares. This will be subject to Parties obtaining all willing to acquire the said Shares. This will be subject to Parties necessary approvals, and to pay in full, the purchase price of obtaining all necessary approvals, and to pay in full, the the Shares offered for sale, within eight weeks of acceptance purchase price of the Shares offered for sale, within eight weeks of offer. of acceptance of offer. If any Party does not accept such offer as stated above, the If any Party does not accept such offer as stated above, the Party making offer will be entitled at its sole discretion to offer Party making offer will be entitled at its sole discretion to offer the said Shares to any Person(s) (hereinafter called "the the said Shares to any Person(s) (hereinafter called "the Permitted Transferee"), provided that the price offered to third Permitted Transferee"), provided that the price offered to third person is not less than as offered to other parties and terms person is not less than as offered to other parties and terms and conditions on which such offer is made to such Person(s) and conditions on which such offer is made to such Person(s) shall not be more favourable compared to the offer made to shall not be more favourable compared to the offer made to the Parties and if the Party making the offer shall fail to sell the the Parties and if the Party making the offer shall fail to sell the Shares so offered to any Permitted Transferee within 90 (ninety) Shares so offered to any Permitted Transferee within 90 (ninety) days of it becoming entitled to sell the offered share to the days of it becoming entitled to sell the offered share to the Permitted Transferee, such Party shall not be entitled to sell Permitted Transferee, such Party shall not be entitled to sell the same to any Person without first offering the same again to the same to any Person without first offering the same again to the other Parties hereto and following the procedure set forth the other Parties hereto and following the procedure set forth in this Article. in this Article. 48. Permitted Transferee shall have to sign an undertaking 48. Permitted Transferee shall have to sign an undertaking In any case the Permitted Transferee under Article 47, acquiring No Change the said Shares shall have to sign an undertaking addressed to the non-selling Party(s) and to the Company thereby confirming to comply with the terms and conditions as may be prescribed. 49. Transfer except in accordance with these Articles 49. Transfer except in accordance with these Articles Subject to provision of Act, no Shares of the Company shall be No Change transferred except in accordance with these Articles or in such other manner as the Parties shall mutually agree in writing. 50. Transferor deemed to be holder 50. Transferor deemed to be holder The transferor shall be deemed to be the holder of such shares No Change until the name of the transferee has been entered in the Register of Members in respect thereof. Before the registration of a transfer, the certificate or certificates of the shares must be delivered to the Company along with Transfer Deed. 51. Closure of Register of Members or Debenture holders 51. Closure of Register of Members or Debenture holders The Directors shall have power, on giving seven days' notice The Directors shall have power, on giving seven days' notice by advertisement as required by Section 154 of the Act, to by advertisement as required by Section 91 of the Act, to close close the transfer books, Register of Members or Register of the transfer books, Register of Members or Register of Debenture holders of the company for such period of time not Debenture holders of the company for such period of time not exceeding in the whole 45 days in each year (but not exceeding exceeding in the whole 45 days in each year (but not exceeding 30 days at a time) as they may determine. 30 days at a time) as they may determine. UNDERWRITING AND BROKERAGE 52. Payment of commission and brokerage 52. Payment of commission and brokerage Subject to the provisions of Section 76 of the Act, the Company Subject to the provisions of Section 40 (6) of the Act, the may at any time pay a commission to any person in Company may at any time pay a commission to any person in consideration of his subscribing or agreeing to subscribe for consideration of his subscribing or agreeing to subscribe for any shares in or debentures of the Company, or procuring, or any shares in or debentures of the Company, or procuring, or agreeing to procure subscriptions for any shares in or agreeing to procure subscriptions for any shares in or debentures of the Company, but so that the commission shall debentures of the Company, but so that the commission shall not exceed in case of shares 5% (five percent) of the price at not exceed in case of shares 5% (five percent) of the price at which the shares are issued, and in case of debentures. 2.5 % which the shares are issued, and in case of debentures 2.5 % (two and half percent) of the price at which the debentures are (two and half percent) of the price at which the debentures are issued. Such commission may be satisfied by payment in cash issued. Such commission may be satisfied by payment in cash or by allotment of fully or partly paid shares or partly in one or by allotment of fully or partly paid shares or partly in one way and partly in other. way and partly in other. The company may pay a reasonable and lawful sum as The company may pay a reasonable and lawful sum as brokerage. brokerage. NOMINATION 53. (i) Every Share/ Bond/ Debenture holder and a Depositor 53. i) No change under the Company's Public Deposit Scheme (Depositor) of 26 Notice EESL Annual Report 2018-19 the Company may at any time, nominate in the prescribed manner, a person to whom his Shares/ Bonds/ Debentures or deposits in the company shall vest in the event of his death. (ii) Where the Shares or Bonds or Debentures or Deposits in (ii) No Change the Company are held by more than one person jointly, the joint holder may together nominate, in the prescribed manner, a person to whom all the rights in the shares or bonds debentures or deposits in the company, as the case may be, shall vest in the event of death of all the joint holders. (iii) Pursuant to section 109A of the Act notwithstanding (iii) Pursuant to section 72 of the Act notwithstanding anything anything contained in any other law for the time being in force contained in any other law for the time being in force or in or in disposition, whether testamentary or otherwise, in respect disposition, whether testamentary or otherwise, in respect of of such Shares/ Bonds /Debentures or Deposits in the Company, the securities of a Company, where a nomination made in the where a nomination made in the prescribed manner purport to prescribed manner purport to confer on any person the right to confer on any person the right to vest the Shares/Bonds/ vest the securities of the Company, the nominee shall on the Debentures or Deposits in the Company, the nominee shall on death of the holder of securities or, as the case may be, on the the death of the Share/Bond /Debenture holder or a Depositor death of the joint holders become entitled to all the rights in the as the case may be, on the death of the joint holders become securities or , as the case may be, all the joint holders, in relation entitled to all the rights in such Shares/Bonds/Debentures or to such securities, to the exclusion of all persons, unless the deposits, as the case may be, all the joint holders in relation to nomination is varied, cancelled in the prescribed manner. such Shares/Bonds/Debentures, or Deposits, to the exclusion of all persons, unless the nomination is varied, cancelled in the prescribed manner. (iv) Where the nominee is a minor, it shall be lawful for the (iv) No Change holder of the Shares/Bonds/Debentures or deposits, to make the nomination to appoint, in the prescribed manner, any person to become entitled to Shares/Bonds/Debentures or deposits in the Company, in the event of his death, during the minority (v) A nomination may be cancelled, or varied by nominating any other person in place of the present nominee, by the holder of securities who has made the nomination, by giving a notice of such cancellation or variation, to the company in the prescribed manner. Such cancellation or variation shall take effect from the date on which the notice of such cancellation is received by the company TRANSMISSION OF SECURITIES BY NOMINEE 54. A nominee, upon production of such evidence as may be required by the Board and subject as hereinafter provided, elect, either- (i) to be registered himself as holder of the share/Bond/ (i) No Change Debenture or Deposits, as the case may be; or (ii) to make such transfer of the Share/Bond/Debenture or (ii) No Change deposits, as the case may be, as deceased Share/Bond/ Debenture holder or Depositor could have made; (iii) if the nominee elects to be registered as holder of the Share/ (iii) No Change Bond/Debenture or Deposits, himself, as the case may be, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects and such notice shall be accompanied with the death certificate of the deceased Share/ Bond/Debenture holder or Depositor, as the case may be. (iv) A nominee shall be entitled to the same dividends and (iv) No Change other advantages to which he would be entitled to, if he were the registered holder of the Share/Bond/Debenture or Deposits except that he shall not, before being registered as a member in respect of his Share/Bond/Debenture or Deposits be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company. Provided further that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the Share/Bond/Debenture or Deposits, and if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable or rights accruing in respect of the Share/ Bond/Debenture or deposits until the requirements of the notice have been complied with. EESL Annual Report 2018-19 Notice 27 INCREASE, REDUCTION AND ALTERATION OF CAPITAL 55. Power to increase Capital 55. Power to increase Capital The Board may with the sanction of the company in a General No Change Meeting, increase the Share capital by the creation of new Shares of such amount, as the resolution shall prescribe, retaining the agreed shareholding ratio. 56. How far new shares to rank with existing shares 56. How far new shares to rank with existing shares Except so far as otherwise provided by the conditions of issue No Change or by these presents, any capital raised by the creation of new Shares shall be considered part of the then existing capital of the company and shall be subject to the provisions herein contained with reference to payment of Dividends, calls and instalments, transfer and transmission, forfeiture, lien, surrender voting and otherwise. 57. Reduction of Capital etc. 57. Reduction of Capital etc. Subject to the provisions of Section 100 to 105 of the Act the Subject to the provisions of Section 66 of the Act and other company may, from time to time, by Special Resolution reduce applicable laws, the company may, from time to time, by Special its Share capital (including the capital redemption reserve Resolution reduce its Share capital (including the capital account, if any) in any way authorized by law and in particular redemption reserve account, if any) in any way authorized by by paying off capital or cancelling capital which has been lost law and in particular by paying off capital or cancelling capital or is unrepresented by available assets or is superfluous or by which has been lost or is unrepresented by available assets or reducing the liability on the Shares or otherwise as may seem is superfluous or by reducing the liability on the Shares or expedient, and capital may be paid off upon the footing that it otherwise as may seem expedient, and capital may be paid off may be called up again or otherwise; and the Directors may upon the footing that it may be called up again or otherwise; subject to the provisions of the Act, accept surrender of Shares. and the Directors may subject to the provisions of the Act, accept surrender of Shares. 58. Sub-division, consolidation and cancellation of shares 58. Sub-division, consolidation and cancellation of shares The Company may in General Meeting by an Ordinary Subject to the provisions of the Act, the Company may, with Resolution alter the conditions of its Memorandum as follows: the sanction of members in General Meeting: - (a) Consolidate and divide all or any of its Share capital into (a) Consolidate and divide all or any of its Share capital into Shares of larger amounts than its existing Shares: Shares of larger amounts than its existing Shares: Provided that If such consolidation and division which results in changes in the voting percentage of shareholders, the consolidation and subdivision shall not take effect unless approved by the Tribunal (b) Sub-divide Shares or any of them into Shares of smaller (b) Convert all or any of its fully paid-up shares into stock, and amounts than originally fixed by the Memorandum of reconver t that stock into fully paid-up shares of any Association subject nevertheless to the provisions of the Act denomination. in that behalf; (c) Cancel Shares which at the date of such General Meeting (c) Sub-divide Shares or any of them into Shares of smaller have not been taken or agreed to be taken by any person and amounts than originally fixed by the Memorandum of diminish the amount of its Share capital by the amount of the Association subject nevertheless to the provisions of the Act Shares so cancelled. in that behalf; Provided however that the provision relating to progressive (d) Cancel Shares which at the date of such General Meeting numbering shall not apply to the Shares of the Company which have not been taken or agreed to be taken by any person and have been dematerialized. diminish the amount of its Share capital by the amount of the Shares so cancelled. Provided however that the provision relating to progressive numbering shall not apply to the Shares of the Company which have been dematerialized. BORROWING POWERS 59. Power to borrow 59. Power to borrow Subject to the provisions of Section 292 and 293 of the Act, Subject to the provisions of Section 179 and 180 of the Act, the Board may by means of a resolution passed at a meeting the Board may by means of a resolution passed at a meeting of the Board from time to time, borrow and/or secure the of the Board from time to time, borrow and/or secure the payment of any sum or sums of money for the purposes of the payment of any sum or sums of money for the purposes of the Company. Company. 60. Conditions on which money may be borrowed 60. Conditions on which money may be borrowed Subject to the provisions of the Companies Act, 1956, Company Subject to the provisions of the Companies Act, 2013, Company may raise or secure the payment of such sum or sums in such may raise or secure the payment of such sum or sums in such manner and upon such terms and conditions in all respects as manner and upon such terms and conditions in all respects as they think fit and in particular by the issue of Bonds, perpetual they think fit and in particular by the issue of Bonds, perpetual 28 Notice EESL Annual Report 2018-19 or redeemable Debentures or Debenture Stocks or any or redeemable Debentures or Debenture Stocks or any mortgage or charge or other security on the property of the mortgage or charge or other security on the property of the company (both present and future) including the uncalled capital company (both present and future) including the uncalled capital for the time being. for the time being. 61. Debentures, Bonds etc. to be under control of the Board 61. Debentures, Bonds etc. to be under control of the Board Any Bonds, Debentures, Debenture Stocks or other securities No Change issued or to be issued by the company shall be under the control of the Board who may issue them upon such terms and conditions and in such manner and for such consideration as they shall consider to be for the benefit of the company. 62. Issue of shares at discount etc. 62. Prohibition to Issue of shares at discount Subject to Sections 78, 79 and 117 of the Act, any Shares, Except as provided in Section 54 of the Act, the company shall Debentures, Debenture Stocks, Bonds or other securities may not issue shares at a discount. be issued at a discount, premium or otherwise and with any special privileges as to redemption, surrender, drawing, allotment of Shares, appointment of Directors and otherwise. Debentures, Debenture Stocks, Bonds and other securities may be made assignable free from any equities between the company and the person to whom the same may be issued. 63. Person not to have priority over any prior charge 63. Person not to have priority over any prior charge Whenever any uncalled capital of the company is charged all No Change persons taking any subsequent charge thereon shall take the same subject to such prior charge and shall not be entitled by notice to the Shareholders or otherwise, to obtain priority over such prior charge. 64. Register of Charges 64. Register of Charges The Directors shall cause a proper Register of charges to be The Directors shall cause a proper Register of charges to be kept in accordance with the provisions of Section 143 of the kept in accordance with the provisions of Section 85 of the Act. Act. GENERAL MEETING 65. When general meeting to be held 65. When general meeting to be held In addition to any other meeting, General Meetings of the Every year, in addition to any other meeting, a General Meeting company shall be held within such intervals as are specified in of the company shall be held within such intervals as are Section 166(1) of the Act and subject to the provisions of specified in Section 96 of the Act, at such day, date, time and Section 166(2) of the Act, at such times and places as may be place as may be determined by the Board. Such General determined by the Board Such General Meetings shall be called Meetings shall be called "Annual General Meetings" and shall "Annual General Meetings" and shall be specified as such in be specified as such in the notice convening the meeting. Any the notice convening the meeting. The Statutory Meeting shall other General Meeting of the company shall be called an "Extra- be held within the period as specified in Section 165(1) of the ordinary General Meeting". Nothing contained in the foregoing Act Any other meeting of the company shall be called an "Extra- provisions shall be taken as affecting the right conferred upon ordinary General Meeting". the Registrar under the provisions of the Act to extend the time within which any Annual General Meeting may be held. 66. Time and place for calling Annual General Meeting 66. Time and place for calling Annual General Meeting Every Annual General Meeting shall be called at such times Every Annual General Meeting shall be called on such date during business hours and on such days (not being a public and time as may be prescribed in the Act from time to time and holiday) as the Board may from time to time determine, and it it shall be held either at the Registered Office of the company shall be held either at the Registered Office of the company or or at such other place in the same city, town, village where the at such other place in the same city, town, village where the Registered office of the company is situated. Registered office of the company is situated. 67. When other General Meeting to be held 67. When other General Meeting to be held The Board may, whenever they think fit call an Extraordinary No Change General Meeting and Extraordinary General Meeting shall also be called on such requisition, or in default may be called by such requisitionists, as provided by the Act. If at any time there are not within India sufficient Directors capable of acting to form a quorum of a Board meeting, any Director may call an Extraordinary General Meeting in the same manner as nearly as possible as that in which meetings may be called by the Board 68. Circulation of member's resolution 68. Circulation of member's resolution The company shall comply with the provisions of Section 188 The company shall comply with the provisions of Section 111 of the Act so as to give notice of resolution and circulating of the Act so as to give notice of resolution and circulating statements on the requisition of members. statements on the requisition of members. EESL Annual Report 2018-19 Notice 29 69. Notice of a General Meeting 69. Notice of a General Meeting Save as provided in sub-Section (2) of Section 171 of the Act, Save as provided in Section 101 of the Act, not less than clear not less than twenty-one days' notice shall be given of every twenty - one days' notice shall be given of every General General Meeting of the company. Every notice of meeting shall Meeting of the company. Every notice of meeting shall specify specify the place and the day and hour of the meeting and the place, date and the day and hour of the meeting and shall shall contain a statement of the business to be transacted contain a statement of the business to be transacted thereat. thereat Where any such business consists of -special business" Where any such business consists of "Special Business" as as hereinafter defined there shall be annexed to the notice a hereinafter defined, there shall be annexed to the notice a statement complying with Section 173(2) and (3) of the Act. statement complying with Section 102 of the Act. Subject to the provisions of the Act, a General Meeting may be convened at a shorter notice. 70. To whom notice is to be given 70. To whom notice is to be given Notice of every meeting of the company shall be given to every Notice of every General Meeting shall be served on every member of the company, to the Auditors of the company and member of the company, legal representative of any deceased to any person entitled to a Share in consequence of the death member or the assignee of an insolvent member, the Auditor or insolvency of a member in any manner hereinafter authorized or Auditors of the company, all Directors of the Company and for the giving of notice to such persons. any other person as be prescribed by the Act and Rules. 71. Accidental omission to give notice 71. Accidental omission to give notice The accidental omission to give any such notice to or its non- No Change receipt by any member or other persons to whom it should be given shall not invalidate the proceedings of the meeting. 72. Shorter notice by consent 72. Shorter notice by consent A general meeting may however be called after giving shorter A General Meeting may however be called after giving shorter notice than twenty-one days in terms of section 171(2) of the notice in terms of Section 101 of the Act. Act. PROCEEDINGS AT GENERAL MEETING 73. Business of Meetings 73. Business of Meetings In the case of an Annual General Meeting, all business to be In the case of an Annual General Meeting, all business to be transacted at the meeting shall be deemed special with the transacted at the meeting shall be deemed Special with the exception of business relating to consideration of the Profit exception of business relating to consideration of Financial and Loss Account, the Balance Sheet and the Reports of the Statements and the Reports of the Board of Directors and Directors and of the Auditors, appointment of Directors in place Auditors; the appointment of Directors in place of those retiring; of those retiring, declaration of Dividend and fixation of the declaration of any Dividend; and the appointment of, and remuneration of Auditors. All other business transacted at an fixation of remuneration of, Auditors and to transact any other Annual General Meeting and all business transacted at an business which under these Articles ought to be transacted an Extraordinary General Meeting shall be deemed special. Annual General Meeting. All other business transacted at an Annual General Meeting and all business transacted at an Extraordinary General Meeting shall be deemed special. 74. Quorum 74. Quorum of the General Meeting Five members present in person shall be the quorum for, a Save as otherwise provided herein, the quorum for the general General Meeting of the company. meetings shall be as provided in Section 103 of the Act. 75. Rights of NTPC, PFC, POWERGRID and REC to appoint 75. Rights of NTPC, PFC, POWERGRID and REC to appoint any person as its representative any person as its representative NTPC, PFC, POWERGRID and REC as Shareholders of the No change Company, may, from time to time appoint one or more person(s) as their respective representative in such a manner that only one representative of each shareholder will be authorized at a given time (who need not be a member(s) of the company) to represent it at all or any meeting(s) of the Company. A person appointed as above shall for the purpose of the Act deemed to be a member of the company and shall be entitled to exercise the same rights and powers (including the right to vote by proxy unless otherwise provided by the order of appointment) as NTPC, PFC, POWERGRID and REC as the case may be, could exercise as a member of the company. NTPC, PFC, POWERGRID and REC may from time to time cancel any appointment made as above and make further fresh appointments. The production at the meeting of a certified copy of resolution of the Board of Directors of NTPC, PFC, POWERGRID and REC shall be accepted by the Company as sufficient evidence of any such respective appointment or cancellation of aforesaid. 30 Notice EESL Annual Report 2018-19 This Article shall mutatis mutandis applicable to any body corporate if inducted in future as shareholder. 76. Resolution to be passed by Company in General Meeting 76. Resolution to be passed by Company in General Meeting Any act or resolution which, under the provisions of these Any act or resolution which, under the provisions of these Articles or of the Act, is permitted or required to be done or Articles or of the Act, is permitted or required to be done or passed by the company in General Meeting shall be sufficiently passed by the company in General Meeting shall be sufficiently so done or passed if effected by an Ordinary Resolution as so done or passed if effected by an Ordinary Resolution as defined in Section 189(1) of the Act unless either the Act or defined in Section 114(1) of the Act unless either the Act or these Articles specifically require such act to be done or these Articles specifically require such act to be done or resolution passed by a Special Resolution as defined in Section resolution passed by a Special Resolution as defined in Section 189(2) of the Act. 114(2) of the Act. 77. Chairman to be elected first if chair is vacant 77. Chairman to be elected first if chair is vacant No business shall be discussed at any General Meeting except No Change the election of a chairman whilst the chair is vacant. Further business will be discussed after the chair is occupied. 78. Chairman of General Meeting 78. Chairman of General Meeting The Chairman of the Board shall be entitled to take the chair at No Change every General Meeting. If there be no such Chairman, or if at any meeting the Chairman shall not be present within fifteen minutes after the time appointed for holding such meeting or is unwilling to act, the members present shall choose another Director as Chairman, out of the Directors present, for the purpose of the meeting and he shall exercise all the rights and powers available to the Chairman. 79. When quorum is not present, meeting to be dissolved 79. When quorum is not present, meeting to be dissolved and when to be adjourned and when to be adjourned If within half-hour from the time appointed for the meeting a No Change quorum be not present, the meeting, if convened on requisition of Shareholders shall be dissolved, but in any other case it shall stand adjourned to the same day in the next week, at the same time and place, or to such other day and at such time and place as the Board may by notice to members appoint. If at such adjourned meeting a quorum be not present, those members who are present, subject to minimum of two members, shall be a quorum and may transact the business for which the meeting was called. 80. What to be evidence of the passing of a resolution where 80. What to be evidence of the passing of a resolution where poll is not demanded poll is not demanded At any General Meeting a resolution put to vote at the meeting No Change shall be decided on a show of hands, unless a poll is (before or after the declaration of the result of the show of hands) demanded in accordance with provisions of the Act and unless a poll is so demanded, a declaration by Chairman that a resolution has on a show of hands been carried unanimously or by a particular majority or lost, and an entry to that effect in the books of proceedings of the company shall be conclusive evidence of the fact, without proof of the number or proportion of votes recorded in favour of or against that resolution. 81. When poll to be taken 81. When poll to be taken Subject to the provisions of Section 180 of the Act, any poll Subject to the provisions of Section 109 of the Act, any poll duly demanded on the election of a chairman of a meeting, or duly demanded on the election of a chairman of a meeting, or on any question of adjournment shall be taken at the meeting on any question of adjournment shall be taken at the meeting forthwith. In any other case poll shall be taken at such time not forthwith. In any other case poll shall be taken at such time not being later than 48 hours from the time when the demand was being later than 48 hours from the time when the demand was made, as the Chairman may direct. made, as the Chairman may direct. 82. Business may proceed notwithstanding demand of poll 82. Business may proceed notwithstanding demand of poll The demand of a poll, except on the question of the election of No change the Chairman and of an adjournment shall not prevent the continuance of a meeting for transaction of any business other than the question on which a poll has been demanded. 83. Chairman's decision conclusive 83. Chairman's decision conclusive The Chairman of any meeting shall be the sole judge of the No Change validity of every vote tendered at such meeting. The chairman EESL Annual Report 2018-19 Notice 31 present at the taking of a poll shall be the sole judge of the validity of every vote tendered by such poll, whose decision shall be final and conclusive. 84. A member need not use all his votes 84. A member need not use all his votes On a poll a member entitled to more than one vote, or his proxy No Change or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses. 85. Power to adjourn General Meeting 85. Power to adjourn General Meeting The Chairman of a General Meeting may, with the consent of No Change the meeting, adjourn the same from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. 86. Minutes of General Meeting 86. Minutes of General Meeting Minutes of proceedings of General Meeting shall be kept in (i) Minutes of proceeding of the General Meeting shall be entered books in terms of Section 193 of the Act and any such minutes in the minute book with the date of such entry within thirty if signed by any person purporting to have been the Chairman days of the conclusion of the meeting. of the meeting to which it relates or by the person who shall (ii) All the pages of the minute book shall be consecutively preside as Chairman at the next- succeeding meeting shall be numbered and initialled or signed, and last page of the record deemed as evidence of the facts therein stated without further of proceeding of each General Meeting in minute book shall be proof. dated and signed, by the Chairman of same General Meeting within the aforesaid period of thirty days or in the event of the death or inability of that Chairman within that period, by a director duly authorised by the Board for the purpose. 87. Minutes to be kept at the Registered office 87. Minutes to be kept at the Registered office The books containing Minutes of proceedings of General No Change Meeting of the company shall be kept at the Registered Office of the Company and shall during business hours (subject to such reasonable restrictions as the Company in General Meeting, may from time to time impose so that not less than two hours in each day be allowed for inspection) be open to the member for inspection without any charge. 88. Members right for a copy of minutes 88. Members right for a copy of minutes Any member shall be entitled to be furnished within seven days Any member shall be entitled to be furnished within seven days after he has made a request in that behalf to the Company with after he has made a request in that behalf to the Company with a copy of any minutes referred to above at a charge as may be a copy of any minutes referred to above at a charge as the provided in the Act. board may decide but not exceeding a sum of ` 10/- each pages or part of any page. VOTE OF MEMBERS 89. Vote of Members 89. Vote of Members Upon show of hands, every member present in person or by No Change proxy or by duly authorized representative shall have one vote, and upon a poll, every member present in person or by proxy or by duly authorized representative, shall have one vote for every Share held by him. 90. Postal Ballot 90. Postal Ballot Subject to the provisions of the Act a resolution may be passed No Change by means of a postal ballot instead of transacting the business in General Meeting of the Company. 91. Procedure where a company is a member of the company 91. Procedure where a company is a member of the company Any member which is a body corporate may attend a General Any member which is a body corporate may attend a General Meeting by a representative duly authorized by a resolution of Meeting by a representative duly authorized by a resolution of the Board of such body corporate in accordance with the the Board of such body corporate in accordance with the provisions of Section 187 of the Act and vote on a show of provisions of Section 113 of the Act and vote on a show of hands or on a poll and also by proxy. The production at the hands or on a poll and also by proxy. The production at the meeting of-a copy of such resolution duly authenticated by meeting of a copy of such resolution duly authenticated by such body corporate shall be accepted by the company as such body corporate shall be accepted by the company as sufficient evidence of the validity of his appointment. sufficient evidence of the validity of his appointment. 92. Votes in respect of deceased, insane and insolvent 92. Votes in respect of deceased, insane and insolvent members members Any person entitled to vote on devolving share under the No Change 32 Notice EESL Annual Report 2018-19 transmission may vote at any General Meeting in respect thereof in the same manner as if he were the Registered holder of such Shares provided that at least seventy two hours before the time of holding the meeting or adjourned meeting as the case may be at which he proposes to vote he shall satisfy the Board of his right to such Shares unless the Board shall have previously admitted his right to such Shares of his right to vote at such meeting in respect thereof. 93. Votes in respect of shares of members of unsound mind 93. Votes in respect of shares of members of unsound mind A member of unsound mind, or in respect of whom an order No Change has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on poll by his constituent or other legal guardian and any such constituent or guardian may on a poll, vote by proxy. 94. Joint holders 94. Joint holders Where there are joint Registered holders of any Share, any one No Change of such persons may vote at any meeting either personally or by proxy in respect of such Shares as if he were solely entitled thereto; and if more than one such joint holders be present at any meeting either personally or by proxy, that one of the said persons so present whose name stands first on the Register in respect of such Share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member in whose name any Share is Registered shall for the purpose of this Article be deemed joint holders thereof. 95. Right to appoint proxy 95. Right to appoint proxy A member entitled to attend and vote at a meeting may appoint No Change another person (whether a member or not) as his proxy to attend a meeting and vote on a show of hands or on a poll. No member shall appoint more than one proxy to attend the same occasion. A proxy shall not have the right to speak at a meeting. The instrument appointing a proxy shall be in writing and be signed by the appointer or his attorney duly authorized in writing. 96. Instrument appointing a proxy to be deposited at the 96. Instrument appointing a proxy to be deposited at the office office The instrument appointing a proxy and the power of attorney No Change or other authority (if any) under which it is signed, or a notary certified copy of that power of authority, shall be deposited at the Registered Office of the Company not less than forty-eight hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument purports to vote in respect thereof and in default the instrument of proxy shall not be treated as valid. 97. When vote by proxy valid though authority Revoked 97. When vote by proxy valid though authority Revoked A vote given in accordance with the terms of an instrument No Change appointing a proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the Instrument, or transfer of the Share in respect of which the vote is given, provided no intimation in writing of the death, insanity, revocation or transfer of the Share shall have been received by the company at the office before the vote is given. Provided nevertheless that the Chairman of any meeting shall be entitled to require such evidence as he may in his discretion think fit of the due execution of an instrument of proxy and that the same has not been revoked. 98. Form of Proxy 98. Form of Proxy Every instrument of proxy for a specified meeting or otherwise Every instrument of proxy for a specified meeting or otherwise shall, as nearly as circumstances will permit, be in the form or shall be in the form as may be prescribed under the Act. to the effect following: 99. Restrictions on voting 99. Restrictions on voting Subject to the provisions of the Act, no member shall be entitled No Change to be present or to vote on any question either personally or by proxy or as proxy for another, at any General Meeting or upon EESL Annual Report 2018-19 Notice 33 a poll or be reckoned in quorum whilst any call or other sum shall be due and payable to the company in respect of any of the share of such members. 100. Admission or rejection of votes 100. Admission or rejection of votes Any objection as to the admission or rejection of a vote, either No Change on a show of hands or on a poll, made in due time shall be referred to the Chairman who shall forthwith determine the same and such determination made in good faith shall be final and conclusive. 101. Time for objection to vote 101. Time for objection to vote No objection shall be raised as to the qualification of any voter No Change except at the meeting or poll at which such vote is tendered and every vote not disallowed at such meeting or poll, shall be valid for all purposes. MANAGEMENT STRUCTURE 102. (i) Management of the Company 102. (i) Management of the Company The Company shall have its own professional management No Change team of Managing Director (MD) and Functional Directors. The Professional Management team will be headed by Managing Director. (Amended by special resolution passed in the extra-ordinary general meetings of the company held on 17.01.2013 & 08.01.2016) (ii) Management of the Company (ii) Management of the Company Subject to ultimate control by Shareholders, the Company shall No Change be managed by Board of Directors. The Management of the day to day affairs of the Company shall, however, vest with Managing Director. (iii) MD shall be selected and appointed by the Board (iii) MD shall be selected and appointed by the Board Subject to the provisions of the Act, the Managing Director No Change shall be selected by the Search & Selection Committee comprising of Secretary (Power), CMD of the Parties and DG, BEE and appointed by the Board on such terms and conditions as the recruitment rules approved by the Board, to manage the affairs and business of the Company. MD 's power The MD shall, subject to control and supervision of the Board, exercise such powers as may be determined by the Board by way of specific authorization. (Amended by special resolution passed in the 9th Annual General meeting held on 28.12.2018) (iv) Director (Finance) & Director (Projects & Business (iv) Director (Finance) & Director (Projects & Business Development) to be selected by Selection Committee Development to be selected by Selection Committee Subject to the provisions of the Act and Clause 7.3 of Joint No Change Venture and Supplementary Agreement dated 23rd October, 2018, the other Functional Directors of the Company except Managing Director shall be selected by Selection Committee comprising of Chairman, EESL; Managing Director, EESL; One representative each from promoter companies, Ministry of Power (Government of India), Bureau of Energy Efficiency, from the promoter companies for period upto 5 years or through Open Recruitment in case no suitable candidate could be selected from the Promoter Companies, on terms and conditions as approved by the Board from time to time. (Amended vide special resolution passed in the 8th Annual General Meeting held on 29.09.2017 and further amended in the 9th Annual General Meeting held on 28.12.2018) (v) Functional Management (v) Functional Management The functional management of the Company including sourcing, No Change purchasing, personnel, finance and other commercial and managerial decisions shall vest with the MD, who shall have authority and responsibility for the management of day-to-day affairs of the Company for which appropriate power may be 34 Notice EESL Annual Report 2018-19 delegated to him by the Board. In like manner the Board may withdraw or annul any such power and authority as may be considered necessary. (Amended by special resolution passed in the extra ordinary general meeting of the company held on 17.01.2013 & 08.01.2016) 103. First Directors 103. First Directors Subject to the provisions of the Companies Act, 2013 the No Change number the Directors of the Company shall not be less than four and more than thirteen that includes nominee directors, par t-time directors, Independent directors & functional directors. The first Directors of the Company shall be :- 1) Shri R. S. Sharma, Chairman, NTPC 2) Shri Rajeev Sharma, Director(Projects), PFC 3) Shri Rama Raman, ED(T&D), REC 4) Shri N. S. Sodha, GM, POWERGRID 5) Shri Devendra Singh, IAS, Joint Secretary, Ministry of Power 6) Shri Rakesh Jain, Joint Secretary(F&A), Ministry of Power One Director each shall be nominated by each of the Parties, who shall also determine the period for which their respective nominees shall hold office & functional Directors except MD, shall be nominated by each parties as per clause 102(iv) of AOA. Apart from Directors nominated by the Parties, two part-time Directors if nominated by MoP GOI, who shall be inducted on the Board. All the directors shall be appointed by the Board, subject to the provision of Companies Act, 2013 or as amended from time to time. There are 3 sanctioned posts of functional directors i.e. Managing Director, Director (Finance) and Director (Projects and Business Development). The Board shall have power to sanction 1 additional post of Functional Director out of total 13 directors, as and when required. The Board shall be responsible for overall functioning of the Company. The Business of JVC shall always be carried on in accordance with the policies laid down by the Board from time to time. (Amended by Special Resolution passed in the extraordinary general meeting of the company held on 17.01.2013 & 08.01.2016 and further amended in the 9th Annual General Meeting held on 28.12.2018) 104. Qualification Shares 104. Qualification Shares A Director shall not be required to hold any shares in the No Change Company as qualification Shares. 105. Chairman to be non- executive 105. Chairman to be non- executive The Chairman of the Board shall be non-executive Director and No Change amongst the Directors representing the Parties on the Board of the Company. The term of the Chairman shall be for a period of two years. The Chairman of the Board shall be rotated amongst the Parties. The first Chairman of the Company shall be nominated by NTPC and subsequent Chairman shall be nominated by PFC, REC and POWERGRID in order of sequence. The Chairman shall not be below the level of Director of the Parties. The Chairman shall preside over the meetings of the Board of Directors and the General Meetings of the Company. If the Chairman is not present at a meeting, Directors present in the meeting shall elect one of them to act as Chairman for the purpose of the meeting. (Amended by special resolution, passed in the extra ordinary general meeting of the company held on 17.01.2013) 106. Company may increase the number of Directors 106. Company may increase the number of Directors Subject to Section 259 of the Act, the Company may subject Subject to Section 149 of the Act, the Company may by special to resolution in General Meeting and with the approval of Central resolution in General Meeting, increase the limit on maximum EESL Annual Report 2018-19 Notice 35 Government increase the maximum number of Directors, number of Directors and may alter their qualification. and may-alter their qualification. Further the Company may, subject to the provisions of Section Further the Company may, subject to the provisions of 169 of the Act, remove any Director before the expiration of Section 284 of the Act, remove any Director before the his period of office and appoint another person in his stead expiration of his period of office and appoint another person provided in case the Director removed is a nominee Director of in his stead provided in case the Director removed is a a Shareholder or a Group of Shareholders, the person appointed nominee Director of a Shareholder or a Group of in his stead shall also be a nominee proposed by the same Shareholders, the person appointed in his stead shall also Shareholder / Group of Shareholders. The person so appointed be a nominee proposed by the same Shareholder/Group of shall hold office for such time as the Director in whose place Shareholders. The person so appointed shall hold office for he is appointed would have held the same office if he had not such time as the Director in whose place he is appointed been removed. would have held the same office if he had not been removed. 107. Nominee Directors 107. Nominee Directors The Parties shall be entitled to nominate one nominee No Change director each and functional directors as per clause 102 (iv) of the AOA not below the level of General Manager of the Par ties on the Board of JVC provided that the shareholding of each such Party does not fall below 10% of the paid up share capital of the JVC. Apart from the Directors nominated by the Parties, two part-time Directors and independent directors will be nominated by MoP , GOI, one of whom would be from BEE. All the directors shall be non- executive except functional directors as may be appointed by the Board from time to time. (Amended by special resolution passed in the extra ordinary general meetings of the company held on 17.01.2013 & 08.01.2016 and further amended in the 9th Annual General Meeting held on 28.12.2018) 108. Appointment of Alternate Directors 108. Appointment of Alternate Directors The alternate Directors shall be nominated by the respective The alternate Directors shall be nominated by the respective parties in place of nominee Director (the ''original Director'') parties in place of nominee Director (the ''original Director'') of of a Party on the Board of Company during his absence for a Party on the Board of Company during his absence for a a period of not less than three months from the State in period of not less than three months from India and shall always which the meetings of the Board are ordinarily held and shall be a person proposed by such Party only and on such always be a person proposed by such Party only and on nomination, the Parties shall cause their respective nominee such nomination, the Parties shall cause their respective Directors to vote for and cause the Board of the Company to nominee Directors to vote for and cause the Board of the appoint him as alternate Director for such original Director. Company to appoint him as alternate Director for such An alternate Director appointed under this Clause shall vacate original Director. An alternate Director appointed under this office, as and when the original Director returns to India. If the Clause shall vacate office, as and when the original Director term of office of the original Director is determined before his returns to that State. If the term of office of the original return to India, any provision in the Act or in Articles of the Director is determined before his return to that State, any Company for the automatic re - appointment of retiring Directors provision in the Act or in Articles of the Company for the shall apply to the original Director and not to the alternate automatic re-appointment of retiring Directors shall apply Director. The alternate Director shall be entitled while holding to the original Director and not to the alternate Director. The his office as such to receive notices of meetings of the Board alternate Director shall be entitled while holding his office and any Committee of Board of which the original Director is a as such to receive notices of meetings of the Board and member and to attend and vote as a Director at any such any Committee of Board of which the original Director is a meetings of the Board and any such Committee. member and to attend and vote as a Director at any such meetings of the Board and any such Committee. 109. Directors power to fill casual vacancies 109. Directors power to fill casual vacancies Subject to the approval of the respective Parties for their Subject to the approval of the respective Parties for their nominee Directors and subject to the provisions of Section nominee Directors and subject to the provisions of Section 260, 262 and 284(6) of the Act, the Board of Directors shall 161 and 169(7) of the Act, the Board of Directors shall have have the power, at any time, and from time to time to appoint the power, at any time, and from time to time to appoint any any person to be a Director, either as an additional Director person to be a Director, either as an Additional Director or to fill or to fill a casual vacancy occurring on account of the office a casual vacancy occurring on account of the office of any of any Director appointed by the Company in General Meeting Director appointed by the Company in General Meeting being being vacated before expiry of his term of office in the normal vacated before expiry of his term of office in the normal course, course, but such that the total number of Directors shall not but such that the total number of Directors shall not at any time at any time exceed the maximum fixed by the Articles of exceed the maximum fixed by the Articles of Association. Association. Any person so appointed as an addition to the Board shall Any person so appointed as an addition to the Board shall retain his office only upto the date of the next Annual General retain his office only upto the date of the next Annual General Meeting but shall be eligible for re - election at such meeting. 36 Notice EESL Annual Report 2018-19 Meeting but shall be eligible for re-election at such meeting. Any person appointed to fill a casual vacancy as aforesaid Any person appointed to fill a casual vacancy as aforesaid shall hold office only upto the date upto which the Director in shall hold office only upto the date upto which the Director in whose place he is appointed would have held office if it had whose place he is appointed would have held office if it had not been vacated as aforesaid. not been vacated as aforesaid. 110. Directors may act notwithstanding any vacancy 110. Directors may act notwithstanding any vacancy The continuing Director may act notwithstanding any vacancy No Change in their body, but if, and so long as their number is reduced below the minimum number fixed by Article 103 hereof, the continuing Directors may act for the purpose of increasing the number of Directors to that number, or of summoning a General Meeting for that purpose. 111. Remuneration of the Director 111. Remuneration of the Director The remuneration/sitting fees payable to Directors, including No Change Managing Director / Whole time Director shall, subject to the applicable provisions of the Act and of these Articles. 112. Special remuneration to Director for extra service, etc. 112. Special remuneration to Director for extra service, etc. If any Director being willing, be called upon to perform extra No Change service or special exertions in going out or residing at particular place or otherwise for any of the purposes of the Company, the Company may remunerate such Director either by a fixed sum or otherwise as may be determined by the Board and such remuneration may be either in addition to or in substitution for his remuneration above provided. 113. Expenses Incurred by Director on Company's Business 113. Expenses Incurred by Director on Company's Business The Board may allow and pay to any Director who is not a No Change resident of the place where the meeting of the Board is held and who shall come to such place for the purpose of attending a meeting such sum as the Board may consider fair compensation for his travel, and living and hotel expenses for attending such meeting; and if any Director be called upon to go and reside out of the ordinary place of his residence on the Company's business, he shall be entitled to be reimbursed for his travel, living and hotel expenses, reasonably incurred in connection with the business of the Company. The Board may also allow and pay to the Directors a fee to be determined from time to time for attending the meetings of the Board and of any Committee appointed by the Board of Directors; such fee shall not exceed an amount as prescribed in the Act or rules made there under. 114. Neither the Board nor a committee thereof (whether at 114. Neither the Board nor a committee thereof (whether at a Board, Meeting or at a committee meeting) a Board, Meeting or at a committee meeting) Neither the Board nor a committee thereof (whether at a Board No Change Meeting or at a committee meeting or by circular resolution or otherwise) nor its MD nor any other person purporting to act on behalf of the Company shall take any action in respect of any of the following matters except with the affirmative vote of the majority of Directors, which majority shall include affirmative vote of at-least one Director each nominated by "NTPC, PFC, POWERGRID and REC". a) The annual revenue budget of the Company. b) The Five Year Annual Plans of development, the capital budget of the Company and processing of any modernization, expansion schemes including programme of capital expenditure or purchase of capital equipment which exceeds ` 10 Crore. c) Winding up of the Company d) Any matter relating to the transfer, sale, lease, exchange, mortgage and/or disposal otherwise of the whole or substantially the whole of the undertaking of the Company or pad thereof e) Increase or otherwise alter the authorized or the issued share capital of the Company. EESL Annual Report 2018-19 Notice 37 f) Induction of new Investor g) Taking of any loan or other borrowing or issue of any debt or other instrument or security carrying the right or option to convert the whole or part thereof or any such instrument or security, as the case may be, or any accrued interest thereon into the Shares of the Company. h) Any matter relating to:- (i) the promotion of company /companies including formation of subsidiary company/companies. (ii) entering into Partnership and/or arrangement of sharing profits; (iii) taking or otherwise acquiring and holding shares in any other company; (iv) pledging or encumbering of any assets of the Company and the issuance of corporate guarantee (other than trade warranties) or incurring of usual liability, except as set forth in the annual operating and capital budgets or as required for the procurement of working capital needs, or as may be required by any government authorities or for any tax purposes (v) recommendations/approval of dividend by the Company (vi) arrangement involving foreign collaboration proposed to be entered into by the company i) Change in the name of the Company j) Entering into any profit sharing, or any share option or other similar schemes for the benefit of the officers and other employees of the Company. In the event of likely absence of nominee Directors of any Party including their duly appointed alternates, such Directors shall endeavour to convey their consent in respect of any such matter, by e-mail, fax or any other agreed mode of communication Provided, however that if due to the absence of the nominee Director of such Party hereto and in the absence of any consent of any nominee Director of such Party in respect of any such matter conveyed by e-mail, fax or any other agreed mode of communication to the Company, such matter cannot be considered, then such Board Meeting for consideration of such item shall be adjourned until such day, time and place as may be decided by the Chairman of the Meeting. If at such adjourned meeting also, no nominee Director of a Party hereto is present or no consent of any nominee Director of such Party in respect of any such matter is sent as agreed hereto, to the Company, in that event, if one- third of the Board be present, they shall notwithstanding anything to the contrary contained-herein above, be entitled to consider and decide all matters covered in the original agenda. (Amended by special resolution, passed in the extra ordinary general meeting of the company held on 17.01.2013) 115. Directors vacating office 115. Directors vacating office The office of a Director shall ipso-facto become vacant if:- A person shall not be capable of being appointed as a Director (a) he is found to be of unsound Mind by a Court of competent of the Company if he suffers from any of the disqualifications jurisdiction, or enumerated in the Act, to the extent applicable to the Company. (b) he is adjudged an insolvent; or The office of a Director shall be vacated, if any of the conditions ( c) he applies to be adjudged an insolvent; or set out in the Act are satisfied. (d) any office or place of profit, under the company or under any subsidiary of the company, is held in contravention of Section 314 of the Act and by operation of that Section he is deemed to vacate office, or (e) he absents himself from three consecutive meetings of the Directors or from all meetings of the Directors for a continuous period of three months whichever is longer without leave of absence from the Board of Directors, or 38 Notice EESL Annual Report 2018-19 116. A Director in a Company can become Director in any of 116. A Director in a Company can become Director in any of Company Company A Director of this company may be, or become a Director of No Change any company promoted by this company or in which it may be PROCEEDINGS OF THE BOARD 117. Meetings of the Board 117. Meetings of the Board The Board shall meet at least once in every three calendar The Board shall meet at least once in every calendar quarter months and at least four such meetings shall be held in every and at least four such meetings shall be held in every year and year for the dispatch of business and the Board may adjourn the gap between two such meetings shall not be more than or otherwise regulate its meeting and proceedings. Notice in 120 Days for the dispatch of business and board may adjourn writing of every meeting of the Board shall be given to every or otherwise regulate its meeting and proceedings. Notice in Director for the time being in India, and at his usual address in writing of every meeting of the Board shall be sent by hand India to every other Director. delivery or by post or by electronic means to every Director at their registered address with the company. Meeting through Video Conferencing The board of directors may attend the meeting through video conferencing or other audio visual means which are capable of recording and recognising the participation of directors. 118. Director may summon meeting 118. Director may summon meeting A Director may at any time and the Secretary shall upon the No Change request of a Director made at any time, convene a meeting of the Board. 119. Chairman of the meeting 119. Chairman of the meeting All meetings of the Board shall be presided over by the No Change Chairman, if present, and if the Chairman is not present within five minutes after the time appointed for holding the meeting of the Board, the Directors present in the meeting shall elect one of them to act as the chairman for the purpose of the meeting. 120. Quorum of the meeting 120. Quorum of the meeting The quorum for a meeting shall be determined from time to The quorum for a meeting shall be determined from time to time in accordance with the provisions of Section 287 of the time in accordance with the provisions of Section 174 of the Act, provided that there shall be no quorum in any meeting Act, provided that there shall be no quorum in any meeting unless at least one nominee Director each from at least three unless at least one nominee Director each from at least three Parties is present. If the meeting of the Board could not be held Parties is present. If the meeting of the Board could not be held for want of quorum (quorum being not present within 15 for want of quorum (quorum being not present within 15 minutes from the time appointed for holding the meeting) the minutes from the time appointed for holding the meeting) the meeting shall stand adjourned until such day, time and place meeting shall stand adjourned until such day, time and place as may be determined by the Chairman of the Meeting. In case as may be determined by the Chairman of the Meeting. In case quorum is not present at adjourned meeting also, members quorum is not present at adjourned meeting also, members present not being less than two or one third of the Board, present not being less than two or one third of the Board, whichever is higher, shall form the quorum however no business whichever is higher, shall form the quorum however no business other than the Agenda circulated for meeting so adjourned other than the Agenda circulated for meeting so adjourned (but (but not the Agenda item out of Reserved Matters) shall be not the Agenda item out of Reserved Matters) shall be transacted, in adjourned meeting. transacted, in adjourned meeting. The directors participating through video conferencing or by other audio visual means shall also be counted for the purpose of quorum. 121. Power of quorum 121. Power of quorum A meeting of the Board at which a quorum is present shall be No Change competent to exercise all or any of the authorities, powers and discretion for the time being vested in or exercisable by the Board generally by or under these Articles or the Act. 122. Delegation of powers 122. Delegation of powers The Board may subject to the provisions of the Act from time No Change to time entrust to and confer upon to MD or any of the officers of the company for the time being such of the powers as they may think fit and may confer such powers for such time and to be exercised for such objects and purposes and upon such terms and conditions and with such restrictions as they may think expedient and may from time to time revoke, withdraw, alter or vary all or any of such powers. (Amended by special resolution, passed in the extra ordinary general meeting of the company held on 17.01.2013) EESL Annual Report 2018-19 Notice 39 123. Powers to appoint committee and to delegate 123. Powers to appoint committee and to delegate The Board may subject to the provisions of the Act, from time No change to time and at any time delegate, any of its powers to a committee or committees consisting of such Director or Directors as they think fit and may from time to time revoke such delegation. Any committee so formed shall in the exercise of the powers so delegated, confirm to any regulations that may from time to time be imposed upon it by the Board. The proceedings of such a committee shall be placed before the Board at its next meeting. 124. Proceedings committee of Board 124. Proceedings committee of Board The minutes and proceedings of any such committee shall be No Change governed by the provisions herein contained for regulating the meeting and proceedings of the Board so far as the same are applicable thereto and are not superseded by any regulation made by the Board under the last preceding Article. 125. When acts of a director valid notwithstanding defective 125. When acts of a director valid notwithstanding defective appointment etc. appointment etc. The acts done by a person as a Director shall be valid No Change notwithstanding, that it may afterwards be discovered that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provisions contained in the Act or in these Articles. Provided that nothing in this Article shall be deemed to give validity of acts done by a Director after his appointment has been shown to the company to be invalid or to have terminated. 126. Resolution by circulation 126. Resolution by circulation Save in those cases where a resolution is required by the No Change provisions of the Act to be passed at a meeting of the Board, a resolution shall be as valid and effectual as if it had been passed at a meeting of the Board or a committee of the Board, as the case may be, duly called and constituted, if a draft thereof in writing is circulated together with the necessary papers, if any, to all the Directors, or to all the members of the committee of the Board, as the case may be, then in India (not being less than in number than the quorum fixed for a meeting of the Board or committee, as the case may be) and to all other Directors or members of the committee, at their usual addresses in India, and has been approved by such of them as are then in India or by a majority of such of them as are entitled to vote on the resolution. MINUTES 127. Minutes to be made 127. Minutes to be made (1) The Board shall in accordance with the provisions of Section (1) The Board shall in accordance with the provisions of Section 193 of the Act, cause minutes to be kept by making entries 118 of the Act, cause minutes to be kept by making entries thereof in books provided for the purpose. The said books shall thereof in books provided for the purpose.The said books shall be maintained and, the entries therein made, dated and signed be maintained and, the entries therein made, dated and signed in the manner provided by Section 193 of the Act. in the manner provided by Section 118 of the Act. (2) The minutes of each meeting shall contain a fair and correct (2) No Change summary of the proceedings thereat. Provided that no matter need be included in any such minutes which in the opinion of the Chairman of the meeting: - (I) is or could reasonably be regarded as defamatory of any person, (ii) is irrelevant or immaterial to the proceedings, or (iii) is detrimental to the interest of the Company (3) All such minutes shall be signed by the chairman of the (3) All the pages of the minute book shall be consecutively meeting as recorded, or by the person who shall preside as numbered and initialled or signed, and last page of the record the chairman at the next succeeding meeting and all minutes of proceeding of each meeting in minute book shall be dated purported to be so signed shall for all purposes be evidence of and signed, by the Chairman of same meeting or of the next the proceedings recorded therein. succeeding meeting. (4) The draft minutes of the meeting shall be circulated among 40 Notice EESL Annual Report 2018-19 all the Directors within fifteen days of the meeting either in writing or in Electronic Mode as may be decided by the Board and/or in accordance with Applicable Laws. (5) Every Director who attended the meeting, whether personally or through Electronic Mode, shall confirm or give his comments in writing, about the accuracy of recording of the proceedings of that particular meeting in the draft minutes, within seven days or some reasonable time as decided by the Board, after receipt of the draft minutes failing which his approval shall be presumed. POWERS OF BOARD 128. General powers 128. General powers The business of the company shall be managed by the Board No Change who may pay all expenses of getting the company registered and may exercise all such powers and do all such acts and things as the company is by its Memorandum of Association or otherwise authorized to exercise but shall not decide matters required to be exercised or done by the company in General Meeting, but subject nevertheless to the provisions of the Act and of the Memorandum of Association and these Articles and to any regulations not being inconsistent with the Memorandum of Association and these Articles from time to time made by the company in General Meeting provided that no such regulation shall invalidate any prior act of the Board which would have been valid if such regulation had been made. 129. Specific powers of the Board 129. Specific powers of the Board Without prejudice to the general powers conferred by the No Change preceding Article, and the other powers conferred by these Articles, and subject to the provisions of the Act, the Board of Directors shall have the following powers, that is to say powers: 1 To purchase take on lease or Property acquire: To purchase, take on lease or otherwise acquire for the company, property, rights or privileges which the company is authorized to acquire at such price and generally on such terms and conditions as they think fit; 2 To provide welfare of employees: To provide for the welfare of employees and/or former employees of the company or of its predecessors in business and the wives, widows and families or the dependents or connections of such employees, or ex-employees by building or contributing to the building of houses, dwellings or quarters or by grant of money pension, superannuation, gratuities, compensation, allowances, bonuses, profit sharing bonuses or benefit of any other kind; or by creating and from time to time subscribing or contributing to provident and other funds and to establish or suppor t other Associations, institutions funds, profit sharing or other scheme or trusts or by providing or subscribing or contributing towards places of instruction and recreation, hospitals and dispensaries, medical and other attendances and any other form of assistance welfare or relief as the Directors shall think fit. 3 To insure and keep insured property of company: To insure and keep insured against loss or damage by fire or otherwise for such period and to such extend as they may think proper all or any part of the buildings, machinery, goods, stores, produce and other movable property of the company either separately or jointly also to ensure all or any portion of the goods; produce, machinery and other Articles imported or exported by the company and to sell, assign, surrender or discontinue any policies of assurances affected in pursuance of this power. 4 To open accounts: To open accounts ordinarily with any Bank of India or any of their Subsidiaries and to pay money, EESL Annual Report 2018-19 Notice 41 into and draw money from any such account from time to time as the Board may think fit. 5 To pay for any property: To pay for any property, rights or privileges acquired by, or services rendered to the company either wholly or partially in cash or in Shares, Bonds, Debentures, Debenture Stocks or other securities of the company, and any such Shares may be issued either as fully paid up or with such amount credited as paid up thereon as may be agreed upon, and any such Bonds, Debentures, Debenture Stocks or other securities may either specifically charged upon all or any part of the property of the company and its uncalled capital or not so charged. 6 To secure fulfilment of any contract: To secure the fulfilment of any contracts or arrangements entered into by the company by mortgage or charge of all or any of the property of the company and its uncalled capital for the time being or in such manner subject to Article 115(d). 7 To create posts below Board level: To create all posts below the Board level and to appoint and at their discretion, remove or suspend such Managers, secretaries, officers, clerks, workmen, employees, agents and servants, specialists and consultants for permanent or temporary or special services as they may, from time to time think fit, and to determine their powers and duties and fix their specific scales of pay and allowances and to acquire security in such instances and to such amount as they think fit. 8 To subscribe or guarantee money to Charitable Funds: To subscribe or otherwise to assist or to guarantee money to charitable, benevolent, religious, scientific, national, public or any other institutions or' objects, or for any exhibition to any individual or body. 9 To provide for depreciation and reserves: Subject to the provisions of the Act before recommending any Dividend to set aside out of the profits of the company such sums as they may think proper for depreciation or to depreciation fund reserve or to Reserve Fund, or to sinking fund, insurance fund or any special other fund to meeting contingencies or to repay redeemable Preference Shares Debentures or Debenture Stocks and for special Dividends and for equalizing Dividends and for retaining, improving, extending and maintaining any part of the property of the company, and for such other purposes (including the purposes referred to in the sub-clause (7) as the Directors may in their absolute discretion think conducive to the interest of the company; and to invest the several sums so set aside or so much thereof as required to be invested upon such investments subject to the restrictions imposed by the Act ) as the Board may think fit; and from time to time deal with and vary such investments and dispose of and apply and expand all or any part thereof for the benefit of the company, in such manner and for such purposes as the Board, subject to any restrictions think conducive to the interest of the company notwithstanding that the matters to which the Directors apply or upon which the capital money of the company rightly be applied or expanded and to divide the Reserve Fund into such special funds as the Board may think fit and to employ the assets constituting all or any of the above funds, including the depreciation fund, in the business of the company or in the purchase or repayment of redeemable Preference Shares, Debentures, Debenture Stocks and that without being bound to keep the same separate from the other assets and without being bound to pay or allow interest on the same, with power however to the Board at their discretion to pay or allow to 42 Notice EESL Annual Report 2018-19 the credit of such fund interest at such rate, as the Board may think proper. 10 To comply local laws: To comply with the requirements of any local laws. 11 To bring and defend action: To institute, conduct, defend, compound or abandon any legal proceeding by or against the company or its officers, or otherwise conducting the affairs of the company and also to compound and allow time for payment or satisfaction of any debt due or of any claim or demand by or against the company. 12 To refer to arbitration: To refer any claim or demand by or against the company to arbitration and observe and perform the award. 13 To give receipt: To make and give receipts, release and other discharges for money payable to the company, and for the claims and demands of the company. 14 To authorize acceptances etc.: To determine from time to time who shall be entitled to sign on the company's behalf bills, notes, receipts, acceptances, endorsements, cheques, releases, Dividend warrants, contracts and documents. 15 To appoint attorneys: To provide from time to time for the management of the affairs of the company at different places in such manner as they think fit, and in particular to appoint any person to be the attorneys or agents of the company with such powers (including power to sub- delegate) and upon such terms as may be thought fit. 16 To invest moneys: To invest in the Scheduled Bank or in such securities as may be approved by the Board and deal with any of the moneys of the company upon such investments authorized by the Memorandum of Association of the company (not being Shares in this company) and in such manner as they think fit, and from time to time to vary or realize such investment. 17 To give security by way of indemnity: To execute in the name and on behalf of the company in favour of any Director or other person who may incur or is about to incur any personal liability for the benefit of the company, such mortgages of the company's property (present and future) as they think fit and any such mortgage may contain a power of sale and such other powers, covenants and provisions as shall be agreed upon. 18 To give award or allow any bonus: To give award or allow any bonus, pension, superannuation, gratuity or compensation to any employee of the company, or his widow, children or dependents, that may appear to the Board just or proper, whether such employee, his widow, children or dependents has or have not a legal claim upon the company. 19 To create Provident Fund: Before declaring any Dividend, to set aside such proportions of the profits of the company as they may think fit, to form a fund to provide for such pensions, gratuities or compensation or to create any provident fund or benefit fund in such manner as the Board may deem fit. 20 To enter into all such negotiations and contracts: To enter into all such negotiations and contracts and vary all such contracts and execute and do all such acts, deeds and things in the name of and on behalf of the company as they may consider expedient for or in relation to any of the matters aforesaid or otherwise for the purposes of the company. 21 To delegate powers: Subject to the restrictions laid down 21 To delegate powers: Subject to the restrictions laid down in Section 292 of the Act, to delegate any of the powers, in Section 179 of the Act, to delegate any of the powers, authorities and discretion for the time being vested in them, authorities and discretion for the time being vested in them, subject, however, to the ultimate control and authority being subject, however, to the ultimate control and authority being EESL Annual Report 2018-19 Notice 43 retained by them. Any such delegate or attorney as retained by them. Any such delegate or attorney as aforesaid may be authorized by the Directors to sub aforesaid may be authorized by the Directors to sub delegate all or any of the powers, authorities and discretion delegate all or any of the powers, authorities and discretion for the time being vested in them. for the time being vested in them. THE SECRETARY 130. Appointment and removal of Secretary 130. Appointment and removal of Secretary The Board may from time to time appoint a secretary to perform The Board may from time to time appoint a secretary to perform any functions, which by the Act, are to be performed by the any functions, which by the Act, are to be performed by the Secretary and to execute any other ministerial or administrative Secretary and to execute any other ministerial or administrative duties, which may from time to time be assigned to the duties, which may from time to time be assigned to the secretary by the Directors and at their discretion remove any secretary by the Directors and at their discretion remove any such Secretary. The Board may also at any time appoint any such Secretary. The Board may also at any time appoint any person or persons (who need not to be the Secretary) to keep person or persons (who need not to be the Secretary) to keep the register required to be kept by the Company; provided that the register required to be kept by the Company; provided that if the paid up capital of the Company shall exceed prescribed if the paid up capital of the Company shall exceed prescribed limits then in such event, the Company shall appoint a Whole limits then in such event, the Company shall appoint a Whole time Secretary as provided in Section 383-A of the Act and he time Secretary as provided in Section 203 of the Act and he shall possess such qualifications as may be prescribed from shall possess such qualifications as may be prescribed from time to time by the rules made under Section 2(45) of the Act. time to time by the rules made under Section 2(24) of the Act. THE SEAL 131. Seal and its custody 131. Seal and its custody (a) The Board shall provide a common seal for the purpose of (a)No Change the Company and shall have power from time to time to destroy the same and substitute a new seal in lieu thereof, and the Board shall provide for the safe custody of the seal. (b) The seal of the company shall not be affixed to any (b) The seal of the company shall not be affixed to any instrument except by the authority of a resolution of the Board instrument except by the authority of a resolution of the Board or of a Committee of the Board authorized by it in that behalf or of a Committee of the Board authorized by it in that behalf and except in the presence of at -least two Director and of and except in the presence of at -least two Director and of Secretary or such other person as the Board may appoint for Secretary or such other person as the Board may appoint for the purpose and those two Director or such other person the purpose and those two Director or such other person aforesaid shall sign every instrument to which the seal of the aforesaid shall sign every instrument to which the seal of the company is so affixed in his presence. Provided, however, the company is so affixed in his presence. In the case of share requirement of Companies (Issue of Share Certificates) Rules, certificates (s), the seal be affixed in the presence of: 1960, shall be complied with for issue of share certificates. a. Two Directors duly authorised by the Board of Directors of the Company for the purpose or the Committee of the Board, if so authorised by the Board; and b. The Secretary or any person authorised by the Board for the purpose. 132. Seal Abroad 132. Seal Abroad The company may exercise the powers conferred by section The company may have official seal for use outside India and 50 of the Act and such powers shall accordingly be vested in subject to Article 131, the board shall decide the manner and the Directors. procedure to use and movement and safe custody of the seal shall be determined by the board. RESERVES 133. Power of Board to create Reserve fund 133. Power of Board to create Reserve fund Subject to the provisions of the Act, the Board may, before No Change recommending any Dividend, set aside and / or create out of the profits of the company such sums as they think proper as a Reserve Fund, to meet the contingencies or for equalizing Dividends, or for special Dividends, or for repairing, improving and maintaining any of the property of the company and for such other purposes as the Directors shall in their absolute discretion think conducive to the interest of the company, and may invest the several sums so set aside upon such investments (other than Shares of the company ) as they think fit from time to time, deal with and vary such investments and dispose of all or any part thereof for the benefit of the company, and may divide the Reserve Fund into such special funds as they think fit and employ the Reserve Fund or any part thereof in business of the company and that without being bound to keep the same separate from the other assets. 44 Notice EESL Annual Report 2018-19 INTEREST OUT OF CAPITAL 134. Payment of interest on borrowing during construction 134. Payment of interest on borrowing during construction period and its capitalization period and its capitalization Where any Shares are issued for the purpose of raising money No Change to defray the expenses of the construction of any works or buildings, or the provisions of any plant, which cannot be made profitable for a lengthened period, the company may pay interest on so much of that Share capital as is for the time being paid up for the period and subject to the conditions and restrictions provided by Section 208 of the Act and may charge the same to capital as part of the cost of construction of work or building or the provision of plant. DIVIDEND 135. Dividend 135. Dividend The profits of the company available for payment of dividend No change subject to any special rights relating thereto created or authorized to be created by these presents and subject to the provisions of these presents as to the Reserve Fund, shall be divisible amongst the members in proportion to the amount of capital held by them respectively provided always that (subject as aforesaid) any capital paid upon a Share during the period in respect of which a Dividend is declared shall only entitle the holder of such Share to an apportioned amount of such Dividend as from the date of payment. 136. Capital paid in advance 136. Capital paid in advance Where capital is paid upon any Shares in advance of calls upon No Change the footing that the same shall carry interest such capital shall not, whilst carrying interest, confer a right to participate in profit. 137. Declaration of Dividend 137. Declaration of Dividend The company in General Meeting may declare a Dividend to be The company in General Meeting may declare a Dividend to paid to the members according to their rights and interest in be paid to the members according to their rights and interest the profits, and may fix the time according to Section 207 of in the profits, and may fix the time according to Section 123 the Act for payment but no Dividend shall exceed the amount of the Act for payment but no Dividend shall exceed the recommended by the Board. amount recommended by the Board. 138. Dividend out of profits only and not to carry interest 138. Dividend out of profits only and not to carry interest No Dividend shall be declared or paid in any financial year by No Dividend shall be declared or paid in any financial year by the company except out of the profits of the Company for that the company except out of the profits of the Company for that year arrived at after providing for depreciation in accordance year arrived at after providing for depreciation in accordance to the provisions of sub-Section (2) of Section 205-of the Act to the provisions of Sub-section (2) of Section 123 of the Act or out of the profits of the Company for any previous financial or out of the profits of the Company for any previous financial year or years arrived at after providing for the depreciation in year or years arrived at after providing for the depreciation in accordance with those provisions remaining undistributed or accordance with those provisions remaining undistributed or out of both or out of moneys provided by the Government for out of both or out of moneys provided by the Government for the payment of Dividend in pursuance of a guarantee given by the payment of Dividend in pursuance of a guarantee given by the Government. No Dividend shall carry any interest as against the Government. No Dividend shall carry any interest as against the company. the company. 139. When to be deemed net profits 139. When to be deemed net profits The declarations of the Directors as to the amount of the net No Change profits of the Company shall be conclusive. 140. Interim Dividend 140. Interim Dividend Subject to the provisions of section 205, 205A & 207 of the Subject to the provisions of section 123 of the Act, the Directors Act, the Directors may, from time to time, pay to the members may, from time to time, pay to the members such interim such interim Dividend as in their judgement, the position of the Dividend as in their judgement, the position of the company company justifies. justifies. 141. Debts may be deducted 141. Debts may be deducted The Directors may retain any Dividend on which the company No Change has lien and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists. 142. Provisions for investments before Dividend 142. Provisions for investments before Dividend Subject to the provisions of the Act, no member shall be entitled No Change EESL Annual Report 2018-19 Notice 45 to receive payment of any interest or Dividend in respect of his Share(s), whilst any money may be due or owing from him to the company in respect of such Share(s) or otherwise howsoever either alone or jointly with any other person(s); and the Directors may deduct from the interest or Dividend payable to any member all sums of money so due from him to the company. 143. Payment of Dividend 143. Payment of Dividend The Directors may retain the Dividend payable upon Shares in No Change respect of which any person is entitled to become a member or which any person is entitled to transfer until such person shall become member in respect of such Shares or shall duly transfer the same. 144. Dividend payable in proportion to the amount paid 144. Dividend payable in proportion to the amount paid The company shall pay Dividend in proportion to the amount No Change paid up or credited as paid up on such Share where a larger amount is paid-up or credited as paid-up on some Share than paid-up or credited as paid-up on some Share than on others. 145. Call not to exceed dividend payable 145. Call not to exceed dividend payable Subject to the provisions of Section 205(A) of the Act, any Subject to the provisions of Section 123 of the Act, any General General Meeting declaring a Dividend may make a call on the Meeting declaring a Dividend may make a call on the members members for such amount as the meeting fixes, but so that the for such amount as the meeting fixes, but so that the call on call on such member shall not exceed the Dividend payable to such member shall not exceed the Dividend payable to him so him so that the call be made payable at the same time as the that the call be made payable at the same time as the Dividend, Dividend, and the Dividend may, if so arranged between the and the Dividend may, if so arranged between the company company and the members, be set off against deemed ordinary and the members, be set off against deemed ordinary business business for an ordinary General Meeting which declares a for an ordinary General Meeting which declares a Dividend. Dividend. 146. Distribution of Reserves etc. 146. Distribution of Reserves etc. The company in General Meeting may resolve that any money The company in General Meeting may resolve that any money investment, or other asset forming part of the undivided profits investment, or other asset forming part of the undivided profits of the company standing to the credit of the reserves, or in the of the company standing to the credit of the reserves, or in the hands of the company, and available for distribution or hands of the company, and available for distribution or representing premium received on the issue of Shares and representing premium received on the issue of Shares and standing to the credit of the Share premium account, be standing to the credit of the Share premium account, be capitalized and distributed amongst the Shareholders in capitalized and distributed amongst the Shareholders in accordance with their rights and that all or any part of such accordance with their rights and that all or any part of such capitalized fund be applied on behalf of the Shareholders in capitalized fund be applied on behalf of the Shareholders in paying up in full any unissued Shares of the company and that paying up in full any unissued Shares of the company and that such unissued Shares so fully paid be distributed accordingly such unissued Shares so fully paid be distributed accordingly amongst the Shareholders in the proportion in which they are amongst the Shareholders in the proportion in which they are entitled to receive Dividends, and shall be accepted by them in entitled to receive Dividends, and shall be accepted by them in full satisfaction of their interest in the said capitalized sum. For full satisfaction of their interest in the said capitalized sum. For the purpose of giving effect to any resolution under this Article, the purpose of giving effect to any resolution under this Article, the Board may settle any difficulty which may arise in regard the Board may settle any difficulty which may arise in regard to the distribution as they think expedient and in particular may to the distribution as they think expedient and in particular may issue fractional Certificates and may fix the value for distribution issue fractional Certificates and may fix the value for distribution of any specific assets and may determine that cash payments of any specific assets and may determine that cash payments shall be made to any members upon the footing of the value shall be made to any members upon the footing of the value so fixed or that fractions or less than one rupee may be so fixed or that fractions or less than one rupee may be disregarded in order to adjust the rights of all parties, and may disregarded in order to adjust the rights of all parties, and may vest any such cases of specific assets in Trustees upon such vest any such cases of specific assets in Trustees upon such trusts for the person entitled to the dividend or capitalized fund trusts for the person entitled to the dividend or capitalized fund as may seem expedient to the Board. Where necessary, a proper as may seem expedient to the Board. Where necessary, a proper contract shall be entered into in accordance with Section 75 of contract shall be entered into in accordance with Section 39 of the Act, and the Board may appoint any person to sign the the Act, and the Board may appoint any person to sign the contract on behalf of the person entitled to the dividend or contract on behalf of the person entitled to the dividend or capitalized fund, and such appointment shall be effective, capitalized fund, and such appointment shall be effective, provided that subject to the provisions contained in Section provided that subject to the provisions contained in Section 205(3) of the Act no Dividend shall be payable except in cash 123 of the Act no Dividend shall be payable except in cash. 147. Dividend are to be paid in cash 147. Dividend are to be paid in cash Subject to the provisions of Section 205 of the Act, no Dividend Subject to the provisions of Section 123 of the Act, no Dividend shall be payable except in cash. shall be payable except in cash. 46 Notice EESL Annual Report 2018-19 148. Effect of transfer 148. Effect of transfer A transfer of Shares shall not pass the right to any Dividend No Change declared thereon before the registration of the transfer. 149. Dividend to joint Holders 149. Dividend to joint Holders Any one of the several persons, who are Registered as the No Change joint holders of any Share may give effectual receipts for all Dividends and payment on account of Dividend in respect of such Shares. 150. Dividend to be paid through cheque or warrant 150. Dividend to be paid through cheque or warrant Unless otherwise directed, any Dividend may be paid by cheque' No Change or warrant sent through post to the Registered address of the member or person entitled or in case of joint holders to that one of them first names in the Register in respect of the joint holding. Every such cheque shall be made payable to the order of the person to whom it is sent. The company shall not be liable or responsible for any cheque or warrant lost in transmission or for any Dividend lost to the member or person entitled thereto by the forged endorsement of any cheque or warrant or the fraudulent or improper recovery thereof by other means. 151. Notice of warrant 151. Notice of warrant Notice of the declaration of any Dividend, whether interim or No Change otherwise, shall be given to the holders of Shares in the manner hereinafter provided. 152. Unclaimed dividend 152. Unclaimed dividend All unclaimed Dividend will be dealt with in accordance with No Change the relevant provisions of the Act BOOKS AND DOCUMENTS 153. Books of accounts to be kept 153. Books of accounts to be kept The Board shall cause to be kept in accordance with Section The Board shall cause to be kept in accordance with Section 209 of the Act proper books of account with respect to: 128 of the Act proper books of account with respect to: (a) All sums of money received and expended by the company (a) All sums of money received and expended by the company and the matters in respect of which the receipt and and the matters in respect of which the receipt and expenditure take place expenditure take place (b) all sales and purchases of goods by the company, and (b) all sales and purchases of goods by the company, and (c) all assets and liabilities of the company. (c) all assets and liabilities of the company. (d) such other matters as specified in the Act. (d) such other matters as specified in the Act. 154. Where to be kept 154. Where to be kept The books of Accounts shall be kept at such place or places The books of Accounts shall be kept at such place or places as as the Board may determine in accordance with the provisions the Board may determine in accordance with the provisions of of Section 209 of the Act. Section 128 of the Act 155. Inspection 155. Inspection (1) The accounts shall be open to inspection by any Director No Change during business hours. (2) The books of account shall also be open to inspection by the Registrar or by an officer of Govt. authorized by the Central Govt. in this behalf if in the opinion of the Registrar or such other officer sufficient cause exists for the inspection of the books of account. (3) The Board shall, from time to time. determine whether and to what extent, and at what times and places and under what conditions or regulations, the books of account and books and documents of the company or any of them, shall be open to inspection of the members not being Directors and no member (not being a Director) shall have any right of inspection of any books of account or book or document of the company except as conferred by law or authorized by the Board or by the company in General Meeting. EESL Annual Report 2018-19 Notice 47 BALANCE SHEET AND ACCOUNTS 156. Balance sheet and Profit and Loss Account 156. Balance sheet and Profit and Loss Account The Board shall at some date not later than 18 months after The Board shall at some date not later than 18 months after the incorporation of the company and subsequently once at the incorporation of the company and subsequently once at least in every calendar year lay before the company in General least in every year lay before the company in General Meeting Meeting a Balance Sheet and Profit and Loss Account made a Balance Sheet and Profit and Loss Account made up in up in accordance with the provisions of Section 210 of the Act accordance with the provisions of Section 129 of the Act and and such Balance Sheet and Profit and Loss account shall such Balance Sheet and Profit and Loss account shall comply comply with the requirements of Sections 210, 211, 212, 215 with the requirements of Sections 129, 134, Accounting and 216 and of schedule VI of the Act so far as they are Standards and of Schedule III of the Act so far as they are applicable to the company. applicable to the company. 157. Annual report of Directors 157. Report of Board of Directors There shall be attached to every Balance Sheet laid before the There shall be attached to every Balance Sheet laid before the company a report by the Board of Directors complying with company a report by the Board of Directors, prepared and the provision of Section 217 of the Act. The report shall be signed in compliance with the provision of Section 134 of the signed in accordance with Section 217 of the Act Act. 158. Copies of Balance Sheet etc. to be filed 158. Copies of Balance Sheet etc. to be filed The company shall comply with Section 220 of the Act as to The company shall comply with Section 137 of the Act as to filing of copies of the Balance Sheet and Profit and Loss account filing of copies of the Balance Sheet and Profit and Loss account and documents required to be annexed or attached thereto with and documents required to be annexed or attached thereto with the Registrar. the Registrar. AUDIT 159. Accounts to be audited annually 159. Accounts to be audited annually Once at least in every financial year the accounts of the No Change company shall be examined and the Profit & Loss Account and Balance Sheet shall be audited by one or more Auditors as provided in the Act. 160. Appointment of Auditors 160. Appointment of Auditors The Auditor(s) of the company shall be appointed by The Auditor(s) of the company shall be appointed by Comptroller and Auditor General of India as per Section 619B Comptroller and Auditor General of India as per Section 139(5) of the Companies Act, 1956, and his/their remuneration, rights of the Act, and his/their remuneration, rights and duties shall and duties shall be regulated as per the provisions of the Act. be regulated as per the provisions of the Act. 161. Auditor's right to attend meetings 161. Auditor's right to attend meetings The Auditors of the company shall be entitled to receive notice No Change of and to attend any General Meeting of the company at which any accounts which have been examined or reported on by them are to be laid down before the company and make any statement or explanation they desire with respect to the accounts. 162. When accounts to be deemed finally settled 162. When accounts to be deemed finally settled Every Balance Sheet and Profit and Loss Account of the No Change company when audited and adopted by the company in General Meeting shall be conclusive. SERVICE OF NOTICE AND DOCUMENTS 163. Service of Notice 163. Service of Notice (1) Notice or other documents may be given by the company (1) Notice or other documents may be given by the company to any member either personally or by sending it by post to to any member, in writing, either personally or by sending it by him to his Registered address or (if he has no Registered post to him to his Registered address or (if he has no Registered address in India) to the address if any, within India supplied by address in India) to the address if any, within India supplied by him to the company for the giving of notices to him. him to the company for the giving of notices to him or by electronic means. (2) Where a notice or other document is sent by post: (2) No Change (a) Service thereof shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the notice or document, provided that where a member has intimated to the company in advance that notices or documents should be sent to him under a Certificate of posting or by Registered post with or without acknowledgment due and has deposited with the company sufficient sum to defray the expenses of doing so service of the notice or document shall not be deemed to be effected unless it is sent in the manner intimated by the member, and 48 Notice EESL Annual Report 2018-19 (b) such services shall be deemed to have been effected: (i) in the case of a notice of a meeting at the expiration of forty- eight hours after the letter containing the same is posted, and (ii) in any other case, at the time at which the letter would be delivered in the ordinary course of post. 164. Notice to members who have not supplied address in 164. Notice to members who have not supplied address in India India A notice or other document adver tised in a newspaper No Change circulating in the neighbourhood area of the office shall be deemed to be duly ser ved on the day on which the advertisement appears on or to every member of the company who has no Registered address in India for the giving of notice to him. Any member who has no Registered address in India shall, if so required to do by the-company, supply the company with an address in India for the giving of notices to him. 165. Notice to joint holders 165. Notice to joint holders A notice or other document may be served by the company on No change the joint holders of a Share by giving the notice to the joint holder named first in the Register in respect of the Share. 166. Notice to persons entitled by transmission 166. Notice to persons entitled by transmission A notice or other document may be served by the company on No Change the persons entitled to a Share or debenture in consequence the death or insolvency of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased or assignee of the insolvent or by any like description, at the address in India supplied for the purposes by the persons claiming to be so entitled, or until such an address has been so supplied, by giving the notice in any manner in which the same might have been given if the death or insolvency had not occurred. 167. Entitlement of notice of General Meeting 167. Entitlement of notice of General Meeting Notice of every General Meeting shall be given in the same Notice of every General Meeting shall be given in the same manner herein before authorized to (a) every member of the manner herein before authorized to: company and also to (b) every person entitled to a Share in a. every member of the company, legal representative of any consequence of the death or insolvency of member who but deceased member or the assignee of an insolvent member; for his death or insolvency would be entitled to receive notice b. the Auditor or Auditors of the company; of the meeting provided the company has been given due notice. c. every director of the company. 168. When notice may be given by advertisement 168. When notice may be given by advertisement Any notice required to be given by the company to members No Change or any of them and not expressly provided for by these Articles or by the Act shall be sufficiently given if given by advertisement. 169. How to be advertised 169. How to be advertised Any notice required to be or which may be given by Any notice required to be or which may be given by adver tisement shall be adver tised once in one or more adver tisement shall be published in at least one English newspapers circulating in the neighbourhood of the office. language national daily newspaper circulating in the whole or substantially the whole of India and in one daily newspaper published in the language of the region, where the registered office of the entity is situated. 170. When notice by advertisement deemed to be served 170. When notice by advertisement deemed to be served Any notice given by the advertisement-shall be deemed to have No Change been given on the day on which the advertisement shall first appear. 171. Transferee etc. bound by prior notice 171. Transferee etc. bound by prior notice Every person who by operation of law, transfer or other means No Change whatsoever shall become entitled to any Share shall be bound by every notice in respect of such Share which previous to his name and address being entered on the Register shall have been duly given to the person from whom he derives his title to such Shares. 172. Notice valid though member deceased 172. Notice valid though member deceased Subject to the provisions of the Article any notice or document No Change EESL Annual Report 2018-19 Notice 49 delivered or sent by post or left at the Registered address of any member in pursuance of these Ar ticles shall, notwithstanding such member being deceased and whether or not the company have notice of his death, be deemed to have been duly served in respect of any Registered Share, whether held solely or jointly with other persons by such members until some other person or persons be Registered instead of him as the holder or joint holders thereof and such service shall for all purposes of these presents be deemed a sufficient service of such notice or document on his or her heirs, executors or administrators and all persons, if any, jointly interested with him or her in any such Share. 173. Who shall sign the notice 173. Who shall sign the notice Any notice to be given by the company shall be signed by No Change such Director or officers as the Board of Directors may appoint and such signature may be written, printed or lithographed. SECRECY 174. Secrecy 174. Secrecy Every Director, Secretary, Trustee for the company, its members No Change or Debenture holders, members of a committee, officer, servant, agent, accountant or other person employed in or about the business of the company shall, if so required by the Board before entering upon his duties, sign a declaration pledging himself to observe strict secrecy respecting all transactions of the company with its customers and the state of accounts with individuals and in matters relating thereto, and shall by such declaration pledge himself not to reveal any of the matters which may come to his knowledge in the discharge of his duties except when required so to do by the Board or by any General Meeting or by a Court of Law except so far as may be necessary in order to comply with any of the provisions contained in these Articles. 175. No member to enter the premises of the Company 175. No member to enter the premises of the Company without permission without permission No member or other person (not being a Director) shall be No Change entitled to enter upon the property of the company or to inspect or examine the premises or properties of the company without the permission of the Board to require discovery of or any information respecting any detail of the trading of the company or any matter which is or may be in the nature of a trade secret, mystery or trade or secret process or of any matter whatsoever which may relate to the conduct of the business of the company and which in the opinion of the Board will be inexpedient in the interest of the members of the company to communicate to the public. WINDING UP 176. Distribution of asset in the case of Winding-up 176. Distribution of asset in the case of Winding-up If the company shall be wound-up and the assets available for No Change distribution among the members as such shall be insufficient to repay the whole of the paid up capital such assets shall be distributed so that as nearly as may be the losses shall be borne by the members in proportion to the capital paid up or which ought to have been paid up at the commencement of the winding up on the Shares held by them respectively. And if in a winding up the assets available for distribution among the members shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding-up, the excess shall be distributed amongst the members in proportion to the capital at the commencement of the winding- up paid up or which ought to have been paid up on the Shares held by them respectively. But this Article is to be without prejudice to the rights of the holders of Shares issued upon special terms and conditions. 50 Notice EESL Annual Report 2018-19 177. Distribution of asset in specie 177. Distribution of asset in specie If the company shall be wound up, whether voluntarily or No Change otherwise the Liquidators, may, with the sanction of a Special Resolution, divide among the contributors, in specie or in kind, any part of the assets of the company and may, with the like sanction, vest any part of the assets of the company in Trustees upon such trusts for the benefit of the contributories, or any of them as the Liquidator, with the like sanction, shall think fit. INDEMNITY 178. Indemnity 178. Indemnity Subject to the provisions of Section 201 of the Act, every Subject to the provisions of Section 197 of the Act, every Director, Auditor, Secretary and other officer, servant or agent Director, Auditor, Secretary and other officer, servant or agent for the time being of the Company shall be indemnified by the for the time being of the Company shall be indemnified by the company, against, and it shall be the duty of the Directors to company, against, and it shall be the duty of the Directors to pay out of the funds of the company, all costs, losses and pay out of the funds of the company, all costs, losses and expenses (including traveling expenses) which any such officer expenses (including traveling expenses) which any such officer or servant may incur or become liable to by reason of any or servant may incur or become liable to by reason of any contract entered into, or act or things done by him as such contract entered into, or act or things done by him as such officer or servant, or in any way in the discharge of his duties; officer or servant, or in any way in the discharge of his duties; and the amount for which such indemnity is provided shall and the amount for which such indemnity is provided shall immediately attach as a lien on the property of the company immediately attach as a lien on the property of the company and have priority as between the members over all other claims. and have priority as between the members over all other claims. Subject as aforesaid every Director, or officer of the company Subject as aforesaid every Director, or officer of the company shall be indemnified against any liability incurred by him or shall be indemnified against any liability incurred by him or them in defending any proceedings whether civil or criminal in them in defending any proceedings whether civil or criminal in which judgement is given in his or their favour or in which he which judgement is given in his or their favour or in which he or they are acquitted or in connection with any application under or they are acquitted or in connection with any application under Section 633 of the Act in which relief is given to him-or them Section 463 of the Act in which relief is given to him-or them by the Court. by the Court. 179. Directors or Managers etc. not responsible for acts of 179. Directors or Managers etc. not responsible for acts of others others Subject to the provisions of Section 201 of the Act, no Director Subject to the provisions of Section 197 of the Act, no Director other officer of the Company shall be liable for the acts, receipts other officer of the Company shall be liable for the acts, receipts neglects or defaults of any other Director or officer, or for joining neglects or defaults of any other Director or officer, or for joining in any receipt or other act for the sake of conformity or for any in any receipt or other act for the sake of conformity or for any loss or expense happening to the Company through loss or expense happening to the Company through insufficiency or deficiency of title to any property acquired by insufficiency or deficiency of title to any property acquired by order of the Directors for or on behalf of the Company or for order of the Directors for or on behalf of the Company or for the insufficiency or deficiency of any security in or upon which the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested, or for any of the moneys of the Company shall be invested, or for any loss or damage arising from the bankruptcy, insolvency or any loss or damage arising from the bankruptcy, insolvency or tortuous act of any person, company or corporation with whom tortuous act of any person, company or corporation with whom any moneys, securities or effects shall be entrusted or deposited any moneys, securities or effects shall be entrusted or deposited or for any loss occasioned by an error of judgement or oversight or for any loss occasioned by an error of judgement or oversight on his or their part, or for any other loss or damage or on his or their part, or for any other loss or damage or misfortune whatever which shall happen in the execution of misfortune whatever which shall happen in the execution of the duties of his or their office or in relation thereto unless the the duties of his or their office or in relation thereto unless the same happens through his own dishonesty. same happens through his own dishonesty. JOINT VENTURE AGREEMENT 180. Adoption of JVA 180. Adoption of JVA After Incorporation, the Company shall adopt the Joint Venture No Change Agreement executed among NTPC, PFC, POWERGRID and REC and in case of any inconsistency between this Articles of Association and Joint Venture Agreement the, provisions of latter will prevail, subject to provisions of the Act. EESL Annual Report 2018-19 Notice 51 DIRECTORS' REPORT To The Members, Energy Efficiency Services Limited equity shares of ` 10 each to ` 35000 million divided into 350,00,00,000 equity shares of ` 10 each. Your Directors are pleased to present the 10th Annual Report on business and operations of the company along with the Audited c. The Board of Directors in their 71st Board Meeting held on Financial Statements for the financial year ended on 31st March, 2019. 7th February, 2019, issued and offered equity shares amounting to ` 3300 million to all existing shareholders Revenue from operations for the financial year 2018 - 19 is ` 18376.50 on rights basis in the proportion of their shareholding. million and total revenue for the period is ` 19356.74 million. Net Power Finance Corporation Limited did not subscribe to profit of the Company in 2018 - 19 is ` 948.79 million. the offer. Consequently, equity shares amounting to A. FINANCIAL PERFORMANCE ` 2100.10 million were allotted to NTPC Limited, REC Limited and Power Grid Corporation of India Limited on 1.1 Financial Highlights (Standalone): 8th June, 2019. Highlights of performance of the Company for the financial year d. The Board of Directors in their 74th Board Meeting held on 2018-19 are given as under with comparative position of 22 nd July, 2019, issued and offered equity shares previous year's performance: amounting to ` 1279.20 million to all existing shareholders (` in million) on rights basis in the proportion of their shareholding. The offer was subscribed by NTPC Limited only where Power Particulars 31st March, 31st March, Finance Corporation Limited and REC Limited renounced 2019 2018 their offer in favour of NTPC Limited. Consequently, equity Paid up Share capital 6752.04 4620.00 shares amounting to ` 981.20 million were allotted to NTPC Limited on 12th September, 2019. Total Revenue 19356.74 14107.03 Therefore, as on date, shareholding pattern of the company is (including Other Income) as under: Profit Before Depreciation & Taxes 5113.33 1947.79 S. Name of Shareholders No. of % of Less: Depreciation 3402.14 1332.77 No. Shares Held holding Profit/(Loss) Before Tax 1711.19 615.02 @ ` 10 each Less: Prior Period Adjustments 0 0 1. NTPC Limited and its 46,36,10,000 47.15 (Net) Nominee 2. REC Limited and its 21,81,10,000 22.18 Less: Provision for Taxation Nominee -Current Year 706.06 160.65 3. Power Finance Corporation 24,55,00,000 24.97 -Earlier years 0 42.14 Limited and its Nominee 4. Power Grid Corporation of 5,61,18,350 5.71 -Deferred Tax credit 54.13 17.61 India Limited and its Profit/(Loss) after Tax 951.00 394.62 Nominee Add : Other comprehensive (2.21) (.78) Total 98,33,38,350 100 income / (expense) Considering that the shareholding of Power Grid Corporation of Total Comprehensive income 948.79 393.84 India Limited stands below 10%, PGCIL does not have the right for the year to nominate director on the Board of EESL, as provided in clause 7.3 of the JVA. 1.2 Transfer to free Reserves and Dividend An amount of ` 47.8 million was transferred to free reserves of 1.4 Net Worth and Earning per Share the company. The Board of Directors recommend the final Your Company's net wor th as on 31 st March, 2019 was dividend of ` 94.88 million (10% of PAT) for the financial year ` 8399.70 million as against `6444.30 million in the previous 2018-19 and Dividend Distribution Tax of ` 19.50 million is year. EPS of the Company for the year ended 31st March, 2019 payable thereon. stands at ` 1.46 in comparison to ` 0.85 for the financial year 1.3 Share Capital ended 31st March, 2018. During the financial year ended on 31st March, 2019: 1.5 Resource Mobilization a. The Company has allotted 21,32,04,350 Equity Shares of ` 10 each to NTPC Limited, Power Finance Corporation The Company mobilized ` 8187.70 million in foreign loans from Limited and Power Grid Corporation of India Limited in Kreditanstalt für Wiederaufbau (KfW), Agence française de 63rd Board Meeting held on 8th May, 2018. développement (AFD), Asian Development Bank (ADB) and International Bank for Reconstruction and Development (IBRD). b. The Authorised Share Capital of the company was The amount outstanding as on 31st March, 2019 in respect of increased from ` 15000 million divided into 150,00,00,000 Foreign Long term borrowings is ` 12885.70 million. 52 Directors' Report EESL Annual Report 2018-19 The Company has mobilised ` 4000 million in domestic loans EESL has issued Secured / Unsecured, Redeemable, Taxable, from Punjab National Bank to meet the capex requirements of Non - Cumulative, Non - Convertible Bonds amounting to the company. The amount outstanding as on 31st March, 2019 ` 12750 million which are listed on BSE Limited. The details of in respect of Domestic Long Term Borrowings is ` 16749.50 outstanding bonds are as under: million. Bond Series - I Bond Series - II Bond Series - III Bond Series - IV STRPP A STRPP B STRPP C Securities Secured, Secured, Secured, Unsecured, Unsecured, Unsecured, Description Redeemable, Redeemable, Redeemable, Redeemable, Redeemable, Redeemable, Taxable, Non - Taxable, Non- Taxable, Non- Taxable, Non- Taxable, Non- Taxable, Non - Cumulative, Non - Cumulative, Non- Cumulative, Non- Cumulative, Non- Cumulative, Non- Cumulative, Non- Convertible Bonds Convertible Convertible Convertible Convertible Convertible Bonds Bonds Bonds Bonds Bonds Mode of Issue Private Placement Private Placement Private Placement Private Placement Private Placement Private Placement basis basis basis basis basis basis No. of Bonds 1250 1250 1250 4500 2000 1250 ISIN INE688V07017 INE688V07025 INE688V07033 INE688V08015 INE688V08023 INE688V08031 Face Value / ` 10,00,000/- ` 10,00,000/- ` 20,00,000/- ` 10,00,000/- ` 10,00,000/- ` 10,00,000/- Issue Price Total Amount ` 1250 million ` 1250 million ` 2500 million ` 4500 million ` 2000 million ` 1250 million raised Date of Issue 20.09.2016 20.09.2016 20.09.2016 18.07.2017 10.01.2018 29.01.2018 Coupon Rate 8.07% 8.07% 8.07% 7.80% 8.15% 8.29% Credit Rating CARE - ‘AA’ CARE - ‘AA’ CARE - ‘AA’ CARE - ‘AA’ CARE - ‘AA’ CARE - AA ICRA - ‘AA-’ ICRA - ‘AA-’ ICRA - ‘AA-’ ICRA - ‘AA-’ ICRA - ‘AA-’ ICRA - AA 1.6 Cash Credit/ Short-Term Facility in estimated energy savings of 303.93 million kWh per As on 31 March, 2019, Company has availed Short Term Loan st year with avoided peak demand of 139MW and GHG amounting to ` 6267.90 million. The Company has been rated emission reduction of 2,49,226 (ton) CO2 per year. A1+ in respect of short term loans by credit rating agency namely • Energy Efficient Fans: EESL provides BEE 5 Star rated CARE & ICRA. ceiling fans which are energy efficient fans. As on 31st March, 2019, EESL has distributed 22.09 lakh energy B. OPERATIONAL HIGHLIGHTS efficient fans under this scheme which will result in an 2. NATIONAL PROGRAMME estimated energy savings of 205.36 million kWh per year 2.1 UJALA with avoided peak demand of 55MW and GHG emission reduction of 1,68,396 (ton) CO2 per year. Hon'ble Prime Minister launched the UJALA programme on 5th January, 2015 which aims to provide LED bulbs to domestic Gram Swaraj Abhiyan (GSA) and Extended Gram Swaraj consumers with a target to replace 77 crore incandescent bulbs Abhiyan (EGSA) - UJALA scheme was one of the seven schemes with LED bulbs. As on 31st March, 2019, EESL has distributed selected for the GSA where EESL has distributed 68 lakh LED 34.74 crore LED bulbs covering all 36 States and Union bulbs covering 65,000 villages across India under Government Territories (UTs.) This has resulted in estimated energy savings of India's GSA and EGSA. of 45.11 billion kWh per year with avoided peak demand of 9,033 2.2 STREET LIGHTING NATIONAL PROGRAM (SLNP) MW and GHG emission reduction of 36.54 million (ton) CO2 per Hon'ble Prime Minister launched Street Lighting National year. The procurement price of LED bulb has dropped significantly Programme (SLNP) on 5th January, 2015 to replace conventional due to aggregation of demand from ` 310 (January, 2014) to ` street lights with smart and energy efficient LED street lights. 41.80 (February, 2019). The programme has been able to engage EESL replaces the conventional street lights with LED street lights with common man in a significant scale and so far, more than 8 at its own costs (without any need for municipalities to invest) crore consumers in all 36 states and UTs have taken the benefit and the consequent reduction in energy and maintenance cost of using these LED bulbs, thus, making it the largest non - subsidy of the municipality is used to repay EESL over a period. The based LED lighting programme in the world. Information about contracts that EESL enters into with municipalities are typically the UJALA programme is disseminated through a website of 7 years' duration where it not only guarantees a minimum www.ujala.gov.in which monitors real time progress of the UJALA energy saving (of-typically 50%) but also provides free scheme. Under UJALA scheme EESL is also distributing LED replacements and maintenance of street lights at no additional Tube Lights and Energy Efficient Fans: cost to the municipalities. Till 31st March, 2019, EESL has • Energy Efficient LED Tube lights: As on 31st March, 2019, installed 84.90 Lakh LED Street Lights in 28 States/UTs across EESL has distributed 69.41 lakh LED tube lights resulting India. This has resulted in estimated energy savings of 5.66 EESL Annual Report 2018-19 Directors' Report 53 billion kWh per year with avoided peak demand of 943.45MW has installed 25 public chargers of 15 kW DC 001 in North Delhi and GHG emission reduction of 3.89 million (ton) CO2 per year. Municipal Council (NDMC) area in New Delhi. This is the largest installation of LED street lights anywhere in 2.6 SOLAR PROGRAMME the world. The programme has been enrolled in 1496 Urban a. Solar Roof Top Programme: EESL has signed MoU with Local Bodies for the installation of LED street lights out of which New Delhi Municipal Council (NDMC) for implementation LED street lights installation work in 504 Urban Local Bodies of Solar PV based projects in buildings under NDMC has been completed. Information about the SLNP programme jurisdiction. is disseminated through a website www.slnp.eeslindia.org which monitors progress of the SLNP scheme. b. Small Solar Power Plant Programme: EESL has initiated a first of its kind large scale programme wherein existing LED Street Lighting Project in Gram Panchayats: EESL is agricultural feeders is being solarized via implementation implementing LED Street lighting projects in Gram Panchayats of small solar power plants at vacant / un-used lands at on the same service model as the Street lighting National DISCOM substations. Power Purchase Agreement (PPA) Programme for municipalities. EESL initiated this programme has been signed between EESL & Maharashtra State from the state of Andhra Pradesh, where EESL is replacing Electricity Distribution Company Limited (MSEDCL) for conventional street lights with LED street lights in all Gram 200MW solar power projects ranging from 0.5MW to 2MW Panchayats of Andhra Pradesh. The objectives of the scheme in vacant / unutilized / spare lands of MSEDCL, are to promote the use of efficient lighting in rural areas, reducing Maharashtra. Feasibility Studies have been completed in energy consumption in lighting which helps DISCOMs to manage all the substations sites for installation of Decentralized peak demand and to increase security and safety in the streets Solar Power Plants. Till 31st March, 2019, solar power and on the roads in rural areas. As on 31st March, 2019, 22.85 plant of 18.2MWp cumulative capacity has been lacs LED Street lights have been installed in Andhra Pradesh, commissioned. Andaman & Nicobar Islands, Goa and Telangana. EESL is in discussion with other states for implementation of LED street lighting project in Gram Panchayats. 2.3 SMART METER NATIONAL PROGRAMME (SMNP) EESL has initiated Smart Meter National Programme (SMNP) to provide Smart Meters to utilities on rental basis for replacing conventional meters. This programme aims to replace 25 crore conventional meters with smart meters in India. As on 31st March, 2019, EESL was working with 12 DISCOMs and 1.68 lac smart meters have been installed in the state of Andhra Pradesh, Uttar Pradesh, Haryana, Bihar and NDMC - Delhi. By implementing SMNP , NDMC became the first utility to have all their consumers with smart meters without any upfront investment from NDMC. Decentralised Solar Power Plant of 509 KW at Wavi, Nasik, Maharashtra 2.4 NATIONAL E-MOBILITY PROGRAM 2.7 AGRICULTURE DEMAND SIDE MANAGEMENT (AgDSM) The National E - Mobility Programme was launched on 7 March, th EESL is implementing the Energy Efficient Pump Programme to 2018 by Hon'ble Minister of Power, New and Renewable Energy. distribute BEE 5 - star energy efficient agricultural pumps. The EESL has aggregated demand by procuring electric vehicles in programme was launched on 7th April, 2016 from Vijayawada bulk to get economies of scale. These electric vehicles are being in the state of Andhra Pradesh. Pilot projects has been completed provided to Government entities by EESL on lease / outright in Maharashtra, Karnataka and Rajasthan. EESL is focusing on purchase basis to replace the existing petrol and diesel vehicles agriculture intensive states, namely Andhra Pradesh, Uttar taken on lease by various Government organizations. As on 31st Pradesh, Maharashtra, Gujarat, Haryana, Jammu & Kashmir, March, 2019, 1408 e - cars have been deployed and under Madhya Pradesh, Punjab, Karnataka, Jharkhand and Rajasthan registration / allocation. For charging e - cars, 286 AC & 142 in Phase - 1 of the AgDSM project and rest of the states will be DC chargers have also been commissioned. EESL has also taken-up in next phase. The AgDSM project for replacement of signed MoU with various PSUs, Government departments, 1 lakh old pumps with BEE 5 Star rated pumps has started in Government of Andhra Pradesh, Maharashtra and Telangana. Andhra Pradesh in 1st week of September, 2017. As on 31st March, 2019, 63,100 no. of pumps have been installed in the 2.5 PUBLIC CHARGING INFRASTRUCTURE state of Andhra Pradesh and Uttar Pradesh. To enable faster adoption of EVs in India, "The charging 2.8 BUILDINGS ENERGY EFFICIENCY PROGRAMME (BEEP) infrastructure for electric vehicles - guidelines and standards", released by the Ministry of Power (MoP) in December 2018, EESL is implementing the Buildings Energy Efficiency Programme suggests development of at least one public charging station in to retrofit commercial buildings in India into energy efficient 3km X 3km grid to promote confidence among users. Energy complexes. Through these future ready solutions, EESL is Efficiency Services Limited (EESL), in its endeavour to support creating a market for clean energy in India. As on 31st March, this move, aims to install electric vehicle chargers across the 2019, EESL has completed building energy efficiency projects country. EESL already extends its support to several State in 10,171 buildings including Railway stations and Airports. Governments in the transition by bringing in innovative business Energy Audits show energy saving potential to the tune of up to models and implementation wherewithal for accelerated roll- 30-50% in these buildings. The major interventions in these out of public charging infrastructure. Till 31st March, 2019, EESL buildings are in area of lighting and air - conditioning systems. 54 Directors' Report EESL Annual Report 2018-19 2.9 ATAL JYOTI YOJANA (AJAY) wholly owned subsidiary of Edina (named as EPSL Trigeneration EESL has been appointed as implementing agency for Atal Jyoti Private Limited) was incorporated to cater the emerging CHP/ Yojana (AJAY), a sub - scheme under Off - Grid and Decentralized Trigeneration business in India. Solar Application Scheme of Ministry of New and Renewable Trigeneration is a technology where both heating and cooling is Energy (MNRE) where Solar LED Lights are to be installed in generated simultaneously along with power. EESL's unique Pay rural, semi - urban and urban areas which don't enjoy adequate As You Save (PAYS) business model, wherein there is no upfront coverage of power. The objective of the scheme is to provide investment from the Client. Repayments to be done from the 'Solar Street Lighting Systems' for public use, demonstration savings, which will play a vital role to shape adoption of CHP and replication which will help in popularizing solar energy in a and Trigeneration on a large scale in India. EESL shall guarantee big way. Till 31st March, 2019, EESL has installed 1.33 lakh the performance with Service Level Agreements (SLAs). EESL Solar LED street lights under AJAY Phase - I in the states of shall offer an integrated turnkey solution - provide end to end Uttar Pradesh, Assam, Bihar, Odisha and Jharkhand. Under AJAY service and maintenance. Till 31st March 2019: Phase - II of the scheme, EESL has carried out the tendering • Service Level Agreements (SLAs) have been signed with process and awarded the work for installation and maintenance Mahindra & Mahindra. of 3,04,500 Solar LED street lights in more than 15 states. Under • MoU signed with Govt. of Maharashtra and Mahindra & AJAY Phase - II, installation has started in the states of Madhya Mahindra for implementing Trigeneration Projects. Pradesh, Uttar Pradesh and Bihar. • MoUs for availability of natural gas was signed with 2.10 SOLAR STUDY LAMP SCHEME(SoUL) M/s GAIL Gas Ltd and various subsidiaries of GAIL like Solar Study Lamp is the scheme of Ministry of New & Renewable MGL (Mahanagar Gas Ltd.) and MNGL (Maharashtra Energy, Government of India and is being implemented by Energy Natural Gas Ltd.). Efficiency Services Limited (EESL) and Indian Institute of Technology, Bombay (IITB) for distribution of 7 Million Solar 2.13 MUNICIPAL ENERGY EFFICIENCY PROGRAMME (MEEP) Study lamps for school students (Class 1 to Class 12) in the To facilitate market transformation and replicate Municipal Energy states, namely Assam, Bihar, Jharkhand, Odisha and Uttar Efficiency Programme (MEEP) on a large scale in India, EESL Pradesh where household grid connectivity is less than 50% as has signed MoU with the Ministry of Housing and Urban Affairs per 2011 census. As on 31st March 2019, 43.42 lakh Solar (erstwhile MoUD). As on 31st March, 2019, IGEA reports for Study lamps have been distributed in 5 states i.e. Assam, Bihar, 300 cities have been submitted. The ULBs/State Governments Jharkhand, Uttar Pradesh and Odisha. 4,018 women have shown keen interest in implementing the project for entrepreneurs have been trained at 130 Assembly-cum- replacing the inefficient pumps with energy efficient pumps. distribution centres (ADC). The cumulative Progress under the 3 INTERNATIONAL OPERATIONS/PROGRAMMES Scheme as on 31.03.2019 are: 3.1 GLOBAL ENVIRONMENT FACILITY - 5 (GEF - 5) - • No. of districts covered - 57 PROMOTING MARKET TRANSFORMATION FOR ENERGY • No. of Blocks covered - 223 EFFICIENCY IN MICRO, SMALL & MEDIUM ENTERPRISES. • Employment generated (in Nos) - 6151 EESL is implanting this project in 10 MSME clusters (Surat, • No. of women employed - 5933 Ankaleswar, Jorhat, Vellore, Jalandhar & Batala, Varanashi, • No. of ADCs Opened - 190 Sundargarh, Howrah, East Godavari, Muzafarnagar) in India in 2.11 SUPER - EFFICIENT AC POGRAMME association with UNIDO, MSME, BEE and SIDBI. A GEF grant to the tune of $3 million has been allocated to EESL to execute EESL Launched the Super-efficient Air Conditioner (SEAC) various activities which are at different stages of execution. The program for deployment of 50,000 no.s ACs in Delhi - NCR following are the highlights of the project in 2018-19. area in July 2019. EESL signed MoUs with Tata Power, BSES Rajdhani and BSES Yamuna Power to deploy Super - Efficient • $245,000 GEF grant was received through UNIDO. ACs and other energy efficient Appliances to consumers under • Project management unit (PMU) at EESL was established their jurisdiction. The pilot program shall target AC with new in June 2018 and the three Project management high EE technology i.e. 5.4 ISEER and environment friendly consultants (PMC) were hired in August 2018. refrigerant. To cater consumer demand and increase the • The program was formally launched by Hon'ble Minister outreach, the programme is being launched in new cities in a of MSME on 6th February, 2019. phased manner. EESL will use ADB financing and EERF grant (to the tune of $5 million) under GEF-6 for this programme. • A dedicated web portal has been developed for this project Based on the success, the program will be replicated with for better and focused outreach to the stakeholders. 200,000 tender size in 2020. • EESL has signed MoUs with 5 Cluster Associations for 2.12 TRI - GENERATION implementation of GEF - 5 project. Pursuant to the Edina acquisition in March 2018, EESL / EPAL • 13 technologies have been identified and approved (by is pursuing the business of Tri - generation (Electricity, Heating Working Technical Group) for proof-of-concept and scaling & Cooling) as Edina has the technological know - how of this up. business. Through this acquisition, EESL also intends to bring CHP technology to India, providing an integrated service offering • Demonstrations of VFD based Screw compressor with PM to industries that would enable them to receive equipment Motor has been completed in two textile units of Surat maintenance, electricity, heat and power at no upfront costs for Cluster. The Joint Secretary, MoMSME inaugurated the pilot technology installation. In the month of December 2018, a new demonstration. EESL Annual Report 2018-19 Directors' Report 55 • More than 200 workshops / surveys / brainstorming • EESL engaged M/s Aureus through ADB's Technical sessions /energy audits have been completed in 10 Assistance support to study and advise the structure and clusters. operationalization of EERF. With the above set of activities, EESL is on discussion with TERI, 3.3 VIETNAM: NABARD and Oxford University, UK to put up a concept proposal to utilize Green Climate Fund (GCF) on Carbon Credit Incentive EESL in collaboration with IIEC organized a study tour for about to MSME units in at least 5 technologies. 15 senior official during the financial year 2018 - 19. 3.2 GLOBAL ENVIRONMENT FACILITY - 6 (GEF - 6) - INDIA: 3.4 THAILAND: "CREATING AND SUSTAINING MARKETS FOR ENERGY EFFICIENCY" • EESL signed a MoU with Energy Conservation Centre of Thailand (ECCT), Department of Energy during January, EESL is implementing this project on Pan - India basis in 2017 to support EESL in various initiatives in the country. association with UNEP and ADB. The project was formally kicked EESL successfully conducted a study called "Thai Auto - off after signing the agreement with UNEP on 15th September, Parts Industries EE Program (TAPEE)" during 2018. 2017. EESL shall receive $18.855 million as GEF grant through UNEP and ADB to execute various activities. $13 million has • EESL in association with ECCT completed the project and been earmarked to establish and operationalize an "Energy submitted the draft scheme to Provincial Electricity Efficiency Revolving Fund" (EERF). The following are the Authority (PEA) during May, 2018. highlights of the activities during FY 2018-19: • EESL is supporting Chiang Mai University (CMU) to help • Physical Progress under component 1 of the project as them in setting up of the energy efficiency improvement on March 31, 2019: targets for 6 industrial sectors under their Energy Performance Certificate (EPC) Scheme - an initiative under 1. LED Domestic Lights: 39,776,293 (Target in Nos), Partnership of Market Readiness (PMR) program of the 65,205,863 (Achievement in Nos.), 163 World Bank. (Achievement %) 3.5 CANADA 2. 5 - Star Ceiling Fans: 2,128,298 (Target in Nos), 736,979 (Achievement in Nos.), 27 (Achievement Deltro and Leclanche have entered into a limited partnership, %) Maple Leaf Energy Storage LP I ("Maple Leaf"), to develop a series of six Energy Storage Projects in Ontario Canada totalling 3. LED Street Lights: 1,505,942 (Target in Nos), 53 MWh in energy capacity (the "Projects"). Maple Leaf is 4,224,120 (Achievement in Nos.), 280 seeking investment for the first two of six projects know as Basin (Achievement %) 1 and Basin 2. Maple Leaf is a special purpose entity ("Project Company"), which has been established to develop the storage 4. 5 - Star Water Pumps (AgDSM): 229,532 (Target in projects. Till 31st March,2019, the final testing of Basin 1 has Nos), 58,448 (Achievement in Nos.), 25.5 begun. Both Project Basin 1 & 2 are expected to be fully (Achievement %) commissioned by 15th August, 2019. • A Market assessment and feasibility study on "Trigeneration" in India was conducted through M/s DESL. 3.6 MYANMAR The report concluded that the overall unconstrained market Pilot projects on LED lighting (Domestic & Street) under financial potential for the building and industrial sector is around assistance of MEA ($1.2 million) including for parliament building 15,000MW in near time growing up to 30,000MW in the submitted to Embassy of India, Yangoon. EESL has received next five years. first overseas project to install 3,756 Energy Efficient LED street • A joint meeting of Project Advisory Committee (PAC) and lights at Nay Pyi Taw in Myanmar. Project Steering Committee (PSC) was held on 25th March, 3.7 SAUDI ARABIA 2019 at New Delhi. Four new technologies like Super - Efficient AC, High Energy Efficient Motors, Public Charging EESL has signed MoU with National Energy Service Company Infrastructure for e - Vehicle and Trigeneration were finalized of Saudi Arabia for providing Consultancy services. EESL is as new technologies to be covered under Component#2 sharing technical knowledge and experience with NESCO for of GEF - 6 program. rolling out LED Street Light projects in Saudi Arabia. Princess Al-Jawhara Street, Riyadh became the first lane to be lit with • PSC approved to utilize USD 13 million from EERF towards LEDs under the consultancy project. these four technologies. • Super - Efficient AC program was announced by EESL on 3.8 MALAYSIA 22nd February, 2019 to deploy 50,000 ACs in Delhi and EESL has signed an agreement with Green Growth Asia for supply Thane. The project cost of this program is about $30 million of 3 million LED bulbs in the state of Melaka in Malaysia ($ out of which $5 million shall be mobilized from EERF i.e. 3.9m). EESL has commercially supplied 1200 No's, 20W LED GEF Grant. Tube lights & 600 No's of 9W LED bulbs to the Indian High • Project Management Unit (PMU) has been established at Commission in Malaysia in December, 2017. EESL. 56 Directors' Report EESL Annual Report 2018-19 3.9 BANGLADESH William Pumfrey, Amit Kumar Bharadwaj - Senior Manager, EESL, Nitin Wadhwa - Senior Manager, EESL • EESL has installed 519 LED Street Lights with CCMS under pilot project at Tungipara Municipal Corporation (TMC). d. EPAL Holdings Limited-> Saurabh Kumar - MD, EESL, Neelima Jain - Regional Head (UK & Europe), EESL, Steven • EESL has supplied 52,500 LED bulbs (9W) to TMC under Derrick Fawkes UJALA scheme. e. Edina Acquisition Limited-> Saurabh Kumar - MD, EESL, 3.10 MALDIVES Neelima Jain - Regional Head (UK & Europe), EESL, Steven MoU has been signed between the Ministry of Environment, Derrick Fawkes Government of Maldives and Energy Efficiency Services Limited f. Edina Power Services Limited-> Saurabh Kumar - MD, (EESL) to collaborate in the field of energy efficiency and EESL, Neelima Jain - Regional Head (UK & Europe), EESL, renewable energy. It is a strategic alliance to execute energy Steven Derrick Fawkes, Hugh Richmond, Shankar Gopal - efficiency and demand - side management projects and Director(Commercial), EESL, Delvine Lane technology solutions for both countries. EESL is aiding the Government of Maldives in replicating the successful model of g. Edina Limited-> Neelima Jain - Regional Head (UK & India's Unnat Jyoti by Affordable LEDs for All (UJALA) and Street Europe), EESL, Hugh Kerr Richmond, Delvine Lane Light National Programme (SLNP). On 31st March, 2019, Hon'ble Minister of Environment and energy launched the street light h. Edina UK Limited-> Neelima Jain - Regional Head (UK & programme in Maldives in presence of High Commissioner of Europe), EESL, Hugh Kerr Richmond, Delvine Lane India. i. Edina Australia Pty Limited-> Neelima Jain - Regional 4 DETAILS OF SUBSIDIARIES, JOINT VENTURES AND Head (UK & Europe), EESL, Hugh Kerr Richmond, Delvine ASSOCIATE COMPANIES Lane The detail of subsidiary / associate companies of EESL is as j. Armoura Holdings Limited-> Neelima Jain - Regional Head under: (UK & Europe), EESL, Hugh Kerr Richmond, Delvine Lane a. EESL EnergyPro Assets Limited (EPAL) k. Stanbeck Limited-> Neelima Jain - Regional Head (UK & Europe), EESL, Hugh Kerr Richmond, Delvine Lane EESL has a UK based subsidiary company, EESL EnergyPro Assets Limited (hereinafter referred to as "EPAL") in which it l. Edina Manufacturing Limited-> Neelima Jain - Regional holds 84.55% Equity Shares. As on 31st March 2019, the paid Head (UK & Europe), EESL, Hugh Kerr Richmond, Delvine - up share capital of EPAL was GBP 35,182,100. EPAL has Lane signed 7 operating energy efficiency agreement with 7 clients in m. Edina Power Limited-> Neelima Jain - Regional Head (UK the education and leisure sectors (schools, district council, golf & Europe), EESL, Hugh Kerr Richmond, Delvine Lane course) across the UK through two step - down subsidiaries namely Anesco Energy Services South Limited and Creighton n. EPSL Trigeneration Pvt. Ltd. -> Saurabh Kumar - MD, Energy Limited. The tenure of these contracts ranges from 9 to EESL, Neelima Jain - Regional Head (UK & Europe), EESL, 18 years. During the year 2018 - 19, EPAL has earned a profit Shankar Gopal - Director(Commercial), EESL of ` 50.40 million. EPAL has acquired Edina, a leading supplier, installer and maintenance provider for combined heat and power (CHP), gas, and diesel power generation solutions in the United Kingdom (UK). Through the acquisition of Edina group, EESL intended to bring CHP technology to India and the first step was to establish its presence in India. In the month of December 2018, a new wholly owned subsidiary of Edina (named as EPSL Trigeneration Private Limited) was incorporated to cater the emerging CHP/ Trigeneration business in India. List of companies under EPAL and name of the officers holding the position in EPAL and its subsidiaries are as under:- a. EESL EnergyPro Assets Limited-> Saurabh Kumar - MD, EESL, Neelima Jain - Regional Head (UK & Europe), EESL, Steven Derrick Fawkes, Shankar Gopal - Plant Facility in Edina Director(Commercial), EESL b. NEESL Private Limited b. Anesco Energy Services South Ltd-> Neelima Jain - Regional Head (UK & Europe), EESL, Michael Anthony FFor the purpose of supply, installation, operation and Tivey, Matthew William Pumfrey, Amit Kumar Bharadwaj - maintenance of Public Street Lighting System in the state of Senior Manager, EESL, Nitin Wadhwa - Senior Manager, Odisha on Public Private Partnership (PPP) basis, a SPV namely EESL NEESL Private Limited was incorporated in July, 2017. EESL holds 26% equity shares in company. As on 31st March 2019, c. Creighton Energy Limited-> Neelima Jain - Regional Head the paid - up share capital of NEESL was ` 0.1 million. During (UK & Europe), EESL, Michael Anthony Tivey, Matthew the year 2018 - 19, NEESL has earned a profit of ` 1.17 million. EESL Annual Report 2018-19 Directors' Report 57 A report on the financial position of subsidiary / associate technology which is being used in monitoring the companies, as per the Companies Act, 2013, has been provided street lighting system of civic bodies in the country. as annexure to the consolidated financial statements and hence, We are the pioneer to implement CCMS based street the same is not repeated here for sake of brevity. lighting solution in the country which had addressed Remote Monitoring and Controlling of LED lights with 5 INFORMATION TECHNOLOGY INITIATIVES following benefits: EESL has robust information technology and communication • Power consumption gets reduced due to improved infrastructure in place. Company has implemented Enterprise control of street lights. Resource Planning (ERP) application to integrate all its business functions to improve information availability, transparency and • Increased security and safety in the streets and on decision - making. Company is deploying a digital platform and the roads. Automatic SMS / Email aler ts to all a system to make sure the entire workflow from sourcing, concerned officials. assembly, delivery and servicing to cater the project objectives. • Promotes Smart Governance, which is the way Some of the highlights are as under: forward for the concept of Smart cities. a. We have enabled IT services, to our core business i.e. • CCMS helps in Data Analytics which helps in load projects for the effective monitoring, operations, grievance forecasting, DSM activities in the state. and tracking to get the right information at right time to • Reduces the turnaround time for repair & address the business problems and facilitate business maintenance jobs which will act as indirect saving stakeholders to enable more. for the municipality. b. We empowered projects for various IoT based solutions like CCMS for SNLP & smart meters etc. Smart Metering c. We are also exploring cutting edge technologies like • EESL is helping utilities to reduce billing inefficiencies Blockchain, AI, Drones, Big Data, Cloud computing, social by deploying smart meters through the Smart Meter responsibility and collaboration to empower more to our National Programme (SMNP). We had setup a business in near future. complete IoT and cloud based solution which will help to replace India's 250 million conventional Based on mission of the company below IT initiatives are helping meters with smar t meters to increase billing EESL business to enable more: efficiencies and reduce aggregate technical and Adoption of SAP - ERP commercial loss. Consumers can plan use of electricity via mobile apps to reduce the cost bill • We have implemented world class leading SAP - and in turn save the electricity. ERP solution on HANA database which helps us to manage and optimise Man, Machine, Money and Comprehensive IT solutions with Digitalisation of Material which in turn increases productivity, better business processes inventory management, promotes quality, reduced • EESL is growing rapidly not only in terms of business material cost, effective human resources but also geographically. Considering the growth, we management, reduced overheads boosts profits. are designing and building comprehensive IT solution This has increased operational efficiency, including business dynamics which will offer a productivity and transparency within and beyond common platform for all the existing and future organisation. We are continuously improving our business schemes with use of all latest trends and systems to facilitate business needs at same speed cutting edge technology to enable more. This solution of business. would be very much configurable and flexible so Management Dashboards that business users can enhance IT based business needs with minimum efforts and impact on existing • We have implemented complete IT based analytics setup. We had already deployed a Mobile App for solution for all the business schemes of EESL, a Complaint handling for street light scheme as a pilot Management dashboard which helps our project for comprehensive solution. In order to Management and customers to track the overall provide a transparency, accountability and project progress, energy savings and CO2 reduction. management of vendor bills, we have enabled • All the dashboards are public facing. We have stakeholders with a web based solution for maintained the complete transparency in public submitting and tracking the bills online. More to be domain about each EESL business scheme using achieved for demands we have received so for the dashboards which builds confidence. Hence, we building common Mobile application for all of our are able to build highest level of trust with all the business schemes. stakeholders including public. 24x7x365 Customer Support Centre for all schemes CCMS (Central Control and Monitoring System) in LED Street Light • Based on the business dynamics and quicker services to consumers we have a call centre based • The new trend of Intelligent Streetlight is concentrated in Rajasthan which supports almost all regional on both, economic and environmental sensitive languages for better customer interaction and developments. CCMS is the first of its kind IoT based increased throughput which leads to improve 58 Directors' Report EESL Annual Report 2018-19 customer service and gives the quick solution to language and Hindi typing / shorthand for doing work in Hindi consumer complaints and address the stake holders' on computer system. All the forms used in office and standard grievance and have happy stakeholders. bids including company's annual report were made bilingual (Hindi / English). Bilingual telephone directory is available. Hindi Cloud Data Centre Setup translation of EESL's website is also in progress. In order to • We have deployed our IT applications on Tier-3 cloud promote the official language, employees were made aware of data centre so that our stakeholder can access all the provisions of Official Languages Act, 1963 and they were the IT application from anywhere in secure and safe encouraged to comply with Official Language Policy of Union manner and it is highly available 24x7 in 365 days. Government. Hindi Pakhwada is also celebrated with great We have adopted best enterprise practices for enthusiasm where a lot of Hindi competition have been backups, IT security, disaster recovery, Storage conducted. space and Networking. All regional and CO offices 8 HUMAN RESOURCES MANAGEMENT are seamlessly connected with each other using MPLS and high speed internet connectivity. The focus of Human Resource Management is to build an enabling culture and ensure motivated work force with required Security skill sets. The year has seen EESL foraying into many new • Understanding security is need of the hour, EESL ventures and the focus has been on multiskilling to meet the has implemented all the latest aspects of IT security. challenges. IT infra is enabled with Perimeter Security, Internal security end points etc. Monitoring of security logs 8.1 Manpower Strength has been setup for proper resolution of any incident. The total employee strength of the company is given as under: We are enabling our processes, people, Machines to tackle security issues at organisation level. Location Number of employees New Policy - To make employees IT enabled, desktop Regular Fixed Consul- Third computer and laptops have been provided to nearly 100%. Tenure tants Party Paperless Communication - Claims such as travel, India 253 135 33 523 telephone etc. were made paperless as Go Green initiatives. United Kingdom 3 - - - e-Waste Management - eWaste such as desktops, laptops, used cartridges, printers etc. are being disposed Maldives 1 1 - - as per the guidelines of Ministry of Environment and Forest Riyadh 1 - - - (MoEF). Video Conferencing (VC) solution - In order to improve Total 258 136 33 523 internal efficiency and transparency, your company has 8.2 Industrial Relations implemented suitable Video Conferencing (VC) solution at corporate office and is in the process to implement the The thrust on participative culture and open communication same across all offices of the Company. Major EESL office channels continued during the year. The Industrial Relations sites have been connected with more safe and secure Scenario has been peaceful and harmonious and no man - days network MPLS. were lost during the year. IT help desk - We have deployed a IT help desk internally 8.3 Employee Welfare to facilitate our business user to use IT systems smoothly and efficiently. The welfare and employee engagement activities in the company are designed in a manner to keep the employees oriented towards 6 INSTITUTIONAL STRENGTHENING organizational goals with team building, work - Life balance and EESL is implementing the world's largest energy efficiency to retain employees in a competitive business scenario. Cashless portfolio, and keeping this in view, institutional strengthening is health care facilities to the employees and their dependent family being under taken as a regular practice in EESL. EESL is members, in our company are being provided through empaneled associated with leading consulting organizations like McKinsey, hospitals, PAN India. In addition, Group Insurance scheme and E&Y, PwC, KPMG for providing technical assistance, Group Personal Accident Insurance scheme are in place. To Organizational restructuring, Capacity building, Standardization ensure long term financial security, your company has introduced of process, Project execution and monitoring etc. EESL is also Superannuation Fund for the employees. Employee annual health associated with various international financial institutions/ checkup has been introduced and OPD facilities provided in the Multilateral Development Banks (MDBs) and leading office for health and wellbeing of the employees. Various cultural environmental authorities such as World Bank, ADB, AfD, KfW, events, festival celebrations etc. were organized throughout the USAID, UNEP etc. for technical assistance, trainings, financing year. The Company also organized events like Women's day and scaling up the Energy Efficiency Programmes in India and celebration with employees. across Globe. 8.4 Human Resource Development 7 OFFICIAL LANGUAGE IMPLEMENTATION During the year, we have strengthened the In - house Learning Various steps have been taken in the organisation to promote Centre by organizing various training programmes. Also in Rajbhasha. During the year, training was provided for Hindi collaboration with NISE, PMI, NPTI we have organized many EESL Annual Report 2018-19 Directors' Report 59 non - residential / residential training programs, both at corporate Since January 2019, we have received and addressed about office and regional offices. We also have achieved the training 140 Right to Information (RTI) requests received through the target of 3 man days per employee as per MOU 2018-19. regular post and RTI MIS portal. This MIS portal is an efficient Numerous technical trainings and general management and responsive website to file online applications. The process programs were conducted to enhance technical, behavioral, of filing RTI at EESL is easy and simple. An applicant can log on managerial and cross functional competencies through programs to https://rtionline.gov.in/ to file their RTI requests directly with like Solar, AgDSM, Advance Excel training, RTI & disciplinary EESL. Also, the prescribed fee for filing can subsequently be procedure, health, lifestyle & stress management, Induction etc. paid on web portal electronic payment gateways. Grievances Fur ther, we are also organizing communication and time are usually received through emails, regular post or through the management programs across the Regions in a phased manner. Department of Administrative Reforms and Public Grievances' highly responsive web portal operating under the name of 8.5 MOU Rating and Awards Centralized Public Grievance Redress and Monitoring System The performance of your company in terms of MOU signed with (CPGRAMS). The web address of the same is https:// promoter companies for the financial year 2017-18 has been pgportal.gov.in. This portal is open for all citizens to promptly rated as "Very Good". report their concerns to EESL, under the scrutiny of higher 8.6 Disclosure under the 'Sexual Harassment of Women at authorities in the Government. Since the inception of this Cell, in Workplace (Prevention, Prohibition and Redressal) Act, 2013 the year 2017, about 350 public grievances have been addressed by this department. In line with provisions of "Sexual Harassment of women at Work Place (Prevention, Prohibition & Redressal) Act, 2013 an "Internal Additionally, in January 2018, as required by Ministry of Power, Complaints Committee" has been constituted for redressal of EESL had also conducted a study to pinpoint the root cause and complaints against sexual harassment of women employees. nature of public grievances submitted at EESL. This study's During the financial year 2018 - 19, the Company did not receive detailed findings were submitted to the Ministry for perusal and any compliant of sexual harassment. Our organization resolution enhancement considerations. emphasizes on providing a safe working environment for women and in all the training programs, a special stress is given on 9 CORPORATE SOCIAL RESPONSIBILITY gender sensitization. The CSR Budget for the financial year 2018 - 19 was ` 12.89 8.7 Friendly policies for women empowerment million, duly approved by the Board. The company has 'The South Asia Gender and Energy Facility (SAGE) at the World undertaken the following projects: - Bank, in collaboration with multiple stakeholders, has established WePOWER, as a regional network. The objectives of WePOWER a. Under Swachh Bharat Abhiyan are to support workforce participation of women in energy • Investment of ` 4.53 million (estimated) for projects and institutions, and promote normative change Construction of 125 Nos. of Toilet Blocks for deprived regarding women in Science, Technology, Engineering, and households of Pauri-Gharwal & Sitarganj Districts Mathematics (STEM) education. EESL has also agreed to of Uttarakhand. become a Strategic Partner of the WePOWER Network by the World Bank and has formed a committee of 5 members to lead • Investment of ` 4.8 million for 10 Schools adopted this initiative in the organisation. As a part of this endeavour, 4 in rural areas across India. participants from EESL attended the WePOWER conference, conducted in Kathmandu, Nepal from 20 - 22 February, 2019. • Investment of ` 0.6 million for the purpose of Additionally, weekly calls are being arranged between various cleanness of 100 Schools falling under the organisations from South Asia to learn about good practices. jurisdiction of SDMC. As a part of continuous learning to enable growth of EESL, a qualitative questionnaire for the women employees of EESL was • Investment of ` 0.2 million for the purpose of developed and floated. This questionnaire helped the company cleanness drive at SCOPE Complex, New Delhi (area to understand the needs and wants of women employees. nearby EESL HO) on 2nd October, 2018. 8.8 Right to Information Act, 2005 and Redressal of public b. Under Skill Development: - grievances • Investment of ` 1,30,855 for purchase of equipment Energy Efficiency Services Limited (EESL) has a dedicated Public for use of differently abled children and young adults Grievances and Right to Information (RTI) cell headed by Chief General Manager (Technical), who has also been designated as • Investment of ` 1.2 million for providing Skill Training the Public Information Officer (PIO) of the organization. to the Students of identified ITI/Polytechnic Colleges All RTI requests are closed in less than the prescribed time as under Skill Development. per the Act, while all Public Grievances are resolved in varying c. As part of our Corporate Social Responsibility programme, timelines, which is usually 30 days or less. This department Swachhta Pakhwada'19, EESL has implemented cleaning continues to ensure higher degrees of accountability in the drive at two NGO - Orphanage Home for Girls: Khushi and organization. Post alignment of manpower to form this cell, it is Kilkari. These NGO's aim to protect, educate and empower setting examples to become the core fabric of a self - regulating Orphan children and providing them a safe environment and ethically sensitized organization. It is highly pertinent to note to grow. EESL gave an opportunity to its employees to that zero Right to Information applications and zero public engage with the initiative, EESL has also organized a grievances have left our desks unanswered and unaddressed. 60 Directors' Report EESL Annual Report 2018-19 donation drive for clothes, shoes, books, toys and Kumar). Shri Abhay Bakre was appointed w.e.f. 8th May, stationary for girl's up to 18 years, which was highly 2018. appreciated and received great response from employees. • REC Limited vide its letter 14th November, 2018 nominated Shri Sanjiv Garg as nominee director in place of Shri V. K. Corporate Social Responsibility Policy of the Company as Singh. Shri Sanjiv Garg was appointed w.e.f 10th December, required under Section 135 of Companies Act, 2013 is 2018. available on our website (www.eeslindia.org). Information required as per Rule 8 of Companies (Corporate Social • Consequent to her resignation, Ms. Renu Narang, Whole - Responsibility) Rules, 2014 is given as per Annexure - I. Time Director (Finance) & CFO ceased to hold the office w.e.f. 23rd January, 2019. • Shri S. Gopal and Shri Venkatesh Dwivedi were appointed as Whole - Time Director (Commercial) and Whole - Time Director (Projects & Business Development), respectively, w.e.f. 7th February, 2019. Board of Directors of the company duly met 9 times during the financial year 2018 - 19. The dates on which meetings were held are as follows: 8th May, 2018, 29th May, 2018, 17th July, 2018, 20th August, 2018, 19th September, 2018, 12th November, 2018, 10th December, 2018, 28th December, 2018 and 7th Training to Students under Skill Development Programme in Haryana February, 2019. 10 NOMINATION AND REMUNERATION POLICY Re-appointment of Directors:- The Nomination and Remuneration Policy of the Company, as In terms of Section 152 of Companies Act, 2013, Shri Rajeev required under sub - section (3) of Section 178 of Companies Sharma and Shri Mohit Bhargava shall retire by rotation at the Act, 2013 is available on our website (www.eeslindia.org). ensuing Annual General Meeting of the company and being 11 FOREIGN EXCHANGE RISK MANAGEMENT POLICY eligible, have offered themselves for re-appointment. The Foreign Exchange Risk Management Policy of the Company, The Board of Directors have constituted following committees is duly approved by the Board of Directors and is available on in order to effectively cater its duties towards diversified role our website (www.eeslindia.org). under the Companies Act, 2013:- 12 CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION A. Audit Committee: Five (5) Audit Committee Meetings were held during the financial There are no significant particulars relating to conservation of year on 28th May, 2018, 12th November, 2018, 10th December, energy and technology absorption as required under the 2018, 28th December, 2018 and 7th February, 2019. The Companies (Accounts) Rules, 2014 as the company does not composition of committee is as under: own any manufacturing facility. Members: 13 FOREIGN EXCHANGE EARNINGS AND OUTGO Shri Seethapathy Chander, Independent Director The details of foreign exchange earning & outgo are as follows: Ms. Gauri Trivedi, Independent Director Shri Mohit Bhargava, Nominee Director (in `) Special Invitee: Particulars Year ended Year ended Director (Finance) 31.03.2019 31.03.2018 CFO Expenditure in Foreign 81,36,38,876 17,91,47,807 In attendance: currency Company Secretary Earning in Foreign 2,57,49,161 2,76,00,820 B. Corporate Social Responsibility (CSR) Committee Exchange One (1) CSR Committee Meeting was held during the financial year 2018 - 19 on 10th December, 2018. The composition of 14 KEY MANAGERIAL PERSONNEL committee is as under: As per the provisions of Companies Act, 2013, the company has appointed Managing Director, Whole - Time Directors, Chief Members: Financial Officer and Company Secretary as Key Managerial Shri Seethapathy Chander, Independent Director Personnel of the Company. Ms. Gauri Trivedi, Independent Director Shri Raj Pal, Director 15 DIRECTORS, KEY MANAGERIAL PERSONNEL, BOARD & Shri S. Gopal, Director (Commercial) COMMITTEES OF THE BOARD Special Invitee: • Ministry of Power vide letter dated 15th March, 2018 Head of CSR Cell nominated Director General, Bureau of Energy Efficiency (Shri Abhay Bakre) as Government Nominee Director in In attendance: place of Secretary, Bureau of Energy Efficiency (Shri Pankaj Company Secretary EESL Annual Report 2018-19 Directors' Report 61 C. Nomination and Remuneration Committee Shri Raj Pal, Nominee Director Shri Venkatesh Dwivedi, Director (Projects & Business Four (4) Nomination and Remuneration Committee meetings Development) were held during the financial year on 8th May, 2018, 17th Shri S. Gopal, Director (Commercial) July, 2018, 10th December, 2018 and 7th February, 2019. The composition of committee is as under: In attendance: Company Secretary Members: Shri Seethapathy Chander, Independent Director E. Business Development Committee Ms. Gauri Trivedi, Independent Director The Board of Directors constituted the Business Development Shri Mohit Bhargava, Nominee Director Committee of the Board during the financial year 2018 - 19. Special Invitee: No meetings of the committee were held during the year. The Director (Finance) composition of the Committee is as under: CFO Members: Head (HR) Shri Saurabh Kumar, Managing Director In attendance: Shri Seethapathy Chander, Independent Director Company Secretary Ms. Gauri Trivedi, Independent Director D. Project Sub - Committee Shri Venkatesh Dwivedi, Director (Projects & Business Development) No Project - Sub Committee Meetings were held during the financial year 2018 - 19. The composition of committee is as Special Invitee: under: Director (Commercial) Members: In attendance: Shri Saurabh Kumar, Managing Director Company Secretary Detail of number meetings attended by each Director during the financial year 2018 - 19 is as under: Name of Director No. of Board Meetings No. of Audit No. of CSR No. of NRC Meetings Committee Meetings Committee Meetings Entitled Attended Entitled Attended Entitled Attended Entitled Attended Shri Rajeev Sharma 9 9 0 0 0 0 0 0 Shri Saurabh Kumar 9 9 0 0 0 0 0 0 Shri Shankar Gopal 1 1 0 0 0 0 0 0 Shri Venkatesh Dwivedi 1 1 0 0 0 0 0 0 Ms. Renu Narang 8 8 0 0 1 1 0 0 Shri Raj Pal 9 4 0 0 1 1 0 0 Shri Abhay Bakre 9 7 1 1 0 0 0 0 Shri V. K. Singh 6 3 0 0 0 0 0 0 Shri Sanjiv Garg 3 2 0 0 0 0 0 0 Shri Mohit Bhargava 9 8 4 4 0 0 4 4 Shri Seethapathy Chander 9 6 5 4 1 1 4 4 Ms. Gauri Trivedi 9 6 5 2 1 1 4 3 16 DIRECTORS' RESPONSIBILITY STATEMENT: accounting standards had been followed along with proper Based on the framework of internal financial controls and explanation relating to material departures; compliance systems established and maintained by the b) They have, in the selection of accounting policies, Company, work performed by the internal, statutory, cost consulted Statutory Auditors and have applied them auditors, secretarial auditors and external consultants and the consistently and made judgements and estimates that are reviews performed by Management and the relevant Board reasonable and prudent so as to give a true and fair view Committees, including the Audit Committee, the Board is of the of state of affairs of the Company at the end of the financial opinion that the Company's internal financial controls were year and of the profit of the Company for that period. adequate and effective during the financial year 2018 - 19. c) They have taken proper and sufficient care to the best of Accordingly, pursuant to Section 134(5) of the Companies Act, their knowledge and ability for maintenance of adequate 2013, the Board of Directors, to the best of their knowledge and accounting records in accordance with the provisions of ability, confirm that: the Act, for safeguarding assets of the Company and for a) In the preparation of the annual accounts, the applicable preventing and detecting fraud and other irregularities; 62 Directors' Report EESL Annual Report 2018-19 d) They have prepared the annual accounts on a going Act, 2013 that he/she meets the criteria of independence laid concern basis. down in Section 149(6) of the Companies Act, 2013. e) They have laid down internal financial controls to be 18 MAINTENANCE OF COST RECORDS followed by the Company and that such internal financial The Company is not required to maintain the cost records as controls are adequate and were operating effectively. specified by the Central Government under sub - section (1) of section 148 of the Companies Act, 2013. f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such 19 REPORTING UNDER PUBLIC PROCUREMENT POLICY FOR systems were adequate and operating effectively. MICRO & SMALL ENTERPRISES (MSE) ORDER, 2012 The Government of India has notified Public Procurement Policy 17 DECLARATION OF INDEPENDENCE on Micro & Small Enterprises (MSEs) Order, 2012 and subsequent amendments till date. In terms of the said policy, The Company has received necessary declaration from each following are the required details: Independent Director under Section 149(7) of the Companies Sl. Particulars Target for FY 2018 - 19 No. FY 2018 - 19 I Total annual procurement (in value ) ` 37000 million ` 44209.50 million II Total annual procurement (in value) through International Competitive bidding funded `18000 million ` 581.20 million by Multilateral/ Bilateral Agencies III Total annual procurement (in value) -Domestic Procurement ` 19000 million ` 43628.30 million IV Total value of goods and services procured from MSEs (including MSEs owned by ` 3800 million ` 8081.60 million SC / ST entrepreneurs) V Total value of goods and services procured from MSEs owned only by SC / ST ` 760 million No Claim Received VI % age of procurement from MSEs (including MSEs owned by SC / ST entrepreneurs) 20% 18.54% out of total procurement VII % age of procurement from MSEs owned only by SC / ST entrepreneurs out of total 4% 0% procurement VIII Total number of Vendor development programmes for MSEs Two One IX Confirmation of uploading annual MSE procurement profile on website by hyperlink http://eeslindia.org/content/raj/eesl/en/ of the same Tenders/tenders.html?id=419 20 VIGILANCE/WHISTLE BLOWER POLICY 23 PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS Your Company ensures transparency, objectivity and quality Loan, guarantees and investment covered under Section 186 of decision making in its operation and to monitor the same, the the Companies Act 2013 form part of the notes to the Financial Company has vigilance depar tment. In compliance with statements (Standalone) provided in the Annual Report. requirement of Companies Act, 2013, the company has also formulated the Whistle Blower Policy which provides for the 24 SINGNIFICANT AND MATERIAL ORDERS PASSED BY THE mechanism to repor t genuine concerns about unethical REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE behaviour, actual or suspected fraud or violation of the company's GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN code of conduct and adequate safeguards against victimisation. FUTURE The said policy is also available on website of the company We have ongoing recovery issues against our DA's. Also, EESL (www.eeslindia.org). has paid considerable amount of "VAT Demand and Penalty" in 21 EXTRACT OF ANNUAL RETURN: Andhra Pradesh. Regarding the company operations from legal perspective, no notice or judgment or order has been received, The Extract of Annual Return for financial year 2018 - 19 is wherein operations and existence of EESL appears to be in attached with the Board repor t in Form No. MGT - 9 as immediate jeopardy / peril. Annexure - II. 25 DEPOSITS 22 PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES Till date, the company has not accepted any deposits and therefore, no deposits that are not in compliance with the During the period under review, the Company has not entered provisions of Chapter V of the Act, exist. into any material transaction with any of its related parties. All related party transactions were in the ordinary course of business 26 PERFORMANCE EVALUATION OF DIRECTORS AND THE and were negotiated on arm's length basis. Accordingly, the BOARD disclosure of related party Transactions as required under Section As required under Companies Act, 2013, evaluation of 134(3)(h) of Companies Act, 2013 in Form AOC - 2 is not performance of directors including that of the Independent applicable. Directors / Board / Committees is to be carried out either by the Board or by the Nomination and Remuneration Committee or by the Independent / Nominee Director. EESL Annual Report 2018-19 Directors' Report 63 27 AUDITORS d) The Company has not issued any stock options to the Directors or any employee of the Company. 27.1 STATUTORY AUDITOR e) The Company has complied with the applicable Secretarial The Comptroller and Auditor General of India (C&AG), in exercise Standards. of power conferred under Section 139 of the Companies Act, 2013 has vide letter dated 31st July, 2019 appointed M/s K K f) In terms of provisions of Companies Act, 2013, the Soni & Co, Chartered Accountants (Firm Reg. No. 000947N), consolidated financial statements are also being presented New Delhi as Statutory Auditor of the Company for financial in addition to the standalone financial statements of the year 2019 - 20. Approval of members of the Company will be company. obtained in ensuing Annual General Meeting to authorise Board 30 MANAGEMENT DISCUSSION AND ANALYSIS REPORT of Directors, to fix auditor's remuneration for financial year 2019-20. Management Discussion and Analysis report forms part of the report and placed as per Annexure - VI. 27.2 SECRETARIAL AUDITOR 31 PARTICULARS OF EMPLOYEES: M/s Astik Tripathi & Associates, practicing Company Secretaries was appointed as Secretarial Auditors of the Company to carry The information required under the provision of Section 197(12) out Secretarial Audit for the Financial Year 2018 - 19. The of Companies Act, 2013 read with Rule 5(2) of Companies Secretarial Audit Report for the same annexed as Annexure - III (Appointment and Remuneration of Managerial Personnel) Rules, to this report. 2014, is placed as per Annexure - VII. 27.3 INTERNAL AUDITORS 32 ACKNOWLEDGEMENT: M/s Jain & Malhotra, Chartered Accountants were appointed as The Directors are grateful to the Government of India particularly Internal Auditors of the Company for the financial year 2018 - Ministry of Power, Ministry of Finance, Department of Economic 19. Affairs for their continued co - operation and support. The Directors thank the state governments, state electricity boards, 27.4 COST AUDITORS State Power Utilities and other borrowers for their continued Cost Audit is not applicable to the Company. supports and trust in the Company. 28 MANAGEMENT REPLY: The Directors wish to place on record their appreciation of the commendable work done, dedication and sincerity by all The Management's Reply to the observation / advice of Statutory employees of the Company at all levels during the year under Auditors and Secretarial Auditors are submitted as per Annexure review. The Company will make every effor t to meet the - IV and Annexure - V to this report, respectively. aspirations of its shareholders and wish to sincerely thank them 29 STATUTORY DISCLOSURE for their whole hearted co - operation and support at all times. a) There was no change in nature of business of the Company during the financial year 2018 - 19. b) The Company maintains an adequate system of Internal For and on Behalf of the Board of Directors Controls including suitable monitoring procedures, which Energy Efficiency Services Limited ensure accurate and timely financial reporting of various transactions, efficiency of operations and compliance with statutory laws, regulations and Company policies. c) There are no material changes and commitments, affecting the financial position of the Company which has occurred Shri Rajeev Sharma between the end of the financial year i.e. March 31, 2019 Date: 26.09.2019 Chairman and the date of this report. Place: New Delhi (DIN: 00973413) 64 Directors' Report EESL Annual Report 2018-19 Annexure - I ANNUAL REPORT ON CSR ACTIVITIES DURING THE FINANCIAL YEAR 2018-19 1. A brief outline of the company's CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web - link to the CSR policy and projects or programs: EESL's CSR policy focuses on activities relating to health sanitation, drinking, water, education, capacity building, women empowerment, social infrastructure development and activities contributing towards Environment towards Environment Sustainability, CSR Policy of the Company as required under Section 135 of Companies Act, 2013 is available on our website (www.eeslindia.org). 2. The composition of the CSR Committee: Members: Shri Seethapathy Chander (Independent Director) Ms. Gauri Trivedi (Independent Director) Shri Raj Pal (Government Nominee Director) Shri S. Gopal (Director - Commercial) Special Invitee: Head of CSR Cell In attendance: Company Secretary 3. Average net profit of the company for last 3 financial years: ` 644.50 million 4. Prescribe CSR Expenditure (two per cent of the amount as in item 3 above): ` 12.89 million 5. Details of CSR spent during the financial year: a. Total amount to be spent for the financial year: ` 12.89 million b. Amount unspent: ` 11.75 million c. Manner in which the amount spent during the financial year is details below: (1) (2) (3) (4) (5) (6) (7) (8) S. CSR project or Sector in which Projects or Amount outlay Amount spent on Cumulative Amount spent No. activity the project is programs (budget) project the projects or expenditure upto Direct or through identified covered 1. Local area or or program-wise programs the reporting implementing other Sub-heads: period agency* 2. specify the (1) Direct State and district expenditure on where projects projects or or Programs was programs undertaken (2) Overheads 1 Financial Skill Dist.- Kanpur ` 0.4 million Nil Nil assistant to Development State- UP support the education of deprived Students 2 Financial Skill Dist.- Jaipur ` 0.13 million Nil Nil assistant to Development State- Rajasthan purchase the office equipment to support the education of students having multiple disabilities 3 Construction of Swachh Dist.- Pauri ` 5.35 million Nil Nil Toilet Blocks Bharat Abhiyan Gharwal & Udhamsingh Nagar State- Uttarakhand EESL Annual Report 2018-19 Directors' Report 65 (1) (2) (3) (4) (5) (6) (7) (8) 4 Swachhta action Swachh Across India in/ ` 4.8 million Direct ` 0.39 million Through M/s plan for Schools Bharat Abhiyan around Regional Expenditure = Eazzycon as a part of offices of EESL ` 0.39 million Swachhta Pakhwara 5 Cleanness Drive Swachh Dist.- New Delhi ` 0.6 million Direct ` 0.48 million Through in 100 Schools Bharat Abhiyan State- Delhi Expenditure = M/s Sulabh falling under the ` 0.48 million International jurisdiction of Social Service SDMC Organisation 6 Cleanness drive Swachh Dist.- New Delhi ` 0.2 million Nil Nil in SCOPE Bharat State- Delhi Complex Abhiyan (EESL-HO) on 2nd October 2018 7 Providing Skill Skill Dist. - Districts ` 1.2 million Direct ` 0.27 million Through Training to the Development of NCR Expenditure = M/s Vistaara Students of State- Haryana ` 0.27 million Management identified ITI/ Solution Ltd Polytechnic Colleges Total ` 12.68 million ` 1.14 million** * Give details of implementing agency **(The utilisation of CSR Expenditure during the financial year 2018 - 19 is ` 2.006 million out of which ` 1.14 million is towards the projects that have been awarded in 2018 - 19. However, expenditure of ` 0.87 million has also been incurred in case of projects which have been awarded before 2018 - 19.) 6. In case the company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof, the company shall provide the reasons for not spending the amount in its Board report: Reasons specified in Annexure - A. For Energy Efficiency Services Limited Shri Saurabh Kumar Ms. Gauri Trivedi Managing Director Independent Director DIN: 06576793 Chairman, CSR Committee DIN: 06502788 66 Directors' Report EESL Annual Report 2018-19 Annexure - A S. No. CSR Project or activity identified Project Cost Unspent CSR Reason / Clarification Amount 1. Financial assistance to support the ` 0.4 million ` 0.4 million EESL has sent the fund sanction letter to DoRA, IIT Kanpur education of deprived students and the Agreement has also been finalised. EESL is in process to sign the agreement with DoRA, IIT Kanpur. Once the agreement is signed, the payment will be released to DoRA, IIT Kanpur. 2. Financial assistance to purchase ` 0.13 million ` 0.13 million Agreement has been signed between EESL and M/s DISHA the office equipment to support the Foundation on 9th March, 2019. M/s DISHA Foundation education of students having is about to send the bills after compliance of T&C of the multiple disabilities agreement. So, this payment immediately will be processed once EESL receives the bills of M/s DISHA Foundation 3. Construction of 125 No.s of Toilet ` 5.35 million ` 5.35 million Agreement has been signed between EESL and M/s Blocks for use of Households Gramin Vikas Trust (GVT) on 28th February, 2019. The construction of 100 Nos. of Toilet Blocks out of 125 Nos. has been completed and payment of ` 26.73 Lacs has been released to M/s GVT in the FY 2019 - 20. The balance work will be completed within coming 2 months. The project has been delayed due to the bad weather conditions. (Due to heavy rain in Uttarakhand) 4. Swachhta Action Plan for schools ` 4.8 million ` 4.41 million The expenditure was for all the Regional Offices PAN India. as a part of Swachhta Pakhwara Many states were not able to identify and tie up for the same. 5. Cleanness Drive in 100 schools ` 0.6 million ` 0.12 million The cleaning drive in 96 schools were done. However, falling under the jurisdiction of SDMC was not able to provide the details of rest 4 (four) SDMC schools. 6. Cleanness Drive in SCOPE Complex ` 0.2 million ` 0.2 million The cleanliness drive was done by the employees itself. (EESL - HO) on 2nd October, 2018 Accordingly, no expenses were incurred. 7. Providing Skill Training to students ` 1.2 million ` 0.88 million The skill development training was given in two of identified ITI / Polytechnic government Polytechnic Institutes. We tried to do in other Colleges colleges but due to unavailability of students / venue due to elections, we could not do more colleges. However, this year we shall be covering 100 students under CSR, while meeting the MOU target. EESL Annual Report 2018-19 Directors' Report 67 Annexure - II Form No. MGT-9 EXTRACT OF ANNUAL RETURN As on the financial year ended on 31st March, 2019 [Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014] I. REGISTRATION AND OTHER DETAILS: i. CIN U40200DL2009PLC196789 ii. REGISTRATION DATE 10/12/2009 iii. NAME OF COMPANY ENERGY EFFICIENCY SERVICES LIMITED iv. CATEGORY OF COMPANY Company Limited by Shares v. SUB-CATEGORY OF COMPANY Indian Non-Government Company vi. ADDRESS OF COMPANY NFL Building, 5th & 6th Floor, Core - III, SCOPE Complex, Lodhi Road, New Delhi - 110003 vii. LISTED/UNLISTED Listed (Debentures of the company are listed) viii. NAME & ADDRESS OF REGISTRAR & TRANSFER AGENT Karvy Fintech Private Limited (Formerly Karvy Computershare Private Limited) Karvy Selenium Tower B, Plot No. 31 - 32, Financial District, Nanakramguda, Serilingampally Mandal, Hyderabad - 500032, India Tel No.: +91 (40) 6716 2222; Fax: +91 (040) 2343 1551 II. PRINCIPAL BUSINESS ACTIVTIES OF THE COMPANY All the business activities contributing 10% or more of the total turnover of the company shall be stated:- Sl. No. Name and Description of main NIC Code of the Product / Service % to total turnover of the Company Products / Services 1. Sale of Goods 47990 60.69 % 2. Sale of Services 74909 39.31 % III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES S. N. NAME AND ADDRESS OF THE CIN/GLN HOLDING/ SUBSIDIARY/ %OF SHARES HELD APPLICABLE COMPANY ASSOCIATE SECTION 1. EESL EnergyPro Assets Limited 10568873 Subsidiary 84.55 2(87) Address: Edina Unit 12 & 13, Rugby Park, Bletchley Road, Stockport, United Kingdom, SK4 3EJ 2. Anesco Energy Services (South) Ltd. 08112903 Subsidiary 84.55 2(87) Address: Edina Unit 12 & 13, Rugby Park, Bletchley Road, Stockport, United Kingdom, SK4 3EJ 3. Creighton Energy Limited 07729268 Subsidiary 84.55 2(87) Address: Edina Unit 12 & 13, Rugby Park, Bletchley Road, Stockport, United Kingdom, SK4 3EJ 4. EPAL Holdings Limited 11217655 Subsidiary 84.55 2(87) Address: Edina Unit 12 & 13, Rugby Park, Bletchley Road, Stockport, United Kingdom, SK4 3EJ 5. Edina Acquisition Limited 11216307 Subsidiary 84.55 2(87) Address: Edina Unit 12 & 13, Rugby Park, Bletchley Road, Stockport, United Kingdom, SK4 3EJ 68 Directors' Report EESL Annual Report 2018-19 6. Edina Power Services Limited 151045 Subsidiary 84.55 2(87) Address: Delaire House, Unit 4 Swords Business Park Swords Co. Dublin 7. Edina Limited 108087 Subsidiary 84.55 2(87) Address: Delaire House, Unit 4 Swords Business Park Swords Co. Dublin 8. Edina UK Limited 05660595 Subsidiary 84.55 2(87) Address: 13 Rugby Park, Bletchley Road, Stockport, Cheshire, SK4 3EJ 9. Edina Australia Pty Limited ABN 77166334416 Subsidiary 84.55 2(87) Address: Level 28, 10 Eagle Street, Brisbane QLD 4000 AUSTRALIA 10. Armoura Holdings Limited 197018 Subsidiary 84.55 2(87) Address: Delaire House, Unit 4 Swords Business Park Swords Co. Dublin 11. Stanbeck Limited 343017 Subsidiary 84.55 2(87) Address: Delaire House, Unit 4 Swords Business Park Swords Co. Dublin 12. Edina Manufacturing Limited NI029915 Subsidiary 84.55 2(87) Address: Lissue Industrial Estate West, Moira Road, Lisburn, County Antrim, BT28 2RE 13. Edina Power Limited NI048701 Subsidiary 84.55 2(87) Address: Rathdown Road, Lissue Industrial Estate West, Lisburn, County Antrim, BT28 2RE 14. EPSL Trigeneration Private Limited U74999DL2018FT Subsidiary 84.55 2(87) Reg. Office: CORE - III, 5th & 6th Floor, C343317 Scope Complex, Lodhi Road, New Delhi - 110003 15. NEESL Private Limited U74999DL2017FT Associate 26 2(6) Reg. Office: D - 40, G/F, Okhla C320579 Phase - I, New Delhi - 110020, India IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as Percentage of Total Equity) i. Category-wise share Holding Category of No. of shares held at the beginning of the No. of shares held at the end of the year % Change Shareholders year i.e. 01.04.2018 i.e. 31.03.2019 during the year Demat Physical Total % of Total Demat Physical Total % of Total Shares Shares A. PROMOTORS 1. Indian a) Individual/HUF - - - - - - - - - b) Central govt. - - - - - - - - - c) State Govt.(s) - - - - - - - - - d) Bodies corp. 292999800 169000200 462000000 100 407829082 267375268 675204350 100 46.15 e) Banks/FI - - - - - - - - - f) Any Others - - - - - - - - - Sub Total A (1): 292999800 169000200 462000000 100 407829082 267375268 675204350 100 46.15 EESL Annual Report 2018-19 Directors' Report 69 2. Foreign a) NRIs - Individuals - - - - - - - - - b) Other - - - - - - - - - - Individuals c) Bodies Corp. - - - - - - - - - d) Banks/FI - - - - - - - - - e) Any Others - - - - - - - - - Sub Total A (2): Total Shareholding 292999800 169000200 462000000 100 407829082 267375268 675204350 100 46.15 of Promoter (A)=(A)(1)+ (A)(2) B. Public Share holding 1. Institutions a) Mutual Funds - - - - - - - - - b) Banks/ FI - - - - - - - - - c) Central govt. - - - - - - - - - d) State Govt.(s) - - - - - - - - - e) Venture Capital Funds - - - - - - - - - f) Insurance Companies - - - - - - - - - g) FIIs - - - - - - - - - h) Foreign Venture - - - - - - - - - Capital Funds i) Others (specify) - - - - - - - - - Sub-total (B)(1):- - - - - - - - - - 2. Non Institutions - - - - - - - - - a) Bodies Corp. - - - - - - - - - i. Indian - - - - - - - - - ii. Overseas - - - - - - - - - b) Individuals - - - - - - - -- (i) Individual - - - - - - - - - Shareholders Holding nominal share capital up to ` 1 lakh ii) Individuals - - - - - - - - - shareholders holding nominal share capital excess of ` 1 lakh c) Others (Specify) - - - - - - - - - sub-total (B) (2):- - - - - - - - - - Total Public - - - - - - - - - Shareholding (B)= (B) (2) C. Share held by - - - - - - - - - Custodian for GDRs & ADRs Grand Total 292999800 169000200 462000000 100 407829082 267375268 675204350 100 46.15 (A+B+C) 70 Directors' Report EESL Annual Report 2018-19 ii. Share Holding of Promoters Shareholder's Shareholding at the beginning of the year i.e. Shareholding at the end of the year i.e. % change in Name 01/04/2018 31/03/2019 shareholding during the year No. of Shares % of total %of Shares No. of Shares % of total %of Shares Shares of the Pledged / Shares of the Pledged / company encumbered to company encumbered to total shares total shares NTPC Limited 14,65,00,000 31.7% Nil 24,55,00,000 36.36% Nil 67.58 Power Finance 14,65,00,000 31.7% Nil 24,55,00,000 36.36% Nil 67.58 Corporation Limited Power Grid 2,25,00,000 4.87% Nil 3,77,04,350 5.58% Nil 67.57 Corporation of India Limited REC Limited 14,65,00,000 31.7% Nil 14,65,00,000 21.70% Nil Nil TOTAL 46,20,00,000 100% - 67,52,04,350 100% - iii. Change in Promoters shareholding: PARTICULARS Shareholding at the beginning of the year Cumulative Shareholding during the year No. of Shares % of Total of share No. of shares % of Total shares of the company of the company At the beginning of the year 46,20,00,000 100 - - Date wise Increase / Decrease in - - 21,32,04,350 - Promoters' Shareholding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus/ sweat equity etc): Allotment of shares on Rights basis on 8th May, 2018 At the end of year - - 67,52,04,350 100 iv. Shareholding Pattern of top ten shareholders (other than Directors, Promoters and Holder of GDRs and ADRs) Shareholding at the beginning of the year Cumulative Shareholding during the year For Each of the Top 10 Shareholders No. of Shares % of Total of share No. of shares % of Total shares of the company of the company At the beginning of the year - - - - Date wise Increase/Decrease in Shareholding during the year specifying the reasons for increase / decrease (e.g. allotment/transfer /bonus/sweat equity etc.) - - - - At the end of year (or on the date of separation during the year) v. Shareholding of Director and Key Managerial Personnel: Shareholding at the beginning of the year Cumulative Shareholding during the year No. of Shares % of Total of share No. of shares % of Total shares of the company of the company At the beginning of the year - - - - Date wise Increase/Decrease in Shareholding during the year specifying the reasons for increase / decrease (e.g. allotment/transfer /bonus/sweat equity etc.) - - - - At the end of year - - - - EESL Annual Report 2018-19 Directors' Report 71 V. INDEBTEDNESS Indebtedness of the company including interest outstanding/accrued but not due for payment (` In Millions): Secured Loans excluding Unsecured Loans Deposits Total Indebtedness deposits Indebtedness at beginning of the year (01.04.2018) (i) Principal Amount 10450.00 8650.00 - 19100.00 (ii) Interest due but not paid - - - - (iii) Interest accrued but not due 215.8 301.1 - 516.90 Total (i+ii+iii) 10665.8 8951.1 - 19616.90 Change in Indebtedness during the financial year • Addition 3881.45 5800.72 - 9682.17 • Reduction 5065.8 701.10 - 5766.90 Net Change -1184.35 5099.62 - 3915.27 Indebtedness at end of the year (31.03.2019) (i) Principal Amount 9267.9 13749.7 - 23017.6 (ii) Interest due but not paid - - - - (iii) Interest accrued but not due 213.55 301.02 - 514.57 Total (i+ii+iii) 9481.45 14050.72 - 23532.17 VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL A. Remuneration to Managing Director, Whole-time Directors and / or Manager: (Amount in `) Sl. No. Particulars of Remuneration Name of MD/WTD/ Manager a. Shri Saurabh Kumar Ms. Renu Narang Shri S. Gopal Shri Venkatesh Dwivedi (Managing Director) (Whole - Time Director) (Whole - time Director) (Whole - time Director) (upto 23rd (w.e.f. 7th (w.e.f. 7th February, January, 2019) February, 2019) 2019) 1. Gross Salary (a) Salary as per provisions contained in 58,46,357.71 34,46,338.84 7,38,744.39 6,51,588.35 section 17(1) of the Income -tax Act,1961 (includes 1,69,992.29 (includes 1,23,047.92 as PRP for FY 18-19) as PRP for FY 18-19) (b) Value of perquisites u/s 17(2) Income tax 0 0 Act, 1961 (c) Profit in lieu of salary under section - - 17(3) Income tax Act,1961 2. Stock Option - - 3. Sweat Equity - - 4. Commission - As % of profit - Others, Specify… - - 5. Others, please specify - - Total (A) 58,46,357.71 34,46,338.84 7,38,744.39 6,51,588.35 Ceiling as per the Act As per Schedule V As per Schedule V 72 Directors' Report EESL Annual Report 2018-19 B. Remuneration to other Directors: (Amount in `) Particulars of Remuneration Total Amount Shri Seethapathy Chander Ms. Gauri Trivedi (Independent Director) (Independent Director) 1. Independent Directors • Fee for attending board / committee meetings 300,000 240,000 540,000 • Commission - - - • Others, Please specify - - - Total (1) 2. Other Non - Executive Directors • Fee for attending board / committee meetings - - - • Commission - - - • Others, please specify - - - Total (2) - - - Total (B) = (1+2) 300,000 240,000 540,000 Total Managerial Remuneration 300,000 240,000 540,000 Overall Ceiling as per the Act As per Section 197 As per Section 197 C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/ MANAGER/WTD: (Amount in `) Sl. Particulars of Remuneration Chief Financial Company Chief Operating Total No. Officer Secretary Officer Ms. Renu Narang Shri S. Gopal Ms. Pooja Shri Venkatesh (w.e.f 6th April, 2018 (w.e.f. 7th February, Shukla Dwivedi (w.e.f. upto 23rd January, 2019) 17th July, 2018 to 2019) 6th February, 2019) 1. Gross Salary (a) Salary as per provisions 33,88,514.36 7,38,744.39 25,32,693.73 13,66,489.00 80,26,441.48 contained in section 17(1) (includes of the Income – Tax Act, 1,69,992.29 as 1961 PRP for FY 18-19) (b) Value of perquisites u/s - - - 1,91,454.00 1,91,454.00 17(2) Income Tax Act, 1961 (c) Profit in lieu of salar y - - - - - under section 17(3) Income Tax Act, 1961 2. Stock Option - - - - - 3. Sweat Equity - - - - - 4. Commission - As % of profit - Others specify….. - - - - - 5. Others, Please specify - - - - - Total 33,88,514.36 7,38,744.39 25,32,693.73 15,57,943.00 82,17,895.48 VII. PENALTIES / PUNISHMENT / COMPOUNDING OF OFFENCES: Type Section of the Brief Description Details of Penalty / Punishment / Authority [RD / Appeal made, companies Act Compounding fees imposed NCLT / COURT] if any (give Details) There were no penalties/punishment/compounding of offences for breach of any section of Companies Act against Company or its directors or other officers in default, if any, during the year. For and on Behalf of the Board of Directors Energy Efficiency Services Limited Rajeev Sharma Date: 26.09.2019 Chairman Place: New Delhi (DIN: 00973413) EESL Annual Report 2018-19 Directors' Report 73 Annexure - III Form No. MR-3 SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED 31.03.2019 [Pursuant to section 204(1) of the Companies Act, 2013 and rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014] To, The Members, Energy Efficiency Services Limited, NFL Building, 5th & 6th Floor, Core - III, Scope Complex, Lodhi Road, New Delhi -110003 Date of Incorporation: 10.12.2009 Authorized Share Capital: INR 3,50,00,000,000 Paid up Share Capital: INR 6,752,043,500 We have conducted the secretarial audit of the compliance of applicable statutory provisions on Energy Efficiency Services Limited hereinafter referred to as ("the company"). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon. Based on our verification of the Energy Efficiency Services Limited books, papers, minute books, forms and returns filed and other records maintained by the company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, We hereby report that in our opinion, the company has, during the audit period covering the financial year ended on 31st Day of March, 2019 ('Audit Period') complied with the statutory provisions listed hereunder and also that the Company has proper Board- processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: We have examined the books, papers, minute books, forms and returns filed and other records maintained by Energy Efficiency Services Limited ('The Company') for the financial year ended on 31st Day of March, 2019 according to the provisions of: i. The Companies Act, 2013 (the Act) and the rules made thereunder; ii. The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the rules made thereunder; (Not applicable to the company during the audit period) iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; (Not applicable to the company during the audit period) iv. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Overseas Direct Investment. (Company has made Overseas Direct Investment during the financial year and complied all the provision of Foreign Exchange Management Act, 1999 along with Companies Act 2013 as applicable) v. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBI Act'): a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (Not applicable to the company during the audit period) b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (Not applicable to the company during the audit period) c. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; (Not applicable to the company during the audit period) d. The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999; (Not applicable to the company during the audit period) e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (Applicable to the company during the audit period as the debt securities of the company is listed on BSE Limited) f. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; (Not applicable to the company during the audit period) g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and (Not applicable to the company during the audit period) h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998; (Not applicable to the company during the audit period) I/We have also examined compliance with applicable clause of the following: i. Secretarial Standards issued by The Institute of Company Secretaries of India. ii. The Listing Agreements entered into by the Company with Stock Exchange(s), if applicable; (Applicable to the company during the audit period as the debt securities of the company is listed on USE Limited and company has complied all the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 w.r.t listed debt securities) 74 Directors' Report EESL Annual Report 2018-19 During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above subject to the following observations: a. The Company has not spent the minimum amount on the CSR activities as per the provisions of section 135 of the Companies Act, 2013 & its schedule VII read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 b. The Company has not filed Annual Return on Foreign Liabilities and Assets (FLA Return) for the FY ended 31.03.2019 We further report that: The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non - Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. Majority decision is carried through while the dissenting members' views are captured and recorded as part of the minutes. We further report that there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. For Astik Tripathi and Associates Company Secretaries Astik Mani Tripathi Proprietor Place: New Delhi FCS No. 8670 Date: 28.08.2019 C P No. 10384 This report is to be read with our letter of even date which is annexed as Annexure- A and forms an integral part of this report. Annexure-A To, The Members, Energy Efficiency Services Limited, NFL Building, 5th & 6th Floor, Core - III, Scope Complex, Lodhi Road, New Delhi -110003 Our report of even date is to be read along with this letter. 1. Maintenance of Secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit. 2. We have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. 3. The verification was done on test basis to ensure that correct facts are reflected in Secretarial records. We believe that the process and practices, we followed provide a reasonable basis for our opinion. 4. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company. 5. Where ever required, we have obtained the management representations about the compliance of laws, rules and regulations and happening of events etc. 6. The Compliance of provisions of corporate and other applicable laws, rules, regulations, standards is the responsibility of the management. Our examination was limited to the verification of procedure. For Astik Tripathi and Associates Company Secretaries Astik Mani Tripathi Proprietor Place: New Delhi FCS No. 8670 Date: 28.08.2019 C P No. 10384 EESL Annual Report 2018-19 Directors' Report 75 Annexure - IV MANAGEMENT REPLY TO STATUTORY AUDITOR'S REPORT FOR THE FINANCIAL YEAR 2018 - 19 S. No. Auditor’s Qualified Opinion Management's Reply 1 The company is in the process of compiling certain data The company is in the process of reconciliation and does not expect and reconciling the amounts billable, receivable & payable any major differences that may arise post such reconciliation/ under the various agreements entered into with various verification, and shall account for the differences, if any, post States, Urban Local Bodies (ULB's) and other organizations completion of the said exercise. under its Energy Service Company (ESCO) model, verification of physical inventory and assets under the scheme & otherwise and reconciliation as to assets to be installed, assets installed pending capitalization, assets capitalized (including capitalization of related direct & indirect cost) and assets against which revenue is booked (as per applicable Indian Accounting Standards) as per the agreements. We are unable to comment upon the differences that may exist and their impact on various account heads such as Capital Work in Progress, Property Plant & Equipment, Inventories, Trade Receivable / Payable, revenue recognition and any other consequential impact on the statement if any, pending completion of such verification and reconciliation. (Refer Note No. 3 a)). 2. Trade receivables are due from government-controlled entities The company earns its revenue from Government institutions/ and other customers. Significant amount of ` 60454.34 undertakings (both central & State) and from other Customers and Lakhs is outstanding for the period of more than 360 days has trade receivables from them which has generated from the as on 31 March 2019 (` 52132.95 Lakhs for the previous normal course of business. The Government agencies account for year ended 31.03.2018). The company has represented that about 88% of the total receivables. the Company earns its revenue mainly from government- Based on the environment in which the Company operates the trade controlled entities (both central and state government) and receivables are considered to be in default (credit impaired) when hence risks attached to such receivables are considered to the possibility of recovery of receivables are deteriorating based on be insignificant. For rest of the customers, the Company does management evaluation of certain parameters such as age of dues, an assessment/evaluation of credit risk based on factors nature of customers, its credit worthiness, etc and are required to such as ageing of dues, specific credit circumstances, nature be provided for allowance on a systematic basis. and credit worthiness of the non-government-controlled ntities/customers. The company has not furnished any In respect of the entities that are government controlled, the counter records or evidences to demonstrate that such an evaluation party risk attached to such receivables are insignificant. and assessment has been carried out. Therefore, we are In respect of non-government controlled which are scattered across unable to quantify the impact on the statement on account different states in India and are in very large number. The Company of any possible allowance on doubtful trade receivables due is still in the process of assessment / evaluation of credit risk based to expected credit loss once such evaluation is done. (Refer on the above parameters. The company does not expect any major Note No. 36 (a)). This was also a subject matter of credit impairment that may arise on such assessment and shall Qualification in the previous auditor's report on the standalone provide for allowances for credit impairment, if any, post completion financial statements for the year ended 31St March 2018. of such assessment. 3. For Financial assets for which loss allowance is measured The counter party risk attached to the government entities (which using life time expected credit losses in the Financial account of nearly 88% of trade receivables) are insignificant. Statements, the Company has represented that its customers In respect of non-government controlled entities, the Company is have capacity to meet the obligations and therefore the risk in receipt of periodic payments even though there are delays in of default is low. Further, management believes that the receipt in certain receivables. Therefore, in view of the management, unimpaired amounts that are past due are still collectible in these customers have the capacity to meet the obligations and the full, based on historical payment behavior. However, an risk of default is low. The management believes that trade receivables allowance for doubtful receivables of ` 196.65 Lakhs was that are past due are collectable in full based on historical payment recognised during the year ended 31.03.2019 (` 196.64 behavior (except for certain cases which are in the various stages Lakhs for the previous year ended on 31.03.2018) i.e., to of litigation and for which the provision for doubtful debt is being the extent of 10% of the total outstanding of ` 1966.40 Lakhs, made on a systematic basis). thereby making a total provision of ` 393.29 Lakhs i.e., 20% of total Outstanding as on 31.03.2019, in respect of cases The agreement with the Customers provide for legal recourse in which are under litigation for recovery. The Company has case of delays in payment. The Company has initiated litigation not been able to demonstrate and produce any evidence that proceedings in respect of four customers for a total outstanding such cases were actually assessed/evaluated for amount of ` 1966.40 Lakhs. As these cases are in the different ascertaining credit risk based on factors such as ageing of stages at various Judicial Authorities, the final outcome of which is 76 Directors' Report EESL Annual Report 2018-19 S. No. Auditor’s Qualified Opinion Management's Reply dues, specific credit circumstances, nature and credit yet to be decided, as a precautionary measure, the Company has worthiness of the customers as defined in the policy of the made provision for doubtful debts of ` 393.29 Lakhs (20% of the management for the purpose of creating allowance on such total outstanding of ` 1966.40 lakhs) till the current FY 2018-19. doubtful trade receivables due to expected credit loss in case Based on the future outcome of the litigations, the company shall of default. Therefore, we are unable to quantify the actual make the provisions of the balance of these receivables, if required, impact on the statement on account of further possible in the forthcoming years on a systematic basis. allowance on such doubtful trade receivables (which are under litigation for recovery) due to expected credit loss once such evaluation is done. (Refer Note 36 a) (ii)). This was also a subject matter of Qualification in the previous auditor's report on the standalone financial statements for the year ended 31st March 2018. 4. The company had deferred 'Adver tisement Expenses' EESL has a target to distribute 77 crores LED bulbs in entire country amounting to ` 4907.39 Lakhs in the previous years, from in 4 year commencing from the FY 2015-16 under the Energy which it has charged an amount of ` 619.89 Lakhs in the Efficiency Programme (DELP/ UJALA) of Government of India. The Statement of Profit & Loss for the year ended 31.03.2019 programme cost per LED bulb is determined by regulatory as Media Expenses. The company continues to defer and commission and includes cost of procurement of LED bulbs, cost carry the balance amount of ` 4287.50 Lakhs as Prepaid of distribution & awareness, return on equity, other financial cost Expenditure shown under the head Other Current Assets in and applicable taxes. EESL had incurred initially the substantial the Financial Statements contrary to the principles enunciated amount on advertisement/awareness of DELP/UJALA programme under Ind AS 38 on 'Intangible Assets', as per which such on national level as well as in the states to create awareness about expenses should be charged to the Profit & Loss Account. the programme in the general public to encourage greater (Refer Note 15 (b)). This was also a subject matter of participation. The cost of awareness is approved by the regulatory Qualification in the previous auditor's report on the standalone commission and is part of the programme cost. As such the cost of financial statements for the year ended 31 March 2018. awareness needs to be spread over the number of LED bulbs that are targeted to be distributed. Accordingly, in the annual accounts for FY 2018-19, only that part of awareness expenses which are in proportion to the actual numbers of bulb distributed for FY 201819 vis-a-vis the total targeted LED bulb distribution at the beginning of the year are accounted for charging in the Statement of Profit & Loss and the balance amount is carried over for charging in the Statement of Profit & Loss of subsequent years on the basis of bulbs distribution in the subsequent years. The treatment made by EESL for carry forward of awareness expenses is in order and is disclosed in details under the notes to the financial statements. Hence, Advertisement expenses shall not be deffered after financial year 2018-19 and the balance amount in total shall be written off in next financial year i.e. 2019-20. 5. The company has entered into agreements with Municipal As per para 55 of Ind AS 16, 'Property, Plant & Equipment', Corporation for replacement of old conventional streetlights depreciation of an asset begins when it is available for use, i.e. with LED Energy efficient streetlights. The Company follows when it is in the location and condition necessary for it to be capable the practice to capitalize these assets in the books of of operating in the manner intended by the Management. accounts from the date of capitalization as indicated in the The management through various agreements has undertaken to cer tificate issued by Municipal Corporation and the provide energy efficiency services by installation/replacement of a depreciation is charged accordingly from the date of definite number of lights in respective Urban Local Bodies (ULBs). capitalization which is inconsistent with the provisions of Though the installations/replacements are being done in a progressive Ind AS 16 on Property Plant and Equipment wherein the manner over a period of time, the basic intent of realising Energy projects need to be capitalized and depreciated when it is Efficiency is met only when a sizeable number of lights are installed available for use. in the ULB. The agreement with customers provides for issuance of a) In the current year the company has received certain Certificate for Completion prior to the billing of revenue for the lights completion certificates from the municipal corporation(s), installed which are normally done in batches. wherein the completion dates mentioned in the certificate Accordingly, the assets are available for the intended use i.e. attaining falls in the previous year. The company has capitalized desired energy efficiency only when a sizeable number of lights are these assets in the books of accounts from the installed, verified and accordingly declared completed by the completion dates as indicated in the certificates and has respective ULBs. The Company capitalises the project on the basis charged depreciation of Rs 2135.02 Lakhs on these of completion certificate as it clarifies that the project have been assets in the Statement of Profit & Loss in current financial implemented and is capable of operating in the manner intended by year which per tain to the previous year, which is the Management. Accordingly, the Company charges the depreciation inconsistent with the provisions of Ind AS 8 on from the date of capitalisation. `Accounting Policies, Change in Accounting Estimates EESL Annual Report 2018-19 Directors' Report 77 S. No. Auditor’s Qualified Opinion Management's Reply and Errors', wherein the Prior Period error has to be During the financial year 2018-19, EESL has received Completion corrected by restating the comparative amounts. This Certificates issued by ULBs for certain lights declaring its completion has resulted in the understatement of Profit for the current from the dates falling in the previous financial years. year and overstatement of the profit for the previous year Ind AS 8, 'Accounting Policies, Changes in Accounting Estimates to that extent. (Refer Note No. 3 b)). and Errors', defines prior period errors as omissions from, and b) Further, in the current year, the CWIP carries amounts misstatements in, the entity's financial statements for one or more pertaining to various projects which are under various prior periods arising from a failure to use, or misuse of, reliable stages of completion and have not been capitalized in information that was available when the financial statements for the books of accounts due to non - receipt of completion those 1 period were approved for issue and could reasonably be certificates from Municipal Corporation, irrespective of expected to have been obtained and taken into account in the the fact that the asset may be available for use. The impact presentation of those financial statements. of this cannot be ascertained by the company as it needs These completion certificates are issued by the Municipal Corporation to carry out an exercise to ascertain the various projects after due satisfaction that work has completed in a timely and where the asset is available for use but the completion satisfactory manner. Since the completion certificates are issued by certificate from the Municipal Corporation is pending. the Municipal Corporations in the current financial year, streetlights are capitalised during the current year with effect from date of completion declared in the certificate and depreciation of Rs 2135.02 Lakhs on these assets have been charged in the Statement of Profit & Loss in current financial year. Accordingly, for the projects which are under progress, the Company is in the process of obtaining completion certificates from the Municipal Corporation and the Company shall capitalise these projects from the date of completion declared in the completion certificates. 78 Directors' Report EESL Annual Report 2018-19 Annexure - V MANAGEMENT REPLY TO SECRETARIAL AUDITOR'S REPORT FOR THE FINANCIAL YEAR 2018 - 19 S. No. Secretarial Auditor's Observation Management's Reply 1. The Company has not spent the minimum As per Annexure amount on the CSR activities as per the provisions of section 135 of the Companies Act, 2013 & its schedule VII read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. 2. The Company has not filed Annual Return on The same could not be filed due to operational issues. Company is in the process Foreign Liabilities and Assets (FLA Return) for of making necessary compliance. the FY ended 31.03.2019. Annexure S. No. CSR Project or activity identified Project Cost Unspent CSR Reason / Clarification Amount 1. Financial assistance to support the ` 0.4 million ` 0.4 million EESL has sent the fund sanction letter to DoRA, IIT Kanpur education of deprived students and the Agreement has also been finalised. EESL is in process to sign the agreement with DoRA, IIT Kanpur. Once the agreement is signed, the payment will be released to DoRA, IIT Kanpur. 2. Financial assistance to purchase the ` 0.13 million ` 0.13 million Agreement has been signed between EESL and M/s DISHA office equipment to suppor t the Foundation on 9th March, 2019. M/s DISHA Foundation is education of students having multiple about to send the bills after compliance of T&C of the disabilities agreement. So, this payment immediately will be processed once EESL receives the bills of M/s DISHA Foundation 3. Construction of 125 No.s of Toilet ` 5.35 million ` 5.35 million Agreement has been signed between EESL and M/s Gramin Blocks for use of Households Vikas Trust (GVT) on 28th February, 2019. The construction of 100 Nos. of Toilet Blocks out of 125 Nos. has been completed and payment of ` 26.73 Lacs has been released to M/s GVT in the FY 2019 - 20. The balance work will be completed within coming 2 months. The project has been delayed due to the bad weather conditions. (Due to heavy rain in Uttarakhand) 4. Swachhta Action Plan for schools as ` 4.8 million ` 4.41 million The expenditure was for all the Regional Offices PAN India. a part of Swachhta Pakhwara Many states were not able to identify and tie up for the same. 5. Cleanness Drive in 100 schools falling ` 0.6 million ` 0.12 million The cleaning drive in 96 schools were done. However, under the jurisdiction of SDMC SDMC was not able to provide the details of rest 4 (four) schools. 6. Cleanness Drive in SCOPE Complex ` 0.2 million ` 0.2 million The cleanliness drive was done by the employees itself. (EESL - HO) on 2nd October, 2018 Accordingly, no expenses were incurred. 7. Providing Skill Training to students of ` 1.2 million ` 0.88 million The skill development training was given in two government identified ITI / Polytechnic Colleges Polytechnic Institutes. We tried to do in other colleges but due to unavailability of students / venue due to elections, we could not do more colleges. However, this year we shall be covering 100 students under CSR, while meeting the MOU target. EESL Annual Report 2018-19 Directors' Report 79 Annexure - VI MANAGEMENT DISCUSSION AND ANALYSIS REPORT Industry structure and development by 2022 in the country. A target of installing 175 GW of renewable In 2010, the 'National Mission for Enhanced Energy Efficiency' energy capacity by the year 2022 has been set, which includes 100 (NMEEE), a policy by govt. of India, has indicated ` 740,000 million GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW of investment potential for energy efficiency and conservation (EE&C) from small hydro-power. The Government is promoting development out of which ` 300,000 million of potential exists in energy intensive of solar energy in the country by providing various fiscal and industries and remaining ` 440,000 million in the other key demand promotional incentives such as accelerated depreciation, waiver of side economic sectors. World Bank's study report in November, 2016 Inter State Transmission System (ISTS) charges and losses, financing indicates that India's Energy Efficiency Market is at ` 0.16 million solar rooftop systems as part of home loan, and permitting Foreign Crores. The renewed Demand Side Management (DSM) market Direct Investment up to 100 per cent under the automatic route. potential is estimated to be 178 billion kWh of energy savings per The building sector in India is seeing an upward trend with high growth annum. in energy demand. This is due to the ever - increasing demand for Demand for energy efficiency is rising. Energy efficiency improvements human comfort and rapid industrialization. There is a need to address have led to an avoided energy use of 6% in 2017 against the baseline this demand both from supply side and demand side. Trigeneration or year 2000. These were largely achieved through interventions in the Combined Cooling, Heating and Power (CCHP) addresses this by industry, service sectors and residential buildings (IEA, 2018). Energy generating power and supplying at the local level. These systems can efficiency improvements have led to avoided GHG emissions of around be implemented at a building level or industry level. Such systems 145 MtCO2e and avoided imports of fossil fuels by 5% in 2017 when installed at district level called as District Energy Systems. The (IEA,2018). Although India's primary energy demand has doubled from advantages of Trigeneration is not only high efficiency but also it is ~11 EJ in 2000 to ~22 EJ in 2017, IEA estimates that energy highly reliable and environment friendly. efficiency could limit demand growth by 82% from the current levels In order to implement these projects, EESL is leveraging the concept in 2040. This decrease is expected to save almost 10 EJ of final energy of PAYS model which has been a successful business proposition for use and emissions reductions of around 985 MtCO2e. most of the projects of EESL. Till date, less than 10% of the overall market has been tapped through Outlook ESCO mode mainly in the areas of lighting and some industrial Energy Efficiency is a key plank of India's strategy to transition into a applications. Large scale deployments have been constrained by a low carbon future which has potential to reduce 50% of India's country number of important regulatory, institutional and financing barriers. level emission; EE project implementation at a large scale and fast Energy Efficiency Services Limited (EESL), has been set-up as a Joint pace for new and emerging technologies is the need of the hour. To Venture of four Public Sector Units, under the administration of Ministry develop the ecosystem for successful implementation of energy of Power, Government of India. EESL is a Super - Energy Service efficiency projects in India, ESCO (Energy Services) industry in India Company enabling consumers, industries and Governments to is heading in the right direction. EESL has been setup as Super ESCO, effectively manage their energy needs through energy efficient which is implementing the world's largest non-subsidized energy technologies and related solutions. efficiency portfolio across sectors like lighting, buildings, E-mobility, Smart metering is among the measures proposed by Government of smart metering and agriculture at a scale which no organization has India under both IPDS and UDAY schemes to improve the financial been able to achieve. health of power DISCOMs. As per Power Ministry's strategy to roll out As per the analysis, EESL shall capture more than 16% of the total Advanced Metering Infrastructure (AMI), Smart Meters are to be market potential of energy efficiency over the next 5 years. EESL installed in phases, aiming to cover a total consumer base of 250 focuses on solution-driven innovation with no subsidy or capital million. expenditure. It is able to do so using its Pay-As-You-Save (PAYS) model, Electric Vehicles (EVs) are at the forefront of global agenda to move which obviates the need for any upfront capital investment by the towards a sustainable future. The Government of India (GoI) is consumer. The entire investment by EESL is recovered through promoting EV adoption in India and has recently announced its target monetized energy savings over a scheduled project period. The cost to reach 30% EVs adoption by 2030. Several state governments have reduction attributed to aggregation strategies adopted by EESL and set targets for EVs and working towards accelerating EV adoption in the success of its business model has created a positive outlook for their respective states. EESL in the coming years. One of the major barriers in EV adoption is unavailability of public Riding on the success and investments of the last year, EESL would charging infrastructure. The Government of India has recently try to adopt the best practices from its matured programs to new announced several initiatives to promote investments in EV Public programmes. EESL would strengthen its programs for Electric Vehicles, Charging Stations (PCS). On 14th December 2018, the Ministry of Charging Infrastructure, Smart Meters, Decentralized solar plants, Power (MoP) released guidelines for charging infrastructure for EVs. Trigeneration, Industrial Energy efficiency and International Operations. MoP also proposed to cover 70 cities and 20% of highways at a cost EESL is also associated with various international financial institutions/ of INR 5,000 crores by 2025, for creating charging infrastructure. Multilateral Development Banks (MDBs) and leading environmental The Ministry of Housing and Urban Affairs (MoHUA) recently approved authorities such as World Bank, ADB, AfD, KfW, USAID, UNEP etc. for amendments to Model Building Bye - laws (MBBL), 2016 and Urban technical assistance, trainings, financing and scaling up the Energy Regional Development Plans Formulation and Implementation (URDPFI) Efficiency Programmes in India and across Globe. Guidelines, 2014. With these amendments, building premise will have to have an additional power load equivalent to power load for all EESL's Strengths charging points in a PCS to be operated simultaneously. EESL has developed in house expertise in execution of energy efficiency The Government has set a target of installing 100 GW of solar capacity and demand side management projects. The team has immense 80 Directors' Report EESL Annual Report 2018-19 knowledge of the key innovation in energy efficient technologies. EESL mechanism. However, most of the outstanding are from states/govt. has technical and financial support from its strong institutional clients and EESL is getting a good support from states with the promoters. EESL has demonstrated proven track record of delivering proactive approach of government of India. outcomes, strong brand and domain expertise. In the last few years, Internal Control System and their Adequacy EESL has developed excellent relationship with their core customer base - distribution utilities and municipal utilities. EESL has pioneered The Company maintains an adequate system of Internal Control the demand side aggregation methodology thereby driving down the including suitable monitoring procedures which ensures accurate and prices of energy efficient appliances. EESL currently has access to timely financial reporting of various transactions, efficiency of economical financing options from multi and bilateral agencies. This operations and compliance with statutory laws, regulations and plays an important role in delivering value and better returns to our Company policies. Suitable delegations of power and guidelines for customers. EESL is one the very few organizations which has accounting have been issued for uniform compliance. In order to ensure successfully executed large scale energy efficiency projects in the that adequate checks and balances are in place and internal control country. systems are in order, regular and exhaustive Internal Audit are conducted internally by experienced firms of Chartered Accountants. EESL's Weaknesses Fur ther to complement the internal controls, EESL has already EESL is projected to grow at a break neck pace in the coming future. implemented an ERP system. Availability of sufficient resources is a key challenge for EESL. The current equity base is small to fuel EESL growth in future. The Material Developments in Human Resources/Industrial Relations Promoters have been infusing equity into the company from time to The Total manpower of the Company as on 31st March 2019 stands time as needed. However, considering the growth trajectory, EESL at 955 which includes 263 regular employees, 136 fixed term would need to explore all options for raising additional equity including employees, 33 consultants, 523 third party employees. With this talent an IPO. Considering the growth of EESL, availability of experienced pool bearing a unique mix of experienced and fresh executives and human resources is also a significant weakness for EESL. For which, staff, the project execution capabilities are enhanced manifold. EESL has already started systematic recruitment and has hired a Discussion on Financial Performance professional consulting firm (M/s Mckinsey & Company) which is During the financial year, the Company registered an increase of ` working towards the complete organization transformation in order to 4817.10 million in revenue from operations which went up to ` match the growth scenario of EESL. 18376.50 million from ` 13559.40 million during the financial year Opportunities 2017 - 18. Profit before tax was at ` 1711.20 million in 2018 - 19 in comparison to ` 615 million in 2017 - 18. Net profit of the Company EESL has excellent working relationship with distribution utilities. They in 2018 - 19 was ` 951 million. Net worth of the Company as on also have a keen understanding of regulations and policies related to March 31, 2019 has increased by 30.34% (from ` 6444.30 million in energy efficiency and demand side management. Their success in 2017 - 18 to ` 8399.70 million in 2018 - 19). large scale deployment of energy efficient lighting technology makes them a prime candidate to develop and implementation project for During the financial year 2018 - 19, fixed assets increased to ` other energy consuming technologies par ticularly fans and air 30640.60 million in comparison to ` 21429.80 million in 2017 - 18. conditioners. Apart from the distribution utilities, EESL has developed Increase in fixed asset was contributed by increase in implementation strong connection with Urban local bodies across India wherein most of projects. of the projects are being implemented to meet national targets and Environmental Protection and Conservation vision. The projects executed by EESL till the end of last financial year i.e. EESL can also work with funding agencies to develop viable business 2018 - 19 saved over 50 billion kWh of energy per year, avoided peak models for large scale deployment of other innovative EE technologies demand of over 10,000 MW and over 39 million tonnes of CO2 annually. including smart grids, tri-generation, and industrial chillers among EESL has also takes proper care in destroying the old lighting inventory other. replaced during the projects to prevent mercur y and lead Overseas Opportunities: EESL is in strong position to deliver its contamination. This inventory is destroyed as per the guidelines set solutions outside India. EESL has made partnerships with various by the electricity regulatory commission and local pollution control Govt. agencies and leading technology providers. EESL has committee. successfully implemented the energy efficiency projects across the Segment-Wise or Product-Wise Performance globe. Till financial year 2018 - 19, EESL has executed its projects across Threats, Risks and Concerns India. Till 31st March, 2019, EESL has completed the distribution of EESL has showcased the success of Standard Offer Program and over 347.40 million LED bulbs, 2.21 million Energy Efficient Fans & On-bill financing in implementation of energy efficient lighting 6.94 million LED Tube lights and installation of 8.49 million LED street programs. This has led to eagerness of utilities to execute of these lights. programs independent of EESL. Further, the cost of debt for EESL Cautionary Note should also be maintained at a sustainable level to ensure better returns for both EESL and their consumers. Certain statements in "Management Discussion and Analysis" section may be forward looking and are stated as required by applicable laws The rapid deployment of these technologies can result in shortage in and regulations. Many factors may affect the actual results, which markets as the manufacturing capacity of the suppliers may not match could be different from what the Management envisages in terms of EESL's requirement. This can also result in distribution of cheaper future performance and outlook. imports and low quality products in the market. With growing business portfolio of EESL, receivables of EESL are also increasing. This is the serious concern, for which commercial wing in EESL is functioning proactively with strong monitoring EESL Annual Report 2018-19 Directors' Report 81 Annexure - VII Statement of Disclosure of Remuneration under Section 197 of the Companies Act, 2013 and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. (i) The ratio of remuneration of each director to the median remuneration of employees of the company for the financial year 2018 - 19 & percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Director, Company Secretary or Manager, if any, in the financial year. S. Name of Director / Remuneration of Remuneration % increase in Median Ratio of Median % N. KMP and Director / KMP of Director / Remuneration Remuneration remuneration Remuneration Increase Designation for F.Y. KMP for F.Y. in the F.Y. (F.Y. 2018-19) of each (F.Y. 2017 - 18) in 2017 - 18 2018-19 2018 - 19 * Director to * median (` In million) (` In million) (` In million) median (` In million) remuneration of employees 1 Shri Saurabh Kumar 4.70 5.85 24 1.4 4.21 0.99 39.84 Managing Director 2 Ms. Renu Narang * 4.19 4.25 1 1.4 3.06 0.99 39.84 Director (Finance) 3 Shri Shankar 3.63 5.11 41 1.4 3.68 0.99 39.84 Gopal*** Director (Commercial) 4 Shri. Venkatesh NIL 3.73 NA 1.4 2.68 0.99 39.84 Dwivedi**** Director (Projects & Business Development) 5 Ms. Pooja Shukla 2.02 2.53 25 1.4 1.82 0.99 39.84 * Median Remuneration of permanent employees on rolls of the company. ** Ms. Renu Narang's remuneration is annualized for the full year for both FY i.e., 2017 - 18 and 2018 - 19 as she was appointed as Director (Finance) w.e.f. 1st March, 2018. She was also appointed as CFO w.e.f. 6th April, 2018 and resigned w.e.f. 23rd January, 2019 from the post of Director (Finance) as well as CFO. *** Shri Shankar Gopal appointed as Director (Commercial) & CFO w.e.f. 7th February, 2019. However, he was CFO of the company during the financial year 2017 - 18. **** Shri Venkatesh Dwivedi's remuneration is taken w.e.f. 7th February, 2019 as he was appointed as Director (Projects & Business Development) on the same day. (ii) The percentage increase in the median remuneration of employees 39.84% in the financial year. (iii) Number of permanent employees on rolls of the company. As on 31st March, 2019: 258 As on 31st March, 2018 : 246 (iv) Average percentile increase already made in the salaries of There was average increase of 3% in the basic remuneration of employees of other than the managerial personnel in the last financial employees of the company including managerial personnel year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. (v) Affirmation that the remuneration is as per the remuneration policy Yes of the company 82 Directors' Report EESL Annual Report 2018-19 (vi) Particulars of Top 10 Employees in terms of Remuneration drawn: S. Name & Designation Nature of Remunera- Qualification Date of Age (DOB) Last Number If relative N. Employment tion Commence- Employ- of Equity of any (whether Received ment of ment Shares Director or contractual or (` In million) Employment held in Manager, otherwise) the name of Company such Director or Manager 1 Shri Saurabh Kumar Permanent 5.85 B. Tech 06.05.2013 51 years UNEP Nil NA (Managing Director) (IIT Kanpur), (14.12.1967) Masters in Public Policy 2 Shri Shankar Gopal Permanent 5.11 B.Com 08.06.2016 51 years Power Grid Nil NA (Director - (hons), (08.07.1967) Corporation Commercial) C.W.A of India (ICWAI) Limited 3 Shri Soumya Prasad Permanent 3.99 PG 01.07.2016 50 years ICF Nil NA Garnaik (Plant (03.06.1969) International (CGM - Technical) Engg.) 4 Shri Sameer Agarwal Permanent 3.89 B.Com 09.01.2014 50 years RailTel Nil NA (AGM - Finance) (hons), CA (07.07.1968) (ICAI), C.W.A (ICWAI) 5 Shri Deepak Garg Permanent 3.87 B.Com 27.12.2013 45 years Indian Nil NA (AGM - Finance) (hons), CA (13.09.1973) Renewable (ICAI), C.W.A Energy (ICWAI) Development Agency Ltd. 6 Shri Venkatesh Permanent 3.73 B.E., MBA 07.10.2013 49 years Take Nil NA Dwivedi (IIM Kolkata), (26.05.1969) solutions (Director - Projects Energy Global LLP & Business Auditor Development) 7 Shri Prakash Jha Permanent 3.69 LLB 09.12.2015 50 years In Practice Nil NA (AGM - Legal) (10.08.1969) 8 Shri Rajneesh Rana Permanent 3.67 B. Com, MBA, 10.10.2013 42 years Indian Nil NA (GM - Contracts & BD) PG Diploma in (25.03.1976) Potash International Limited Law 9 Shri Girja Shankar Permanent 3.66 M.Tech 01.09.2016 49 years BEE Nil NA (15.11.1969) 10 Shri Jaspal Singh Aujla Permanent 3.65 B.E., M. Tech., 29.10.2013 52 years Sant (CGM - Technical) MBA (27.06.1969) Longowal Nil NA Institute of Engineering and Technology Note: a. Remuneration is as per the Remuneration Policy of the Company. b. The Remuneration for the purpose of above table is defined as Total Cost of the Company (TCC) which includes variable Performance related pay. c. In terms of the provisions of Section 197(12) of the Companies Act,2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, no employee of the Company employed throughout the year who was in receipt of remuneration of Rupees one crore and two lacs or more in a year. Further, during the year under review, there was no employee of the Company employed for a part of year who was in receipt of remuneration of rupees eight lacs and fifty thousand or more per month. For and on Behalf of the Board of Directors Energy Efficiency Services Limited Shri Rajeev Sharma Date: 26.09.2019 Chairman Place: New Delhi (DIN: 00973413) EESL Annual Report 2018-19 Directors' Report 83 84 Directors' Report EESL Annual Report 2018-19 EESL Annual Report 2018-19 Directors' Report 85 86 Directors' Report EESL Annual Report 2018-19 EESL Annual Report 2018-19 Directors' Report 87 88 Directors' Report EESL Annual Report 2018-19 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ENERGY EFFICIENCY SERVICES LIMITED Report on the Audit of the Standalone Financial Statements Qualified Opinion We have audited the accompanying standalone financial statements of Energy Efficiency Services Limited ("the Company"), which comprise the standalone balance sheet as at 31st March 2019, and the standalone statement of Profit and Loss (including Other Comprehensive Income), the standalone statement of changes in equity and the standalone statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements"). In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matters described in Basis for Qualified Opinion section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, the profit (financial performance including other comprehensive income), changes in equity and its cash flows for the year ended on that date. Basis for Qualified Opinion 1. The company is in the process of compiling certain data and reconciling the amounts billable, receivable & payable under the various agreements entered into with various States, Urban Local Bodies (ULB's) and other organizations under its Energy Service Company (ESCO) model, verification of physical inventory and assets under the scheme & otherwise and reconciliation as to assets to be installed, assets installed pending capitalization, assets capitalized (including capitalization of related direct & indirect cost) and assets against which revenue is booked (as per applicable Indian Accounting Standards) as per the agreements. We are unable to comment upon the differences that may exist and their impact on various account heads such as Capital Work in Progress, Property Plant & Equipment, Inventories, Trade Receivable Payable, revenue recognition and any other consequential impact on the statement if any, pending completion of such verification and reconciliation. (Refer Note No. 3 a)) 2. Trade receivables are due from government-controlled entities and other customers. Significant amount of Rs. 60454.34 Lakhs is outstanding for the period of more than 360 days as on 31 March 2019 (` 52132.95 Lakhs for the previous year ended 31.03.2018). The company has represented that the Company earns its revenue mainly from government-controlled entities (both central and state government) and hence risks attached to such receivables are considered to be insignificant. For rest of the customers, the Company does an assessment/ evaluation of credit risk based on factors such as ageing of dues, specific credit circumstances, nature and credit worthiness of the non- government-controlled entities/customers. The company has not furnished any records or evidences to demonstrate that such an evaluation and assessment has been carried out. Therefore, we are unable to quantify the impact on the statement on account of any possible allowance on doubtful trade receivables due to expected credit loss once such evaluation is done. (Refer Note No. 36 (a)). This was also a subject matter of Qualification in the previous auditor's report on the standalone financial statements for the year ended 31st March 2018. 3. For Financial assets for which loss allowance is measured using life time expected credit losses in the Financial Statements, the Company has represented that its customers have capacity to meet the obligations and therefore the risk of default is low. Further, management believes that the unimpaired amounts that are past due are still collectible in full, based on historical payment behaviour. However, an allowance for doubtful receivables of ` 196.65 Lakhs was recognised during the year ended 31.03.2019 (` 196.64 Lakhs for the previous year ended on 31.03.2018) i.e., to the extent of 10% of the total outstanding of ` 1966.40 Lakhs, thereby making a total provision of ` 393.29 Lakhs i.e., 20% of total Outstanding as on 31.03.2019, in respect of cases which are under litigation for recovery. The Company has not been able to demonstrate and produce any evidence that such cases were actually assessed/evaluated for ascertaining credit risk based on factors such as ageing of dues, specific credit circumstances, nature and credit worthiness of the customers as defined in the policy of the management for the purpose of creating allowance on such doubtful trade receivables due to expected credit loss in case of default. Therefore, we are unable to quantify the actual impact on the statement on account of further possible allowance on such doubtful trade receivables (which are under litigation for recovery) due to expected credit loss once such evaluation is done. (Refer Note 36 a) (ii)). This was also a subject matter of Qualification in the previous auditor's report on the standalone financial statements for the year ended 31st March 2018. 4. The company had deferred 'Advertisement Expenses' amounting to ` 4907.39 Lakhs in the previous years, from which it has charged an amount of ` 619.89 Lakhs in the Statement of Profit & Loss for the year ended 31.03.2019 as Media Expenses. The company continues to defer and carry the balance amount of ` 4287.50 Lakhs as Prepaid Expenditure shown under the head Other Current Assets in the Financial Statements contrary to the principles enunciated under Ind AS 38 on 'Intangible Assets', as per which such expenses should be charged to the Profit & Loss Account. (Refer Note 15 (b)). This was also a subject matter of Qualification in the previous auditor's report on the standalone financial statements for the year ended 31st March 2018. 5. The company has entered into agreements with Municipal Corporation for replacement of old conventional streetlights with LED Energy efficient streetlights. The Company follows the practice to capitalize these assets in the books of accounts from the date of capitalization as indicated in the certificate issued by Municipal Corporation and the depreciation is charged accordingly from the date of capitalization which is inconsistent with the provisions of Ind AS 16 on Property Plant and Equipment wherein the projects need to be capitalized and depreciated when it is available for use. a) In the current year the company has received certain completion certificates from the municipal corporation(s), wherein the completion dates mentioned in the certificate falls in the previous year. The company has capitalized these assets in the books of accounts from the completion dates as indicated in the certificates and has charged depreciation of ` 2135.02 Lakhs on these assets in the EESL Annual Report 2018-19 Independent Auditor's Report 89 Statement of Profit & Loss in current financial year which pertain to the previous year, which is inconsistent with the provisions of Ind AS 8 on 'Accounting Policies, Change in Accounting Estimates and Errors', wherein the Prior Period error has to be corrected by restating the comparative amounts. This has resulted in the understatement of Profit for the current year and overstatement of the profit for the previous year to that extent. (Refer Note No. 3 b) ). b) Further, in the current year, the CWIP carries amounts pertaining to various projects which are under various stages of completion and have not been capitalized in the books of accounts due to non - receipt of completion certificates from Municipal Corporation, irrespective of the fact that the asset may be available for use. The impact of this cannot be ascertained by the company as it needs to carry out an exercise to ascertain the various projects where the asset is available for use but the completion certificate from the Municipal Corporation is pending. We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements. Emphasis of Matter We draw attention to the following matters in the notes to the Standalone Financial Statements: 1. Note No. 29 b) which states that the company has recognized revenue under agreements with ULBs based on certain assumptions/ estimates for which it is seeking clarification from the respective ULBs. 2. Note no. 9 c) on Trade Receivables and Note no. 25 a) on Trade Payables which state that Trade Receivables and Trade Payables are subject to confirmations, reconciliation and consequential adjustments that may arise on reconciliation. 3. Note no. 15 a) and Note No. 27 a) which state that the sales, corresponding output tax liability and purchases along with corresponding input tax credit reported in GST and VAT returns, the net input tax credit receivable or the net output tax liability payable, as the case may be, are subject to reconciliation with the books of accounts. Differences which will be identified on reconciliation of GST/VAT returns will be addressed in annual GST/VAT statements/Revised returns to be filed in due course. 4. Note no. 36 a) (ii) on Financial Risk Management which states that the company has not made a provision of ` 1650 Iakhs on account of subsidy not received from Delhi Government/DERC as per the recommendation made by the CAG of India in their report dated 18th October 2017 issued to company. However, the management is of the view that the recovery is being followed up with concerned authority, which is under review and the management is confident for recovery of their dues. Our opinion is not modified in respect of these matters Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report. Sr. No. Key Audit Matter How our Audit addressed the Key Audit Matter 1. Classification of E-Vehicle given on Lease We have obtained an understanding and analysed the contracts for E-Vehicles given on lease to various parties w.r.t. to terms of the The number of E-Vehicles given on lease by the company lease specified under the contract. has increased significantly during the year and Management's judgment and assessment is required for Management's judgments and the conditions stipulated in the Ind classification of such leases as Operating Lease or finance AS 17 "Leases" for classification of lease as Operating Lease or lease. Finance Lease were assessed w.r.t the terms of the lease specified in the contract. We identified this as a Key Audit Matter because classification of such leases involves significant Based on the above procedures performed, the recognition of management judgment and it may be subject to E-Vehicles as finance lease, are considered adequate and reasonable. management bias. (Refer Note 43(b)) 2. Recognition of revenue under agreements with Urban An understanding of the agreements with ULBs was obtained in Local Bodies (ULBs). respect of the payments terms specified under the contract for recognition of revenue under the agreement and adopted the following The Company has recognised revenue under agreements audit procedures: with ULB 's based on certain assumptions / estimate in respect of Certain areas not specifically covered under - Evaluated and tested the effectiveness of the company's design the agreements. of internal controls relating to recognition and measurement of revenue under the agreements with ULBs. 90 Independent Auditor's Report EESL Annual Report 2018-19 This is considered as Key Audit Matter due to its nature - The reasonability of the assumptions / Estimates made by the and extent of estimates made by the company, which leads company for the recognition of revenue under agreements with to recognition and measurement of Revenue under the ULBs was assessed. agreements with ULBs. - Verified the accounting of revenue under the agreements with (Refer Note No. 29 b)) ULBs based on the 1ND AS 115 "Revenue from Contracts with Customers" Based on the above procedures performed and based on the representation by the company that they are in the process of seeking clarification on such matters, the recognition of revenue under the agreements with ULBs is considered to be adequate and reasonable. Information Other than the Standalone Financial Statements and Auditor's Report Thereon The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Board's Report including annexures to the Board's Report, but does not include the standalone financial statements and our auditor's report thereon. The above Report is expected to be made available to us after the date of this Auditor's Report. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the above identified reports, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions necessitated by the circumstances and the applicable laws and regulations. Responsibility of Management for Standalone Financial Statements The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rule, 2015 as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the standalone financial statements" management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors is also responsible for overseeing the Company's financial reporting process. Auditor's Responsibilities for the Audit of the Standalone Financial Statements Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to EESL Annual Report 2018-19 Independent Auditor's Report 91 continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in i. planning the scope of our audit work and in evaluating the results of our work; and ii. to evaluate the effect of any identified misstatements in the standalone financial statements. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Matter We did not audit the financial statements / information of one branch of the company in London, included in the standalone financial statements of the Company whose financial statement / information reflects total assets of Rs. 717.61 lakhs as at 31st March 2019 and total revenue of Rs. 561.02 lakhs for the year ended on that date, the financial statements / information of the said branch is certified by the management, and our opinion in so far as it relates to the amounts and disclosures included in respect of the said branch is based solely on the information certified by the management. Our opinion is not modified in respect of these matters. Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor's Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub- section (11) of section 143 of the Companies Act, 2013, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. 2. As required by Section 143(3) of the Act, we report that: a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; c) The accounts of one foreign branch of the company situated in London that reflect total Assets of Rs. 717.61 lakhs as at 31st March 2019 and total Revenue Rs. 561.02 lakhs for the year ended on that date are unaudited and certified by the management. d) the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement and the statement of changes in equity dealt with by this Report are in agreement with the relevant books of account; e) in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with relevant rule issued there under; f) on the basis of the written representations received from the directors as on 31st March, 2019 taken on record by the Board of Directors none of the directors is disqualified as on 31st March, 2019 from being appointed as a director in terms of Section 164 (2) of the Act. However, in the case of Gauri Trivedi, Ministry of Corporate Affairs (MCA) had freezed her Directors Identification Number (DIN) on the grounds that one of the companies in which she was a director had failed to file Annual Returns and Financial Statements for the years 2014-15 to 2016-17, which was reactivated by MCA after she procured a Stay Order from the Hon'ble High Court of Gujarat as on 26 December, 2018. Further, in the case of Sh Sanjiv Garg, one of the Companies in which he is a director has not filed Annual Returns and / or Financial Statements for past three Financial Years, reportedly due to reasons beyond the control of the Company and its Management and has been marked a Status of 'Management Dispute' by the Registrar of Companies ; g) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B"; and 92 Independent Auditor's Report EESL Annual Report 2018-19 h) with respect to the matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act, as amended: In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the company to its directors during the year is in accordance with the provisions of section 197 of the Act. i) with respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 44 to the financial statements ii. The Company did not have any on long-term contracts including derivative contracts for which there were any material foreseeable losses. iii. There were no amount which were required to be transferred to the Investor Education and Protection Fund by the Company 3. Based on the verification of the books of accounts of the company and according to the information and explanations given to us, we give in the "Annexure C", a report on the directions and sub-directions, issued by the Comptroller and Auditors General of India in terms of Section 143(5) of the Act. For KK Soni & Co. Chartered Accountants FRN: 000947N CA. Sant Sujat Soni Place: New Delhi Partner Date: 27th May, 2019 Membership number: 094227 EESL Annual Report 2018-19 Independent Auditor's Report 93 Annexure - A to the Auditors' Report The Annexure referred to in Independent Auditors' Report to the members of the Company on the standalone financial statements for the year ended 31 March 2019, we report that: i. (a) The Company has represented that they are in the process to construct proper records showing full particulars, including quantitative details and situation of fixed assets for the project equipments and Capital work in progress (CWIP). (b) The company has represented that it is in the process to construct proper records and subsequently shall formulate a regular programme to carry out the physical verification of its fixed assets. According to the explanation given by the management, the project equipments and CWIP are large in number and spread across the country hence the company was unable to complete the same and have assured that the physical verification shall be completed in the next financial year. (c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company. The Possession of 2nd floor at NBCC centre, Sahkar Marg, Jaipur was taken by the company on 19.03.2019 for which the registration is under process. ii. The company has a system of physical verification of inventory during the year and as at year end, including physical verification at some places by third parties. The company has represented that they are in the process to reconcile and examine the reasons for the discrepancies noticed during such verification and post such examination they shall make appropriate entries in its books of accounts. In our opinion, the system of such physical verification and subsequent recording / adjusting the differences noticed needs to be strengthened. iii. The Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, paragraph 3(iii) of the Order is not applicable. iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, with respect to the loans and investments made. v. According to the information and explanation given to us, the Company has not accepted any deposits from the public within the meaning of Sections 73 to 76 or any other relevant provision of the Companies Act, 2013 and rules framed thereunder. vi. The Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the services rendered by the Company. vii. (a) The Company is regular in depositing undisputed statutory dues including Provident fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty / Cess and other material statutory dues with appropriate authorities except WCT payable of Kerala which is unpaid for Rs 553,178, pertaining to Quarter ended June 2017 has not been deposited yet. According to the information and explanations given to us, other than above, no undisputed amounts payable in respect of provident fund, income tax, sales tax, value added tax, duty of customs and other material statutory dues were in arrears as at 31 March 2019 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues of sales tax, Income Tax, duty of customs which have not been deposited with the appropriate authorities on account of any dispute except as follows: Name of the statute Nature of dues Amount Period to which Forum where dispute (` in Crores) the amount relates is pending Andhra Pradesh Value Added Tax 37.04 FY 2014-15 Sales Tax Appellate Value Added (Amount already Tribunal, Andhra Pradesh Tax Act, 2005 paid under protest) Andhra Pradesh Value Added Tax 12.92 (VAT) FY 2015-16 CTO Value Added Tax & Penalty 12.92 (Penalty) Visakhapatnam Act, 2005 Andhra Pradesh Value Added Tax 9.26 (out of which FY 2014-15 AP VAT Value Added Tax Penalty 1.15 Deposited Tribunal, Andhra Pradesh Act, 2005 for stay) Uttrakhand Value Added Tax 2.41 FY 2015-16 Dy Commissioner (CT), Value Added Tax 0.69 FY 2016-17 Dehradun Delhi Value Added Tax Value Added Tax 2.96 FY 2015-16 Asst. Commissioner, Dept of Trade & Taxes, Delhi UP Value Added Tax Value Added Tax 14.02 FY 2015-16 Dy Commissioner (CT), Noida HP Value Added Tax Value Added Tax 0.69 FY 2016-17 Asst. Commissioner, State Taxes, Shimla 94 Annexure - A to the Auditors' Report EESL Annual Report 2018-19 viii. In our opinion and according to the information and explanation given to us, the Company has not defaulted in repayment of any loans or borrowings from any financial institution, banks, government or debenture holders during the year. ix. In our opinion and according to the information and explanations given to us, the Company has utilized Rs. 307.63 crore out of Rs. 400 crores, raised by way of term loans during the year, for the purposes for which they were raised and balance Rs. 92.37 crores is unutilized as on 31.3.2019. x. According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during our audit. xi. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act. xii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable. xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards except that we could not verify whether consent of the Board of Directors given by a resolution at a meeting of the Board have been obtained for entering into transactions with related parties. xiv. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has made offer for Right Issue under private placement of Equity shares to its existing shareholders proportionately and the company has complied with the requirements of Section 42 of the Companies Act, 2013 and the funds raised have been used for the purposes for which they were raised. xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable. xvi. As per the information and explanations provided by the Management, the Company does not undertake any activity which requires the Company to be registered under section 45-IA of the Reserve Bank of India Act 1934. For KK Soni & Co. Chartered Accountants FRN: 000947N CA. Sant Sujat Soni Place: New Delhi Partner Date: 27th May, 2019 Membership number: 094227 EESL Annual Report 2018-19 Annexure - A to the Auditors' Report 95 Annexure - B to the Independent Auditors' Report Report on the Internal Financial Controls under Clause (I) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act") We have audited the internal financial controls over financial reporting in financial statements of Energy Efficiency Services Limited ("the Company") as of 31 March 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date. Management's Responsibility for Internal Financial Controls The Company's management is responsible for establishing and maintaining internal financial controls over financial reporting in financial statements based on the internal control over financial reporting in financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilities include the design, implementation and maintenance of adequate internal financial controls over financial reporting in financial statements that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013. Auditors' Responsibility Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting in financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls over financial reporting in financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting in financial statements were established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting in financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting in financial statements included obtaining an understanding of internal financial controls over financial reporting in financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting in financial statements. Meaning of Internal Financial Controls over Financial Reporting A company's internal financial control over financial reporting in financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting in financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting in financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting in financial statements to future periods are subject to the risk that the internal financial control over financial reporting in financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion In our opinion, to the best of our information and according to the explanations given to us, except for the effects of the Qualifications given under the paragraph -"Basis for Qualified Opinion" of the Independent Auditor's Report, the Company has, in all material respects, an adequate internal financial controls over financial reporting in financial statements and such internal financial controls over financial reporting in financial statements were operating effectively as at 31 March 2019, based on the internal control over financial reporting in financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. 96 Annexure - B to the Independent Auditors' Report EESL Annual Report 2018-19 Other Matters Our aforesaid audit report under section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting in financial statements in so far as it relates to one foreign Branch Office (whose financial statements / financial information are unaudited) and our opinion on the adequacy and operating effectiveness of internal financial controls over financial reporting in standalone financial statements is based solely on the information and explanations given by the management of the Company. Our report is not modified in respect of above matter. For KK Soni & Co. Chartered Accountants FRN: 000947N CA. Sant Sujat Soni Place: New Delhi Partner Date: 27th May, 2019 Membership number: 094227 EESL Annual Report 2018-19 Annexure - B to the Independent Auditors' Report 97 Annexure - C to the Independent Auditors' Report Directions under section 143(5) of the Companies Act 2013 for the year 2018-19. S. No. Directions u/s 143(5) of the Auditors' Reply on Action taken Impact on Companies Act, 2013 on the directions Financial Statement 1 Whether the Company has system in place to process all As per the information and explanations given to us, Nil the accounting Transactions through IT system? If Yes, the company has a system in place to process all the the implication of processing of accounting transactions accounting transactions through IT system. SAP-ERP outside IT system on the integrity of the accounts along has been implemented for the processes like Financial with the financial implications, if any, may be stated. Accounting and Controlling (FICO), Sales and Distribution (S&D), Material Management (MM), Payroll / Human Capital Management (HCM). Based on the audit procedures carried out and as per the information and explanations given to us, all material accounting transaction have been processed / carried through the IT system. Accordingly, there are no implications on the integrity of the accounts. 2 Whether there is any restructuring of an existing loan or Based on the audit procedures carried out and as per Nil cases of waiver / write off of debts / loans / interest etc. the information and explanations given to us, there made by a lender to the company due to company's was no restructuring of existing loans or cases of inability to repay the loan? If yes, the financial impact may waiver / write off of debts/ loans/ interest etc. made be stated. by the lender to the company due to the company's inability to repay the loan. 3 Whether funds received / receivable for specific schemes Based on the audit procedures carried out and as per Nil from Central / State agencies were properly accounted the information and explanations given to us, the funds for / utilized as per its term and conditions? List the cases received / receivable for specific schemes from the of deviation. central / state agencies were properly accounted for / utilized as per the respective terms and conditions. For KK Soni & Co. Chartered Accountants FRN: 000947N CA. Sant Sujat Soni Place: New Delhi Partner Date: 27th May, 2019 Membership number: 094227 98 Annexure - C to the Independent Auditors' Report EESL Annual Report 2018-19 ENERGY EFFICIENCY SERVICES LIMITED STANDALONE BALANCE SHEET AS AT 31 MARCH 2019 ` in Lakhs Particulars Note No. As at 31 March, 2019 As at 31 March, 2018 ASSETS Non-current Assets Property, plant and equipment 2A 1,83,288.82 83,372.59 Capital work-in-progress 3 1,21,606.23 1,29,348.91 Intangible assets 2B 1,510.48 1,576.08 Investments in subsidiary and joint venture company 4 27,131.13 19,369.08 Financial assets Loans 5 493.95 465.93 Other financial assets 6 4,579.81 1,848.02 Other non-current assets 7 1,350.64 1,683.56 Total non-current assets 3,39,961.06 2,37,664.17 Current assets Inventories 8 26,968.66 29,993.41 Financial assets Trade receivables 9 1,83,148.24 1,16,182.54 Cash and cash equivalents 10 42,482.84 52,061.67 Bank balances other than cash and cash equivalents 11 33,576.49 5,437.22 Loans 12 364.34 153.34 Other financial assets 13 8,263.18 5,603.80 Current tax assets (net) 14 3,815.83 2,545.68 Other current assets 15 43,563.29 25,104.29 Total current assets 3,42,182.87 2,37,081.95 TOTAL ASSETS 6,82,143.93 4,74,746.12 EQUITY AND LIABILITIES Equity Equity share capital 16 67,520.44 46,200.00 Other equity 17 16,476.09 18,242.96 Total equity 83,996.53 64,442.96 Liabilities Non-current liabilities Financial liabilities Borrowings 18 2,79,188.06 1,75,420.16 Trade payables 19 - total outstanding dues of micro enterprises and small enterprises 1,277.49 - - total outstanding dues of creditors other than micro enterprises 10,523.97 - and small enterprises Other financial liabilities 20 40,680.09 8,019.85 Provisions 21 280.94 410.39 Deferred tax liabilities (net) 22 709.60 180.29 Other non-current liabilities 23 486.68 624.93 Total non-current liabilities 3,33,146.83 1,84,655.62 Current liabilities Financial liabilities Borrowings 24 62,678.99 63,500.00 Trade payables 25 - total outstanding dues of micro enterprises and small enterprises 8,214.58 - - total outstanding dues of creditors other than micro enterprises 1,25,750.06 1,28,526.81 and small enterprises Other financial liabilities 26 42,167.88 26,934.59 Other current liabilities 27 20,385.75 6,119.98 Provisions 28 11.66 566.16 Current tax liabilities (net) 5,791.65 - Total current liabilities 2,65,000.57 2,25,647.54 TOTAL EQUITY AND LIABILITIES 6,82,143.93 4,74,746.12 Significant Accounting Policies 1 The accompanying notes 1 to 54 form an integral part of these financial statements. For and on behalf of the Board of Directors As per our audit report of even date annexed. For KK Soni & Co. Chartered Accountants (FRN 000947N) Saurabh Kumar S. Gopal Pooja Shukla Sant Sujat Soni Managing Director Director Commercial and CFO Company Secretary Partner DIN : 06576793 DIN : 08339439 M. No. 094227 Place : New Delhi Date : 27th May, 2019 EESL Annual Report 2018-19 Standalone Balance Sheet 99 ENERGY EFFICIENCY SERVICES LIMITED STANDALONE STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH 2019 ` in Lakhs Particulars Note No. For the year ended For the year ended 31 March 2019 31 March 2018 Income Revenue from operations 29 1,83,765.24 1,35,594.27 Other income 30 9,802.16 5,476.03 Total revenue 1,93,567.40 1,41,070.30 Expenses Purchase of stock-in-trade 91,700.00 1,01,153.80 Distribution expenses (Ujala) 2,119.29 4,901.04 Media expenses (Ujala) 2,630.99 861.04 (Increase)/Decrease in inventories 31 3,024.75 (14,528.44) Employee benefits expense 32 2,840.42 3,922.75 Finance costs 33 19,023.52 13,305.45 Depreciation and amortisation expense 34,021.44 13,327.71 Other expenses 34 21,095.09 11,976.72 Total expenses 1,76,455.50 1,34,920.07 Profit before tax 17,111.90 6,150.23 Tax expense Current tax Current year 7,060.62 1,606.52 Earlier years - 421.41 Deferred tax expense 541.30 176.06 Total tax expense 7,601.92 2,203.99 Profit for the year 9,509.98 3,946.24 Other comprehensive income/(expense) Items that will not be reclassified to profit or loss (net of tax) - Net actuarial gains/(losses) on defined benefit plans (34.03) (12.00) - Less: Income tax relating to above item (11.89) (4.15) Other comprehensive income/(expense) for the year, net of income tax (22.14) (7.85) Total comprehensive income for the year 9,487.84 3,938.39 Earnings per equity share (Par value ` 10/- each) 42 Basic (`) 1.46 0.85 Diluted (`) 1.11 0.85 The accompanying notes 1 to 54 form an integral part of these financial statements. For and on behalf of the Board of Directors As per our audit report of even date annexed. For KK Soni & Co. Chartered Accountants (FRN 000947N) Saurabh Kumar S. Gopal Pooja Shukla Sant Sujat Soni Managing Director Director Commercial and CFO Company Secretary Partner DIN : 06576793 DIN : 08339439 M. No. 094227 Place : New Delhi Date : 27th May, 2019 100 Standalone Statement of Profit and Loss EESL Annual Report 2018-19 ENERGY EFFICIENCY SERVICES LIMITED STANDALONE CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2019 ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 A. CASH FLOW FROM OPERATING ACTIVITIES Profit before tax 17,111.90 6,150.23 Adjustment for:- Depreciation and amortization expense 34,021.44 13,327.71 Interest income (4,770.40) (1,422.01) Net (gain)/loss on foreign currency transactions and translation (2,696.02) 3,975.85 Deferred rent expense (15.97) 29.03 Grant income (397.64) - Net loss on sale of property, plant and equipment 142.54 - Allowance for doubtful receivables 196.65 196.64 Finance costs 18,905.27 9,837.73 Operating profit before working capital changes 62,497.77 32,095.18 Adjustment for: (Increase) in Trade receivables (65,830.21) (36,238.42) (Increase)/ Decrease in Inventories 3,024.75 (14,528.44) (Increase) in loans, other financial assets and other assets (22,877.16) (1,636.92) Increase in trade payables, other financial liabilities and other liabilities 31,655.05 88,677.44 Increase/(Decrease) in provisions (717.98) 730.57 Cash generated from operations 7,752.22 69,099.40 Less: Income tax paid 2,539.22 4,275.16 Net cash from operating activities (A) 5,213.00 64,824.25 B Cash flow from investing activities Acquisition of property, plant and equipment and intangible assets (89,020.17) (1,27,496.87) Interest income 3,396.76 1,422.01 Investment in subsidiary and joint venture company (7,762.05) (19,180.04) Net investment in bank balances other than cash and cash equivalents (28,152.11) 329.82 Net cash used in investing activities (B) (1,21,537.57) (1,44,925.08) C Cash flow from financing activities Proceeds from non-current borrowings 1,23,223.48 91,756.40 (Repayment) of non-current borrowings (4,700.06) (10,000.00) Net (repyaments) / proceeds of current borrowings (821.01) 28,495.90 Finance costs (20,758.05) (9,527.65) Share application money received 11,420.44 9,900.00 Share issue costs (25.00) (25.01) Dividend paid (1,102.99) (4,074.67) Tax on dividend (491.07) (829.54) Net cash from financing activities (C) 1,06,745.74 1,05,695.43 Net (decrease) / increase in cash and cash equivalents (A+B+C) (9,578.83) 25,594.59 Cash and cash equivalents at the beginning of the year 52,061.67 26,467.08 Cash and cash equivalents at the end of the period 42,482.84 52,061.67 EESL Annual Report 2018-19 Standalone Cash Flow Statement 101 a) Cash and cash equivalents consists of balances with banks. b) Reconciliation of cash and cash equivalents: ` in Lakhs Particulars As at 31 March, 2019 As at 31 March, 2018 Balances with banks - Current accounts 42,482.84 52,061.67 Cash and cash equivalents as per note-10 42,482.84 52,061.67 c) Reconciliation between the opening and closing balances of the balance sheet for liabilities arising from financing activities: ` in Lakhs Particulars Non-current borrowings* Current borrowings Interest on borrowings For the year ended 31 March 2019 Opening balance as at 1 April 2018 1,79,978.93 63,500.00 5,445.06 Cash flow during the year 1,18,523.42 (821.01) (20,758.05) Non-cash changes due to: - Variation in exchange rates (2,243.77) - - - Interest accrued - - 20,132.43 - Transaction cost on borrowings (0.06) - - Closing balance as at 31 March 2019 2,96,258.52 62,678.99 4,819.44 For the year ended 31 March 2018 Opening balance as at 1 April 2017 92,623.86 35,000.00 2,411.06 Cash flow during the year 81,756.40 28,500.00 (9,527.65) Non-cash changes due to: - Variation in exchange rates 5,598.67 - - - Interest accrued - - 12,561.65 Closing balance as at 31 March 2018 1,79,978.93 63,500.00 5,445.06 * includes current maturities of non-current borrowings, refer note 26. d) Refer note 36 for details of undrawn borrowing facilities that may be available for future operating activities and to settle capital commitments. For and on behalf of the Board of Directors As per our audit report of even date annexed. For KK Soni & Co. Chartered Accountants (FRN 000947N) Saurabh Kumar S. Gopal Pooja Shukla Sant Sujat Soni Managing Director Director Commercial and CFO Company Secretary Partner DIN : 06576793 DIN : 08339439 M. No. 094227 Place : New Delhi Date : 27th May, 2019 102 Standalone Cash Flow Statement EESL Annual Report 2018-19 ENERGY EFFICIENCY SERVICES LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2019 A. Equity share capital ` in Lakhs Particulars As at 31 March, 2019 As at 31 March, 2018 Outstanding as at the beginning of the year 46,200.00 46,200.00 Shares issued during the year 21,320.44 - Outstanding as at the end of the year 67,520.44 46,200.00 B. Other equity For the year ended 31 March 2019 ` in Lakhs Particulars Reserves & surplus Total Share application money Debenture redemption Retained pending allotment reserve earnings Balance as at 1 April 2018 9,900.00 6,515.21 1,827.75 18,242.96 Profit for the year - - 9,509.98 9,509.98 Other comprehensive income for the year - - (22.14) (22.14) Total comprehensive income for the year - - 9,487.84 9,487.84 Share application money received 11,420.44 - - 11,420.44 Shares allotted against share (21,320.44) - - (21,320.44) application money Transfer to/(from) retained earnings - 8,611.23 (8,611.23) - Transaction cost arising on account of - - (25.00) (25.00) increase in authorised share capital Final dividend (including tax) for - - (1,329.71) (1,329.71) FY 2017-18 Balance as at 31 March 2019 - 15,126.44 1,349.65 16,476.09 B. Other equity For the year ended 31 March 2018 ` in Lakhs Particulars Reserves & surplus Total Share application money Debenture redemption Retained pending allotment reserve earnings Balance as at 1 April 2017 - 1,452.99 7,880.80 9,333.79 Profit for the year - - 3,946.24 3,946.24 Other comprehensive income for the year - - (7.85) (7.85) Total comprehensive income for the year - - 3,938.39 3,938.39 Share application money received 9,900.00 - - 9,900.00 Transfer to/(from) retained earnings - 5,062.22 (5,062.22) (0.00) Transaction cost arising on account of - - (25.01) (25.01) increase in authorised share capital Final dividend (including tax) for FY 2016-17 - - (3,341.45) (3,341.45) Interim dividend (including tax) for - - (1,562.76) (1,562.76) FY 2017-18 Balance as at 31 March 2018 9,900.00 6,515.21 1,827.75 18,242.96 For and on behalf of the Board of Directors As per our audit report of even date annexed. For KK Soni & Co. Chartered Accountants (FRN 000947N) Saurabh Kumar S. Gopal Pooja Shukla Sant Sujat Soni Managing Director Director Commercial and CFO Company Secretary Partner DIN : 06576793 DIN : 08339439 M. No. 094227 Place : New Delhi Date : 27th May, 2019 EESL Annual Report 2018-19 Statement of Changes in Equity 103 Notes to Standlone financial statements 1. Company Information and Significant Accounting Policies A. Reporting entity Energy Efficiency Services Limited (the "Company") is a Company domiciled in India and limited by shares (CIN: U40200DL2009PLC196789). The Company has its debt securities listed on BSE Limited. The address of the Company's registered office is 4th Floor, Sewa Bhawan, R.K. Puram, New Delhi - 110066. The registered office of the company has been shifted to NFL Building, 5th & 6th Floor, Core III, SCOPE Complex, Lodhi Road, New Delhi - 110003 with effect from 16 April 2019. The Company is a Joint Venture of NTPC Limited, Power Finance Corporation Limited, Rural Electrification Corporation Limited and Power Grid Corporation of India Limited and is engaged in implementation of energy efficiency projects as an Energy Saving Company (ESCO). It acts as the resource center for capacity building for State Distribution Companies (DISCOMs), Energy Regulatory Commissions (ERCs), State Development Authorities (SDAs), upcoming ESCOs, financial institutions, etc. B. Basis of preparation 1 Statement of Compliance These standalone financial statements are prepared on going concern basis following accrual system of accounting and comply with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto, the Companies Act, 2013 (to the extent notified and applicable) and applicable provisions of the Companies Act, 1956. These financial statements were authorised for issue by Board of Directors on 27 May 2019. 2 Basis of measurement The financial statements have been prepared on a historical cost basis except for: • Certain financial assets and liabilities (including derivative instruments) that are measured at fair value (refer accounting policy regarding financial instruments); and • Plan assets in the case of employees defined benefit plans that are measured at fair value. The methods used to measure fair values are discussed in notes to the financial statements. Historical cost is the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire assets at the time of their acquisition or the amount of proceeds received in exchange for the obligation, or at the amounts of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 3 Functional and presentation currency These financial statements are presented in Indian Rupees (`), which is the Company's functional currency. All financial information presented in ` has been rounded to the nearest lakhs (upto two decimals), except as stated otherwise. 4 Current and non-current classification The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is current when it is: • Expected to be realised or intended to be sold or consumed in normal operating cycle; • Held primarily for the purpose of trading; • Expected to be realised within twelve months after the reporting period; or • Cash or cash equivalent unless restricted from being exchange or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is current when: • It is expected to be settled in normal operating cycle; • It is held primarily for the purpose of trading; • It is due to be settled within twelve months after the reporting period; or • There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets/liabilities are classified as non-current. C. Significant accounting policies A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the financial statements. 104 Notes to Standlone financial statements EESL Annual Report 2018-19 The Company has elected to utilize the option under Ind AS 101 by not applying the provisions of Ind AS 16 and Ind AS 38 retrospectively and continue to use the previous GAAP carrying amount as a deemed cost under Ind AS at the date of transition to Ind AS. Therefore, the carrying amount of property, plant and equipment and intangible assets as per the previous GAAP as at 1 April 2015, i.e. the Company's date of transition to Ind AS, were maintained on transition to Ind AS. 1 Property, plant and equipment 1.1. Initial recognition and measurement An item of property, plant and equipment is recognized as an asset if and only if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Items of property, plant and equipment are initially recognized at cost. Subsequent measurement is done at cost less accumulated depreciation/ amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Project Development Cost incurred on ESCO Model Energy Efficiency Projects other than LED projects undertaken by the Company are recognised as property, plant and equipment. Project Development Cost includes purchase price, taxes and duties, labour cost and any other cost directly attributable to the implementation of the project or acquisition of property, plant and equipment are allocated on systematic basis on implementation of projects, incurred up to the date when the asset is ready for its intended use. When parts of an item of property, plant and equipment have different useful lives, they are recognised separately. In the case of assets put to use, where final settlement of bills with contractors is yet to be effected, capitalisation is done on a provisional basis subject to necessary adjustment in the year of final settlement. 1.2. Subsequent costs Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the Company and the cost of the item can be measured reliably. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. 1.3. Decommissioning costs The present value of expected cost for the decommissioning of the asset its use in included in the cost of the respective assets if the recognition criteria for the provision are met. 1.4. Derecognition Property, plant and equipment is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and losses on derecognition of an item of property, plant and equipment are determined by comparing the proceeds from disposal, if any, with the carrying amount of property, plant and equipment, and are recognised in the statement of profit and loss. 1.5. Depreciation Depreciation is recognised in the statement of profit and loss on pro rata basis on Straight Line Method using the rate arrived on useful lives of assets, specified in part C of Schdule H thereto of the Companies Act 2013 (the 'Act'). Freehold land is not depreciated. Estimated useful lives of the assets, based on technical assessment, which are different in certain cases from those prescribed in Schedule II to the Act, are as follows: Nature of assets Life of property, plant and equipment Cell phones 2 years ESCO projects other than LED projects Project period Lease hold improvement Lease period Residential assets 3 years Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives as given above best represent the period over which management expects to use these assets. Depreciation on additions to/deductions from property, plant and equipment during the year is charged on pro-rata basis from/up to the month in which the asset is available for use/disposed off. Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liabilities on account of exchange fluctuation, the unamortised balance of such asset is charged off prospectively over the remaining useful life determined following the applicable accounting policies relating to depreciation/ amortisation. Where it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably, subsequent expenditure on a PPE along-with its unamortised depreciable amount is charged off prospectively over the EESL Annual Report 2018-19 Notes to Standlone financial statements 105 revised useful life determined by technical assessment. The residual values, useful lives and method of depreciation of assets are reviewed at each financial year end and adjusted prospectively, wherever required. 2 Capital work-in-progress The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management and borrowing costs. Expenses directly attributable to construction of property, plant and equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis on the cost of related assets. If the ESCO Model Energy Efficiency project doesn't materialise, then the expenditure incurred in respect of the same will be charged to Statement of Profit and Loss in that year. 3. Intangible assets 3.1. Initial recognition and measurement An intangible asset is recognized if and only if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Company and the cost of the asset can be measured reliably. Intangible assets that are acquired by the Company, which have finite useful lives, are recognized at cost. Subsequent measurement is done at cost less accumulated amortisation and accumulated impairment losses. Cost includes any directly attributable incidental expenses necessary to make the assets ready for their intended use. 3.2. Subsequent costs Subsequent expenditure is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably. 3.3. Derecognition An intangible asset is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and losses on derecognition of an item of intangible assets are determined by comparing the proceeds from disposal, if any, with the carrying amount of intangible assets and are recognised in the statement of profit and loss. 3.4. Amortisation Cost of software recognised as intangible asset, is amortised on a straight line basis over the period of legal right to use or 3 years, whichever is less. The amortization period and the amortization method of intangible assets with finite useful lives is reviewed at each financial year end and adjusted prospectively, wherever required. 4 Borrowing costs Borrowing costs consist of (a) interest expense calculated using the effective interest method as described in Ind AS 109 - 'Financial Instruments'; (b) finance charges in respect of finance leases recognized in accordance with Ind AS 17 - 'Leases' and (c) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of cost of such asset until such time the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale. When the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing costs incurred are capitalised. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalisation of the borrowing costs is computed based on the weighted average cost of general borrowings that are outstanding during the period and used for the acquisition or construction of the qualifying asset. Income earned on temporary investment of the borrowings pending their expenditure on the qualifying assets Is deducted from the borrowing costs eligible for capitalisation. Capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Other borrowing costs are recognised as an expense in the year in which they are incurred. The borrowing cost proportionate to the unutilised amount of borrowings are being kept for utilization of qualifying assets being carried forward for capitalization in the subsequent year of utilization. 5 Inventories Inventories are valued at the lower of cost and net realisable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on a FIFO basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The diminution in the value of obsolete, unserviceable, surplus and non-moving items of stores and spares is ascertained on review and provided for. 6 Cash and cash equivalents Cash and cash equivalents in the balance sheet comprise cash at banks, cash on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value. 106 Notes to Standlone financial statements EESL Annual Report 2018-19 7 Government grants Government grants related to assets are recognized initially as deferred income when there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant. Grants that compensate the Company for the cost of an asset are recognized in profit or loss on a systematic basis over the useful life of the related asset. Grants that compensate the Company for expenses incurred are recognized over the period in which the related costs are incurred and deducted from the related expenses. 8 Provisions, contingent liabilities and contingent assets A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement. Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/ independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate. Contingent assets are possible assets that arise from past events and whose existence will be confirmed only by the occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent assets are disclosed in the financial statements when inflow of economic benefits is probable on the basis of judgment of management. These are assessed continually to ensure that developments are appropriately reflected in the financial statements. 9 Foreign currency transactions and translations Transactions in foreign currencies are initially recorded at the prevailing exchange rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated by applying the RBI reference rate at the reporting date. Exchange differences arising on settlement or translation of monetary/ items are recognised in profit or loss in the year in which it arises with the exception that exchange differences on long term monetary items related to acquisition of property, plant and equipment recognised upto 31 March 2016 and still outstanding are adjusted to carrying cost of property, plant and equipment. Non-monetary items are measured in terms of historical cost in a foreign currency and are translated using the exchange rate at the date of the transaction. In case of advance consideration received or paid in a foreign currency, the date of transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it), is when the Company initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. 10 Revenue Company's revenues arise from sale of goods, rendering of services and other income. Revenue from other income comprises interest from banks, employees, customers, other miscellaneous income, etc. Effective 1 April 2018, the Company has adopted Ind AS 115 "Revenue from Contracts with Customers" using the cumulative effect method, applied to the contracts that were not completed as of 1 April 2018 and therefore the comparatives have not been restated and continues to be reported as per lnd AS 18 "Revenue". The details of accounting policies as per Ind AS 18 are disclosed separately if they are different from those under Ind AS 115. 10.1. Revenue from sale of goods Revenue is measured based on the consideration that is specified in a contract with a customer or is expected to be received in exchange for the products or services and excludes amounts collected on behalf of third parties. The Company recognizes revenue when (or as) the performance obligation is satisfied, which typically occurs when (or as) control over the products or services is transferred to a customer. In the comparative period, revenue from sale of goods was measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. This inter alia involved discounting of the consideration to present value if payment extends beyond normal credit terms. Revenue was recognised when the significant risks and rewards of ownership had been transferred to the buyer, recovery of the consideration was probable, the associated costs and possible return of goods could be estimated reliably, there was no continuing effective control over, or managerial involvement with, the goods, and the amount of revenue could be measured reliably. 10.2. Revenue from rendering of services Revenue from rendering of services is measured based on the consideration that is specified in a contract with a customer or is expected to be received in exchange for the services and excludes amounts collected on behalf of third parties. The Company recognizes revenue when (or as) the performance obligation is satisfied, which typically occurs when (or as) control over the services is transferred to a EESL Annual Report 2018-19 Notes to Standlone financial statements 107 customer. In the comparative period, revenue from services rendered was generally recognized in proportion to the stage of completion of the transaction at the reporting date. Revenue was recognized when the following conditions are met: - the amount of revenue could be measured reliably; - it was probable that the economic benefits associated with the transaction will flow to the entity; - the stage of completion of the transaction at the end of the reporting period could be measured reliably; and - the costs incurred for the transaction and the costs to complete the transaction could be measured reliably. The revenue recognition in respect of the various stream of revenue is described as follows: Energy efficiency services: Revenue from rendering of energy efficiency services by supply and installation of street lights, agricultural pumps and other equipment is recognised over time as the the customers simultaneously receive and consume the benefits provided by the Company. In the comparative period, revenue from above services was recognised in the statement of profit and loss based on the agreement with the customer on accrual basis. Consultancy services: Revenue from consultancy services rendered is recognised over time based on satisfaction of performance obligations over time as the customers simultaneously receive and consume the benefits provided by the Company. Revenue from consultancy services rendered was recognised in the statement of profit and loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion was assessed by reference to actual progress/technical assessment of work executed, in line with the terms of the respective contracts. Income on consultancy contracts are accounted in proportion to expenses incurred based on the progress of service rendered on that contract. Contract modifications Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catchup basis, while those that are distinct are accounted for prospectively, either as a separate contract, if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price. E-vehicles leases: Revenue from leases of e-vehicles is recognised as per policy no. C.13.2. 10.3. Other income Interest income is recognised, when no significant uncertainty as to measurability or collectability exists, on a time proportion basis taking into account the amount outstanding and the applicable interest rate, using the effective interest rate method (EIR). For debt instruments measured at amortised cost, interest income is recorded using the EIR. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the EIR, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss. The interest/surcharge on late payment/overdue trade receivables for sale of energy is recognized when no significant uncertainty as to measurability or collectability exists. 10.4. Expenses related to awareness on UJALA programme Expenses incurred on advertisement / awareness on DELP / UJALA programme in the state is charged to statement of profit and loss in proportion to LED bulbs distributed in current year vis-a-vis the total targeted LED bulbs distribution for that respective state at the begining of year and balance amount is carried forward for charging to the statement of profit and Loss in subsequent years. Similary expenses incurred on National Media Campaining for DELP / UJALA programme is charged to the statement of profit and loss in proportion to the total LED bulbs distributed in current financial year vis-a-vis the overall targeted LED bulbs distribution under DELP/ UJALA programme at the begining of the year and balance amount is carried forward for charging to statement of Profit and Loss in subsequent years. 11 Employee benefits 11.1. Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into separate entities and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefits expense in the statement of profit and loss in the period during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due after more than 12 months after the end of the period in which the employees 108 Notes to Standlone financial statements EESL Annual Report 2018-19 render the service are discounted to their present value. The Company pays fixed contribution to Provident Fund at the predetermined rates to regional provident fund commissioner. The company has a trust for Contributory Superannuation Scheme which provides pension benefits and company pays a fixed contribution to the trust. The contributions to both the funds for the year are recognised as expense and are charged to the statement of profit and loss. 11.2. Defined benefit plans A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company's liability towards gratuity are in the nature of defined benefit plans. The Company contributes to (Life Insurance Corporation of India) a fund set up by the Company and administered by a board of trustees with respect to its gratuity obligation. The Company's net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Company's obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognised asset is limited to the total of any unrecognised past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities. Any actuarial gains or losses are recognised in other comprehensive income (OCI) in the period in which they arise. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognized immediately in statement of profit and loss. 11.3. Other long-term employee benefits Benefits under the Company's leave encashment constitute other long term employee benefit. The Company's net obligation in respect of leave encashment is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Company's obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognised in the statement of profit and loss in the period in which they arise. 11.4. Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under performance related pay if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. 12 Income tax Income tax expense comprises current and deferred tax. Current tax expense is recognised in the statement of profit and loss except to the extent that it relates to items recognised directly in OCI or equity, in which case it is recognised in OCI or equity respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted and as applicable at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax is recognised in the statement of profit and loss except to the extent that it relates to items recognised directly in OCI or equity, in which case it is recognised in OCI or equity respectively. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Additional income taxes that arise from the distribution of dividends are recognised at the same time that the liability to pay the related dividend is recognised. 13 Leases 13.1 Accounting for operating leases- As lessee Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases are recognized as an expense on a straight-line basis over the lease term unless EESL Annual Report 2018-19 Notes to Standlone financial statements 109 the payments are structured to increase in line with expected general inflation to compensate for the lessor's expected inflationary cost increases. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease. 13.2 Accounting for operating leases- As lessor Lease income from operating leases where the Company is a lessor is recognised as income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature. 13.3 Accounting for finance leases- As lessor Leases are classified as finance lease when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables ('Finance lease receivable') at the Company's net investment in the leases. Finance leases income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease. 14 Impairment of non-financial assets The carrying amounts of the Company's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 'Impairment of Assets'. If any such indication exists, then the asset's recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre- tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash. inflow's from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit", or "CGU"). An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in statement of profit and loss. Impairment losses recognised in respect of CGUs are reduced from the carrying amounts of the assets of the CGU. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 15 Operating segments In accordance with Ind AS 108, Operating Segments, the operating segments used to present segment information are identified on the basis of internal reports used by the Company's Management to allocate resources to the segments and assess their performance. The Board of Directors is collectively the Company's `Chief Operating Decision Maker' or `CODM' within the meaning of Ind AS 108. Segment results that are reported to the CODM include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate expenses, finance expenses and income tax expenses. Revenue directly attributable to the segments is considered as segment revenue. Expenses directly attributable to the segments and common expenses allocated on a reasonable basis are considered as segment expenses. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill. Segment assets comprise property, plant and equipment, intangible assets, trade and other receivables, inventories and other assets that can be directly or reasonably allocated to segments. For the purpose of segment reporting, property, plant and equipment have been allocated to segments based on the extent of usage of assets for operations attributable to the respective segments. Segment assets do not include investments, income tax assets, capital work in progress, capital advances, corporate assets and other current assets that cannot reasonably be allocated to segments. Segment liabilities include all operating liabilities in respect of a segment and consist principally of trade and other payables, employee benefits and provisions. Segment liabilities do not include equity, income tax liabilities, loans and borrowings and other liabilities and provisions that cannot reasonably be allocated to segments. 16 Dividends Dividends and interim dividends payable to the Company's shareholders are recognized as changes in equity in the period in which they are approved by the shareholders and the Board of Directors respectively. 17 Material prior period errors Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred. If the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated. 18 Earnings per share Basic earnings per equity share is computed by dividing the net profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the financial year. Diluted earnings per equity share is computed by dividing the net profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. 110 Notes to Standlone financial statements EESL Annual Report 2018-19 19 Statement of cash flows Statement of cash flows is prepared in accordance with the indirect method prescribed in Ind AS 7 'Statement of cash flows'. 20 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. 20.1. Financial assets Initial recognition and measurement The Company recognizes financial assets when it becomes a party to the contractual provisions of the instrument. All financial assets are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition of financial assets, which are not at fair value through profit or loss, are added to the fair value on initial recognition. Subsequent measurement Debt instruments at amortised cost A 'debt instrument' is measured at the amortized cost if both the following conditions are met: (a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and (b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables. Debt instrument at FVTOCI (Fair Value through OCI) A 'debt instrument' is classified as at FVTOCI if both of the following criteria are met: (a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and (b) The asset's contractual cash flows represent SPPI Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the OCI. However, the Company recognises interest income, impairment losses and reversals and foreign exchange gain or loss in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to statement of profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method. Debt instrument at FVTPL (Fair value through profit or loss) FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to classify a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as 'accounting mismatch'). Debt instruments included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss. Equity Investments Equity investments in subsidiary and joint venture companies are measured at cost, less impairment if any. Other equity investments are measured at fair value. The Group decides to classify the equity investments either as at FVTOCI or FVTPL. The Group makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable. If the Group decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Company's balance sheet) when: • The rights to receive cash flows from the asset have expired, or • The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. EESL Annual Report 2018-19 Notes to Standlone financial statements 111 Impairment of financial assets In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure: (a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits and bank balance. (b) Trade receivables, unbilled revenue and contract assets under Ind AS 115. For trade receivables and unbilled revenue, the Company applies the simplified approach required by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL. 20.2. Financial liabilities Initial recognition and measurement All financial liabilities are recognised initially at fair value and in the case of borrowings and payables, net of directly attributable transaction costs. The Company's financial liabilities include trade and other payables, borrowings and retention money. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below: Financial liabilities at amortised cost After initial measurement, such financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the statement of profit and loss. This category generally applies to borrowings, trade payables and other contractual liabilities. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind-AS 109. Gains or losses on liabilities held for trading are recognised in the statement of profit and loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/losses attributable to changes in own credit risk are recognised in OCI. These gains/losses are not subsequently transferred to the statement of profit and loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit or loss. The Company has not designated any financial liability as at fair value through profit and loss. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss. 20.3 Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. 21 Other expenses Expenses on annual maintenance, legal & professional consultancy, training & recruitment etc. are charged to statement of profit and loss in the year incurred. 22 Related party transactions The transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions. D. Use of estimates and management judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that may impact the application of accounting policies and the reported value of assets, liabilities, income, expenses and related disclosures concerning the items involved as well as contingent assets and liabilities at the balance sheet date. The estimates and management's judgments are based on previous 112 Notes to Standlone financial statements EESL Annual Report 2018-19 experience and other factors considered reasonable and prudent in the circumstances. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In order to enhance understanding of the financial statements, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is as under: 1 Useful life of property, plant and equipment and intangible assets The estimated useful life of property, plant and equipment and intangible assets is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. The Company reviews at the end of each reporting date the useful life of property, plant and equipment and are adjusted prospectively, if appropriate. 2 Recoverable amount of property, plant and equipment and intangible assets The recoverable amount of property, plant and equipment and intangible assets is based on estimates and assumptions regarding in particular the expected market outlook and future cash flows. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment. 3 Post-employment benefit plans Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, the rate of salary increases and the discount rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations. 4 Revenues The Company applies judgment to determine whether each product or service promised to a customer are capable of being distinct, and are distinct in the context of the contract, if not, the promised product or services are combined and accounted as a single performance obligation. The Company allocates the arrangement consideration to separately identifiable performance obligation deliverables based on their relative stand-alone selling price. Rebates and discounts, if any, are recognised as a reduction from revenue on the basis of management estimates. Refer note 49 for detailed disclosure. 5 Provisions and contingencies The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37, 'Provisions, Contingent Liabilities and Contingent Assets'. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss. Should circumstances change following unforeseeable developments, this likelihood could alter. 6 Income taxes Significant estimates are involved in determining the provision for income taxes and deferred taxes, including amount expected to be paid/ recovered for uncertain tax positions. 7 Impairment of non-financial assets The recoverable amount of investment in subsidiary and joint venture companies is based on estimates and assumptions regarding in particular the future cash flows associated with the operations of the investee Company. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment. 8 Leases not in legal form of lease Significant judgment is required to apply lease accounting rules under Appendix C to Ind AS 17 'Determining whether an arrangement contains a lease'. In assessing the applicability to arrangements entered into by the Company, management has exercised judgment to evaluate the right to use the underlying asset, substance of the transactions including legally enforceable agreements and other significant terms and conditions of the arrangements to conclude whether the arrangement needs the criteria under Appendix C to Ind AS 17. EESL Annual Report 2018-19 Notes to Standlone financial statements 113 2A Property, plant & equipment 114 ` in Lakhs Particulars Gross block Accumulated depreciation Net block As Additions Deductions/ As at As at For the Deductions/ As at As at 1 April 2018 adjustments 31 March 2019 1 April 2018 year Adjustments 31 March 2019 31 March 2019 Freehold land 743.64 - - 743.64 - - - - 743.64 Leasehold improvements 195.48 - 192.65 2.83 64.15 22.33 84.90 1.58 1.25 Project equipment 1,00,883.62 1,32,283.45 650.98 2,32,516.09 20,094.08 33,086.46 - 53,180.54 1,79,335.55 Cell phones 60.63 12.03 0.62 72.04 35.50 20.81 0.25 56.06 15.98 Office equipment 261.66 10.06 1.34 270.38 67.48 52.01 - 119.49 150.89 Notes to Standlone financial statements Furniture and fittings 349.91 26.32 41.36 334.87 91.92 33.93 5.55 120.30 214.57 Computers 402.64 85.29 23.51 464.42 199.23 112.70 22.89 289.04 175.38 E-Vehicles 956.45 22.79 904.73 74.51 12.22 (2.94) - 9.28 65.23 Residential assets 84.17 0.25 1.73 82.69 1.03 37.91 0.22 38.72 43.97 Solar plant - 2,102.64 - 2,102.64 - 31.72 - 31.72 2,070.92 Building - 472.01 - 472.01 - 0.57 - 0.57 471.44 Total 1,03,938.20 1,35,014.84 1,816.92 2,37,136.12 20,565.61 33,395.50 113.81 53,847.30 1,83,288.82 ` in Lakhs Particulars Gross block Accumulated depreciation Net block As Additions Deductions/ As at As at For the Deductions/ As at As at 1 April 2017 adjustments 31 March 2018 1 April 2017 year Adjustments 31 March 2018 31 March 2018 Freehold land 743.64 - - 743.64 - - - - 743.64 Leasehold improvements 195.48 - - 195.48 35.31 28.84 - 64.15 131.33 Project equipment 65,615.68 35,267.94 - 1,00,883.62 7,028.07 13,066.01 - 20,094.08 80,789.54 Cell phones 37.46 23.66 0.49 60.63 13.89 21.80 0.19 35.50 25.13 Office equipment 168.82 92.84 - 261.66 32.51 34.97 - 67.48 194.18 Furniture and fittings 323.06 26.85 - 349.91 58.06 33.86 - 91.92 257.99 Computers 294.45 109.23 1.04 402.64 100.85 98.75 0.37 199.23 203.41 E-Vehicles - 956.45 - 956.45 - 12.22 - 12.22 944.23 Residential assets - 85.67 1.50 84.17 - 1.13 0.10 1.03 83.14 Total 67,378.59 36,562.64 3.03 1,03,938.20 7,268.69 13,297.58 0.66 20,565.61 83,372.59 EESL Annual Report 2018-19 2B Intangible assets ` in Lakhs Particulars Gross block Accumulated depreciation Net block As Additions Deductions/ As at As at For the Deductions/ As at As at 1 April 2018 adjustments 31 March 2019 1 April 2018 year Adjustments 31 March 2019 31 March 2019 Software 1,634.64 560.34 - 2,194.98 58.56 625.94 - 684.50 1,510.48 EESL Annual Report 2018-19 Total 1,634.64 560.34 - 2,194.98 58.56 625.94 - 684.50 1,510.48 ` in Lakhs Particulars Gross block Accumulated depreciation Net block As Additions Deductions/ As at As at For the Deductions/ As at As at 1 April 2017 adjustments 31 March 2018 1 April 2017 year Adjustments 31 March 2018 31 March 2018 Software 101.22 1,533.42 - 1,634.64 28.44 30.12 - 58.56 1,576.08 Total 101.22 1,533.42 - 1,634.64 28.44 30.12 - 58.56 1,576.08 2C Notes to PPE and intangible assets a) Exchange differences capitalised are disclosed in the 'Addition' column of capital work-in-progress (CWIP) and allocated to various heads of CWIP in the year of capitalisation through 'Deductions/ Adjustments' column of CWIP . Exchange differences in respect of assets already capitalised are disclosed in the 'Deductions/Adjustments' column of property, plant and equipment (PPE). Asset-wise details of exchange differences and borrowing costs included in the cost of major heads of PPE and CWIP are given below: ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Project Equipment Exchange differences included in PPE/CWIP (233.56) 1,518.42 Borrowing costs included in PPE/CWIP 3,582.44 2,449.16 b) Refer note 18 and 24 for information on property, plant and equipment pledged as security by the company. c) Refer note 43 for disclosure on assets given under operating leases. d) Refer note 44 for disclosure of contractual commitments for the acquisition of property, plant and equipment. Notes to Standlone financial statements 115 3. Capital work-in-progress As at 31 March 2019 ` in Lakhs Particulars As at Additions Deductions/ As at 01 April 2018 adjustments/capitalised 31 March 2019 Project equipments Street lights 1,20,188.18 58,902.72 89,448.15 89,642.75 Building 5,368.18 6,166.04 2,865.27 8,668.95 Smart Meter 1,937.95 8,324.73 - 10,262.68 Agricultural Demand Side Management (AgDSM) 12.26 - 12.26 - Software 7.55 - - 7.55 Solar rooftop 9.04 - 9.04 - Ujala project 0.54 - 0.54 - National Motor Replacement Program Project - 22.69 - 22.69 1,27,523.70 73,416.18 92,335.26 1,08,604.62 Land and property 1,671.68 110.71 1,760.56 21.83 E-Vehicle 151.19 66.78 150.84 67.13 Solar plant - 12,776.39 - 12,776.39 Others 2.34 136.25 2.33 136.26 Total 1,29,348.91 86,506.31 94,248.99 1,21,606.23 As at 31 March 2018 ` in Lakhs Particulars As at Additions Deductions/ As at 01 April 2017 adjustments/capitalised 31 March 2018 Street lights CWIP - SL LED Rajasthan 8,082.24 14,481.61 12,736.85 9,827.00 CWIP - SL LED Andhra Pradesh 6,936.03 14,502.60 9,521.93 11,916.70 Chhattisgarh Project 464.69 7,187.34 1,058.78 6,593.25 Kerala LED Street Lighting 492.96 94.67 407.32 180.31 Marine Drive Mumbai LED SL 2,797.98 1,736.52 1,839.37 2,695.13 CWIP - SL LED Punjab 236.78 2,588.12 0.93 2,823.97 CWIP- Puducherry LED Street Lighting - 2.12 0.51 1.61 South Delhi LED Street Light 2,861.77 6,200.64 466.20 8,596.21 CWIP - SL LED - GHMC 52.68 11,927.06 102.84 11,876.90 Goa Street Light Project 3,792.90 9,729.80 3,121.79 10,400.91 CWIP - SL LED Gujarat 3,820.71 18,607.07 13,621.58 8,806.20 Guwahati Street Lighting 437.38 189.73 235.97 391.14 H.P LED Street Light 915.19 1,566.23 2,242.94 238.48 CWIP - SL LED - Agartala MC - 32.94 13.55 19.39 CWIP - SL LED - Jharkhand 688.87 4,188.55 1,704.39 3,173.03 CWIP - SL LED -Andman & Nicobar - 49.39 - 49.39 CWIP - SL LED J&K 40.16 111.17 2.56 148.77 CWIP - SL LED Telangana 302.58 13,303.64 6,806.23 6,799.99 CWIP SL LED Bihar - 2,094.00 4.82 2,089.18 CWIP SL LED Chandigarh - 88.85 - 88.85 Varanasi LED Street Lighting 2,846.53 23,336.64 897.39 25,285.78 CWIP SL LED Haryana - 348.61 - 348.61 CWIP - SL LED - Karnataka - 29.72 - 29.72 CWIP - SL LED - Madhya Pradesh - 456.66 5.02 451.64 116 Notes to Standlone financial statements EESL Annual Report 2018-19 3. Capital work-in-progress As at 31 March 2018 ` in Lakhs Particulars As at Additions Deductions/ As at 01 April 2017 adjustments/capitalised 31 March 2018 CWIP - SL LED - Odisha - 1,422.71 1.29 1,421.42 CWIP - SL LED - PortBlair - 343.52 4.38 339.14 CWIP SL LED Sikkim - 0.49 - 0.49 CWIP SL LED Tamilnadu - 87.83 - 87.83 CWIP - SL LED -Tripura - 18.09 - 18.09 CWIP SL LED Uttarakhand - 992.19 - 992.19 CWIP - SL LED -West Bengal - 431.37 - 431.37 CWIP - West Bengal - 0.68 - 0.68 CWIP – SL LED Tripura - 67.27 - 67.27 CWIP -Kolkata - 12.07 - 12.07 CWIP- GHMC (Hyderabad) - 1,562.71 - 1,562.71 CWIP- Andhra Pradesh (Hyderabad) - 890.50 - 890.50 CWIP- SL- Maharashtra (Mumbai) 24.49 188.28 2.29 210.48 CWIP unallocated Expenses - 690.94 100.04 590.90 CWIP- Interest on Bond (unallocated) * 53.32 849.10 171.54 730.88 Sub total 34,847.26 1,40,411.43 55,070.51 1,20,188.18 Building Capital Work in Progress - Building J&K 108.15 44.70 49.52 103.33 Capital Work in Progress - CGO 12 Building - 242.06 2.34 239.72 CWIP- Building - Delhi - 14.42 - 14.42 CWIP- Building - Gujurat - 0.22 - 0.22 CWIP- Building - Madhya Pradesh - 3.90 - 3.90 CWIP- Building- PAN INDIA - 267.70 - 267.70 CWIP- Building - Uttar Pradesh - 19.77 - 19.77 CWIP- Building - West Bengal - 16.04 - 16.04 CWIP- CPWD BUILDINGS DELHI (Direct Expenses) 4.81 20.66 20.66 4.81 CWIP - CPWD - IP Bhawan Delhi 623.58 313.98 314.20 623.36 CWIP - Indian Railways - 46.63 - 46.63 CWIP - UPSC - Delhi 4.56 - - 4.56 CWIP BEEP AP - 31.69 - 31.69 CWIP - Building Bond Interest - 13.72 - 13.72 CWIP- CPWD CGO Building, New Delhi - 19.89 - 19.89 CWIP-CPWD CGO Complex Faridabad - 7.97 - 7.97 CWIP - CPWD CGO/GPO /Training Center Bhawan - 24.48 2.24 22.24 Ghaziabad (Direct Expenses) CPWD - IP Bhawan DELHI 89.21 25.57 2.42 112.36 CWIP- CPWD Jaipur (Direct Expenses) - 18.94 - 18.94 CWIP-CPWD Trikoot I & II Bhawan New Delhi - 0.32 - 0.32 (Direct Expenses) CWIP- DMRC Rajeev Chowk (Direct Expenses) 53.22 45.61 53.22 45.61 CWIP- DMRC Rajeev Chowk (Indirect Expenses) 2.25 9.71 - 11.96 CWIP Maharashtra Sadan (Direct Expenses) - 13.09 - 13.09 CWIP- Niti Aayog CPWD Ph-II Building 26.89 70.17 2.50 94.56 (Direct Expenses) CWIP (UJALA stock to BEEP) - 3,636.67 5.30 3,631.37 Sub total 912.67 4,907.91 452.40 5,368.18 EESL Annual Report 2018-19 Notes to Standlone financial statements 117 3. Capital work-in-progress As at 31 March 2018 ` in Lakhs Particulars As at Additions Deductions/ As at 01 April 2017 adjustments/capitalised 31 March 2018 Land and property CWIP - Jaipur Property 334.56 89.22 - 423.78 CWIP - Kolkata Property 55.29 88.89 - 144.18 CWIP - Delhi Property (NBCC - Nauroji Nagar) - 1,103.72 - 1,103.72 Sub total 389.85 1,281.83 - 1,671.68 Smart Meter CWIP Smart Meter - 1,937.95 - 1,937.95 Sub total - 1,937.95 - 1,937.95 E-Vehicle CWIP E Vehicle Project - 151.19 - 151.19 Sub total - 151.19 - 151.19 Agricultural Demand Side Management (AgDSM) CWIP - AgDSM - Maharashtra 13.97 - 13.97 - CWIP - AgDSM - Rajasthan 16.74 0.08 16.82 - CWIP - AgDSM - Andhra Pradesh - 12.50 0.24 12.26 Sub total 30.71 12.58 31.03 12.26 Software CWIP-SAP 437.11 174.36 611.47 - CWIP Software - 1,218.68 1,211.13 7.55 Sub total 437.11 1,393.04 1,822.60 7.55 Solar Rooftop CWIP Solar Rooftop Delhi - 9.04 - 9.04 Sub total - 9.04 - 9.04 Ujala project Capital Work in Progress-(DELP Hyderabad)-Indirect - 0.54 - 0.54 Sub total - 0.54 - 0.54 Others Capital Work in Progress - 1.57 - 1.57 CWIP - Trade Mark 0.77 - - 0.77 Sub total 0.77 1.57 - 2.34 Total 36,618.37 1,50,107.08 57,376.54 1,29,348.91 * The borrowing cost proportionate to the unutilised amount of borrowings are being kept for utilization for acquisition or construction of qualifying assets being carried forward for capitalization in the subsequent year of utilization. However, income earned on temporary investment of the borrowings pending their expenditure on the qualifying assets is deducted from the borrowing costs eligible for capitalisation, as stated in Note No. C 4 of Accounting Policies i.r.t. 'Borrowing Costs'. Notes to capital work-in-progress a) The company has entered into agreements with various states, Urban Local Bodies (ULB’s) and other organisations under its Energy Service Company (ESCO) model, wherein the company undertakes upfront investments for projects (along with maintenance and warranty obligations, covered back to back with agreements with various suppliers) which are recovered through mutually agreed periodic installments under the agreements. The company is in the process to compile certain data and reconciling the amounts billable, receivable and payable under the various agreements, verification of physical inventory and assets under the scheme & otherwise and reconciliation as to assets to be installed, assets installed pending capitalisation, assets capitalised (including capitalisation of related direct & indirect cost) and assets against which revenue is booked (as per applicable Indian Accounting Standards). The company does not expect any major differences that may arise post such verification, and shall account for the differences, if any, post completion of the said exercise. b) The company has entered into agreement with Municipal Corporation for replacement of old conventional streetlights with LED energy efficient streetlights. The assets are capitalised in the books of accounts from the date of capitalization as indicated in the certificate issued by respective Municipal Corporation and the depreciation is charged accordingly from the date of capitalization. During the current financial year, the company has received certain completion certificates from the municipal corporation(s), wherein the completion dates mentioned in the certificates falls in the previous year. The company has capitalised these assets in the books of accounts from the completion dates as indicated in the certificates and has accordingly charged depreciation of ` 2,135.03 Lakhs on these assets in the statement of profit ot loss in current financial year from the said respective dates. 118 Notes to Standlone financial statements EESL Annual Report 2018-19 4 Investments in subsidiary and joint venture company ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Equity instruments - Unquoted (fully paid up - unless otherwise stated, at cost) Subsidiary company EESL EnergyPro Assets Limited 29,745,680 (31 March 2018: 21,745,680) equity shares of £1 each 27,130.87 19,368.82 Joint venture company NEESL Private Limited 2,600 (31 March 2018: 2,600) equity shares of `10 each 0.26 0.26 Total 27,131.13 19,369.08 Aggregate amount of unquoted investments 27,131.13 19,369.08 Aggregate amount of impairment in value of investments - - a) Investments have been valued as per accounting policy no. C.20.1 (Note 1). Equity investment in subsidiary and joint venture company are measured at cost as per the provisions of Ind AS 27 on 'Separate Financial Statements'. b) During the year, the Company has invested ` 7,762.05 Lakhs (£ 8 Million) in EESL EnergyPro Assets Limited (EPAL). c) Disclosure as per Ind AS 27 'Separate financial statements' Particulars Proportion of ownership interest (%) As at 31 March 2019 As at 31 March 2018 Investment in subsidiary company: EESL EnergyPro Assets Limited (incorporated in United Kingdom) 84.55% 80.00% Investment in joint venture company: NEESL Private Limited (incorporated in India) 26.00% 26.00% 5 Non-current loans ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Unsecured, considered good Loan to employees (including interest accrued) 120.39 101.77 Security deposits 373.56 364.16 Total 493.95 465.93 6 Other non-current financial assets ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Unbilled revenue 662.62 1,843.40 Finance lease receivables (refer note 43(b)) 3,900.81 - Deposits with banks maturing after twelve months Deposits under lien (refer note a below) 3.54 4.62 Other deposits 12.84 - Total 4,579.81 1,848.02 a) Deposits with banks under lien includes fixed deposits for CST & VAT amounting to ` 3.54 Lakhs (31 March 2018: ` 4.62 Lakhs). EESL Annual Report 2018-19 Notes to Standlone financial statements 119 7 Other non-current assets ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Capital advances 1,336.78 1,576.38 Advances other than capital advances Security deposits - 27.70 Deferred rent 13.86 79.48 Total 1,350.64 1,683.56 8 Inventories ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Stock in trade 26,968.66 29,993.41 Total 26,968.66 29,993.41 a) Inventory items have been valued as per accounting policy no. C.5 (Note 1). b) Stock in trade includes goods in transit of ` 1,396.43 Lakhs (31 March 2018: ` 93.72 Lakhs) valued at cost. c) The cost of inventories recognised as expense for the year ended 31 March 2019 is ` 94,775.91 Lakhs (including ` 51.16 Lakhs as Business promotion) (31 March 2018: ` 86,672.50 Lakhs (including ` 47.14 Lakhs as Business Promotion)). d) Loans are secured on first pari-passu charge on stock and book debts. (Refer note 18 and 24). 9 Trade receivables ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Trade receivables Unsecured, considered good 1,83,148.24 1,16,182.54 Credit impaired 393.29 196.64 1,83,541.53 1,16,379.18 Less: Provision for credit impaired trade receivables 393.29 196.64 Total 1,83,148.24 1,16,182.54 a) Refer note 36 for details with respect to credit risk. b) Amounts receivables from related parties are disclosed in note 48. c) Trade receivables are subject to confirmations, reconciliation and consequential adjustments that may arise on reconciliation. d) Loans are secured on first pari-passu charge on stock and book debts. (Refer note 18 and 24). e) The carrying amounts of the trade receivables include receivables which are subject to a factoring arrangement. Under this arrangement, the Company has transferred the relevant receivables to the bank in exchange for cash and is prevented from selling or pledging the receivables. However, the Company has retained late payment and credit risk. The Company therefore continues to recognise the transferred assets in their entirety in its balance sheet. The amount repayable under the factoring agreement is presented as secured borrowing. 10 Cash and cash equivalents ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Balances with banks- Current accounts 42,482.84 52,061.67 Total 42,482.84 52,061.67 120 Notes to Standlone financial statements EESL Annual Report 2018-19 11 Bank balances other than cash and cash equivalents ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Deposits with original maturity of more than three months 33,269.28 - and maturing within one year (including interest accrued) Deposits with banks under lien (refer note a below) 307.21 5,437.22 Total 33,576.49 5,437.22 a) Deposits with banks under lien includes fixed deposit with ICICI Bank against standby letter of credit issued by ICICI Bank to ICICI Bank UK Plc with respect to term loan facility availed by EPAL amounting to ` Nil (31 March 2018: ` 5,418.19 Lakhs), fixed deposits for CST & VAT amounting to ` 3.01 Lakhs (31 March 2018: ` 19.03 Lakhs) and fixed deposits held as margin money for letter of credit and bank guarantees of ` 304.20 Lakhs (31 March 2018: ` Nil). 12 Current loans ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Unsecured, considered good Loan to employees (including interest accrued) 113.56 81.14 Security deposits 250.78 72.20 Total 364.34 153.34 13 Other current financial assets ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Unbilled revenue 2,234.05 4,782.86 Finance lease receivables (refer note 43(b)) 812.22 - Others (refer note a below) 5,216.91 820.94 Total 8,263.18 5,603.80 a) Others includes expenses incurred on behalf of third parties which are recoverable. 14 Current tax assets (Net) ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Advance tax 894.72 1,298.48 Self assessment refund 2,360.41 591.48 TCS recoverable 39.49 11.04 TDS recoverable 521.21 644.68 Total 3,815.83 2,545.68 15 Other current assets ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Receivable from statutory authorities (refer note a below) 29,157.12 14,124.45 Deposits paid under protest 4,327.95 3,844.28 Prepaid expenditure (refer note b below) 6,594.43 5,168.57 Advance to suppliers 2,812.01 729.78 Deferred rent 65.44 39.33 Imprest to employees 13.40 5.30 Others (refer note c below) 592.94 1,192.58 Total 43,563.29 25,104.29 EESL Annual Report 2018-19 Notes to Standlone financial statements 121 a) The sales, corresponding output tax liability and purchases along with the corresponding input tax credit reported in GST and VAT returns, the net input tax credit receivable or the net output tax liability payable as the case may be are subject to reconciliation with the books of accounts. Differences which will be identified on reconciliation of GST/ VAT returns will be addressed in annual GST/ VAT statements/ revised returns to be filed in due course. b) Expenses incurred on advertisement / awareness on DELP / UJALA programme in a State are charged to statement of profit and loss in proportion to LED bulbs distributed in current year vis-a-vis the total targeted LED bulbs distribution for that respective State at the beginning of the year and balance amount is carried forward for charging to statement of profit and loss in subsequent years. Similarly expenses incurred on national media campaigning for DELP / UJALA programme are charged to statement of profit & loss in proportionate to the total LED bulbs distributed in current financial year vis-a-vis the overall targeted LED bulbs distribution under DELP/ UJALA programme at the beginning of the year and balance amount is carried forward for charging to statement of profit and loss in subsequent years. Accordingly, out of total expenditure ` 4907.39 Lakhs balance brought forward from previous year 2017-18, ` 619.89 has been charged in Media /advertisement expenses till the year 2018-19, ` 4287.50 Lakhs has been carried forward as prepaid expenditure under the head, "Other Current Assets". c) Others include advances given to vendors and to employees. 16 Share capital ` in Lakhs As at 31 March 2019 As at 31 March 2018 Particulars No. of shares Amount No. of shares Amount Authorised Equity shares of par value `10/- each 350,00,00,000 3,50,000.00 1,50,00,00,000 1,50,000.00 Issued, subscribed and fully paid up Equity shares of par value `10/- each 67,52,04,350 67,520.44 46,20,00,000 46,200.00 a) Movements in equity share capital: As at 31 March 2019 As at 31 March 2018 Particulars No. of shares Amount No. of shares Amount Outstanding at the beginning of the year 46,20,00,000 46,200.00 46,20,00,000 46,200.00 Add: Shares issued during the financial year 21,32,04,350 21,320.44 - - Outstanding at the end of the year 67,52,04,350 67,520.44 46,20,00,000 46,200.00 The Company made an offer for right issue under private placement of equity shares to existing shareholders. An amount of `9,900.00 Lakhs was received from NTPC Limited on 31 March 2018 and subsequently ` 9,900.00 Lakhs and ` 1,520.44 Lakhs were received from Power Finance Corporation Limited and Power Grid Corporation of India Limited respectively on 27 April 2018. The Company issued 213,204,350 shares of ` 21,320.44 Lakhs during the year. The Company made an offer for right issue under private placement of equity shares to existing shareholders on 11 March 2019. An amount of ` 11,998.80 Lakhs was received from NTPC Limited, ` 7,161.00 Lakhs from REC Limited and ` 1,841.40 Lakhs received from Power Grid Corporation of India Limited post 31 March 2019. The total share application money of ` 21,001.20 Lakhs received is pending for allotment as on the date of approval of financial statements. b) Terms and rights attached to equity shares: The Company has only one class of equity shares having a par value ` 10/- per share. The holders of the equity shares are entitled to receive dividends as declared from time to time and are entitled to voting rights proportionate to their share holding at the meetings of shareholders. c) Dividends: ` in Lakhs Paid during the year 2018-19 Paid during the year 2017-18 Particulars Per share Amount Per share Amount Equity shares Final dividend 0.16 1,102.99 0.60 2,776.27 Interim dividend - - 0.28 1,298.40 122 Notes to Standlone financial statements EESL Annual Report 2018-19 d) Details of shareholders holding more than 5% shares in the Company: As at 31 March 2019 As at 31 March 2018 Particulars No. of shares %age holding No. of shares %age holding Power Finance Corporation Limited 24,55,00,000 36.36% 14,65,00,000 31.71% NTPC Limited 24,55,00,000 36.36% 14,65,00,000 31.71% REC Limited 14,65,00,000 21.70% 14,65,00,000 31.71% Powergrid Corporation of India Limited 3,77,04,350 5.58% 2,25,00,000 4.87% Total 67,52,04,350 46,20,00,000 The promoters initially subscribed to 25% shares each of the Company. Over the years, the Company has made an offer for right issue under private placement of equity shares to existing shareholders. REC Limited and Powergrid Corporation of India Limited have not subscribed to the offered shares and accordingly there shareholding percentage has declined. 17 Other equity ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Share application money pending allotment - 9,900.00 Debenture redemption reserve 15,126.44 6,515.21 Retained earnings 1,349.65 1,827.75 Total 16,476.09 18,242.96 a) Share application money pending allotment ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 9,900.00 - Share application money received 11,420.44 9,900.00 Equity shares issued (21,320.44) - Closing balance - 9,900.00 b) Debenture redemption reserve The company is required to create a debenture redemption reserve out of the profits which is available for payment of dividend for the purpose of redemption of debentures. Movement in reserves is as follows ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 6,515.21 1,452.99 Add: Transfer from retained earnings 8,611.23 5,062.22 Closing balance 15,126.44 6,515.21 c) Retained earnings Retained earning represents the amount of accumulated earnings of the company and re-measurement differences on defined benefit plans and gains. Movement in reserves is as follows: ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 1,827.75 7,880.80 Profit for the year as per statement of profit and loss 9,509.98 3,946.24 Dividend paid (1,102.99) (4,074.67) Tax on dividend paid (226.72) (829.54) Transfer to debenture redemption reserve (8,611.23) (5,062.22) Transaction cost arising on issue of equity shares, net of tax (25.00) (25.01) 1,371.79 1,835.60 Items of OCI recognised directly in retained earnings: Net actuarial gains/(losses) on defined benefit plans (22.14) (7.85) Closing balance 1,349.65 1,827.75 EESL Annual Report 2018-19 Notes to Standlone financial statements 123 18 Non-current borrowings ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Debentures/Bonds Secured (i) 8.07% Debentures (Domestic bonds)- Secured by pari passu charge 52,133.58 52,133.59 on the movable fixed assets both present and future (8.07% p.a. secured non-cumulative non-convertible redeemable taxable bonds with three unequal separately transferable redeemable principal parts (STRPP) of `12,500.00 Lakhs, `12,500.00 Lakhs and `25,000.00 Lakhs redeemable at par on 20 March 2020, 20 September 2021 and 20 September 2023, respectively (First Issue - Private Placement)) Unsecured (i) 7.80% Debentures (Domestic bonds) 47,471.42 47,471.42 (7.80% p.a. unsecured non-cumulative non-convertible redeemable taxable bonds repayable as bullet payment in the month of July 2022 amounting `45,000.00 Lakhs (Second Issue - Private Placement)) (ii) 8.15% Debentures (Domestic bonds) 20,361.73 20,361.72 (8.15% p.a. unsecured non-cumulative non-convertible redeemable taxable bonds repayable as bullet payment in the month of Feb 2021 amounting `20,000.00 Lakhs (Third Issue - Private Placement)) (iii) 8.29% Debentures (Domestic bonds) 12,676.02 12,676.02 (8.29 % p.a. unsecured non-cumulative non-convertible redeemable taxable bonds repayable as bullet payment in the month of May 2021 amounting `12,500.00 Lakhs (Fourth Issue - Private Placement)) Term loan from banks Unsecured rupee term loan (i) Punjab National Bank 39,997.59 - ROI: 8.45% p.a. (linked to 6 months MCLR) repayable in 10 equated instalments starting from June 2021 and ending in December 2025. Term loan from other than banks Unsecured foreign currency loans (i) KFW Loan -Guaranteed by Government of India 34,455.63 38,938.98 (1.96% p.a. loan repayable on half yearly basis starting from 30 June 2018 in 14 instalments of Euro 2,941,000 each and 3 instalments of Euro 2,942,000 each) (ii) AFD Loan -Guaranteed by Government of India 12,929.37 3,997.83 (1.87% p.a. for Euro 3,719,016.59, 2.20% p.a. for Euro 1,205,674.41, 2.19% p.a. for Euro 8460156.73 and 2.22% p.a. for Euro 3112936.93 loan repayable in half yearly basis starting from 31 October 2020 in 20 equal instalments of Euro 2,500,000 each) (iii) ADB Loan - Guaranteed by Government of India 43,391.19 9,768.69 (3.166% p.a. (Method: 6 month LIBOR+ 60 Basis point +/- rebate/surcharge, if any) loan repayable on half yearly basis starting from 15 March 2022 in 30 equal instalments of USD 6,666,667 each) (iv) IBRD Loan -Guaranteed by Government of India 38,484.04 - (3.55% p.a. (Method: 6 month LIBOR+66 Basis point, if any) loan repayable on half yearly basis starting from 15 May 2023 in 27 equal instalments of USD 7854000 each and one installment of 7942000) 3,01,900.57 1,85,348.25 Less: Current maturities of long term borrowings 17,070.46 4,558.77 Less: Interest accrued but not due on borrowings 5,642.05 5,369.32 Total 2,79,188.06 1,75,420.16 There has been no default in repayment of the loans/ interest thereon as at the end of the year. 124 Notes to Standlone financial statements EESL Annual Report 2018-19 19 Non-current trade payable ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Trade payable for goods and services Total outstanding dues of micro enterprises and small enterprises 1,277.49 - Total outstanding dues of creditors other than micro and small enterprises 10,523.97 - Total 11,801.46 - a) Trade payable are subject to confirmations, reconciliation and consequential adjustments that may arise on reconciliation. b) Amounts payable to related parties are disclosed in note 48. c) Refer note 50 for disclosures as required under Companies Act, 2013/Micro, Small and Medium Enterprises Development Act, 2006. 20 Other non-current financial liabilities ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Retention money 40,680.09 8,019.85 Total 40,680.09 8,019.85 21 Non-current provisions ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Provision for employee benefits Gratuity 136.73 140.88 Leave encashment 144.21 269.51 Total 280.94 410.39 a) Refer note 38 for disclosure as per Ind AS 19 on 'Employee Benefits'. 22 Deferred tax liabilities (net) ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Deferred tax liability Revenue measured at fair value 931.57 2,322.68 Financial assets and liabilities measured at amortised cost 3,007.11 1,181.23 Difference in book depreciation and tax depreciation 8.00 - 3,946.68 3,503.91 Less: Deferred tax assets Difference in book depreciation and tax depreciation 2,848.29 2,972.24 Leave encashment 50.39 98.38 Provisions for gratuity 47.78 55.69 Provisions for bonus 113.07 0.88 Allowance for credit impaired receivables 137.43 68.05 Operating lease liabilities 37.84 25.95 Revenue measured at fair value - 60.11 Financial assets and liabilities measured at amortised cost 2.28 42.32 3,237.08 3,323.62 Total deferred tax liabilities (net) 709.60 180.29 a) Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority. EESL Annual Report 2018-19 Notes to Standlone financial statements 125 b) Movement in deferred tax balances 31 March 2019 ` in Lakhs Particulars Net Balance Recognised in Recognised Net Balance 1 April 2018 profit or loss in OCI 31 March 2019 Deferred tax liability Revenue measured at fair value 2,322.68 (1,391.11) - 931.57 Financial assets and liabilities measured at amortised cost 1,181.23 1,825.88 - 3,007.11 3,503.91 434.77 - 3,938.68 Less: Deferred tax assets Difference in book depreciation and tax depreciation 2,972.24 (131.95) - 2,840.29 Leave encashment 98.38 (47.99) - 50.39 Provisions for gratuity 55.69 (19.80) 11.89 47.78 Provisions for bonus 0.88 112.19 - 113.07 Allowance for credit impaired receivables 68.05 69.38 - 137.43 Operating lease liabilities 25.94 11.90 - 37.84 Revenue measured at fair value 60.11 (60.11) - - Financial assets and liabilities measured at amortised cost 42.32 (40.04) - 2.28 3,323.61 (106.42) 11.89 3,229.08 Deferred tax liabilities (net) 180.30 541.19 (11.89) 709.60 31 March 2018 ` in Lakhs Particulars Net Balance Recognised in Recognised Net Balance 1 April 2017 profit or loss in OCI 31 March 2018 Deferred tax liability Revenue measured at fair value 4,197.71 (1,875.03) - 2,322.68 Financial assets and liabilities measured at amortised cost 709.47 471.76 - 1,181.23 4,907.18 (1,403.27) - 3,503.91 Less: Deferred tax assets Difference in book depreciation and tax depreciation 4,576.68 (1,604.44) - 2,972.24 Leave encashment 59.55 38.83 - 98.38 Provisions for gratuity 21.43 30.11 4.15 55.69 Provisions for bonus 0.88 - - 0.88 Allowance for credit impaired receivables 68.05 - 68.05 Operating lease liabilities 15.90 10.05 - 25.94 Revenue measured at fair value 211.78 (151.67) - 60.11 Financial assets and liabilities measured at amortised cost 12.58 29.74 - 42.32 4,898.80 (1,579.34) 4.15 3,323.61 Deferred tax liabilities (net) 8.38 176.07 (4.15) 180.30 23 Other non-current liabilities ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Operating lease liabilities 59.00 74.77 Deferred income on account of government grants 427.68 550.16 (refer notes a and b below) Total 486.68 624.93 a) Deferred income on account of government grants have been accounted in line with Accounting policy no. C.7 (Note 1). b) International Bank for Reconstruction and Development ("World Bank") acting as an implementation agency of the Global Environment Facility ("GEF") had sanctioned a grant of USD 1,500,000 for implemention of SAP . Total grant amounting to ` 1,062.56 Lakhs has been received out of the sanctioned amount. There are no unfulfilled conditions or other contingencies attached to above grant.“During the year, the Company has received ` 290.73 Lakhs (31 March 2018: ` 611.37 Lakhs) as grant from World Bank and has recognised ` 397.64 Lakhs (31 March 2018: ` 0.17 Lakhs) as grant income (refer note 30). 126 Notes to Standlone financial statements EESL Annual Report 2018-19 24 Current borrowings ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Loans from banks Secured (i) ICICI Bank - Secured by first pari passu charge on the stock 15,600.00 15,000.00 and receivables both present and future (ROI varying between 8.20% p.a.(linked to 1 year MCLR) to 8.90% p.a. (linked to 3 months MCLR + 30 bps) depending on the date of disbursement of the respective tranches repaid/ repayable as bullet payment of the respective tranche starting from Sep 2018 to June 2019 in the range of ` 2,000.00 Lakhs to ` 8,000.00 Lakhs) (ii) HDFC - Secured by first pari passu charge on the stock and debtors both 7,500.00 11,000.00 present and future (ROI varying between 7.85% p.a.(linked to 3 months MCLR) to 8.45% p.a. (linked to 3 months MCLR) depending on the date of disbursement of the respective tranches repayable as Bullet payment of the respective tranche starting from June 2019 to Feb 2020 in the range of of ` 1,000.00 Lakhs to ` 5,000.00 Lakhs) (iii) SBI - Secured by first pari passu charge on the stock and receivables both present and future - 28,525.59 (ROI varying between 7.85% p.a.(linked to 3 months MCLR) to 8.25% p.a. (linked to 3 months MCLR) depending on the date of disbursement of the respective tranches repaid as Bullet payment in the month of March 2019 in the range of ` 5,000.00 Lakhs to ` 23,500.00 Lakhs) (iv) IndusInd Bank - Secured by pari passu charge on stock and book debts of the Company 10,000.00 - (ROI varying between 9.13% p.a. to 9.25% p.a. (linked to 3 months MIBOR + 169 bps) repayable as Bullet in the month of Nov 2019 amounting to ` 10,000.00 Lakhs) (v) IndusInd Bank (factored receivables)- Secured by pari passu charge on stock and book debts of the Company 9,579.08 - (ROI be at 9.00% p.a. (linked to 364 days T-bill plus 258 basis point), repayable after 120 days from the discounting date in the event of default/ delay in receipt of proceeds from the companies (whose bills are discounted) in the month of July 2019 amounting to ` 9,579.08 Lakhs) Unsecured (i) IndusInd Bank 5,003.69 5,001.14 (ROI varying between 8.30% p.a. to 8.75% p.a. (linked to 3 months MIBOR + 121 bps) repayable as Bullet in the month of Sep 2019 amounting to ` 5,000.00 Lakhs) (ii) J&K Bank 14,999.91 - (Borrowing-1: ROI varying between 8.15% p.a. to 8.30% p.a. (linked to 1 month MCLR) repayable as Bullet in the month of June 2019 amounting to ` 5,000 lakhs) (Borrowing-2: ROI varying between 8.35% p.a. to 8.45% p.a. (linked to 3 months MCLR) repayable as Bullet in the month of Sep 2019 amounting to ` 10,000 lakhs) (iii) CTBC Bank - 4,000.88 (ROI varying between 7.96% p.a. ( linked to 1 months MIBOR + 75 bps) to 8.42% p.a. (linked to 3 months MIBOR + 82 bps) repaid as Bullet in the month of Feb 2019 amounting to ` 4,000.00 Lakhs) Total 62,682.68 63,527.61 Less: Interest accrued on current borrowings 3.69 27.61 Total 62,678.99 63,500.00 EESL Annual Report 2018-19 Notes to Standlone financial statements 127 25 Trade payables ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Trade payable for goods and services Total outstanding dues of micro enterprises and small enterprises 8,214.58 - Total outstanding dues of creditors other than micro and small enterprises 1,25,750.06 1,28,526.81 Total 1,33,964.64 1,28,526.81 a) Trade payable are subject to confirmations, reconciliation and consequential adjustments that may arise on reconciliation. b) Amounts payable to related parties are disclosed in note 48. c) Refer note 50 for disclosures as required under Companies Act, 2013/Micro, Small and Medium Enterprises Development Act, 2006. 26 Other current financial liabilities ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Current maturities of non-current borrowings (refer note 18) 17,070.46 4,558.77 Interest accrued on borrowings 5,645.74 5,396.93 Unclaimed interest on debentures/bonds 1.61 - Liabilities for expenses 2,333.37 2,184.77 Retention money 15,546.09 13,703.52 Earnest money deposits 430.81 700.16 Security deposits 138.94 72.85 Payable to employees 762.79 5.11 Commitment fee payable 238.07 48.13 Tax on dividend payable - 264.35 Total 42,167.88 26,934.59 27 Other current liabilities ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Statutory dues (refer note a below) 18,574.62 5,660.23 Liquidated damages 93.25 314.64 Advance from customers 1,308.50 5.87 Unearned income 172.20 77.90 Operating lease liabilities - 0.19 Deferred income on account of government grants (refer note 23) 237.18 61.15 Total 20,385.75 6,119.98 a) The sales, corresponding output tax liability and purchases along with the corresponding input tax credit reported in GST and VAT returns, the net input tax credit receivable or the net output tax liability payable as the case may be are subject to reconciliation with the books of accounts. Differences which will be identified on reconciliation of GST/ VAT returns will be addressed in annual GST/ VAT statements/ revised returns to be filed in due course. 28 Current provisions ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Provision for employee benefits Gratuity 3.29 1.39 Leave encashment 8.37 14.77 Pay revision (refer note 32(b)) - 550.00 Total 11.66 566.16 a) Refer note 38 for disclosure as per Ind AS 19 on 'Employee Benefits'. 128 Notes to Standlone financial statements EESL Annual Report 2018-19 29 Revenue from operations ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Sale of goods 1,11,527.89 1,04,788.27 Rendering of services 72,237.35 30,806.00 Total 1,83,765.24 1,35,594.27 a) Refer note 49 for disclosure in respect of Ind AS 115, 'Revenue from contracts with customers'. b) The Company has recognised revenue under agreements with ULB’s based on certain assumptions / estimate like the start date of the project period is taken as the date of completion specified in the first Completion Certificate received from the ULB, the actual expenses towards PMC, AMC and interest (including indirect finance costs) are more than the percentage specified in the agreement, the billing commences from next month of the month of completion mentioned in the completion certificate except in the case where the date of completion is the first day of the month, in which case the billing is done for the same month. The company is seeking necessary clarifications on such and other matters. 30 Other income ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Interest income from financial assets measured at amortised cost Bank deposits 3,229.49 1,233.99 Trade receivables/unbilled revenue 1,332.14 2,166.34 Loans to employees 4.85 3.49 Security deposit 41.50 14.50 Others 162.42 1,422.01 Other non-operating income Tender document fees 38.63 59.37 E- Tendering registration fee 11.10 15.49 Net gain on foreign currency transactions and translation 2,580.71 - EMD forfeited 1,424.00 - Deferred rent income 15.97 - Grant income 397.64 0.17 Miscellaneous income 563.71 560.67 Total 9,802.16 5,476.03 31 (Increase)/ Decrease in inventories ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening stock 29,993.41 15,464.97 Closing stock 26,968.66 29,993.41 Total 3,024.75 (14,528.44) 32 Employee benefits expense ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Salaries and wages 2,712.61 3,368.56 Leave encashment (100.11) 148.31 Contribution to provident and other funds 79.49 178.85 Staff welfare expenses 148.43 227.03 Total 2,840.42 3,922.75 EESL Annual Report 2018-19 Notes to Standlone financial statements 129 a) Refer note 38 for disclosure as per Ind AS 19 on 'Employee Benefits'. b) The pay revision of the employees of the company was due with effect from 1 January 2017. The Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises, Government of India vide office memorandums No. W-02/0028/2017-DPE(WC)-GL- XIII/17 dated 3 August 2017 had revised scales of pay in respect of Board level and below Board level executives and Non-unionised Supervisors of Central Public Sector Enterprises with effect from 1 January 2017. Since the pay scales of regular employees in EESL have been formulated in accordance with NTPC pay scales of the regular employees, in terms of the guidelines issued by the Department of Public Enterprises applicable to NTPC, a provision was made on an estimated basis in respect of regular employees on account of pay revision. Movement in provision is as follows: ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 550.00 - Addition during the year - 550.00 Amounts used during the year (550.00) - Total - 550.00 33 Finance costs ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Finance charges on financial liabilities measured at amortised cost Debentures/Bonds 8,237.85 4,595.01 Cash credit 6,308.69 4,102.52 Foreign currency term loans 1,260.61 733.64 Rupee term loans 246.23 - Unwinding of discount on retention money 1,067.48 604.38 Unwinding of discount on trade payables 1,048.69 - Others - 176.30 Net loss on foreign currency transactions and translation 118.25 2,687.04 Other borrowing costs Commitment fees for foreign currency term loans 188.02 11.05 Guarantee fees 547.70 395.51 Total 19,023.52 13,305.45 a) Interest on loans amounting to ` 4,836.16 Lakhs for the comparative period has been bifurcated between interest on foreign currency term loans (` 733.64 Lakhs) and cash credit (` 4,102.52 Lakhs) to enhance comparability with the current year’s financial statements. b) Borrowing costs capitalised during the year is ` 3,582.44 Lakhs (31 March 2018: ` 2,449.16 Lakhs). 34 Other expenses ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Annual maintenance charges (projects) 9,396.79 2,042.59 Project expenses 2,757.36 2,677.63 Legal fees & professional charges 2,004.99 1,276.90 Rent 2,015.59 757.37 Manpower expenses 1,336.91 573.71 Tour and traveling expenses 755.06 295.59 Communication expenses 474.16 203.91 130 Notes to Standlone financial statements EESL Annual Report 2018-19 34 Other expenses (Continued) ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Advertisement and publicity expenses 344.14 267.80 Business promotion 205.89 758.85 Printing and stationery expenses 158.29 80.60 Meeting expense/ Hospitality expenses 175.76 1.65 Net loss on sale of property, plant and equipment 142.54 - Bank charges 207.74 153.75 Sponsorship expenses 142.54 3.00 Insurance charges 147.61 23.52 Testing expenses 117.29 22.36 Electricity expenses 93.67 70.16 Payment to auditors (refer note b below) 32.05 28.25 Conveyance expenses 25.20 132.52 Recruitment expenses 11.04 301.02 Repair and maintenance expenses - Building 66.36 82.30 - Computer 4.72 - - Other - 0.94 Internal audit fees 6.00 3.00 Deferred rent expenses - 29.03 Rate and taxes 15.87 112.25 Corporate social responsibility expenses 20.06 12.27 Books and periodicals 0.78 - Net loss on foreign currency transactions and translation - 1,291.03 Allowance for doubtful receivables 196.65 196.64 Diwali gift expenses - 25.26 Annual day celebration expenses - 4.48 Awareness creation, training & outreach activities - 0.46 Miscellaneous expenses 240.03 547.88 Total 21,095.09 11,976.72 a) Ujala scheme expenses amounting to ` 1,801.27 Lakhs (software expenses ` 361.55 Lakhs, project maintenance expenses ` 0.92 Lakhs and other project expenses ` 1,438.80 Lakhs) and other project expenses amounting to ` 876.36 Lakhs have been aggregated and presented as project expenses (` 2,677.63 Lakhs) in the comparative period to enhance comparability with current year. b) Details in respect of payment to auditors: Statutory audit fee 16.50 15.00 Tax audit fee 7.15 6.50 Limited review 5.50 5.00 Reimbursement of expenses 2.90 2.75 Total 32.05 29.25 35 Fair Value Measurements (a) Financial instruments by category All of the Company's financial assets and liabilities viz. loans, cash and cash equivalents, other bank balances, unbilled revenue and trade and other receivables, borrowings, retention money payable, liability for expenses and other payables are measured at amortised cost. EESL Annual Report 2018-19 Notes to Standlone financial statements 131 (b) Fair value hierarchy To provide an indication about the reliability of the inputs used in determining fair value of financial instruments measured at amortised cost for which fair value is being disclosed, the company has classified these into levels prescribed under the Ind AS 113, ' Fair value measurement' details of which are as under: ` in Lakhs Particulars Level 2* As at 31 March 2019 As at 31 March 2018 Financial assets: Security deposits 633.96 485.70 Unbilled revenue 3,961.72 9,307.00 Loan to employees 200.55 151.00 Finance lease receivables 3,900.81 - Bank deposits 16.38 - Total 8,713.42 9,943.70 Financial liabilities: Borrowings 2,91,039.18 1,87,290.00 Retention money 65,682.89 23,132.00 Trade payables 12,884.96 - Total 3,69,607.03 2,10,422.00 * Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. c) Valuation technique used to determine fair value (i) For financial assets (security deposits, employee loans, unbilled revenue) - Discounted future cash flow; appropriate market rate as of each balance sheet date used for discounting. (ii) For financial liabilities (retention money liabilities, debentures,foreign currency loans): Discounted cash flow; appropriate market borrowing rate of the entity as of each balance sheet date used for discounting. d) Fair value of financial assets and liabilities measured at amortised cost ` in Lakhs As at 31 March 2019 As at 31 March 2018 Particulars Carrying Fair value Carrying Fair value amount amount Financial assets: Security deposits 624.34 633.96 464.06 485.70 Unbilled revenue 2,896.67 3,961.72 6,626.26 9,307.00 Loan to employees 233.95 200.55 182.91 151.00 Finance lease receivables 3,900.81 3,900.81 - - Bank deposits 16.38 16.38 - - Total 7,672.15 8,713.42 7,273.23 9,943.70 Financial liabilities: Borrowings 3,01,900.57 2,91,039.18 1,79,978.93 1,87,290.00 Retention money 56,226.18 65,682.89 21,723.37 23,132.00 Trade payables 11,801.46 12,884.96 - - Total 3,69,928.21 3,69,607.03 2,01,702.30 2,10,422.00 The carrying amounts of current trade receivables, trade payables, payable for capital expenditure, cash and cash equivalents and other financial assets and liabilities are considered to be the same as their fair values, due to their short-term nature. The fair values for security deposits, unbilled revenue, employee term loans, borrowings and retention money were calculated based on cash flows discounted using a current lending rate/borrowing rate. They are classified as level 2 fair values in the fair value hierarchy due to the use of observable market inputs. 132 Notes to Standlone financial statements EESL Annual Report 2018-19 36 Financial risk management The Company’s principal financial liabilities comprise loans and borrowings in foreign as well as domestic currency, trade payables and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include loans, trade & other receivables, and cash and short-term deposits that derive directly from its operations. The Company is exposed to the following risks from its use of financial instruments: - Credit risk - Liquidity risk - Market risk This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk. a) Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations resulting in a financial loss to the Company. Credit risk arises principally from trade receivables, unbilled revenue, loans & advances, cash & cash equivalents and deposits with banks. Trade receivables and unbilled revenue The Company earns its revenue mainly from government controlled entities (both central and state government). As these entities are government controlled, the counter party risk attached to such receivables are considered to be insignificant. For rest of the customers, Company evaluates and manages its credit risk by taking into consideration the ageing of the dues, specific credit circumstances, nature of the customers and credit worthiness of the customers. The impairment loss allowance is assessed by the company using life time ECL approach which is based on the business environment in which the company operates. The trade receivables are considered in default (credit impaired) when the possibility of recovery of receivables based on the assessment/evaluation on the parameters stated above are deteriorating and are required to be provided as allowance for doubtful receivables in a systematic manner. The Company has not experienced any significant impairment losses in respect of trade receivables in the past years. Since the Company has its customers within different states of India, geographically there is no concentration of credit risk. Loan to employees The company has given loans to employees. The company manages its credit risk in respect of loan and advances to employees through settlement of dues against full & final payment to employees. Cash and cash equivalents The Company held cash and cash equivalents of ` 42,482.84 Lakhs (31 March 2018: ` 52,061.67 Lakhs). The cash and cash equivalents are held with banks with high rating. Deposits with banks and financial institutions The Company held deposits with banks and financial institutions of ` 33,592.87 Lakhs (31 March 2018: ` 5441.84 Lakhs). In order to manage the risk, Company places deposits with only high rated banks/institutions. (i) Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Financial assets for which loss allowance is measured using 12 months Expected Credit Losses Non-current loans 493.95 465.93 Other non-current financial assets* 3,917.19 4.62 Cash and cash equivalents 42,482.84 52,061.67 Deposits with banks 33,576.49 5,437.22 Current loans 364.34 153.34 Other current financial assets* 6,029.13 820.94 Total 86,863.94 58,943.72 Financial assets for which loss allowance is measured using Life time Expected Credit Losses Trade receivables 1,83,148.24 1,16,182.54 Unbilled revenue 2,896.67 6,626.26 Total 1,86,044.91 1,22,808.80 * Excluding unbilled revenue EESL Annual Report 2018-19 Notes to Standlone financial statements 133 (ii) Provision for expected credit losses Financial assets for which loss allowance is measured using 12 month expected credit losses The Company has assets where the counter- parties have sufficient capacity to meet the obligations and where the risk of default is very low. Accordingly, no loss allowance for impairment has been recognised. Financial assets for which loss allowance is measured using life time expected credit losses The Company has customers with capacity to meet the obligations and therefore the risk of default is low. Further, management believes that the unimpaired amounts that are past due are still collectible in full, based on historical payment behaviour. However, an allowance for doubtful receivables of ` 196.65 Lakhs (31 March 2018: ` 196.64 Lakh) has been recognised during the year to the extent of additional 10% of the total outstanding of ` 1,966.40 Lakhs of cases which are under litigation for recovery. Financial assets for which loss allowance is measured and recommended by Comptroller and Auditor General of India The company has not made a provision of ` 1650.00 Lakhs on account of subsidy not received from Delhi Government/DERC as per the recommendation made by the CAG of India of their report dated 18 October 2017 issued to Company. However, the management is of the view that the recovery is being followed up with concerned authority, which is under review and the management is confident for recovery of their dues. (iii) Ageing analysis of trade receivables ` in Lakhs Particulars 0-30 days 31-60 days 61-90 days 91-120 days More than 120 Total past due past due past due past due days past due Gross carrying amount as at 31 March 2019 36,882.44 19,679.94 5,137.24 15,452.68 1,06,389.23 1,83,541.53 Gross carrying amount as at 31 March 2018 23,656.24 6,484.74 3,822.37 1,164.71 81,251.13 1,16,379.18 (iv) Reconciliation of allowance for doubtful receivables The movement in the allowance for doubtful receivables in respect of trade receivables during the year is as follows: ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 196.64 - Add: Allowance for doubtful debts recognised during the year 196.65 196.64 Closing balance 393.29 196.64 Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company has an appropriate liquidity risk management framework for the management of short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Typically the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations, this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. (i) Financing arrangements The company had access to the following undrawn borrowing facilities at the end of the reporting period: ` in Lakhs Particulars 31 March 2019 31 March 2018 Fixed-rate borrowings Foreign currency loans 1,81,436.83 1,99,144.30 Working capital loan 14,400.00 - Total 1,95,836.83 1,99,144.30 Floating-rate borrowings Term loans 10,002.41 11,500.00 Foreign currency loans 2,08,762.33 1,20,331.59 Working capital loan 2,500.10 - Total 2,21,264.84 1,31,831.59 Total 4,17,101.67 3,30,975.88 134 Notes to Standlone financial statements EESL Annual Report 2018-19 (ii) Maturitites of financial liabilities The following are the contractual maturities of non-derivative financial liabilities, based on contractual cash flows: As at 31 March 2019 ` in Lakhs Particulars 3 months 3-12 1-2 2-5 More than Total or less months years years 5 years Non-current borrowings* 4,360.57 37,277.59 40,029.99 1,70,447.16 1,35,117.51 3,87,232.82 Current borrowings 25,599.91 37,082.77 - - - 62,682.68 Trade payables 60,917.95 73,046.69 2,895.60 7,061.74 1,844.12 1,45,766.10 Retention money 1,868.79 16,946.77 15,003.01 19,632.53 2,775.08 56,226.18 Liability for expenses 2,333.37 - - - - 2,333.37 Payable to employees 762.79 - - - - 762.79 Others 378.62 430.81 - - - 809.43 Total 96,222.00 1,64,784.63 57,928.60 1,97,141.43 1,39,736.71 6,55,813.37 As at 31 March 2018 ` in Lakhs Particulars 3 months 3-12 1-2 2-5 More than Total or less months years years 5 years Non-current borrowings* 2,904.75 18,313.30 30,275.51 1,30,293.77 55,207.56 2,36,994.89 Current borrowings 10,000.00 53,500.00 - - - 63,500.00 Trade payables 588.21 1,27,911.77 13.42 13.42 - 1,28,526.81 Retention money - 11,874.46 837.97 5,724.99 3,285.94 21,723.37 Liability for expenses - 2,186.77 - - - 2,186.77 Payable to employees 5.11 - - - - 5.11 Others 310.48 700.16 - - - 1,010.64 Total 13,808.55 2,14,486.46 31,126.90 1,36,032.18 58,493.50 4,53,947.59 * includes contractually committed interest c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company’s income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Board of Directors is responsible for setting up of policies and procedures to manage market risks of the Company. All such transactions are carried out within the guidelines set by the risk management committee. (i) Currency risk The Company is exposed to foreign currency risk on certain transactions that are denominated in a currency other than entity’s functional currency, hence exposure to exchange rate fluctuations arises. The risk is that the functional currency value of cash flows will vary as a result of movements in exchange rates. The currency profile of financial liabilities as at 31 March 2019 and 31 March 2018 are as below: ` in Lakhs As at 31 March 2019 As at 31 March 2018 Particulars EURO USD GBP EURO USD GBP Financial liabilities Foreign currency borrowings 47,385.00 81,875.23 - 42,722.30 9,756.61 - Trade payables - - 8.17 - - 5.37 Total 47,385.00 81,875.23 8.17 42,722.30 9,756.61 5.37 Financial assets Trade receivables - - 578.54 - - 125.02 Balance with bank-current account - 2,017.42 38.97 - 6,191.77 6.93 Total - 2,017.42 617.51 - 6,191.77 131.95 Net Exposure 47,385.00 79,857.81 (609.34) 42,722.30 3,564.84 (126.58) EESL Annual Report 2018-19 Notes to Standlone financial statements 135 Sensitivity analysis A strengthening of the Indian Rupee, as indicated below, against Euro, USD and GBP at 31 March would have increased/(decreased) profit or loss (before tax) by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the company considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for previous year. ` in Lakhs 31 March 2019 31 March 2018 Particulars Strengthening Weakening Strengthening Weakening 10% movement INR/EUR (4,738.50) 4,738.50 (4,272.23) 4,272.23 INR/USD (7,985.78) 7,985.78 (356.48) 356.48 INR/GBP 60.93 (60.93) 12.66 (12.66) Total (12,663.35) 12,663.35 (4,616.06) 4,616.06 (i) Interest rate risk The Company is exposed to interest rate risk arising mainly from non-current borrowings with floating interest rates. The Company is exposed to interest rate risk because the cash flows associated with floating rate borrowings will fluctuate with changes in interest rates. The Company manages the interest rate risks by entering into different kinds of loan arrangements with varied terms (e.g. fixed rate loans, floating rate loans, rupee term loans, foreign currency loans, etc.). At the reporting date the interest rate profile of the Company’s interest-bearing financial instruments is as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Financial assets Fixed-rate instruments Employee Loans 57.38 178.11 Total 57.38 178.11 Financial liabilities Fixed-rate instruments Foreign currency loans 47,099.92 42,722.30 Debentures 1,27,500.00 1,27,500.00 Rupee term loans 39,997.59 - Cash credit 15,600.00 26,000.00 2,30,197.51 1,96,222.30 Variable-rate instruments Foreign currency loans 81,661.00 9,756.63 Cash credit 47,079.00 37,500.00 1,28,740.00 47,256.63 Total 3,58,937.51 2,43,478.93 Fair value sensitivity analysis for fixed-rate instruments The company’s fixed rate instruments are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates. Cash flow sensitivity analysis for variable-rate instruments A change of 50 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for the previous year. ` in Lakhs 31 March 2019 31 March 2018 Particulars Increase Decrease Increase Decrease Foreign currency loans (408.31) 408.31 (48.78) 48.78 Rupee loans (235.40) 235.40 (187.50) 187.50 Total (643.70) 643.70 (236.28) 236.28 136 Notes to Standlone financial statements EESL Annual Report 2018-19 37 Capital Management The Company’s objectives when managing capital are to: - safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and - maintain an appropriate capital structure of debt and equity. The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management in deployment of funds and sourcing by leveraging opportunities in domestic and international financial markets so as to maintain investors, creditors & markets' confidence and to sustain future development of the business. The Board of Directors also monitors the level of dividends to equity shareholders. Under the terms of major borrowing facilities, the Company is required to comply with the following financial covenants: (i) Maintain a current ratio (current assets divided by current liabilities) of at least 1.0 (ii) Maintain a minimum asset coverage of 1.00 times (iii) Maintain a Debt:Equity ratio (long-term debt divided by equity net of accumulated profits/losses) not exceeding 80:20 (iv) Maintain a asset debt service coverage ratio (net cash flow from operations divided by debt service obligations, including all principal payments and tax-shielded interest and lease payments following due within the year) of at least 1.2 (v) Borrower shall inform the Bank simultaneously along with Stock Exchange if substantial effect on their profit or business means an adverse variance of 20% or more. There have been no breaches in the financial covenants of any interest bearing borrowings. The Company is not subject to externally imposed capital requirements. The Company monitors capital, using a medium term view of three to five years, on the basis of number of financial ratios generally used by industry and by the rating agencies. The Company monitors capital using gearing ratios which are net debt divided by total equity and debt divided by total equity. Debt comprises of non-current and current borrowings and net debt comprises of non-current and current borrowings less cash and cash equivalent. Equity includes equity share capital and reserves that are managed as capital. The gearing ratios at the end of the reporting periods were as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Borrowings 3,64,583.25 2,48,875.86 Less : Cash and cash equivalents 42,482.84 52,066.97 Net debt 3,22,100.41 1,96,808.89 Total equity 83,996.53 64,442.96 Net debt to equity ratio 3.83 3.05 ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Borrowings 3,64,583.25 2,48,875.86 Total equity 83,996.53 64,442.96 Debt to equity ratio 4.34 3.86 38 Disclosure as per Ind AS 19 'Employee Benefits' a) Defined contribution plans: (i) Provident fund The Company pays fixed contribution to provident fund at predetermined rates to a registered provident fund administered by the Government, which invests the funds in permitted securities. Amount of ` 82.09 Lakhs (31 March 2018: ` 178.02 Lakhs) pertaining to employers' contribution to provident fund is recognised as an expense and included in "Employee benefits expense" in note 32. (ii) Superannuation fund The Company pays fixed contribution to superannuation fund to a separate trust. Amount of ` 213.91 Lakhs (31 March 2018: ` 119.57 Lakhs) pertaining to employers' contribution to superannuation fund is recognised as an expense and included in "Employee benefits expense" in note 32. EESL Annual Report 2018-19 Notes to Standlone financial statements 137 b) Defined benefit plan (gratuity) The Company operates a gratuity plan which provides lump sum benefits linked to the qualifying salary and completed years of service with the Company at the time of separation. Every employee who has completed 5 years of continuous service is entitled to receive gratuity at the time of his retirement or separation from the organisation, whichever is earlier. The gratuity benefit that is payable to any employee, is computed in accordance with the provisions of "The Payment of Gratuity Act, 1972". The company has set up a fund with Life Insurance Corporation (LIC) of India and contribution is made to the gratuity policy issued by LIC of India. Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company’s financial statements as at balance sheet date: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Net defined benefit (asset)/liability: 140.02 142.27 Gratuity 140.02 142.27 Non-current 136.73 140.89 Current 3.29 1.38 (i) Movement in net defined benefit (asset)/liability ` in Lakhs Particulars For the year ended 31 March 2019 For the year ended 31 March 2018 Defined Fair value Net defined Defined Fair value Net defined benefit of plan benefit liability/ benefit of plan benefit liability/ obligation assets (asset) obligation assets (asset) Opening balance 142.27 6.51 135.76 61.91 - 61.91 Included in profit or loss: Current service cost 74.89 - 74.89 61.16 - 61.16 Past service cost - - - - - Net Interest cost 11.09 1.00 10.09 4.55 - 4.55 Total amount recognised in profit or loss 85.98 1.00 84.98 65.71 - 65.71 Included in other comprehensive income (OCI): Remeasurement loss/(gain) arising from: Financial assumptions 2.15 - 2.15 (10.39) - (10.39) Experience adjustment 38.74 - 38.74 22.39 - 22.39 Return on plan assets excluding interest 6.86 (6.86) income Total amount recognised in OCI 40.89 6.86 34.03 12.00 - 12.00 Other Contributions paid by the employer - 114.20 (114.20) - 14.92 (14.92) Acquisition adjustment 5.70 - 5.70 11.05 - 11.05 Adjustment in plan assets - 6.25 (6.25) - - - Benefits paid 2.72 2.72 - 8.41 8.41 - Closing balance 272.12 132.10 140.02 142.27 6.51 135.76 (ii) Plan assets The plan assets of the Company are managed by Life Insurance Corporation of India through a trust managed by the Company in terms of an insurance policy taken to fund obligations of the Company. Information on categories of plan assets as at 31 March 2019 and 31 March 2018 has not been provided by Life Insurance Corporation of India. Actual return on plan assets is ` 7.86 Lakhs (31 March 2018: Nil). 138 Notes to Standlone financial statements EESL Annual Report 2018-19 (iii) Actuarial assumptions The following were the principal actuarial assumptions at the reporting date: Particulars As at 31 March 2019 As at 31 March 2018 Discount rate 7.75 7.80% Salary escalation rate 6.00% 6.00% Retirement age (years) 60 60 Mortality rates inclusive of provision for disability 100% of IALM (2006 - 08) Withdrawal rate Up to 30 Years 3.00% 3.00% From 31 to 44 years 2.00% 2.00% Above 44 years 1.00% 1.00% The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. (iv) Sensitivity analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below. ` in Lakhs 31 March 2019 31 March 2018 Increase Decrease Increase Decrease Discount rate (0.5% movement) (20.77) 23.10 (11.09) 12.34 Salary escalation rate (0.5% movement) 23.39 (21.19) 12.44 (11.32) Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. This analysis may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. (v) Risk exposure Changes in discount rate: Reduction in discount rate in subsequent valuations can increase the plan’s liability. Salary increases: Actual salary increases will increase the plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability. Life expectancy: The plan obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans’ liabilities. This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy. Investment risk: Assets liabilities mismatch and actual investment return on assets lower than the discount rate assumed at the last valaution date can impact the liability. (vi) Expected maturity analysis of the defined benefit plans in future years ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Less than 1 year 3.30 1.39 Between 1-2 years 2.50 1.36 Between 2-5 years 13.28 7.78 Over 5 years 253.05 131.74 Total 272.13 142.27 Expected contributions to post-employment benefit plans for the year ending 31 March 2020 are ` 100.80 Lakhs. The weighted average duration of the defined benefit plan obligation as at 31 March 2019 is 19.77 years (31 March 2018: 20.25 years). EESL Annual Report 2018-19 Notes to Standlone financial statements 139 c) Other long term employee benefit plans Leave encashment The Company provides for earned leave (EL) benefit (including compensated absences) to the employees of the Company which accrue annually at 30 days. Leave Encashment subject to maximum of 300 days (Earned Leave) is permissible on superannuation/separation. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date and accumulated leave is treated as long term employee benefit. The scheme is unfunded and liability for the same is recognised on the basis of actuarial valuation. An amount of ` (-)100.11 Lakhs (31 March 2018: ` 143.65 Lakhs) for the year have been made on the basis of actuarial valuation at the year end and debited to the statement of profit and loss. 39 The Company raises funds through various sources including series of Non-Convertible Bond issue. The details of redeemable, taxable, non-cumulative, non-convertible bonds in the nature of debentures issued by the Company are as follows: ` in Lakhs Series Secured/ Total issue Face value Allotment First Due Date Next Due Date Unsecured Size of each Bond Date of principal of Annual repayment Interest Series-I Secured* 50,000.00 ` 40.00 Lakh** 20-Sep-16 20-Mar-20 20-Sep-19 Series-II Unsecured 45,000.00 ` 10.00 Lakh 18-Jul-17 18-Jul-22 18-Jul-19 Series-III Unsecured 20,000.00 ` 10.00 Lakh 10-Jan-18 10-Feb-21 10-Jan-20 Series-IV Unsecured 12,500.00 ` 10.00 Lakh 29-Jan-18 28-May-21 29-Jan-20 * Series-I is secured by first pari-passu charge over moveable fixed assets of the Company with minimum asset coverage of 1.00 times. ** Each bond of Series-I comprises of 2 STRPP of the value of ` 10.00 Lakh each and 1 STRPP of the value of ` 20.00 Lakh. The Company is creating Debenture Redemption Reserve for Bonds issued @ 25% (as required by Companies (Share Capital and Debentures) Rules, 2014). 40 Disclosure as per Ind AS 108 'Operating Segments' A. General Information The Company has two reportable segments, as described below, which are the Company’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Chief operating decision maker (CODM) reviews internal management reports on at least a quarterly basis. The following summary describes the operations in each of the Company’s reportable segments: Trading: Sale of energy efficient appliances to the different customers Services: Providing the energy efficient technology services on ESCO model and consultancy services. Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Company’s Board. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. b) Information about reportable segments and reconciliations to amounts reflected in the financial statements: ` in Lakhs Particulars For the year ended 31 March 2019 For the year ended 31 March 2018 Trading Services Total Trading Services Total Segment revenue Sale of products/ESCO Project income/ 1,11,527.89 72,237.35 1,83,765.24 1,04,788.27 30,806.00 1,35,594.27 Other consultancy Segment expenses 1,02,232.39 35,202.63 1,37,435.02 94,188.71 13,670.39 1,07,859.10 Segment results 9,295.50 37,034.72 46,330.22 10,599.56 17,135.61 27,735.17 Unallocated corporate interest and (163.38) (532.28) 9,802.16 5,476.03 other income Unallocated corporate expenses, -361.37 39,020.48 27,060.97 finance charges Profit before tax (334.29) 17,111.90 6,150.23 Income tax (net) (170.91) 7,601.92 2,203.99 Profit after tax 9,509.98 3,946.24 140 Notes to Standlone financial statements EESL Annual Report 2018-19 ` in Lakhs Particulars For the year ended 31 March 2019 For the year ended 31 March 2018 Trading Services Total Trading Services Total Depreciation and amortisation expense - 33,086.46 33,086.46 - 13,066.01 13,066.01 Non-cash expenses other than depreciation 196.65 - 196.65 196.64 - 196.64 Capital expenditure - 1,23,889.79 1,23,889.79 - 1,27,998.48 1,27,998.48 ` in Lakhs Particulars For the year ended 31 March 2019 For the year ended 31 March 2018 Trading Services Total Trading Services Total Segment assets 1,34,331.58 3,95,645.51 5,29,977.09 1,15,878.05 2,57,907.92 3,73,785.97 Unallocated corporate and other assets 1,52,166.84 1,00,960.15 Total assets 1,34,331.58 3,95,645.51 6,82,143.93 1,15,878.05 2,57,907.92 4,74,746.12 Segment liabilities 56,331.83 79,113.56 1,35,445.39 12,092.64 96,313.10 1,08,405.74 Unallocated corporate and other liabilities 4,62,702.01 3,01,897.42 Total liabilities 56,331.83 79,113.56 5,98,147.40 12,092.64 96,313.10 4,10,303.16 The Company has not disclosed geographical segments as operations of the Company are mainly carried out within the country. c) Information about major customers No external customer individually accounted for more than 10% of the revenues during the year ended 31 March 2019 and 2018. 41 Disclosure as per Ind AS 12 'Income taxes' a) Income tax recognised in statement of profit and loss ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Current tax expense Current year 7,060.62 1,606.52 Earlier years - 421.41 7,060.62 2,027.93 Deferred tax expense Origination and reversal of temporary differences 541.30 176.06 541.30 176.06 Total income tax expense 7,601.92 2,203.99 b) Income tax recognised in other comprehensive income ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Other comprehensive income Net actuarial gains/(losses) on defined benefit plans (34.03) (12.00) Income tax relating to above items (11.89) (4.15) Other comprehensive income for the year, net of income tax (22.14) (7.85) EESL Annual Report 2018-19 Notes to Standlone financial statements 141 c) Reconciliation of tax expense and the accounting profit multiplied by India’s domestic tax rate: ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Profit before tax 17,111.90 6,150.23 Tax using the Company’s domestic tax rate of 34.944% (31 March 2018: 34.61 %) 5,979.58 2,128.47 Tax effect of: Non-deductible tax expenses 1,051.90 (282.17) Previous year tax liability - 421.40 Others 570.44 (63.72) At the effective income tax rate of 44.42% (31 March 2018: 35.84%) 7,601.92 2,203.98 d) The Company has paid tax on dividend distribution @ 20.55% during the year out of its reserves. 42 Disclosure as per Ind AS 33 'Earnings per Share' ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Basic earnings per share* [A/B] 1.46 0.85 Diluted earnings per share* [A/C] 1.11 0.85 Nominal value per share 10.00 10.00 *rounded upto two decimal places a) Profit attributable to equity shareholders [A] 9,509.98 3,946.24 b) Weighted average number of equity shares ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Opening balance of issued equity shares 46,20,00,000 46,20,00,000 Effect of shares issued during the year, if any 19,15,91,854 - Weighted average number of equity shares for Basic EPS [B] 65,35,91,854 46,20,00,000 Effect of dilution 20,50,69,246 2,71,233 Weighted average number of equity shares for Diluted EPS [C] 85,86,61,100 46,22,71,233 43 Disclosure as per Ind AS 17 on 'Leases' a) Operating leases The Company has taken certain residential/office premises and warehouses under non-cancellable operating lease arrangements. Lease rentals are subject to escalation of upto 15% per annum. Lease rental expenses charged during the year to the Statement of Profit and Loss amounts to ` 2,015.59 Lakhs (31 March 2018: ` 757.37 Lakhs). Total future minimum lease payments due under non-cancellable operating leases are as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Less than one year 1,370.95 1,538.58 Between one and five years 2,410.64 3,108.80 More than five years - 1,054.46 Total 3,781.59 5,701.84 142 Notes to Standlone financial statements EESL Annual Report 2018-19 b) Finance leases The Company provides electrical vehicles (E-vehicles) on finance lease for a period of six years. Lease rentals are subject to escalation of 0% to 10% per annum. Total future minimum lease payments due under non-cancellable finance leases are as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Less than one year 1,077.85 - Between one and five years 4,171.86 - More than five years 668.11 - Total minimum lease payments 5,917.82 - Unearned finance income 1,204.79 - Present value of minimum lease payments 4,713.03 - Present value of future minimum lease payments due under non-cancellable finance leases are as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Less than one year 812.22 - Between one and five years 3,254.16 - More than five years 646.65 - Present value of minimum lease payments 4,713.03 - The Company provides E-vehicles on lease to various customers. Up to 31 March 2018, such leases were classified as operating lease. The Company has reevaluated the leasing arrangements and concluded that these lease should be classified as finance lease as per Ind AS 17, 'Leases'. The change in classification of leases has resulted in a reduction in profit before tax by ` 13.33 Lakhs and tax expense by ` 4.66 Lakhs for the year ended 31 March 2019. Impact of such change on earnings per share is not material. 44 Contingent liabilities and commitments ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Contingent liabilities Irrevocable stand by letter of credit in favour of ICICI Bank, UK for £5.5 Millions 4,976.16 5,407.04 in the favor of M/s EESL EnergyPro Assets Limited in London, UK valid upto 22 March 2020 with claim expiry upto 31 March 2020 against the Company's non-fund based bank guarantee limit Corporate guarantee given to Bank of Baroda, UK for availment of equity bridge 12,666.58 12,919.84 loan of £12Millions by M/s EESL EnergyPro Assets Limited in London, UK Corporate guarantee given to Bank of Baroda, UK for availment of equity bridge 2,714.27 - loan of £3 Millions by M/s EESL EnergyPro Assets Limited in London, UK Corporate guarantee given to investee bank PLC, UK for availment of equity - 3,691.38 bridge loan of £3 Millions by M/s EESL EnergyPro Assets Limited in London, UK Claims against the Company not acknowledged as debt 9,291.06 5,921.11 (VAT paid under protest) Bank guarantees- lien against fixed deposits 2,027.90 23.65 On account of wage revision as per agreeement with Mass Management - 28.00 Services Private Limited Total 31,675.97 27,991.03 Commitments Estimated value of contract to be executed on capital/revenue account and 13,83,403.70 10,00,354.48 not provided for in the books of accounts Total 13,83,403.70 10,00,354.48 EESL Annual Report 2018-19 Notes to Standlone financial statements 143 45 Corporate Social Responsibility Expenses (CSR) As per Section 135 of the Companies Act, 2013 read with guidelines issued by Department of Public Enterprises, GOI, the Company is required to spend, in every financial year, at least two per cent of the average net profits of the Company made during the three immediately preceding financial years in accordance with its CSR Policy. However, the Company has not spent the minimum amount on the CSR activities as per the provisions of Section 135 of the Companies Act, 2013 and its schedule VII read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. The details of CSR expenses for the year are as under: a) Amount required to be spent on CSR activities ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Amount required to be spent during the year 128.90 96.94 Amount spent during the year on- Construction/ acquisition of any asset 4.66 12.27 On purposes other than (i) above 15.40 - Total 20.06 12.27 b) Amount spent on CSR activities ` in Lakhs Particulars In cash Yet to be paid in cash Total Amount spent during the year ended 31 March 2019 Construction/acquisition of any asset 4.66 - 4.66 On purposes other than (i) above 11.40 4.00 15.40 Amount spent during the year ended 31 March 2018 Construction/acquisition of any asset 10.85 1.42 12.27 On purposes other than (i) above - - - c) Break-up of the CSR expenses under major heads is as under: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Swachh Vidyalaya Abhiyan 8.80 - Healthcare and sanitation - 12.27 Education and skill development 6.60 - Construction of toilets 4.66 - Total 20.06 12.27 46 Central Board of Direct Taxes on 31 March 2015 notified 10 ICDS vide Notification no. 32/2015 [F. No. 134/48/2010 – TPL]/ SO 892(E), which is applicable to all taxpayers (corporate and non-corporate) following mercantile method of accounting including nonresident taxpayers. It applies to income computed under the head Profit and Gains of Business and Profession and Income from Other Sources. However, there is no impact on computation of Book Profits for the purposes of MAT (Minimum Alternate Tax), which will continue to be governed by the methodology according to the Companies Act, 2013. 47 Major Investments made during the year: a) The Company has subscribed to 8,000,000 shares (31 March 2018: 21,515,000 shares) having Face Value of £1/- each in M/s. EESL Energypro Assets Limited in London, UK equivalent to 80% shares in Equity for GBP 8,000,000.00 (` 7,762.05 Lakhs) (31 March 2018: GBP 21,515,000.00 (` 19,179.78 Lakhs)). b) The Company has made an advance payment of ` 48.23 Lakhs (31 March 2018: ` 89.21 Lakhs) during the year towards the purchase of property at NBCC Center, Sahkar Marg, Jaipur for its Regional Office at Jaipur. c) The Company has also made an advance payment of ` 88.89 Lakhs (31 March 2018: ` 88.89 Lakhs) during the year towards the purchase of Built up offices in NBCC Square, Action Area-III, Rajarhat, Kolkata. d) The Company has also made an advance payment of ` Nil (31 March 2018: ` 1,103.72 Lakhs) towards the purchase of Built up offices in commercial complex, NBCC, Nauroji Nagar New Delhi. 144 Notes to Standlone financial statements EESL Annual Report 2018-19 48. Disclosure as per Ind AS 24 'Related Party Disclosures' a) List of Related parties: (i) Entities having joint control over the company: Power Finance Corporation Limited NTPC Limited REC Limited Powergrid Corporation of India Limited (ii) Subsidiary of the company: EESL EnergyPro Assets Limited (with effect from 13 March 2018) (iii) Joint Ventures of the company: EESL EnergyPro Assets Limited (upto 12 March 2018) NEESL Private Limited (iv) Subsidiaries of subsidiary of the Company EPAL Holding Limited Edina Acquitions Limited Edina Power Services Limited Edina Limited Edina UK Limited Edina Manufacturing Limited Armoura Holdings Limited Stanbeck Limited Edina Power Limited Edina Australia Pty Limited EPSL Trigeneration Private Limited Aneco Energy Services (South) Limited Ceighton Energy Limited (v) Subsidiaries, joint ventures and associates of entities having joint control over the company: PFC Capital Advisory Services Limited PFC Consulting Limited PFC Green Energy Limited REC Power Distribution Co. Limited Utility Powertech Limited vi) Key Managerial Personnel (KMP): Saurabh Kumar Managing Director w.e.f. 7 May, 2013 Rajeev Sharma Director and Chairman w.e.f. 5 February, 2018 Kaushal Kishore Sharma Director and Chairman w.e.f. 21 October, 2016 upto 31 October, 2017 Raj Pal Nominee Director w.e.f.14 July, 2016 Vijay Kumar Singh Nominee Director w.e.f. 21 October, 2016 upto 14 November, 2018 Avakash Saxena Nominee Director w.e.f. 22 September, 2016 till 5 February, 2018 Pankaj Kumar Nominee Director w.e.f. 4 August, 2017 till 15 March, 2018 Mohit Bhargava Nominee Director w.e.f. 5 February, 2018 Sanjiv Garg Nominee Director w.e.f. 21 October, 2018 Abhay Bakre Nominee Director w.e.f. 8 May, 2018 Seethapathy Chander Independent Director w.e.f. 5 February, 2018 Gauri Surendra Trivedi Independent Director w.e.f. 5 February, 2018 Renu Narang Director (Finance) w.e.f. 1 March, 2018 upto 23 January, 2019 Venkatesh Dwivedi Director (P & BD) w.e.f. 7 February, 2019 Shankar Gopal Director (Comm) w.e.f. 7 February, 2019 Shankar Gopal Chief Financial Officer w.e.f. 8 June, 2016 upto 5 April, 2018 Shankar Gopal Chief Financial Officer w.e.f. 7 February, 2019 Renu Narang Chief Financial Officer w.e.f. 6 April, 2018 upto 23 January, 2019 Pooja Shukla Company Secretary w.e.f. 27 December, 2012 vii) Post Employment Benefit Plans: Energy Efficiency Services Limited Employees Group Superannuation Defined Contribution Scheme Trust EESL Annual Report 2018-19 Notes to Standlone financial statements 145 viii)Entities under the control of the same government: The Company is controlled by Central Government through its controlled entities (refer Note 16). Pursuant to Paragraph 25 and 26 of Indian Accounting Standard 24, entities over which the same government has control or joint control of, or significant influence, then the reporting entity and other entities shall be regarded as related parties. The Company has applied the exemption available for government related entities and have made limited disclosures in the financial statements. Such entities with which the Company has significant transactions include but not limited are: Bureau of Energy Efficiency NHPC Limited Oil and Natural Gas Corporation Limited Bharat Heavy Electricals Limited Coal India Limited Central Electronics Limited Indian Renewable Energy Development Agency Limited (IREDA) b) Transactions with the related parties are as follows: ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Manpower services received by the Company Utility Powertech Limited 1,984.82 1,917.19 Sales of goods NTPC Limited 5,873.43 7,953.05 Power Grid Corporation of India Limited 2,257.51 434.72 REC Limited 2.47 95.76 Power Finance Corporation Limited 8.11 205.94 Bureau of Energy Efficiency 10.52 2,269.46 Oil and Natural Gas Corporation Limited 728.75 380.10 Bharat Heavy Electricals Limited - 15.88 Total 8,880.79 11,354.90 Consultancy services Coal India Limited - 148.72 Indian Renewable Energy Development Agency Limited (IREDA) - 221.28 NHPC Limited - 555.95 Total - 925.96 Purchase of goods and services Bharat Heavy Electricals Limited 5,026.00 1,035.00 Central Electronics Limited 9,329.00 - Total 14,355.00 1,035.00 Recoverable expenses EESL EnergyPro Assets Limited - 216.49 Deputation of employees NTPC Limited 680.32 88.49 Equity contribution received NTPC Limited - 9,900.00 Power Grid Corporation of India Limited 1,520.44 - Power Finance Corporation Limited 9,900.00 - Total 11,420.44 9,900.00 Equity contribution paid EESL EnergyPro Assets Limited 7,762.05 19,179.78 NEESL Private Limited - 0.26 Total 7,762.05 19,180.04 146 Notes to Standlone financial statements EESL Annual Report 2018-19 Final dividend paid NTPC Limited 401.04 880.35 Power Grid Corporation of India Limited 61.59 135.21 REC Limited 239.31 880.35 Power Finance Corporation Limited 401.04 880.35 Total 1,102.98 2,776.27 Interim dividend paid NTPC Limited - 411.72 Power Grid Corporation of India Limited - 63.23 REC Limited - 411.72 Power Finance Corporation Limited - 411.72 Total - 1,298.39 Guarantee fees received EESL EnergyPro Assets Limited 361.37 190.68 Management fees received EESL EnergyPro Assets Limited 66.18 - Edina UK Limited 268.11 - Corporate guarantee provided (refer note 44) EESL EnergyPro Assets Limited 21,261.77 22,018.27 Transactions with post employment benefit plan Contributions made during the year 208.42 119.57 Compensation to Key Management Personnel (KMP) Short term benefits 140.75 96.02 Post employment benefits 15.92 5.85 Other long term benefits 0.40 0.28 Total 157.07 102.15 c) Outstanding balances with related parties are as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Amount recoverable for sale/purchase of goods and services NTPC Limited 4,349.98 4,894.98 Power Grid Corporation of India Limited 1,564.61 110.74 REC Limited 156.63 538.85 Power Finance Corporation Limited 133.16 263.76 PFC Capital Advisory Services Limited 2.32 2.32 PFC Consulting Limited 133.57 0.20 PFC Green Energy Limited 0.08 0.08 Total 6,340.35 5,810.92 Amount recoverable (other than loans) EESL EnergyPro Assets Limited 952.11 449.17 Edina UK Limited 182.68 - Amount payable (other than loans) Utility Powertech Limited 27.49 202.36 Outstanding compensation to KMP - 0.13 EESL Annual Report 2018-19 Notes to Standlone financial statements 147 d) Terms and conditions of transactions with the related parties (1) Transactions with the related parties are made on normal commercial terms and conditions and at market rates. (2) The contracts or arrangements or transactions entered into during the year ended 31 March 2019 which were at arm's length basis. (3) The Company is receiving manpower services from M/s Utility Powertech Ltd (UPL), a 50:50 joint venture between NTPC Limited and Reliance Infrastructure Ltd. (4) The Company provides consultancy services and sell goods to companies having joint control on which it recovers cost plus service charges from such companies. (5) Outstanding balances of related parties at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended 31 March 2019, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2018: ` Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. 49 Disclosure as per Ind AS 115, 'Revenue from contracts with customers' a) Nature of goods and services The revenue of the Company comprises of revenue from sale of goods and rendering of services. The following is a description of the principal activities: Revenue from sale of goods The Company sells energy efficient appliances such as LEDs, streetlights, solar lamps, agricultural pumps, energy efficient fans/tubes etc. (including standard warranties) to various customers. Majority of the revenue is derived from government customers. Sale of goods is made as per the terms and conditions mentioned in agreement entered into between the Company and the customer. Nature, timing of satisfaction of performance obligation and significant payment terms The Company recognises revenue from sale of goods at a point in time when control of the goods is transferred to the customers. The amount of revenue recognised as per the terms of the contracts and is adjusted for components of variable consideration, wherever applicable, which are estimated based on the historical data available with the Company. The amounts are billed as per the terms of the contracts and are payable within contractually agreed credit period which varies from 30 to 60 days. Revenue from rendering of services The Company provides energy efficiency services on ESCO model and consultancy services to various customers. Majority of the revenue is derived from government customers. Services are provided as per the terms and conditions mentioned in agreement entered into between the Company and the customer. Nature, timing of satisfaction of performance obligation and significant payment terms The Company recognises revenue from rendering of services over time as the customers simultaneously receive and consume the benefits provided by the Company. The amount of revenue recognised as per the terms of the contracts and is adjusted for components of variable consideration, wherever applicable, which are estimated based on the historical data available with the Company. The amounts are billed as per the terms of the contracts and are payable within contractually agreed credit period which varies from 30 to 60 days. b) Disaggregation of revenue Revenue is disaggregated by type and nature of goods and services and timing of revenue recognition. ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 (i) Nature of goods and services Sale of goods Ujala Scheme 37,231.30 57,887.33 Agricultural Demand Side Management 13,249.56 7,925.36 Street light projects 34,140.86 12,928.64 Solar lamps 15,395.60 6,471.45 Solar street light projects 7,307.51 18,543.46 Building projects 1,758.06 17.28 Others 2,445.00 1,014.75 Total [A] 1,11,527.89 1,04,788.27 Rendering of services Solar street light projects 64,290.18 23,741.35 148 Notes to Standlone financial statements EESL Annual Report 2018-19 Building projects 1,982.10 199.14 Solar lamps 191.57 834.73 Agricultural Demand Side Management 521.14 1,125.21 Solar street light projects 354.92 793.82 Others 4,897.44 4,111.75 Total [B] 72,237.35 30,806.00 Total [A + B] 1,83,765.24 1,35,594.27 (ii) Timing of revenue recognition Products and services transferred at a point in time 1,11,527.89 1,04,788.27 Products and services transferred over time 72,237.35 30,806.00 Total 1,83,765.24 1,35,594.27 * The Company has applied Ind AS 115 using the cumulative effect method. Under this method, the comparative information is not restated. c) Reconciliation of revenue recognised with contract price: ` in Lakhs Particulars For the year ended 31 March 2019 Contract price 1,83,765.24 Adjustments - Revenue from operations 1,83,765.24 d) Contract balances Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are transferred to unbilled revenue when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. The contract liabilities primarily relate to the advance consideration received from the customers which are referred as 'advances from customers' and advance billings referred as 'unearned revenue'. The following table provides information about trade receivables, unbilled revenue, advances from customers and unearned revenue from contracts with customers: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Trade receivables 1,83,148.24 1,16,182.54 Unbilled revenue Non-current 662.62 1,843.40 Current 2,234.05 4,782.86 Advances from customers 1,308.50 5.87 Unearned revenue 172.20 77.90 * The Company has applied Ind AS 115 using the cumulative effect method. Under this method, the comparative information is not restated. The amount of revenue recognised in 2018-19 from performance obligations satisfied (or partially satisfied) in previous periods, mainly due to delay in issuance of completion certificate by competent authorities is ` 3,956.70 Lakhs. The Company recognized revenue of ` 77.90 Lakhs arising from opening unearned revenue from customers as at 1 April 2018. There have been no significant changes in unearned revenue during the year ended 31 March 2019. Significant increase in advances from customers during the year ended 31 March 2019 is on account of cash received, excluding amounts recognised as revenue or adjusted against expenses during the year ended 31 March 2019. e) Practical expedients applied as per Ind AS 115: (i) The company has not disclosed information about remaining performance obligations that have original expected duration of one year or less and where the revenue recognised corresponds directly with the value to the customer of the entity's performance completed to date. There are no performance obligations that are completely or partially unsatisfied as of 31 March, 2019, other than those meeting this exclusion criteria. EESL Annual Report 2018-19 Notes to Standlone financial statements 149 (ii) The Company does not expect to have any contracts for which revenue is recognised during the year where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company has not adjusted the transaction prices for the time value of money. f) Incremental costs of obtaining contracts The Company has not incurred any incremental costs of obtaining contracts with a customer and therefore, not recognised an asset for such costs. g) Significant Judgments (i) Significant judgments in determining the timing of satisfaction of performance obligation The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and transfer of significant risks and rewards to the customer etc. For performance obligations that are satisfied over time, the Company uses judgement to determine the method used for revenue recognition. The Company uses input method where the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of performance obligation. Revenue is recorded proportionally based on measure of progress. The Company uses output method where direct measurements of value to the customer is based on survey’s of performance completed to date. (ii) Significant judgment in determining the transaction price and allocation of transaction price Judgement is also required to determine the transaction price for the contract. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. h) The Company adopted Ind AS 115 using the cumulative effect method and therefore the comparatives have not been restated and continues to be reported as per Ind AS 18. On account of adoption of Ind AS 115, no cumulative adjustment was required as at 1 April 2018. Further, no financial statement line items are affected in the current year as a result of applying Ind AS 115 as compared to Ind AS 18. 50 Information in respect of micro and small enterprises as required by Micro, Small and Medium Enterprises Development Act, 2006: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 a) Amount remaining unpaid to any supplier: Principal amount 9,492.07 - Interest due thereon - - b) Amount of interest paid in terms of Section 16 of the MSMED Act - - along-with the amount paid to the suppliers beyond the appointed day. c) Amount of interest due and payable for the period of delay in making - - payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the MSMED Act. d) Amount of interest accrued and remaining unpaid - - e) Amount of further interest remaining due and payable even in the - - succeeding years, until such date when the interest dues as above are actually paid to the small enterprises, for the purpose of disallowances as a deductible expenditure under Section 23 of MSMED Act 51 Reclassifications and comparative figures Certain reclassifications have been made to the comparative period’s financial statements to enhance comparability with the current year’s financial statements. As a result, certain line items have been reclassified in the statement of cash flows and notes to the financial statements, the details of which are as under: Items of balance sheet before and after reclassification as at 31 March 2018 ` in Lakhs Particulars Before Reclassification After reclassification reclassification Cash and cash equivalents 52,066.97 (5.30) 52,061.67 Other financial assets 6,333.58 (729.78) 5,603.80 Other current assets 24,369.21 735.08 25,104.29 150 Notes to Standlone financial statements EESL Annual Report 2018-19 Items of statement of profit and loss before and after reclassification for the year ended 31 March 2018 ` in Lakhs Particulars Before Reclassification After reclassification reclassification Net actuarial gains/(losses) on defined benefit plans (7.85) (4.15) (12.00) Income tax relating to above item - 4.15 4.15 Items of statement of cash flows before and after reclassification for the year ended 31 March 2018 ` in Lakhs Particulars Before Reclassification After reclassification reclassification Cash flow from operating activities 64,359.06 465.19 64,824.25 Cash flow from investing activities (1,45,147.01) 221.93 (1,44,925.08) Cash flow from financing activities 1,06,387.85 (692.42) 1,05,695.43 Cash and cash equivalents at the end of the period 52,066.97 (5.30) 52,061.67 52 Disclosure as per Ind AS 21 'The Effects of Changes in Foreign Exchange Rates' The amount of exchange differences (net) credited to the statement of profit and loss is ` 2,462.46 Lakhs (31 March 2018: debited to Statement of profit and loss ` 3,978.07 Lakhs). 53 Disclosure as per Ind AS 20 'Accounting for Government Grants and Disclosure of Government Assistance' International Bank for Reconstruction and Development ("World Bank") acting as an implementation agency of the Global Environment Facility ("GEF") had sanctioned a grant of USD 1,500,000 for implemention of SAP . Total grant amounting to ` 1,062.56 Lakhs has been received out of the sanctioned amount. There are no unfulfilled conditions or other contingencies attached to above grant.“During the year, the Company has received ` 290.73 Lakhs (31 March 2018: ` 611.37 Lakhs) as grant from World Bank and has recognised ` 397.64 Lakhs (31 March 2018: ` 0.17 Lakhs) as grant income (refer note 30). 54 Standards issued but not yet effective On 30 March 2019, Ministry of Corporate Affairs (MCA) has notified the following standards/ appendix/ amendments which will come into force from 1 April 2019: a) Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments Appendix C of Ind AS 12, 'Uncertainty over Income Tax Treatments' is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The standard permits two possible methods of transition: • Full retrospective approach – Under this approach, Appendix C will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 – Accounting Policies, Changes in Accounting Estimates and Errors • Retrospectively with cumulative effect of initially applying Appendix C recognized by adjusting equity on initial application The Company will adopt the standard on 1 April 2019 and has decided to adjust the cumulative effect in equity on the date of initial application i.e. 1 April 2019 without adjusting comparatives. b) Ind AS 116 ‘Leases’ The new leasing standard will replace the existing leases standard, Ind AS 17 Leases, and related Interpretations. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Currently, operating lease expenses are charged to the statement of profit and loss on a straight line basis. Lessor accounting remains similar to the current standard – i.e. lessors continue to classify leases as finance or operating leases. Further, the new standard contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17. The standard permits two possible methods of transition: • Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors EESL Annual Report 2018-19 Notes to Standlone financial statements 151 • Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (modified retrospective approach) Under modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease payments, discounted at the incremental borrowing rate and the right of use asset either as: • Its carrying amount as if the standard had been applied since the commencement date, but discounted at lessee’s incremental borrowing rate at the date of initial application or • An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that lease recognized under Ind AS 17 immediately before the date of initial application. Certain practical expedients are available under both the methods. Certain practical expedients are available under both the methods. The Company will adopt the standard on 1 April 2019 by using the modified retrospective approach and accordingly comparatives for the year ended 31 March 2019 will not be retrospectively adjusted. c) Amendment to Ind AS 12 'Income taxes' The amendments to the guidance in Ind AS 12, ‘Income Taxes’, clarifies that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the past transactions or events that generated distributable profits were originally recognized. d) Amendment to Ind AS 19 'Employee benefits' The amendments to the guidance in Ind AS 19, ‘Employee Benefits’, in connection with accounting for plan amendments, curtailments and settlements require an entity: • to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and • to recognize in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognised because of the impact of the asset ceiling. e) Amendment to Ind AS 23 'Borrowing Costs' The amendments to the guidance in Ind AS 23, ‘Borrowing Costs’, clarifies the following: • while computing the capitalisation rate for funds borrowed generally, borrowing costs applicable to borrowings made specifically for obtaining a qualified asset should be excluded, only until the asset is ready for its intended use or sale. • borrowing costs (related to specific borrowings) that remain outstanding after the related qualifying asset is ready for its intended use or sale would subsequently be considered as part of the general borrowing costs. f) Amendment to Ind AS 28 'Investments in Associates and Joint Ventures' The amendments to the guidance in Ind AS 28, 'Investments in Associates and Joint Ventures', clarifies that an entity applies Ind AS 109 Financial Instruments, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. The Company is evaluating the requirements of the above amendments and the effect on the financial statements is being evaluated. For and on behalf of the Board of Directors As per our audit report of even date annexed. For KK Soni & Co. Chartered Accountants (FRN 000947N) Saurabh Kumar S. Gopal Pooja Shukla Sant Sujat Soni Managing Director Director Commercial and CFO Company Secretary Partner DIN : 06576793 DIN : 08339439 M. No. 094227 Place : New Delhi Date : 27th May, 2019 152 Notes to Standlone financial statements EESL Annual Report 2018-19 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ENERGY EFFICIENCY SERVICES LIMITED Report on the Audit of the Consolidated Financial Statements Qualified Opinion We have audited the accompanying consolidated financial statements of Energy Efficiency Services Limited ("the Holding Company") and its Subsidiary (the Holding Company and its subsidiary together referred to as "the Group"), and its joint venture, which comprise the consolidated balance sheet as at 31st March 2019, the consolidated statement of Profit and Loss (including Other Comprehensive Income), the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the consolidated financial statements"). In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of reports of other auditors on separate financial statements and on the other financial information of the subsidiary and the joint venture as referred to in the 'Other Matters' paragraph below, except for the effect of the matters described in Basis for Qualified Opinion section of our report, the aforesaid consolidated financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group and its joint ventures as at March 31, 2019, their consolidated net profit (financial performance including other comprehensive income), their consolidated changes in equity and consolidated cash flows for the year ended on that date. Basis for Qualified Opinion 1. The Holding Company is in the process of compiling certain data and reconciling the amounts billable, receivable & payable under the various agreements entered into with various States, Urban Local Bodies (ULB's) and other organizations under its Energy Service Company (ESCO) model, verification of physical inventory and assets under the scheme & otherwise and reconciliation as to assets to be installed, assets installed pending capitalization, assets capitalized (including capitalization of related direct & indirect cost) and assets against which revenue is booked (as per applicable Indian Accounting Standards) as per the agreements. We are unable to comment upon the differences that may exist and their impact on various account heads such as Capital Work in Progress, Property Plant & Equipment, Inventories, Trade Receivable / Payable, revenue recognition and any other consequential impact on the statement if any, pending completion of such verification and reconciliation. (Refer Note No. 3 a)). 2. Trade receivables are due from government-controlled entities and other customers. Significant amount of ` 60182.89 Lakhs is outstanding for the period of more than 360 days as on 31 March 2019 (Rs. 35889.98 Lakhs for the previous year ended 31.03.2018). The Group has represented that it earns its revenue mainly from government-controlled entities (both central and state government) and hence risks attached to such receivables are considered to be insignificant. For rest of the customers, the group does an assessment/evaluation of credit risk based on factors such as ageing of dues, specific credit circumstances, nature and credit worthiness of the non-government- controlled entities/customers. The group has not furnished any records or evidences to demonstrate that such an evaluation and assessment has been carried out. Therefore, we are unable to quantify the impact on the statement on account of any possible allowance on doubtful trade receivables due to expected credit loss once such evaluation is done. (Refer Note No. 38 (a)). This was also a subject matter of Qualification in the previous auditor's report on the consolidated financial statements for the year ended 31 March 2018 3. For Financial assets for which loss allowance is measured using life time expected credit losses in the Financial Statements, the group has represented that its customers have capacity to meet the obligations and therefore the risk of default is low. Further, management believes that the unimpaired amounts that are past due are still collectible in full, based on historical payment behaviour. However, an allowance for doubtful receivables of ` 196.65 Lakhs was recognised during the year ended 31.03.2019 (` 196.64 Lakhs for the previous year ended on 31.03.2018) i.e., to the extent of 10% of the total outstanding of ` 1966.40 Lakhs, thereby making a total provision of ` 393.29 Lakhs i.e., 20% of total Outstanding as on 31.03 2019, in respect of cases which are under litigation for recovery. The group has not been able to demonstrate and produce any evidence that such cases were actually assessed/evaluated for ascertaining credit risk based on factors such as ageing of dues, specific credit circumstances, nature and credit worthiness of the customers as defined in the policy of the management for the purpose of creating allowance on such doubtful trade receivables due to expected credit loss in case of default. Therefore, we are unable to quantify the actual impact on the statement on account of further possible allowance on such doubtful trade receivables (which are under litigation for recovery) due to expected credit loss once such evaluation is done. (Refer Note 38 a) (ii). This was also a subject matter of Qualification in the previous auditor's report on the consolidated financial statements for the year ended 31 March 2018. 4. The group had deferred 'Advertisement Expenses' amounting to ` 4907.39 Lakhs in the previous years, from which it has charged an amount of ` 619.89 Lakhs in the Statement of Profit & Loss for the year ended 31.03.2019 as Media Expenses. The group continues to defer and carry the balance amount of ` 4287.50 Lakhs as Prepaid Expenditure shown under the head Other Current Assets in the Financial Statements contrary to the principles enunciated under Ind AS 38 on 'Intangible Assets', as per which such expenses should be charged to the Profit & Loss Account. (Refer Note 17 (b)). This was also a subject matter of Qualification in the previous auditor's report on the consolidated financial statements for the year ended 31 March 2018. 5. The Holding Company has entered into agreements with Municipal Corporation for replacement of old conventional streetlights with LED Energy efficient streetlights. The Holding Company follows the practice to capitalize these assets in the books of accounts from the date of capitalization as indicated in the certificate issued by Municipal Corporation and the depreciation is charged accordingly from the date of capitalization which is inconsistent with the provisions of Ind AS 16 on Property Plant and Equipment wherein the projects need to be capitalized and depreciated when it is available for use. EESL Annual Report 2018-19 Independent Auditor's Report 153 a) In the current year the Holding Company has received certain completion certificates from the municipal corporation(s), wherein the completion dates mentioned in the certificate falls in the previous year. The holding company has capitalized these assets in the books of accounts from the completion dates as indicated in the certificates and has charged depreciation of Rs 2135.02 Lakhs on these assets in the Statement of Profit & Loss in current financial year which pertain to the previous year, which is inconsistent with the provisions of Ind AS 8 on 'Accounting Policies, Change in Accounting Estimates and Errors', wherein the Prior Period error has to be corrected by restating the comparative amounts. This has resulted in the understatement of Profit for the current year and overstatement of the profit for the previous year to that extent. (Refer Note No. 3 b)). b) Further, in the current year, the CWIP carries amounts pertaining to various projects which are under various stages of completion and have not been capitalized in the books of accounts due to non - receipt of completion certificates from Municipal Corporation, irrespective of the fact that the asset may be available for use. The impact of this cannot be ascertained by the holding company as it needs to carry out an exercise to ascertain the various projects where the asset is available for use but the completion certificate from the Municipal Corporation is pending. We conducted our audit of the consolidated financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the-Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group and its Joint Ventures in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAO together with the ethical requirements that are relevant to our audit of the consolidated financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports as referred to in sub-paragraph (a) of the 'Other Matters' paragraph below, is sufficient and appropriate to provide a basis for our opinion on the consolidated financial statements. Emphasis of Matter We draw attention to the following matters in the notes to the Consolidated Financial Statements: 1. Note No. 31 b) which states that the Holding Company has recognized revenue under agreements with ULBs based on certain assumptions I estimates for which it is seeking clarification from the respective ULBs. 2. Note no. 11 c) on Trade Receivables and Note no. 27 a) on Trade Payables which state that Trade Receivables and Trade Payables are subject to confirmations, reconciliation and consequential adjustments that may arise on reconciliation. 3. Note no. 17 a) and Note No 29 a) which state that the sales, corresponding output tax liability and purchases along with corresponding input tax credit reported in GST and VAT returns, the net input tax credit receivable or the net output tax liability payable, as the case may be, are subject to reconciliation with the books of accounts. Differences which will be identified on reconciliation of GST/VAT returns will be addressed in annual GST/VAT statements/Revised returns to be filed in due course. 4. Note no. 38 a) (ii) on Financial Risk Management which states that the group has not made a provision of Rs. 1650 lakhs on account of subsidy not received from Delhi Government/DERC as per the recommendation made by the CAG of India in their report dated 18th October 2017 issued to group. However, the management is of the view that the recovery is being followed up with concerned authority, which is under review and the management is confident for recovery of their dues. Our opinion is not modified in respect of these matters. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report. Considering the requirement of Standard on Auditing (SA 600) on 'Using the Work of Another Auditor' including materiality, below Key Audit Matters have been reproduced from the Independent Auditor's Report on the Audit of Standalone Financial Statements of the Holding Company. Sr. No. Key Audit Matter How our Audit addressed the Key Audit Matter 1. Classification of E-Vehicle given on Lease We have obtained an understanding and analysed the contracts for E-Vehicles given on lease to various parties w.r.t. to terms of the The number of E-Vehicles given on lease by the company lease specified under the contract. has increased significantly during the year and Management's judgment and assessment is required for Management's judgments and the conditions stipulated in the Ind classification of such leases as Operating Lease or finance AS 17 "Leases" for classification of lease as Operating Lease or lease. Finance Lease were assessed w.r.t the terms of the lease specified in the contract. We identified this as a Key Audit Matter because classification of such leases involves significant Based on the above procedures performed, the recognition of E- management judgment and it may be subject to Vehicles as finance lease, are considered adequate and reasonable. management bias. (Refer Note 47(b)(i)) 154 Independent Auditor's Report EESL Annual Report 2018-19 2. Recognition of revenue under agreements with Urban An understanding of the agreements with ULBs was obtained in Local Bodies (ULBs). respect of the payments terms specified under the contract for recognition of revenue under the agreement and adopted the following The Company has recognised revenue under agreements audit procedures: with ULB 's based on certain assumptions / estimate in respect of certain areas not specifically covered under - Evaluated and tested the effectiveness of the company's design the agreements. of internal controls relating to recognition and measurement of revenue under the agreements with ULBs. This is considered as Key Audit Matter due to its nature and extent of estimates made by the company, which leads - The reasonability of the assumptions / estimates made by the to recognition and measurement of Revenue under the company for the recognition of revenue under agreements with agreements with ULBs. ULBs was assessed. (Refer Note No. 29 b)) - Verified the accounting of revenue under the agreements with ULBs based on the IND AS 115 "Revenue from Contracts with Customers" Based on the above procedures performed and based on the representation by the company that they are in the process of seeking clarification on such matters, the recognition of revenue under the agreements with ULBs is considered to be adequate and reasonable. Information Other than the Consolidated Financial Statements and Auditor's Report Thereon The Holding Company's Board of Directors is responsible for preparation of the other information. The other information comprises the information included in the Board's Report including annexures to the Board's Report, but does not include the consolidated financial statements and our auditor's report thereon. The above Report is expected to be made available to us after the date of this Auditor's Report. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the above identified reports, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions necessitated by the circumstances and the applicable laws and regulations. Responsibility of Management and Those Charged with Governance for the Consolidated Financial Statements The Holding Company's Board of Directors is responsible for the preparation and presentation of these consolidated financial statements in terms of the requirements of the Act, that give a true and fair view of the consolidated financial position, consolidated financial performance including other comprehensive income, consolidated statement of changes in equity and consolidated cash flows of the Group including its joint ventures in accordance with the accounting principles generally accepted in India including the Accounting Standards specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended. The Respective Board of Directors of the Companies included in the Group and of its Joint Ventures are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the group and its joint ventures and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparations of the consolidated financial statements by the directors of the holding company, as aforesaid. In preparing the consolidated financial statements, the respective Board of Directors of the Companies included in the Group and of its Joint Venture are responsible for assessing the ability of the Group and of its Joint venture to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The respective Boards of Directors of the Companies included in the Group and of its Joint Ventures are responsible for overseeing the financial reporting process of the Group and of its Joint Venture. Auditor's Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our EESL Annual Report 2018-19 Independent Auditor's Report 155 opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group and its joint venture to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group and its joint venture to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group and joint venture to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities included in the Consolidated Financial Statements of which we are the independent auditors. For the other entities included in the Consolidated Financial Statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Materiality is the magnitude of misstatements in the consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the consolidated financial statements may be influenced. We consider quantitative materiality and qualitative factors in i. planning the scope of our audit work and in evaluating the results of our work; and ii. to evaluate the effect of any identified misstatements in the consolidated financial statements. We communicate with those charged with governance of the Holding Company and such other entities included in the consolidated financial statements of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Matter We did not audit the financial statements / financial information of one direct foreign subsidiary of the Holding Company, whose consolidated financial statements (which included 13 step down subsidiaries) reflect total assets of Rs. 84472.77 lakhs as at 31' March 2019, total revenue of Rs. 63582.61 lakhs and net cash outflows amounting to Rs. 2474.01 lakhs for the year ended on that date, as considered in the consolidated financial statements of the Group. These financial statements / financial information have been certified by the management and our opinion on Consolidated Financial Statements, in so far as it relates to the amounts and disclosures included in respect of the said direct foreign subsidiary and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiary, is based solely on such certification. The consolidated Financial Statements also include the Group's share of Net Profit of Rs. 3.05 lakhs and Comprehensive Income of NIL for the year ended 31st March 2019, as considered in the consolidated financial statements of the Group, in respect of one Joint Venture, whose financial statement / financial information have neither been audited by their auditors nor by us . These Financial statement / financial information are unaudited and have been certified by the Management and our opinion on Consolidated Financial Statements, in so far as it relates to the amounts and disclosures included in respect of the Joint Venture and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid Joint Venture, is based solely on such certification. Our opinion is not modified in respect of these matters. Report on Other Legal and Regulatory Requirements 1. As required by Section 143(3) of the Act, based on our audit of the Holding company we report, to the extent applicable to the Holding Company that: (a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; 156 Independent Auditor's Report EESL Annual Report 2018-19 (b) in our opinion, proper books of account as required by law have been kept by the Holding Company so far as it appears from our examination of those books; (c) The accounts of one foreign branch of the company situated in London that reflect total Assets of Rs. 717.61 lakhs as at 31st March 2019 and total Revenue Rs. 561.02 lakhs for the year ended on that date are unaudited and certified by the management. (d) the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement and the statement of changes in equity dealt with by this Report are in agreement with the relevant books of account; (e) in our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with relevant rule issued there under; (f) on the basis of the written representations received from the directors of the Holding Company as on 31st March, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2019 from being appointed as a director in terms of Section 164 (2) of the Act. However, in the case of Gauri Trivedi, Ministry of Corporate Affairs (MCA) had freezed her Directors Identification Number (DIN) on the grounds that one of the companies in which she was a director had failed to file Annual Returns and Financial Statements for the years 2014-15 to 2016- 17, which was reactivated by MCA after she procured a Stay Order from the Hon'ble High Court of Gujarat as on 26 December, 2018. Further, in the case of Sh Sanjiv Garg, one of the Companies in which he is a director has not filed Annual Returns and or Financial Statements for past three Financial Years, reportedly due to reasons beyond the control of the Company and its Management and has been marked a Status of 'Management Dispute' by the Registrar of Companies; (g) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A"; and (h) with respect to the matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act, as amended: In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Holding Company to its directors during the year is in accordance with the provisions of section 197 of the Act. (i) with respect to the other matters to be included in the Auditor's Report in accordance witl Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The Holding Company has disclosed the impact of pending litigations on its financial position in its consolidated financial statements - Refer Note 54 to the consolidated financial statements ii. The Holding Company did not have any on long-term contracts including derivative contracts for which there were any material foreseeable losses. iii. There were no amount which were required to be transferred to the Investor Education and Protection Fund by the Holding Company. For KK Soni & Co. Chartered Accountants FRN: 000947N CA. Sant Sujat Soni Place: New Delhi Partner Date: 2nd July, 2019 Membership number: 094227 EESL Annual Report 2018-19 Independent Auditor's Report 157 Annexure - A to the Independent Auditors' Report Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act") In conjunction with our audit of the Consolidated Financial Statements of the Energy Efficiency Services Limited ("the Holding Company") and its direct foreign subsidiary company which are incorporated outside India (the Holding company and its subsidiary together referred to as "the Group") and its joint venture which is a company incorporated in India as of and for the year ended 31' March 2019, we have audited the internal financial controls over financial reporting in financial statements of the Holding Company (excluding its subsidiary which is incorporated outside India and its joint venture, which is a company incorporated in India and is unaudited), as of that date. Management's Responsibility for internal Financial Controls The respective Board of Directors of the Holding Company and its joint venture, which are companies incorporated in India, are responsible for establishing and maintaining internal financial controls over financial reporting in financial statements based on the internal control over financial reporting in financial statements criteria established by the Company incorporated in India considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls over financial reporting in financial statements that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013. Auditors' Responsibility Our responsibility is to express an opinion on the internal financial controls over financial reporting in financial statements of the Holding Company and its joint venture company as aforesaid, based on-our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") issued by the ICAI and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls over financial reporting in financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting in financial statements were established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting in financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting in financial statements included obtaining an understanding of internal financial controls over financial reporting in financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting in financial statements of the Holding Company and its Joint Venture Company as aforesaid. Meaning of Internal Financial Controls over Financial Reporting A company's internal financial control over financial reporting in financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting in financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting in financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting in financial statements to future periods are subject to the risk that the internal financial control over financial reporting in financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion In our opinion, to the best of our information and according to the explanations given to us, except for the effects related to the Qualifications given under the paragraph -"Basis for Qualified Opinion" of the Independent Auditor's Report, the Holding Company, have in all material respects, an adequate internal financial controls over financial reporting in financial statements and such internal financial controls over financial reporting in financial statements were operating effectively as at 31st March 2019, based on the internal control over financial reporting in financial statements criteria established by the Holding Company, considering the essential components of internal control stated in the Guidance Note issued by the ICAI. 158 Annexure - A to the Independent Auditors' Report EESL Annual Report 2018-19 Other Matters Our aforesaid audit report under section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting in financial statements with reference to Consolidated Financial Statements in so far as it relates to one Joint Venture incorporated in India (whose financial statements / financial information are unaudited) and our opinion on the adequacy and operating effectiveness of internal financial controls over financial reporting in financial statements with reference to Consolidated Financial Statements of the Group is not affected as the Group's share of Net profit / loss (including other comprehensive income) and disclosures included in respect of these joint ventures in these consolidated financial statements are not material to the Group. Our report is not modified in respect of above matter For KK Soni & Co. Chartered Accountants FRN: 000947N CA. Sant Sujat Soni Place: New Delhi Partner Date: 2nd July, 2019 Membership number: 094227 EESL Annual Report 2018-19 Annexure - A to the Independent Auditors' Report 159 ENERGY EFFICIENCY SERVICES LIMITED CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2019 ` in Lakhs Particulars Note No. As at 31 March, 2019 As at 31 March, 2018 ASSETS Non-current Assets Property, plant and equipment 2A 1,87,084.56 91,157.78 Capital work-in-progress 3 1,21,606.23 1,29,348.91 Goodwill 2B 43,307.56 44,163.34 Other intangible assets 2B 1,526.27 1,636.48 Investments in joint venture accounted for using equity method 4 5.96 2.91 Financial assets Investments 5 1,527.24 1,440.51 Loans 6 5,713.72 5,475.59 Other financial assets 7 10,290.57 3,814.49 Deferred tax assets (net) 8 559.16 356.80 Other non-current assets 9 1,350.64 1,703.37 Total non-current assets 3,72,971.91 2,79,100.18 Current assets Inventories 10 34,752.96 41,297.89 Financial assets Trade receivables 11 1,94,375.67 1,29,847.96 Cash and cash equivalents 12 43,820.05 55,872.89 Bank balances other than cash and cash equivalents 13 33,794.43 6,857.92 Loans 14 364.34 166.33 Other financial assets 15 8,351.05 5,621.87 Current tax assets (net) 16 3,815.83 2,548.92 Other current assets 17 46,616.86 25,599.98 Total current assets 3,65,891.19 2,67,813.76 TOTAL ASSETS 7,38,863.10 5,46,913.94 EQUITY AND LIABILITIES Equity Equity share capital 18 67,520.44 46,200.00 Other equity 19 14,897.00 18,122.45 Equity attributable to owners 82,417.44 64,322.45 Non-controlling interests 4,576.33 4,684.84 Total equity 86,993.77 69,007.29 Liabilities Non-current liabilities Financial liabilities Borrowings 20 2,93,701.06 2,06,514.95 Trade payables 21 (A) total outstanding dues of micro enterprises and small enterprises 1,277.49 - (B) total outstanding dues of creditors other than micro enterprises 10,523.97 - and small enterprises Other financial liabilities 22 40,680.09 8,019.85 Provisions 23 280.94 410.39 Deferred tax liabilities (net) 24 814.06 349.98 Other non-current liabilities 25 486.68 643.19 Total non-current liabilities 3,47,764.29 2,15,938.36 Current liabilities Financial liabilities Borrowings 26 83,544.93 71,344.06 Trade payables 27 (A) total outstanding dues of micro enterprises and small enterprises 8,214.58 - (B) total outstanding dues of creditors other than micro enterprises 1,40,513.89 1,51,612.76 and small enterprises Other financial liabilities 28 42,419.93 31,197.63 Other current liabilities 29 23,602.56 7,006.56 Provisions 30 11.66 566.16 Current tax liabilities (net) 5,797.49 241.12 Total current liabilities 3,04,105.04 2,61,968.29 TOTAL EQUITY AND LIABILITIES 7,38,863.10 5,46,913.94 Significant Accounting Policies 1 The accompanying notes 1 to 56 form an integral part of these financial statements. For and on behalf of the Board of Directors As per our audit report of even date annexed. For KK Soni & Co. Chartered Accountants (FRN 000947N) Saurabh Kumar S. Gopal Pooja Shukla Sant Sujat Soni Managing Director Director Commercial and CFO Company Secretary Partner DIN : 06576793 DIN : 08339439 M. No. 094227 Place : New Delhi Date : 2nd July, 2019 160 Consolidated Balance Sheet EESL Annual Report 2018-19 ENERGY EFFICIENCY SERVICES LIMITED CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH 2019 ` in Lakhs Particulars Note No. For the year ended For the year ended 31 March 2019 31 March 2018 Income Revenue from operations 31 2,45,101.31 1,42,782.46 Other income 32 11,353.04 5,522.35 Total income 2,56,454.35 1,48,304.81 Expenses Purchase of stock-in-trade 1,30,798.94 1,06,538.06 Distribution expenses (Ujala) 2,119.29 4,901.04 Media expenses (Ujala) 2,630.99 861.04 (Increase)/Decrease in inventories 33 6,366.58 (14,528.60) Employee benefits expense 34 13,504.40 4,520.26 Finance costs 35 22,008.06 13,523.97 Depreciation and amortization expense 2 34,590.79 13,361.18 Other expenses 36 24,971.43 12,733.19 Total expenses 2,36,990.48 1,41,910.14 Profit before share of net profits of investments accounted for 19,463.87 6,394.67 using equity method and tax Add: Share of net profits of joint ventures accounted for using equity method 3.05 (167.84) Profit before tax 19,466.92 6,226.83 Tax expense 45 Current tax Current year 7,045.92 2,252.10 Earlier years - 421.40 Deferred tax credit 292.97 161.82 Total tax expense 7,338.89 2,835.32 Profit for the year 12,128.03 3,391.51 Other comprehensive income/ (expense) Items that will not be reclassified to profit or loss (net of tax) - Net actuarial losses on defined benefit plans (22.14) (7.85) Items that will be reclassified to profit or loss (net of tax) - Exchange differences on translation of foreign operations (2,111.51) 459.12 Other comprehensive income/ (expense) for the year, net of income tax (2,133.65) 451.27 Total comprehensive income for the year 9,994.38 3,842.78 Profit attributable to -Owners of Energy Efficiency Services Limited 11,658.23 3,468.89 -Non-controlling interests 469.80 (77.38) 12,128.03 3,391.51 Other comprehensive income attributable to -Owners of Energy Efficiency Services Limited (1,840.04) 357.42 -Non-controlling interests (293.61) 93.85 (2,133.65) 451.27 Total comprehensive income attributable to -Owners of Energy Efficiency Services Limited 9,818.19 3,826.31 -Non-controlling interests 176.19 16.47 9,994.38 3,842.78 Earnings per equity share (Par value ` 10/- each) 46 Basic (`) 1.78 0.75 Diluted (`) 1.36 0.75 The accompanying notes 1 to 56 form an integral part of these financial statements. For and on behalf of the Board of Directors As per our audit report of even date annexed. For KK Soni & Co. Chartered Accountants (FRN 000947N) Saurabh Kumar S. Gopal Pooja Shukla Sant Sujat Soni Managing Director Director Commercial and CFO Company Secretary Partner DIN : 06576793 DIN : 08339439 M. No. 094227 Place : New Delhi Date : 2nd July, 2019 EESL Annual Report 2018-19 Consolidated Statement of Profit and Loss 161 ENERGY EFFICIENCY SERVICES LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2019 ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 A Cash flow from operating activities Profit before tax 19,466.92 6,226.83 Adjustment for:- Depreciation and amortization expense 34,590.79 13,361.18 Interest income (5,761.52) (2,670.56) Net (gain)/loss on foreign currency transactions and translation (4,676.21) 3,854.04 Deferred rent expense (15.97) 29.03 Grant income (420.42) - Net loss on sale of property, plant and equipment 135.66 - Allowance for doubtful receivables 196.65 196.65 Finance costs 21,889.81 10,056.25 Share of net profits/(losses) of joint ventures (3.05) 167.84 Gain on financial assets measured at fair value through profit or loss (116.48) 6.81 Operating profit before working capital changes 65,286.18 31,228.07 Adjustment for: (Increase) in Trade receivables (63,646.12) (40,882.33) (Increase)/ Decrease in Inventories 6,366.58 (14,665.15) (Increase) in loans, other financial assets and other assets (31,475.81) 6,725.43 Increase in trade payables, other financial liabilities and other liabilities 61,574.00 89,121.14 Increase in provisions (717.98) 730.57 Cash generated from operations 37,386.85 72,257.73 Income tax paid 2,781.37 4,279.24 Net cash from operating activities (A) 34,605.48 67,978.49 B Cash flow from investing activities Acquisition of property, plant and equipment and intangible assets (1,20,154.30) (1,29,120.87) Payment for acquisition of subsidiary, net of cash acquired - (34,248.38) Investments - (1,925.05) Interest income 4,387.88 2,670.56 Bank balances other than cash and cash equivalents (26,973.74) 559.62 Loan given (238.13) (5,348.00) Net cash used in investing activities (B) (1,42,978.29) (1,67,412.12) C Cash flow from financing activities Proceeds from non-current borrowings 1,25,973.33 1,14,846.23 Repayment of non-current borrowings (12,513.07) (10,000.00) Net proceeds from current borrowings (3,570.73) 28,303.79 Finance costs (22,898.58) (9,668.68) Share application money (pending allotment) 11,420.44 9,900.00 Share issue costs (25.00) (25.01) Dividend paid (1,102.99) (4,074.69) Tax on dividend (491.07) (829.54) Net cash from financing activities (C) 96,792.33 1,28,452.10 Net (decrease) / increase in cash and cash equivalents (A+B+C) (11,580.48) 29,018.47 Effect of exchange differences on translation of foreign currency (472.36) 387.34 cash and cash equivalents Net increase in cash and cash equivalents (12,052.84) 29,405.81 Cash and cash equivalents at the beginning of the year 55,872.89 26,467.08 Cash and cash equivalents at the end of the period 43,820.05 55,872.89 162 Consolidated Cash Flow Statement EESL Annual Report 2018-19 Notes: a) Cash and cash equivalents consists of balances with banks. b) Reconciliation of cash and cash equivalents: ` in Lakhs Particulars As at 31 March, 2019 As at 31 March, 2018 Cash on hand 26.08 26.91 Balance with banks - Current accounts 43,790.35 55,839.59 Balance with banks - Deposit accounts 3.62 6.39 Cash and cash equivalents as per note-12 43,820.05 55,872.89 c) Reconciliation between the opening and closing balances of the balance sheet for liabilities arising from financing activities: ` in Lakhs Particulars Non-current borrowings* Current borrowings Interest on borrowings For the year ended 31 March 2019 Opening balance as at 1 April 2018 2,15,250.19 71,344.06 5,522.55 Cash flow during the year 1,13,460.26 (3,570.73) (22,898.58) Non-cash changes due to: - Transfer between current and (16,098.10) 16,098.10 non-current borrowing - Variation in exchange rates (2,673.12) (326.50) (10.47) - Interest accrued - - 22,205.94 - Transaction cost on borrowings 910.97 - - Closing balance as at 31 March 2019 3,10,850.20 83,544.93 4,819.44 For the year ended 31 March 2018 Opening balance as at 1 April 2017 92,623.86 35,000.00 2,411.06 Cash flow during the year 1,04,868.10 28,500.00 (9,527.65) Acquired in business combination 12,159.56 7,844.06 - Non-cash changes due to: - Variation in exchange rates 5,598.67 - - - Interest accrued - - 12,639.14 Closing balance as at 31 March 2018 2,15,250.19 71,344.06 5,522.55 * includes current maturities of non-current borrowings, refer note 28. d) Refer note 38 for details of undrawn borrowing facilities that may be available for future operating activities and to settle capital commitments. For and on behalf of the Board of Directors As per our audit report of even date annexed. For KK Soni & Co. Chartered Accountants (FRN 000947N) Saurabh Kumar S. Gopal Pooja Shukla Sant Sujat Soni Managing Director Director Commercial and CFO Company Secretary Partner DIN : 06576793 DIN : 08339439 M. No. 094227 Place : New Delhi Date : 2nd July, 2019 EESL Annual Report 2018-19 Consolidated Cash Flow Statement 163 ENERGY EFFICIENCY SERVICES LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2019 A. Equity share capital ` in Lakhs Particulars As at 31 March, 2019 As at 31 March, 2018 Outstanding as at the beginning of the year 46,200.00 46,200.00 Shares issued during the year 21,320.44 - Outstanding as at the end of the year 67,520.44 46,200.00 B. Other equity For the year ended 31 March 2019 ` in Lakhs Particulars Reserves & surplus OCI Other equity Non- Total Share application Debenture Retained Foreign Currency attributable to controlling money pending redemption earnings Translation owners of the interests allotment reserve Reserve parent Balance as at 1 April 2018 9,900.00 6,515.21 1,331.83 375.41 18,122.45 4,684.84 22,807.29 Profit for the year - - 11,658.23 - 11,658.23 469.80 12,128.03 Other comprehensive income/ (expense) - - (22.14) (1,817.90) (1,840.04) (293.61) (2,133.65) Total comprehensive income - - 11,636.09 (1,817.90) 9,818.19 176.19 9,994.38 Effects of change in accounting policy - - (1,658.90) - (1,658.90) (414.73) (2,073.63) (refer note 53) Share application money received 11,420.44 - - - 11,420.44 - 11,420.44 Equity shares issued (21,320.44) - - - (21,320.44) - (21,320.44) Impact of change in ownership interest in - - (130.03) - (130.03) 130.03 - Subsidiary (refer note 43) Transfer to/(from) retained earnings - 8,611.23 (8,611.23) - - - - Transaction cost arising on account of - - (25.00) - (25.00) - (25.00) increase in authorised share capital Final dividend (including tax) for - - (1,329.71) - (1,329.71) - (1,329.71) FY 2017-18 Balance as at 31 March 2019 - 15,126.44 1,213.05 (1,442.49) 14,897.00 4,576.33 19,473.33 For the year ended 31 March 2018 ` in Lakhs Particulars Reserves & surplus OCI Other equity Non- Total Share application Debenture Retained Foreign Currency attributable to controlling money pending redemption earnings Translation owners of the interests allotment reserve Reserve parent Balance as at 1 April 2017 - 1,452.99 7,874.86 (2.47) 9,325.38 - 9,325.38 Profit for the year - - 3,468.89 - 3,468.89 (77.38) 3,391.51 Other comprehensive income/(expense) - - (7.85) 365.27 357.42 93.85 451.27 Total comprehensive income - - 3,461.04 365.27 3,826.31 16.47 3,842.78 Non-controlling interests on acquisition - - - - - 4,668.37 4,668.37 of subsidiaries Addition during the year 9,900.00 - - - 9,900.00 - 9,900.00 Transfer to/(from) retained earnings - 5,062.22 (5,074.83) 12.61 0.00 - 0.00 Transaction cost arising on account of - - (25.01) - (25.01) - (25.01) increase in authorised share capital Final dividend (including tax) for - - (3,341.47) - (3,341.47) - (3,341.47) FY 2016-17 Interim dividend (including tax) for - - (1,562.76) - (1,562.76) - (1,562.76) FY 2017-18 Balance as at 31 March 2018 9,900.00 6,515.21 1,331.83 375.41 18,122.45 4,684.84 22,807.29 For and on behalf of the Board of Directors As per our audit report of even date annexed. For KK Soni & Co. Chartered Accountants (FRN 000947N) Saurabh Kumar S. Gopal Pooja Shukla Sant Sujat Soni Managing Director Director Commercial and CFO Company Secretary Partner DIN : 06576793 DIN : 08339439 M. No. 094227 Place : New Delhi Date : 2nd July, 2019 164 Conslidated Statement of Changes in Equity EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 1. Group Information and Significant Accounting Policies A. Reporting entity Energy Efficiency Services Limited (the "Company") is a Company domiciled in India and limited by shares (CIN: U40200DL2009PLC196789). The Company has its debt securities listed on BSE Limited. The address of the Company's registered office is 4th Floor, Sewa Bhawan, R.K. Puram, New Delhi - 110066. The registered office of the company has been shifted to NFL Building, 5th & 6th Floor, Core - III, SCOPE Complex, Lodhi Road, New Delhi - 110003 with effect from 16 April 2019. The Company is a Joint Venture of NTPC Limited, Power Finance Corporation Limited, REC Limited and Power Grid Corporation of India Limited and is engaged in implementation of energy efficiency projects as an Energy Saving Company (ESCO). These consolidated financial statements comprise the Company, its subsidiaries and its interest in joint ventures (referred to collectively as the 'Group). For details of group structure, refer note 43. The Company acts as the resource center for capacity building for State Distribution Companies (DISCOMs), Energy Regulatory Commissions (ERCs), State Development Authorities (SDAs), upcoming ESCOs, financial institutions, etc. The Group provides energy saving services, manufactures, sales, installs, hires and services diesel and gas powered generators and related spare parts and invests in and rental of property. The principal activities of the Company's subsidiaries is the manufacture, installation, containerisation, sale and service of diesel and gas generators and the sale of related spare parts. B. Basis of preparation 1. Statement of Compliance These consolidated financial statements are prepared on going. concern basis following accrual system of accounting and comply with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto, the Companies Act, 2013 (to the extent notified and applicable) and applicable provisions of the Companies Act, 1956. These consolidated financial statements were authorised for issue by Board of Directors on 2 July 2019. 2. Basis of measurement The consolidated financial statements have been prepared on a historical cost basis except for: • Certain financial assets and liabilities (including derivative instruments) that are measured at fair value (refer accounting policy regarding financial instruments); and • Plan assets in the case of employees defined benefit plans that are measured at fair value. The methods used to measure fair values are discussed in notes to the consolidated financial statements. Historical cost is the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire assets at the time of their acquisition or the amount of proceeds received in exchange for the obligation, or at the amounts of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 3. Functional and presentation currency These consolidated financial statements are presented in Indian Rupees (`), which is the Company's functional currency. All financial information presented in ` has been rounded to the nearest lakhs (upto two decimals), except as stated otherwise. 4. Current and non-current classification The Group presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is current when it is: • Expected to be realised or intended to be sold or consumed in normal operating cycle; • Held primarily for the purpose of trading; • Expected to be realised within twelve months after the reporting period; or • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is current when: • It is expected to be settled in normal operating cycle; • It is held primarily for the purpose of trading; • It is due to be settled within twelve months after the reporting period; or • There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets/liabilities are classified as non-current. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 165 C. Significant accounting policies A summary of the significant accounting policies applied in the preparation of the consolidated financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the consolidated financial statements. The Group has elected to utilize the option under Ind AS 101 by not applying the provisions of Ind AS 16 and Ind AS 38 retrospectively and continue to use the previous GAAP carrying amount as a deemed cost under Ind AS at the date of transition to Ind AS. Therefore, the carrying amount of property, plant and equipment and intangible assets as per the previous GAAP as at I April 2015, i.e. the Group's date of transition to Ind AS, were maintained on transition to Ind AS. 1. Basis of consolidation The financial statements of Subsidiary Companies and Joint ventures are drawn up to the same reporting date as of the Company for the purpose of consolidation. 1.1. Subsidiaries Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. In accordance with Ind AS 103, the Group accounts for these business combinations using the acquisition method when control is transferred to the Group. The consideration transferred for the business combination is measured at fair value as at the date the control is acquired (acquisition date), as are the net identifiable assets acquired. Any goodwill that arises is tested annually for impairment. Transaction costs are expensed as incurred, except to the extent related to the issue of debt or equity securities. If a business combination is achieved in stages, any previously held equity interest in the acquiree is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss or OCI, as appropriate. The group combines the financial statements of the parent and its subsidiaries line by line adding together like items of assets, liabilities, equity, income and expenses. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests (NCI) in the results and equity of subsidiaries are shown separately in the consolidated statement of profit and loss, consolidated statement of changes in equity and consolidated balance sheet respectively. NCI are measured at their proportionate share of the acquiree's net identifiable assets at the date of acquisition. Changes in the Group's equity interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any interest retained in the former subsidiary is measured at fair value at the date the control is lost. Any resulting gain or loss is recognised in profit or loss. 1.2. Joint ventures Interests in joint ventures are accounted for using the equity method after initially being recognised at cost in the consolidated balance sheet. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the group's share of the post-acquisition profits or losses of the investee in profit and loss, and the group's share of other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from joint ventures are recognised as a reduction in the carrying amount of the investment. When the group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealised gains on transactions between the group and its joint ventures are eliminated to the extent of the group's interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted material investees have been changed where necessary to ensure consistency with the policies adopted by the group. The carrying amount of equity accounted as investments are tested for impairment in accordance with the policy described in C.15 below. When the group ceases to apply equity method of accounting for an investment because of a loss of joint control, any retained interest in the entity is re-measured to its fair value with the change in carrying amount recognised in profit or loss. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. 2. Property, plant and equipment 2.1. Initial recognition and measurement An item of property, plant and equipment is recognized as an asset if and only if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Items of property, plant and equipment are initially recognized at cost. Subsequent measurement is done at cost less accumulated depreciation/amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Project Development Cost incurred on ESCO Model Energy Efficiency Projects other than LED projects undertaken by the Group are recognised as property, plant and equipment. 166 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 Project Development Cost includes purchase price, taxes and duties, labour cost and any other cost directly attributable to the implementation of the project or acquisition of property, plant and equipment are allocated on systematic basis on implementation of projects, incurred up to the date when the asset is ready for its intended use. When parts of an item of property, plant and equipment have different useful lives, they are recognised separately. In the case of assets put to use, where final settlement of bills with contractors is yet to be effected, capitalisation is done on a provisional basis subject to necessary adjustment in the year of final settlement. 2.2. Subsequent costs Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the Group and the cost of the item can be measured reliably. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. 2.3. Decommissioning costs The present value of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. 2.4. Derecognition Property, plant and equipment is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and losses on derecognition of an item of property, plant and equipment are determined by comparing the proceeds from disposal, if any, with the carrying amount of property, plant and equipment, and are recognised in the statement of profit and loss. 2.5. Depreciation Depreciation is recognised in the statement of profit and loss on pro rata basis on Straight Line Method using the rate arrived on useful lives of assets, specified in part C of Schdule II thereto of the Companies Act 2013 (the 'Act). Freehold land is not depreciated. Estimated useful lives of the assets, based on technical assessment, which are different in certain cases from those prescribed in Schedule II to the Act, are as follows: Nature of assets Life of property, plant and equipment Cell phones 2 years ESCO projects other than LED projects Project period Lease hold improvement Lease period Residential assets 3 years Estimated useful lives of the assets of foreign subsidiaries are as follows: Nature of assets Life of property, plant and equipment Buildings 50 years ESCO projects equipment Project period Motor vehicles 5/6 years Fixtures and fittings 6/8/10 years Plant and machinery 6/8 years Computer equipment 6/8 years Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives as given above best represent the period over which management expects to use these assets. Depreciation on additions to/deductions from property, plant and equipment during the year is charged on pro-rata basis from/up to the month in which the asset is available for use/disposed off. Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liabilities on account of exchange fluctuation, the unamortised balance of such asset is charged off prospectively over the remaining useful life determined following the applicable accounting policies relating to depreciation/ amortisation. Where it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably, subsequent expenditure on a PPE along-with its unamortised depreciable amount is charged off prospectively over the revised useful life determined by technical assessment. The residual values, useful lives and method of depreciation of assets are reviewed at each financial year end and adjusted prospectively, wherever required. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 167 3. Capital work-in-progress The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management and borrowing costs. Expenses directly attributable to construction of property, plant and equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis on the cost of related assets. If the ESCO Model Energy Efficiency project doesn't materialise, then the expenditure incurred in respect of the same will be charged to Statement of Profit and Loss in that year. 4. Intangible assets 4.1. Initial recognition and measurement An intangible asset is recognized if and only if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group and the cost of the asset can be measured reliably. Intangible assets that are acquired by the Group, which have finite useful lives, are recognized at cost. Subsequent measurement is done at cost less accumulated amortisation and accumulated impairment losses. Cost includes any directly attributable incidental expenses necessary to make the assets ready for their intended use. 4.2. Subsequent costs Subsequent expenditure is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably. 4.3. Derecognition An intangible asset is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and losses on derecognition of an item of intangible assets are determined by comparing the proceeds from disposal, if any, with the carrying amount of intangible assets and are recognised in the statement of profit and loss. 4.4. Amortisation Cost of software is recognised as intangible asset. Intangible assets of parent company are amortised on a straight line basis over the period of legal right to use or 3 years, whichever is less. Intangible assets of subsidiaries are amortised on a straight line basis over 6 years. The amortization period and the amortization method of intangible assets with finite useful lives is reviewed at each financial year end and adjusted prospectively, wherever required. 5. Borrowing costs Borrowing costs consist of (a) interest expense calculated using the effective interest method as described in Ind AS 109 -'Financial Instruments'; (b) finance charges in respect of finance leases recognized in accordance with Ind AS 17 - teases' and (c) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of cost of such asset until such time the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale. When the Group borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing costs incurred are capitalised. When Group borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalisation of the borrowing costs is computed based on the weighted average cost of general borrowings that are outstanding during the period and used for the acquisition or construction of the qualifying asset. Income earned on temporary investment of the borrowings pending their expenditure on the qualifying assets is deducted from the borrowing costs eligible for capitalisation. Capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Other borrowing costs are recognised as an expense in the year in which they are incurred. The borrowing cost proportionate to the unutilised amount of borrowings are being kept for utilization of qualifying assets being carried forward for capitalization in the subsequent year of utilization. 6. Inventories Inventories are valued at the lower of cost and net realisable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on a FIFO basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The diminution in the value of obsolete, unserviceable, surplus and non-moving items of stores and spares is ascertained on review and provided for. 7. Cash and cash equivalents Cash and cash equivalents in the balance sheet comprise cash at banks, cash on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value. 168 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 8. Government grants Government grants related to assets are recognized initially as deferred income when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. Grants that compensate the Group for the cost of an asset are recognized in profit or loss on a systematic basis over the useful life of the related asset. Grants that compensate the Group for expenses incurred are recognized over the period in which the related costs are incurred and deducted from the related expenses. 9. Provisions, contingent liabilities and contingent assets A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement. Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Group'. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/ independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate. Contingent assets are possible assets that arise from past events and whose existence will be confirmed only by the occurrence or non- occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent assets are disclosed in the consolidated financial statements when inflow of economic benefits is probable on the basis of judgment of management. These are assessed continually to ensure that developments are appropriately reflected in the consolidated financial statements. 10. Foreign currency transactions and translations 10.1 Foreign currency transactions Transactions in foreign currencies are initially recorded at the prevailing exchange rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies arc translated by applying the RBI reference rate at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss in the year in which it arises with the exception that exchange differences on long term monetary items related to acquisition of property, plant and equipment recognised upto 31 March 2016 and still outstanding are adjusted to carrying cost of property, plant and equipment. Non-monetary items are measured in terms of historical cost in a foreign currency and are translated using the exchange rate at the date of the transaction. In case of advance consideration received or paid in a foreign currency, the date of transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it), is when the Group initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. 10.2Foreign operations The assets and liabilities of foreign operations (i.e. subsidiary) including goodwill and fair value adjustments arising on acquisition, are translated into INR, the functional currency of the Company, at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into INR at the average exchange rate as the average rate approximates the actual rate at the date of the transaction. 11. Revenue Group's revenues arise from sale of goods, rendering of services and other income. Revenue from other income comprises interest from banks, employees, customers, other miscellaneous income, etc. Effective 1 April 2018, the Group has adopted Ind AS 115 "Revenue from Contracts with Customers" using the cumulative effect method, applied to the contracts that were not completed as of 1 April 2018 and therefore the comparatives have not been restated and continues to be reported as per hid AS 18 "Revenue". The details of accounting policies as per Ind AS 18 are disclosed separately if they are different from those under Ind AS 115. 11.1. Revenue from sale of goods Revenue is measured based on the consideration that is specified in a contract with a customer or is expected to be received in exchange for the products or services and excludes amounts collected on behalf of third parties. The Group recognizes revenue when (or as) the performance obligation is satisfied, which typically occurs when (or as) control over the products or services is transferred to a customer. In the comparative period, revenue from sale of goods was measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. This inter alia involved discounting of the consideration to present value if payment extends beyond normal credit terms. Revenue was recognised when the significant risks and rewards of ownership had been transferred to the buyer, recovery of the consideration was probable, the associated costs and possible return of goods could be estimated reliably, there was no continuing effective control over, or managerial involvement with, the goods, and the amount of revenue could be measured reliably. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 169 11.2. Revenue from rendering of services Revenue from rendering of services is measured based on the consideration that is specified in a contract with a customer or is expected to be received in exchange for the services and excludes amounts collected on behalf of third parties. The Group recognizes revenue when (or as) the performance obligation is satisfied, which typically occurs when (or as) control over the services is transferred to a customer. in the comparative period, revenue from services rendered was generally recognized in proportion to the stage of completion of the transaction at the reporting date. Revenue was recognized when the following conditions are met: - the amount of revenue could be measured reliably; - it was probable that the economic benefits associated with the transaction will flow to the entity; - the stage of completion of the transaction at the end of the reporting period could be measured reliably; and - the costs incurred for the transaction and the costs to complete the transaction could be measured reliably. The revenue recognition in respect of the various streams of revenue is described as follows: Energy efficiency services: Revenue from rendering of energy efficiency services by supply and installation of street lights, agricultural pumps and other equipment is recognised over time as the customers simultaneously receive and consume the benefits provided by the Group. In the comparative period, revenue from above services was recognised in the statement of profit and loss based on the agreement with the customer on accrual basis. Consultancy services: Revenue from consultancy services rendered is recognised over time based on satisfaction of performance obligations over time as the customers simultaneously receive and consume the benefits provided by the Group. Revenue from consultancy services rendered was recognised in the statement of profit and loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion was assessed by reference to actual progress/technical assessment of work executed, in line with the terms of the respective contracts. Income on consultancy contracts are accounted in proportion to expenses incurred based on the progress of service rendered on that contract. Contract modifications Contact modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catchup basis, while those that are distinct are accounted for prospectively, either as a separate contract, if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price. E-vehicles leases: Revenue from leases of e-vehicles is recognised as per policy no. C.14.2. 11.3. Other income Interest income is recognised, when no significant uncertainty as to measurability or collectability exists, on a time proportion basis taking into account the amount outstanding and the applicable interest rate, using the effective interest rate method (EIR). For debt instruments measured at amortised cost, interest income is recorded using the EIR. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the EIR, the Group estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses, Interest income is included in other income in the statement of profit and loss. The interest/surcharge on late payment/overdue trade receivables for sale of energy is recognized when no significant uncertainty as to measurability or collectability exists. 11.4. Expenses related to awareness on UJALA programme Expenses incurred on advertisement / awareness on DELP / UJALA programme in the state is charged to statement of profit and loss in proportion to LED bulbs distributed in current year vis-a-vis the total targeted LED bulbs distribution for that respective state at the beginning of year and balance amount is carried forward for charging to the statement of profit and Loss in subsequent years. Similary expenses incurred on National Media Campaigning for DELP / UJALA programme is charged to the statement of profit and loss in proportion to the total LED buslbs distributed in current financial year vis-a-vis the overall targeted LED bulbs distribution under DELP/ UJALA programme at the begining of the year and balance amount is carried forward for charging to statement of Profit and Loss in subsequent years. 12. Employee benefits 12.1. Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into separate entities and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised 170 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 as an employee benefits expense in the statement of profit and loss in the period during which services are rendered by employees. Prepaid contributions arc recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due after more than 12 months after the end of the period in which the employees render the service arc discounted to their present value. The Company pays fixed contribution to Provident Fund at the predetermined rates to regional provident fund commissioner. Further, the group voluntary contributes 6% to an external pension fund for the employees of its subsidiaries. The company has a trust for Contributory Superannuation Scheme which provides pension benefits and company pays a fixed contribution to the trust. The contributions to both the funds for the year are recognised as expense and are charged to the statement of profit and loss. 12.2. Defined benefit plans A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company's liability towards gratuity are in the nature of defined benefit plans. The Company contributes to (Life Insurance Corporation of India) a fund set up by the Company and administered by a board of trustees with respect to its gratuity obligation. The Company's net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Company's obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognised asset is limited to the total of any unrecognised past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities. Any actuarial gains or losses are recognised in other comprehensive income (OCI) in the period in which they arise. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognized immediately in statement of profit and loss. 12.3. Other long-term employee benefits Benefits under the Company's leave encashment constitute other long term employee benefit. The Company's net obligation in respect of leave encashment is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Company's obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognised in the statement of profit and loss in the period in which they arise. 12.4. Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under performance related pay if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. 13. Income tax Income tax expense comprises current and deferred tax. Current tax expense is recognised in the statement of profit and loss except to the extent that it relates to items recognised directly in OCI or equity, in which case it is recognised in OCI or equity respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted and as applicable at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax is recognised in the statement of profit and loss except to the extent that it relates to items recognised directly in OCI or equity, in which case it is recognised in OCI or equity respectively. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Additional income taxes that arise from the distribution of dividends are recognised at the same time that the liability to pay the related dividend is recognised. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 171 14. Leases 14.1 Accounting for operating leases- As lessee Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments made under operating leases are recognized as an expense on a straight-line basis over the lease term unless the payments are structured to increase in line with expected general inflation to compensate for the lessor's expected inflationary cost increases. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease. 14.2 Accounting for operating leases- As lessor Lease income from operating leases where the Group is a lessor is recognised as income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature. 14.3 Accounting for finance leases- As lessor Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Group to the lessee. Amounts due from lessees under finance leases are recorded as receivables ('Finance lease receivables') at the Group's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease. 15. Impairment of non-financial assets The carrying amounts of the Group's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 'Impairment of Assets'. If any such indication exists, then the asset's recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit", or "CGU"). An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in statement of profit and loss. Impairment losses recognised in respect of CGUs are reduced from the carrying amounts of the assets of the CGU. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 16. Operating segments In accordance with Ind AS 108, Operating Segments, the operating segments used to present segment information are identified on the basis of internal reports used by the Group's Management to allocate resources to the segments and assess their performance. The Company's Board of Directors is collectively the Company's 'Chief Operating Decision Maker' or `CODM' within the meaning of Ind AS 108. Segment results that are reported to the CODM include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate expenses, finance expenses and income tax expenses. Revenue directly attributable to the segments is considered as segment revenue. Expenses directly attributable to the segments and common expenses allocated on a reasonable basis are considered as segment expenses. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill. Segment assets comprise property, plant and equipment, intangible assets, trade and other receivables, inventories and other assets that can be directly or reasonably allocated to segments. For the purpose of segment reporting, property, plant and equipment have been allocated to segments based on the extent of usage of assets for operations attributable to the respective segments. Segment assets do not include investments, income tax assets, capital work in progress, capital advances, corporate assets and other current assets that cannot reasonably be allocated to segments. Segment liabilities include all operating liabilities in respect of a segment and consist principally of trade and other payables, employee benefits and provisions. Segment liabilities do not include equity, income tax liabilities, loans and borrowings and other liabilities and provisions that cannot reasonably be allocated to segments. 17. Dividends Dividends and interim dividends payable to the Company's shareholders are recognized as changes in equity in the period in which they are approved by the shareholders and the Board of Directors respectively. 18. Material prior period errors Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred. If the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated. 172 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 19. Earnings per share Basic earnings per equity share is computed by dividing the net profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the financial year. Diluted earnings per equity share is computed by dividing the net profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. 20. Statement of cash flows Statement of cash flows is prepared in accordance with the indirect method prescribed in Ind AS 7 `Statement of cash flows'. 21 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. 21.1. Financial assets Initial recognition and measurement The Group recognizes financial assets when it becomes a party to the contractual provisions of the instrument. All financial assets are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition of financial assets, which are not at fair value through profit or loss, are added to the fair value on initial recognition. Subsequent measurement Debt instruments at amortised cost A 'debt instrument' is measured at the amortized cost if both the following conditions are met: (a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and (b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables. Debt instrument at FVTOCI (Fair Value through OCI) A 'debt instrument' is classified as at FVTOCI if both of the following criteria are met: (a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and (b) The asset's contractual cash flows represent SPPI Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the OCI. However, the Group recognises interest income, impairment losses and reversals and foreign exchange gain or loss in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognised in 00 is reclassified from the equity to statement of profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method. Debt instrument at FVTPL (Fair value through profit or loss) FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL. In addition, the Group may elect to classify a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as 'accounting mismatch'). Debt instruments included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss. Equity Investments Equity investments other than equity investment in subsidiaries and joint ventures are measured at fair value. The Group decides to classify the equity investments either as at FVTOCI or FVTPL. The Group makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable. If the Group decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Group may transfer the cumulative gain or loss within equity. Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 173 Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Group's balance sheet) when: • The rights to receive cash flows from the asset have expired, or • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Impairment of financial assets In accordance with Ind AS 109, the Group applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure: (a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits and bank balance. (b) Trade receivables, unbilled revenue and contract assets under Ind AS 115. For trade receivables and unbilled revenue, the Group applies the simplified approach required by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. For recognition of impairment loss on other financial assets and risk exposure, the Group determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL. 21.2. Financial liabilities Initial recognition and measurement All financial liabilities are recognised initially at fair value and in the case of borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables, borrowings and retention money. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below: Financial liabilities at amortised cost After initial measurement, such financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the statement of profit and loss. This category generally applies to borrowings, trade payables and other contractual liabilities. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Gains or losses on liabilities held for trading are recognised in the statement of profit and loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/losses attributable to changes in own credit risk are recognised in OCI. These gains/losses are not subsequently transferred to the statement of profit and loss. However, the Group may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit or loss. The Group has not designated any financial liability as at fair value through profit and loss. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss. 21.3 Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. 174 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 22. Other expenses Expenses on annual maintenance, legal & professional consultancy, training & recruitment etc. are charged to statement of profit and loss in the year incurred. 23. Related party transactions The transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions. D. Use of estimates and management judgments The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that may impact the application of accounting policies and the reported value of assets, liabilities, income, expenses and related disclosures concerning the items involved as well as contingent assets and liabilities at the balance sheet date. The estimates and management's judgments are based on previous experience and other factors considered reasonable and prudent in the circumstances. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In order to enhance understanding of the consolidated financial statements, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is as under: 1. Useful life of property, plant and equipment and intangible assets The estimated useful life of property, plant and equipment and intangible assets is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. The Group reviews at the end of each reporting date the useful life of property, plant and equipment and are adjusted prospectively, if appropriate. 2. Recoverable amount of property, plant and equipment and intangible assets The recoverable amount of property, plant and equipment and intangible assets is based on estimates and assumptions regarding in particular the expected market outlook and future cash flows. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment. 3. Post-employment benefit plans Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, the rate of salary increases and the discount rate. The Group considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations. 4. Revenues The Group applies judgement to determine whether each product or service promised to a customer are capable of being distinct, and are distinct in the context of the contract, if not, the promised product or services are combined and accounted as a single performance obligation. The Group allocates the arrangement consideration to separately identifiable performance obligation deliverables based on their relative stand-alone selling price. Rebates and discounts, if any, are recognised as a reduction from revenue on the basis of management estimates. Refer note 49 for detailed disclosure. 5. Provisions and contingencies The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37, `Provisions, Contingent Liabilities and Contingent Assets' The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss. Should circumstances change following unforeseeable developments, this likelihood could alter. 6. Income taxes Significant estimates are involved in determining the provision for income taxes and deferred taxes, including amount expected to be paid/ recovered for uncertain tax positions. 7. Impairment of non-financial assets The recoverable amount of investment in joint venture company is based on estimates and assumptions regarding in particular the future cash flows associated with the operations of the investee Company. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment. 8. Leases not in legal form of lease Significant judgment is required to apply lease accounting rules under Appendix C to Ind AS 17 'Determining whether an arrangement contains a lease'. In assessing the applicability to arrangements entered into by the Group, management has exercised judgment to evaluate the right to use the underlying asset, substance of the transactions including legally enforceable agreements and other significant terms and conditions of the arrangements to conclude whether the arrangement needs the criteria under Appendix C to Ind AS 17. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 175 2 Property, plant & equipment 176 As at 31 March 2019 ` in Lakhs Particulars Gross block Depreciation Net block As at Acquisition Additions Deductions/ Foreign As at Upto Acquisition For Deductions/ Foreign Upto As at 01 April through adjustments exchange 31 March 01 April through the year adjustments exchange 31 March 31 March 2018 business translation 2019 2018 business translation 2019 2019 combination difference combination difference Freehold land 743.64 - - - - 743.64 - - - - - - 743.64 Building 4,515.64 - 472.01 - (185.10) 4,802.55 1,461.35 - 231.68 - (68.51) 1,624.52 3,178.03 Leasehold improvements 195.48 - - 192.65 - 2.83 64.15 - 22.33 84.90 - 1.58 1.25 Project equipment 1,04,912.53 - 1,32,283.45 4,652.70 (27.19) 2,32,516.09 20,624.56 - 33,086.46 526.90 (3.58) 53,180.54 1,79,335.55 Cell phones 60.63 - 12.03 0.62 - 72.04 35.50 - 20.81 0.25 - 56.06 15.98 Office equipment 261.66 - 10.06 1.34 - 270.38 67.48 - 52.01 - - 119.49 150.89 Notes to Consolidated Financial Statements Furniture and fitting 1,989.49 - 172.24 41.36 (71.94) 2,048.43 1,328.06 - 152.48 5.55 (41.78) 1,433.21 615.22 Computers 402.64 - 85.29 23.51 - 464.42 199.23 - 112.70 22.89 - 289.04 175.38 Plant and machinery 1,608.17 - 28.41 78.66 (67.65) 1,490.27 810.71 - 100.87 41.09 (37.28) 833.21 657.06 E-Vehicles 956.45 - 22.79 904.73 - 74.51 12.22 - (2.94) - - 9.28 65.23 Other motor vehicles 291.66 - 27.92 (28.60) (12.25) 335.93 260.09 - 66.16 (3.88) (25.64) 304.49 31.44 Residential assets 84.17 - 0.25 1.73 - 82.69 1.03 - 37.91 0.22 - 38.72 43.97 Solar plant - - 2,102.64 - - 2,102.64 - 31.72 - - 31.72 2,070.92 Total 1,16,022.16 - 1,35,217.09 5,868.70 (364.13) 2,45,006.42 24,864.38 - 33,912.19 677.92 (176.79) 57,921.86 1,87,084.56 As at 31 March 2018 ` in Lakhs Particulars Gross block Depreciation Net block As at Acquisition Additions Deductions/ Foreign As at Upto Acquisition For Deductions/ Foreign Upto As at 01 April through adjustments exchange 31 March 01 April through the year adjustments exchange 31 March 31 March 2017 business translation 2018 2017 business translation 2018 2018 combination difference combination difference Freehold land 743.64 - - - - 743.64 - - - - - - 743.64 Building - 4,446.26 - - 69.38 4,515.64 - 1,433.25 5.67 - 22.43 1,461.35 3,054.29 Leasehold improvements 195.48 - - - - 195.48 35.31 - 28.84 - - 64.15 131.33 Project equipment 65,615.68 2,387.52 36,838.75 - 70.58 1,04,912.53 7,028.07 511.71 13,073.06 - 11.72 20,624.56 84,287.97 Cell phones 37.46 - 23.66 0.49 - 60.63 13.89 - 21.80 0.19 - 35.50 25.13 Office equipment 168.82 - 92.84 - - 261.66 32.51 - 34.97 - - 67.48 194.18 Furniture and fitting 323.06 1,614.39 26.85 - 25.19 1,989.49 58.06 1,210.75 40.27 - 18.98 1,328.06 661.43 Computers 294.45 - 109.23 1.04 - 402.64 100.85 - 98.75 0.37 - 199.23 203.41 Plant and machinery - 1,584.00 - - 24.17 1,608.17 - 787.66 10.74 - 12.31 810.71 797.46 E-Vehicles - - 956.45 - - 956.45 - - 12.22 - - 12.22 944.23 Other motor vehicles - 287.18 - - 4.48 291.66 - 252.95 3.16 - 3.98 260.09 31.57 Residential assets - - 85.67 1.50 - 84.17 - - 1.13 0.10 - 1.03 83.14 EESL Annual Report 2018-19 Total 67,378.59 10,319.35 38,133.45 3.03 193.80 1,16,022.16 7,268.69 4,196.32 13,330.61 0.66 69.42 24,864.38 91,157.78 a) Exchange differences capitalised are disclosed in the 'Addition' column of capital work-in-progress (CWIP) and allocated to various heads of CWIP in the year of capitalisation through 'Deductions/ Adjustments' column of CWIP . Exchange differences in respect of assets already capitalised are disclosed in the 'Deductions/Adjustments' column of property, plant and equipment (PPE). Asset-wise details of exchange differences and borrowing costs included in the cost of major heads of PPE and CWIP are given below: ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Project Equipment EESL Annual Report 2018-19 Exchange differences included in PPE/CWIP (233.56) 1,518.42 Borrowing costs included in PPE/CWIP 3,582.44 2,449.16 b) Refer note 20 and 26 for information on property, plant and equipment pledged as security by the group. c) Refer note 47 for disclosure on assets given under operating leases. d) Refer Note 54 for disclosure of contractual commitments for the acquisition of property, plant and equipment. 2B Intangible assets As at 31 March 2019 ` in Lakhs Particulars Gross block Depreciation Net block As at Acquisition Additions Deductions/ Foreign As at Upto Acquisition For Deductions/ Foreign Upto As at 01 April through adjustments exchange 31 March 01 April through the year adjustments exchange 31 March 31 March 2018 business translation 2019 2018 business translation 2019 2019 combination difference combination difference Software 1,712.48 - 569.01 - (1.64) 2,279.85 76.00 - 678.60 - (1.02) 753.58 1,526.27 Goodwill 44,163.34 - - - (855.78) 43,307.56 - - - - - - 43,307.56 Total 45,875.82 - 569.01 - (857.42) 45,587.41 76.00 - 678.60 - (1.02) 753.58 44,833.83 As at 31 March 2018 ` in Lakhs Particulars Gross block Depreciation Net block As at Acquisition Additions Deductions/ Foreign As at Upto Acquisition For Deductions/ Foreign Upto As at 01 April through adjustments exchange 31 March 01 April through the year adjustments exchange 31 March 31 March 2017 business translation 2018 2017 business translation 2018 2018 combination difference combination difference Software 101.22 76.11 1,533.42 - 1.73 1,712.48 28.44 16.59 30.58 - 0.39 76.00 1,636.48 Goodwill - 43,192.36 - - 970.98 44,163.34 - - - - - - 44,163.34 Total 101.22 43,268.47 1,533.42 - 972.71 45,875.82 28.44 16.59 30.58 - 0.39 76.00 45,799.82 Notes to Consolidated Financial Statements 177 3. Capital work-in-progress As at 31 March 2019 ` in Lakhs Particulars As at Additions Deductions/ As at 01 April 2018 adjustments/capitalised 31 March 2019 Project equipments Street lights 1,20,188.18 58,902.72 89,448.15 89,642.75 Building 5,368.18 6,166.04 2,865.27 8,668.95 Smart Meter 1,937.95 8,324.73 - 10,262.68 Agricultural Demand Side Management (AgDSM) 12.26 - 12.26 - Software 7.55 - - 7.55 Solar rooftop 9.04 - 9.04 - Ujala project 0.54 - 0.54 - National Motor Replacement Program Project - 22.69 - 22.69 1,27,523.70 73,416.18 92,335.26 1,08,604.62 Land and property 1,671.68 110.71 1,760.56 21.83 E-Vehicle 151.19 66.78 150.84 67.13 Solar plant - 12,776.39 - 12,776.39 Others 2.34 136.25 2.33 136.26 Total 1,29,348.91 86,506.31 94,248.99 1,21,606.23 As at 31 March 2018 ` in Lakhs Particulars As at Additions Deductions/ As at 01 April 2017 adjustments/capitalised 31 March 2018 Street lights CWIP - SL LED Rajasthan 8,082.24 14,481.61 12,736.85 9,827.00 CWIP - SL LED Andhra Pradesh 6,936.03 14,502.60 9,521.93 11,916.70 Chhattisgarh Project 464.69 7,187.34 1,058.78 6,593.25 Kerala LED Street Lighting 492.96 94.67 407.32 180.31 Marine Drive Mumbai LED SL 2,797.98 1,736.52 1,839.37 2,695.13 CWIP - SL LED Punjab 236.78 2,588.12 0.93 2,823.97 CWIP- Puducherry LED Street Lighting - 2.12 0.51 1.61 South Delhi LED Street Light 2,861.77 6,200.64 466.20 8,596.21 CWIP - SL LED - GHMC 52.68 11,927.06 102.84 11,876.90 Goa Street Light Project 3,792.90 9,729.80 3,121.79 10,400.91 CWIP - SL LED Gujarat 3,820.71 18,607.07 13,621.58 8,806.20 Guwahati Street Lighting 437.38 189.73 235.97 391.14 H.P LED Street Light 915.19 1,566.23 2,242.94 238.48 CWIP - SL LED - Agartala MC - 32.94 13.55 19.39 CWIP - SL LED - Jharkhand 688.87 4,188.55 1,704.39 3,173.03 CWIP - SL LED -Andman & Nicobar - 49.39 - 49.39 CWIP - SL LED J&K 40.16 111.17 2.56 148.77 CWIP - SL LED Telangana 302.58 13,303.64 6,806.23 6,799.99 CWIP SL LED Bihar - 2,094.00 4.82 2,089.18 CWIP SL LED Chandigarh - 88.85 - 88.85 Varanasi LED Street Lighting 2,846.53 23,336.64 897.39 25,285.78 CWIP SL LED Haryana - 348.61 - 348.61 CWIP - SL LED - Karnataka - 29.72 - 29.72 CWIP - SL LED - Madhya Pradesh - 456.66 5.02 451.64 178 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 3. Capital work-in-progress (Continued) As at 31 March 2018 ` in Lakhs Particulars As at Additions Deductions/ As at 01 April 2017 adjustments/capitalised 31 March 2018 CWIP - SL LED - Odisha - 1,422.71 1.29 1,421.42 CWIP - SL LED - PortBlair - 343.52 4.38 339.14 CWIP SL LED Sikkim - 0.49 - 0.49 CWIP SL LED Tamilnadu - 87.83 - 87.83 CWIP - SL LED -Tripura - 18.09 - 18.09 CWIP SL LED Uttarakhand - 992.19 - 992.19 CWIP - SL LED -West Bengal - 431.37 - 431.37 CWIP - West Bengal - 0.68 - 0.68 CWIP – SL LED Tripura - 67.27 - 67.27 CWIP -Kolkata - 12.07 - 12.07 CWIP- GHMC (hyderabad) - 1,562.71 - 1,562.71 CWIP- Andhra Pradesh (hyderabad) - 890.50 - 890.50 CWIP- SL- Maharashtra (Mumbai) 24.49 188.28 2.29 210.48 CWIP unallocated Expenses - 690.94 100.04 590.90 CWIP- Interest on Bond (unallocated) * 53.32 849.10 171.54 730.88 Sub total 34,847.26 1,40,411.43 55,070.51 1,20,188.18 Building Capital Work in Progress - Building J&K 108.15 44.70 49.52 103.33 Capital Work in Progress - CGO 12 Building - 242.06 2.34 239.72 CWIP- Building - Delhi - 14.42 - 14.42 CWIP- Building - Gujurat - 0.22 - 0.22 CWIP- Building - Madhya Pradesh - 3.90 - 3.90 CWIP- Building- PAN INDIA - 267.70 - 267.70 CWIP- Building - Uttar Pradesh - 19.77 - 19.77 CWIP- Building - West Bengal - 16.04 - 16.04 CWIP- CPWD BUILDINGS DELHI (Direct Expenses) 4.81 20.66 20.66 4.81 CWIP - CPWD - IP Bhawan Delhi 623.58 313.98 314.20 623.36 CWIP - Indian Railways - 46.63 - 46.63 CWIP - UPSC - Delhi 4.56 - - 4.56 CWIP BEEP AP - 31.69 - 31.69 CWIP - Building Bond Interest - 13.72 - 13.72 CWIP- CPWD CGO Building, New Delhi - 19.89 - 19.89 CWIP-CPWD CGO Complex Faridabad - 7.97 - 7.97 CWIP - CPWD CGO/GPO /Training Center - 24.48 2.24 22.24 Bhawan Ghaziabad (Direct Expenses) CPWD - IP Bhawan DELHI 89.21 25.57 2.42 112.36 CWIP- CPWD Jaipur (Direct Expenses) - 18.94 - 18.94 CWIP-CPWD Trikoot I & II Bhawan New Delhi - 0.32 - 0.32 (Direct Expenses) CWIP- DMRC Rajeev Chowk (Direct Expenses) 53.22 45.61 53.22 45.61 CWIP- DMRC Rajeev Chowk (Indirect Expenses) 2.25 9.71 - 11.96 CWIP Maharashtra Sadan (Direct Expenses) - 13.09 - 13.09 CWIP- Niti Aayog CPWD Ph-II Building 26.89 70.17 2.50 94.56 (Direct Expenses) CWIP (UJALA stock to BEEP) - 3,636.67 5.30 3,631.37 Sub total 912.67 4,907.91 452.40 5,368.18 EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 179 3. Capital work-in-progress (Continued) As at 31 March 2018 ` in Lakhs Particulars As at Additions Deductions/ As at 01 April 2017 adjustments/capitalised 31 March 2018 Land and property CWIP - Jaipur Property 334.56 89.22 - 423.78 CWIP - Kolkata Property 55.29 88.89 - 144.18 CWIP - Delhi Property (NBCC - Nauroji Nagar) - 1,103.72 - 1,103.72 Sub total 389.85 1,281.83 - 1,671.68 Smart Meter CWIP Smart Meter - 1,937.95 - 1,937.95 Sub total - 1,937.95 - 1,937.95 E-Vehicle CWIP E Vehicle Project - 151.19 - 151.19 Sub total - 151.19 - 151.19 Agricultural Demand Side Management (AgDSM) CWIP - AgDSM - Maharashtra 13.97 - 13.97 - CWIP - AgDSM - Rajasthan 16.74 0.08 16.82 - CWIP - AgDSM - Andhra Pradesh - 12.50 0.24 12.26 Sub total 30.71 12.58 31.03 12.26 Software CWIP-SAP 437.11 174.36 611.47 - CWIP Software - 1,218.68 1,211.13 7.55 Sub total 437.11 1,393.04 1,822.60 7.55 Solar Rooftop CWIP Solar Rooftop Delhi - 9.04 - 9.04 Sub total - 9.04 - 9.04 Ujala project Capital Work in Progress-(DELP Hyderabad)-Indirect - 0.54 - 0.54 Sub total - 0.54 - 0.54 Others Capital Work in Progress - 1.57 - 1.57 CWIP - Trade Mark 0.77 - - 0.77 Sub total 0.77 1.57 - 2.34 Total 36,618.37 1,50,107.08 57,376.54 1,29,348.91 * The borrowing cost proportionate to the unutilised amount of borrowings are being kept for utilization for acquisition or construction of qualifying assets being carried forward for capitalization in the subsequent year of utilization. However, income earned on temporary investment of the borrowings pending their expenditure on the qualifying assets is deducted from the borrowing costs eligible for capitalisation, as stated in Note No. C.5 of Accounting Policies i.r.t. 'Borrowing Costs'. Notes to capital work-in-progress a) The company has entered into agreements with various states, Urban Local Bodies (ULB’s) and other organisations under its Energy Service Company (ESCO) model, wherein the company undertakes upfront investments for projects (along with maintenance and warranty obligations, covered back to back with agreements with various suppliers) which are recovered through mutually agreed periodic installments under the agreements. The company is in the process to compile certain data and reconciling the amounts billable, receivable and payable under the various agreements, verification of physical inventory and assets under the scheme & otherwise and reconciliation as to assets to be installed, assets installed pending capitalisation, assets capitalised (including capitalisation of related direct & indirect cost) and assets against which revenue is booked (as per applicable Indian Accounting Standards). The company does not expect any major differences that may arise post such verification, and shall account for the differences, if any, post completion of the said exercise. b) The company has entered into agreement with Municipal Corporation for replacement of old conventional streetlights with LED energy efficient streetlights. The assets are capitalised in the books of accounts from the date of capitalization as indicated in the certificate issued by respective Municipal Corporation and the depreciation is charged accordingly from the date of capitalization. During the current financial year, the company has received certain completion certificates from the municipal corporation(s), wherein the completion dates mentioned in the certificates falls in the previous year. The company has capitalised these assets in the books of accounts from the completion dates as indicated in the certificates and has accordingly charged depreciation of ` 2,135.03 Lakhs on these assets in the statement of profit ot loss in current financial year from the said respective dates. 180 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 4 Non-current assets - Investment in joint venture accounted for using equity method ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Equity instruments - Unquoted (fully paid up) Joint venture companies NEESL Private Limited 2,600 (31 March 2018: 2,600) equity shares of 5.96 2.91 `10 each Total 5.96 2.91 Aggregate amount of unquoted investments 5.96 2.91 Aggregate amount of impairment in value of investments - - a) Investments have been valued as per accounting policy no. C.1.2 (Note 1). b) Refer note 43 for disclosure required as per Ind AS 112 'Disclosure of interest in other entities'. 5 Non-current financial assets - Investments ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Unquoted investments Unqouted at Fair Value Through Profit and Loss (FVTPL): Investment in Maple Leaf 1,527.24 1,440.51 Total 1,527.24 1,440.51 Aggregate amount of unquoted investments 1,527.24 1,440.51 Aggregate amount of impairment in value of investments - - a) Information about fair value measurement and group's exposure to market risks is disclosed in note 37 and note 38. 6 Non-current financial assets - Loans ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Unsecured, considered good Loan to EnergyPro Asset Management Ltd (includes interest accrued) 5,219.77 5,009.66 Loans to employees (includes interest accrued) 120.39 101.77 Security deposits 373.56 364.16 Total 5,713.72 5,475.59 a) Refer note 48 for disclosure required as per Ind AS 24 'Related party disclosures'. 7 Other non-current financial assets ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Unbilled revenue 1,080.93 2,317.59 Finance lease receivables (refer note 47) 7,687.96 - Deposits with banks under lien (refer note a below) 1,506.07 1,496.90 Deposits with banks maturing after twelve months 15.61 - Total 10,290.57 3,814.49 a) Deposits with banks under lien includes: National Westminster Bank, UK- Security to cash collateralise the bonds 795.96 811.78 Chubbs, UK- Security to cash collateralise the bonds 390.97 405.83 Bank of Baroda, UK- Debt service reserve account mandatorily required under 290.76 249.15 loan facility agreement Westpac Banking Corporation, UK- security towards credit cards 24.84 25.52 FDs for CST & VAT 3.54 4.62 Total 1,506.07 1,496.90 EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 181 8 Deferred tax asset (net) ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Deferred tax asset Tax losses carried forward 465.69 218.18 Expenses disallowed 290.51 204.23 Financial instruments measured at amortised cost (14.65) - Less: Deferred tax liability Financial assets and liabilities measured at amortised cost - 30.93 Difference in book depreciation and tax depreciation - 26.25 Revenue measured at fair value 152.28 - Financial asset measured at FVTPL 30.11 8.43 Total 559.16 356.80 a) Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority. b) Refer note 45 for disclosure required as per Ind AS 12 Income Taxes and note 24 for movement in deferred tax balances. 9 Other non-current assets ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Capital advances 1,336.78 1576.38 Advances other than capital advances Security deposits - 27.70 Deferred rent 13.86 79.48 Prepaid Expenditure - 19.81 Total 1,350.64 1,703.37 10 Inventories ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Stock in trade 27,498.43 39,893.21 Work in progress 7,254.53 1,403.31 Raw materials - 1.37 Total 34,752.96 41,297.89 a) Inventory items have been valued as per accounting policy no. C.6 (Note 1). b) Stock in trade includes goods in transit of ` 1,396.43 Lakhs (31 March 2018: ` 93.72 Lakhs) valued at cost. c) The cost of inventories recognised as expense for the year ended 31 March 2019 is ` 1,37,216.68 Lakhs (including ` 51.16 Lakhs as Business promotion) (31 March 2018: ` 92,066.27 Lakhs (including ` 47.14 Lakhs as Business Promotion)). d) Loans are secured on first pari-passu charge on stock and book debts. (refer note 20 and 26) 11 Trade receivables ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Trade receivables Unsecured, considered good 1,94,375.67 1,29,847.96 Credit impaired 393.29 196.64 1,94,768.96 1,30,044.60 Less: Provision for credit impaired trade receivables 393.29 196.64 Total 1,94,375.67 1,29,847.96 a) Refer note 38 for details with respect to credit risk. b) Amounts receivables from related parties are disclosed in note 48. c) Trade receivables are subject to confirmations, reconciliation and consequential adjustments that may arise on reconciliation. d) Loans are secured on first pari-passu charge on stock and book debts. (refer note 20 and 26) e) The carrying amounts of the trade receivables include receivables which are subject to a factoring arrangement. Under this arrangement, the Company has transferred the relevant receivables to the bank in exchange for cash and is prevented from selling or pledging the receivables. However, the Company has retained late payment and credit risk. The Company therefore continues to recognise the transferred assets in their entirety in its balance sheet. The amount repayable under the factoring agreement is presented as secured borrowing. 182 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 12 Cash and cash equivalents ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Balances with banks Current accounts 43,790.35 55,839.59 Deposit accounts 3.62 6.39 Cash on hand 26.08 26.91 Total 43,820.05 55,872.89 13 Bank balances other than cash and cash equivalents ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Deposits with original maturity of more than three months and maturing within one year (including interest accrued) 33,269.28 - Deposits with banks under lien (refer a below) 525.15 6,857.92 Total 33,794.43 6,857.92 a) Deposits with banks under lien includes interest accrued and represents: Deposit with Investec Bank as security to cash collateralise the bonds - 1,420.70 FD with ICICI Bank Limited, India against Standby letter of credit issued - 5,418.19 by latter to ICICI Bank UK Plc with respect to term loan facility availed by EESL EnergyPro Assets Limited Deposits for CST & VAT 3.01 19.03 Margin money for letter of credit and bank guarantees 522.14 - Total 525.15 6,857.92 14 Current loans ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Unsecured, considered good Loan to employees (including interest accrued) 113.56 81.14 Security deposits 250.78 85.19 Total 364.34 166.33 15 Other current financial assets ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Unbilled revenue 2,462.17 4,965.96 Finance lease receivables (refer note 47) 888.45 - Others (refer note a below) 5,000.43 655.91 Total 8,351.05 5,621.87 a) Others includes expenses incurred on behalf of third parties which are recoverable. 16 Current tax assets (Net) ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Advance tax 894.72 1,298.48 Self assessment refund 2,360.41 591.48 TCS recoverable 39.49 11.04 TDS recoverable 521.21 644.68 Fringe benefit tax - 3.24 Total 3,815.83 2,548.92 EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 183 17 Other current assets ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Receivable from statutory authorities (refer note a below) 29,157.12 14,287.71 Deposits paid under protest 4,327.95 3,844.28 Prepaid expenditure (refer note b below) 7,081.06 5,501.00 Advance to suppliers 2,812.01 729.78 Deferred cost 2,566.94 - Deferred rent 65.44 39.33 Imprest to employees 13.40 5.30 Others (refer note c below) 592.94 1,192.58 Total 46,616.86 25,599.98 a) The sales, corresponding output tax liability and purchases along with the corresponding input tax credit reported in GST and VAT returns, the net input tax credit receivable or the net output tax liability payable as the case may be are subject to reconciliation with the books of accounts. Differences which will be identified on reconciliation of GST/ VAT returns will be addressed in annual GST/ VAT statements/ revised returns to be filed in due course. b) Expenses incurred on advertisement / awareness on DELP / UJALA programme in a State is charged to statement of profit and loss in proportionate to LED bulbs distributed in current year vis-a-vis the total targeted LED bulbs distribution for that respective State at the beginning of year and balance amount is carried forward for charging to statement of profit and loss in subsequent years. Similarly expenses incurred on national media campaigning for DELP / UJALA programme is charged to statement of profit & loss in proportionate to the total LED bulbs distributed in current financial year vis-a-vis the overall targeted LED bulbs distribution under DELP/ UJALA programme at the beginning of the year and balance amount is carried forward for charging to statement of profit and loss in subsequent years. Accordingly, out of total expenditure `4907.39 Lakhs balance brought forward from previous year 2017-18, ` 619.89 has been charged in Media /advertisement expenses till the year 2018-19., ` 4287.50 Lakhs has been carried forward as prepaid expenditure under the head, "Other Current Assets". c) Others include advances given to vendors and to employees. 18 Share capital ` in Lakhs As at 31 March 2019 As at 31 March 2018 Particulars No. of shares Amount No. of shares Amount Authorised Equity shares of par value `10/- each 350,00,00,000 3,50,000.00 15,00,00,000 1,50,000.00 Issued, subscribed and fully paid up Equity shares of par value `10/- each 67,52,04,350 67,520.44 46,20,00,000 46,200.00 a) Movements in equity share capital: As at 31 March 2019 As at 31 March 2018 Particulars No. of shares Amount No. of shares Amount Outstanding at the beginning of the year 46,20,00,000 46,200.00 46,20,00,000 46,200.00 Add: Shares issued during the financial year 21,32,04,350 21,320.44 - - Outstanding at the end of the year 67,52,04,350 67,520.44 46,20,00,000 46,200.00 The Company made an offer for right issue under private placement of equity shares to existing shareholders. An amount of ` 9,900.00 Lakhs was received from NTPC Limited on 31 March 2018 and subsequently ` 9,900.00 Lakhs and `1,520.44 Lakhs were received from Power Finance Corporation Limited and Power Grid Corporation of India Limited respectively on 27 April 2018. The Company issued 213,204,350 shares of ` 21,320.44 Lakhs during the year. The Company made an offer for right issue under private placement of equity shares to existing shareholders on 11 March 2019. An amount of ` 11,998.80 Lakhs was received from NTPC Limited, ` 7,161.00 Lakhs from REC Limited and ` 1,841.40 Lakhs received from Power Grid Corporation of India Limited post 31 March 2019. The total share application money of ` 21,001.20 Lakhs received was alloted on 8 June 2019 to respective shareholders. b) Terms and rights attached to equity shares: The Company has only one class of equity shares having a par value ` 10/- per share. The holders of the equity shares are entitled to receive dividends as declared from time to time and are entitled to voting rights proportionate to their share holding at the meetings of shareholders. 184 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 c) Dividends: ` in Lakhs Paid during the year 2018-19 Paid during the year 2017-18 Particulars Per share Amount Per share Amount Equity shares Final dividend 0.16 1,102.99 0.60 2,776.27 Interim dividend - - 0.28 1,298.40 d) Details of shareholders holding more than 5% shares in the Company: As at 31 March 2019 As at 31 March 2018 Particulars No. of shares %age holding No. of shares %age holding Power Finance Corporation Limited 24,55,00,000 36.36% 14,65,00,000 31.71% NTPC Limited 24,55,00,000 36.36% 14,65,00,000 31.71% REC Limited 14,65,00,000 21.70% 14,65,00,000 31.71% Powergrid Corporation of India Limited 3,77,04,350 5.58% 2,25,00,000 4.87% Total 67,52,04,350 46,20,00,000 The promoters initially subscribed to 25% shares each of the Company. Over the years, the Company has made an offer for right issue under private placement of equity shares to existing shareholders. REC Limited and Powergrid Corporation of India Limited have not subscribed to the offered shares and accordingly there shareholding percentage has declined. 19 Other equity ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Share application money pending allotment - 9,900.00 Debenture redemption reserve 15,126.44 6,515.21 Retained earnings 1,213.05 1,331.83 Foreign currency translation reserve (1,442.49) 375.41 Total 14,897.00 18,122.45 a) Share application money pending allotment ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 9,900.00 - Share application money received 11,420.44 9,900.00 Equity shares issued (21,320.44) - Closing balance - 9,900.00 b) Debenture redemption reserve The Group is required to create a debenture redemption reserve out of the profits which is available for payment of dividend for the purpose of redemption of debentures. Movement in reserves is as follows ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 6,515.21 1,452.99 Add: Transfer from retained earnings 8,611.23 5,062.22 Closing balance 15,126.44 6,515.21 EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 185 c) Retained earnings Retained earning represents the amount of accumulated earnings of the company and re-measurement differences on defined benefit plans and gains. Movement in reserves is as follows: ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 1,331.83 7,874.86 Profit for the year as per statement of profit and loss 11,658.23 3,468.89 Transferred from foreign currency translation reserve - (12.61) Effects of change in accounting policy (refer note 53) (1,658.90) - Impact of change in ownership interest in Subsidiary (refer note 43) (130.03) - Dividend paid (1,102.99) (4,074.69) Tax on dividend paid (226.72) (829.54) Transfer to debenture redemption reserve (8,611.23) (5,062.22) Transaction cost arising on issue of equity shares, net of tax (25.00) (25.01) 1,235.19 1,339.68 Items of other comprehensive income recognised directly in retained earnings: Remeasurements of post-employment benefit obligation, net of tax (22.14) (7.85) Closing balance 1,213.05 1,331.83 d) Foreign currency translation reserve ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 375.41 (2.47) Add: Currency translation adjustments (1,817.90) 365.27 Less: Transferred to retained earnings - (12.61) Closing balance (1,442.49) 375.41 20 Non-current borrowings ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Debentures/Bonds Secured (i) 8.07% Debentures (Domestic bonds)- Secured by pari passu charge 52,133.58 52,133.59 on the movable fixed assets both present and future (8.07% p.a. secured non-cumulative non-convertible redeemable taxable bonds with three unequal separately transferable redeemable principal parts (STRPP) of `12,500.00 Lakhs, `12,500.00 Lakhs and `25,000.00 Lakhs redeemable at par on 20 March 2020, 20 September 2021 and 20 September 2023, respectively (First Issue - Private Placement)) Unsecured (i) 7.80% Debentures (Domestic bonds) 47,471.42 47,471.42 (7.80% p.a. unsecured non-cumulative non-convertible redeemable taxable bonds repayable as bullet payment in the month of July 2022 amounting `45,000.00 Lakhs (Second Issue - Private Placement)) (ii) 8.15% Debentures (Domestic bonds) 20,361.73 20,361.72 (8.15% p.a. unsecured non-cumulative non-convertible redeemable taxable bonds repayable as bullet payment in the month of Feb 2021 amounting `20,000.00 Lakhs (Third Issue - Private Placement)) (iii) 8.29% Debentures (Domestic bonds) 12,676.02 12,676.02 (8.29 % p.a. unsecured non-cumulative non-convertible redeemable taxable bonds repayable as bullet payment in the month of May 2021 amounting `12,500.00 Lakhs (Fourth Issue - Private Placement)) 186 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 20 Non-current borrowings (Continued) ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Term loan from banks Secured (i) Investec Term Loan A- Secured by way of charge over EPAL's investment - 15,815.46 in equity shares of EPAL Holdings Limited. (ROI: 3 months LIBOR plus 400 bps repayable quarterly in 2 installments of GBP 2,218,750 each and 15 instalments of GBP 887,500 each starting from 28.12.2018) (ii) Investec Term Loan B- Secured by way of charge over EPAL's investment - 7,349.48 in equity shares of EPAL Holdings Limited. (ROI: 3 months LIBOR plus 450 bps repayable as bullet payment of GBP 8.25 Millions on 14.03.2024) (iii) National Westminster Bank PLC- Secured by way of fixed and floating 1,145.68 1,248.18 charge over all property and assets, present and future, including deposits of Edina UK Limited (ROI: Base Rate plus 179 bps repayable as 31 equated monthly installments of GBP 9850 each and balance as bullet payment on 24 November 2020) Unsecured (i) Punjab National Bank 39,997.59 - ROI: 8.45% p.a. (linked to 6 months MCLR) repayable in 10 equated instalments starting from June 2021 and ending in December 2025. Unsecured (i) Bank of Baroda, UK 10,731.73 10,930.03 (ROI: 3 months LIBOR plus 280 bps repayable as bullet payment of GBP 12 Millions on 13.03.2023) (ii) Bank of Baroda, UK 2,714.27 - (ROI: 3 months LIBOR plus 280 bps repayable in 8 equal instalments of GBP 375,000 each starting from June 2020) Term loan from other than banks Unsecured (i) KFW Loan -Guaranteed by Govt of India 34,455.63 38,938.98 (1.96% p.a. loan repayable on half yearly basis starting from 30 June 2018 in 14 instalments of Euro 2,941,000 each and 3 instalments of Euro 2,942,000 each) (ii) AFD Loan -Guaranteed by Govt of India 12,929.37 3,997.83 (1.87% p.a. for Euro 3,719,016.59, 2.20% p.a. for Euro 1,205,674.41, 2.19% p.a. for Euro 8460156.73 and 2.22% p.a. for Euro 3112936.93 loan repayable in half yearly basis starting from 31 October 2020 in 20 equal instalments of Euro 2,500,000 each) (iii) ADB Loan -Guaranteed by Govt of India 43,391.19 9,768.69 (3.166% p.a. (Method: 6 month LIBOR+ 60 Basis point +/- rebate/surcharge, if any) loan repayable on half yearly basis starting from 15 March 2022 in 30 equal instalments of USD 6,666,667 each) (iv) IBRD Loan -Guaranteed by Govt of India 38,484.04 - (3.55% p.a. (Method: 6 month LIBOR+66 Basis point, if any) loan repayable on half yearly basis starting from 15 May 2023 in 27 equal instalments of USD 7854000 each and one installment of 7942000) 3,16,492.25 2,20,691.40 Less : Current Maturities of non-current borrowings 17,149.14 8,735.24 Less: Interest accrued on non-current borrowings 5,642.05 5,441.21 Total 2,93,701.06 2,06,514.95 There has been no default in repayment of the loans/ interest thereon as at the end of the year. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 187 21 Non-current trade payable ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Trade payable for goods and services Total outstanding dues of micro enterprises and small enterprises 1,277.49 - Total outstanding dues of creditors other than micro and small enterprises 10,523.97 - Total 11,801.46 - a) Trade payable are subject to confirmations, reconciliation and consequential adjustments that may arise on reconciliation. b) Amounts payable to related parties are disclosed in note 48. 22 Other non current financial liabilities ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Retention money 40,680.09 8,019.85 Total 40,680.09 8,019.85 23 Non-current provisions ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Provision for employee benefits Gratuity 136.73 140.88 Leave encashment 144.21 269.51 Total 280.94 410.39 a) Refer note 40 for disclosure as per Ind AS 19 on 'Employee Benefits'. 24 Deferred tax liabilities (net) ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Deferred tax liability Revenue measured at fair value 1,036.03 2,322.67 Financial assets and liabilities measured at amortised cost 3,007.11 1,295.75 Difference in book depreciation and tax depreciation 8.00 - Less: Deferred tax assets Difference in book depreciation and tax depreciation 2,848.29 2,661.95 Expenses disallowed - 96.96 Leave encashment 50.39 98.38 Provisions for bonus 47.78 55.68 Provisions for gratuity 113.07 0.88 Allowance for doubtful receivables 137.43 68.05 Operating lease liabilities 37.84 25.95 Revenue measured at fair value - 37.47 Tax losses carried forward - 223.12 Financial assets and liabilities measured at amortised cost 2.28 - Total 814.06 349.98 a) Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority. b) Refer note 45 for disclosure required as per Ind AS 12 Income Taxes. 188 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 24 Deferred tax liabilities (net) (Continued) 31 March 2019 ` in Lakhs Particulars Net balance Acquired in Recognised Recognised Net balance 1 April 2018 business in profit in OCI 31 March combination or loss 2019 Deferred tax liabilities Revenue measured at fair value 2,322.67 - (1,391.10) - 931.57 Financial assets and liabilities measured at amortised cost 1,326.68 - 1,680.43 - 3,007.11 Financial asset measured at FVTPL 8.43 - 21.22 0.46 30.11 Less: Deferred tax assets Difference in book depreciation and tax depreciation 2,635.70 - 197.59 (2.40) 2,830.89 Expenses disallowed 301.19 - 44.06 6.65 351.90 Leave encashment 98.38 - (47.99) - 50.39 Provisions for gratuity 55.68 - (19.79) 11.89 47.78 Provisions for bonus 0.88 - 112.19 - 113.07 Allowance for credit impaired receivables 68.05 - 69.38 - 137.43 Operating lease liabilities 25.95 - 11.89 37.84 Revenue measured at fair value 37.47 - (187.60) (2.15) (152.28) Tax losses carried forward 441.29 - (139.07) 7.03 309.25 Financial assets and liabilities measured at amortised cost - - (10.91) (1.46) (12.37) Total (6.81) - 280.80 (19.10) 254.89 31 March 2018 ` in Lakhs Particulars Net balance Acquired in Recognised Recognised Net balance 1 April 2017 business in profit in OCI 31 March combination or loss 2018 Deferred tax liabilities Revenue measured at fair value 4,197.70 - (1,875.03) - 2,322.67 Financial assets and liabilities measured at amortised cost 696.89 30.86 596.63 2.30 1,326.68 Financial asset measured at FVTPL - 6.96 1.29 0.18 8.43 Less: Deferred tax assets Difference in book depreciation and tax depreciation 4,576.69 (140.89) (1,794.92) (5.18) 2,635.70 Expenses disallowed - 199.73 95.92 5.54 301.19 Leave encashment 59.55 - 38.83 - 98.38 Provisions for gratuity 21.42 - 30.11 4.15 55.68 Provisions for bonus 0.88 - - - 0.88 Allowance for credit impaired receivables - - 68.05 - 68.05 Operating lease liabilities 15.90 - 10.05 - 25.95 Revenue measured at fair value 211.78 (22.76) (151.04) (0.51) 37.47 Tax losses carried forward - 170.60 264.08 6.61 441.29 Total 8.37 (168.86) 161.82 (8.13) (6.81) 25 Other non-current liabilities ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Operating lease liabilities 59.00 74.77 Deferred income on account of government grants 427.68 568.42 Total 486.68 643.19 a) Deferred income on account of government grants have been accounted in line with Accounting policy no. C.8 (Note 1). b) International Bank for Reconstruction and Development ("World Bank") acting as an implementation agency of the Global Environment Facility ("GEF") had sanctioned a grant of USD 1,500,000 for implemention of SAP . Total grant amounting to ` 1,062.56 Lakhs has been received out of the sanctioned amount. There are no unfulfilled conditions or other contingencies attached to above grant. During the year, the Group has received ` 290.73 Lakhs (31 March 2018: ` 611.37 Lakhs) as grant from World Bank. The Group has recognised ` 420.42 Lakhs (31 March 2018: ` 0.20 Lakhs) as grant income for the year (refer note 32). EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 189 26 Current borrowings ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Loans from banks Secured (i) ICICI Bank - Secured by first pari passu charge on the stock and 15,600.00 15,000.00 receivables both present and future (ROI varying between 8.20% p.a.(linked to 1 year MCLR) to 8.90% p.a. (linked to 3 months MCLR + 30 bps) depending on the date of disbursement of the respective tranches repaid/ repayable as bullet payment of the respective tranche starting from Sep 2018 to June 2019 in the range of ` 2,000.00 Lakhs to ` 8,000.00 Lakhs) (ii) HDFC - Secured by first pari passu charge on the stock and debtors both 7,500.00 11,000.00 present and future (ROI varying between 7.85% p.a.(linked to 3 months MCLR) to 8.45% p.a. (linked to 3 months MCLR) depending on the date of disbursement of the respective tranches repayable as Bullet payment of the respective tranche starting from June 2019 to Feb 2019 in the range of of ` 1,000.00 Lakhs to ` 5,000.00 Lakhs) (iii) SBI - Secured by first pari passu charge on the stock and receivables both - 28,525.59 present and future (ROI varying between 7.85% p.a.(linked to 3 months MCLR) to 8.25% p.a. (linked to 3 months MCLR) depending on the date of disbursement of the respective tranches repaid as Bullet payment in the month of March 2019 in the range of ` 5,000.00 Lakhs to ` 23,500.00 Lakhs) (iv) IndusInd Bank - Secured by pari passu charge on stock and book debts of 10,000.00 - the Company (ROI varying between 9.13% p.a. to 9.25% p.a. (linked to 3 months MIBOR + 169 bps) repayable as Bullet in the month of Nov 2019 amounting to ` 10,000.00 Lakhs) (v) IndusInd Bank (factored receivables)- Secured by pari passu charge on stock and book debts of the Company 9,579.08 (ROI be at 9.00% p.a. (linked to 364 days T-bill plus 258 basis point), repayable after 120 days from the discounting date in the event of default/ delay in receipt of proceeds from the companies (whose bills are discounted) in the month of July 2019 amounting to ` 9,579.08 Lakhs) (vi) Investec Bank, UK 15,889.78 (ROI: 3 months LIBOR plus 400 bps to 450 bps repayable in April 2019) Unsecured (i) IndusInd Bank 5,003.69 5,001.14 (ROI varying between 8.30% p.a. to 8.75% p.a. (linked to 3 months MIBOR + 121 bps) repayable as Bullet in the month of Sep 2019 amounting to ` 5,000.00 Lakhs) (ii) J&K Bank 14,999.91 - (Borrowing-1: ROI varying between 8.15% p.a. to 8.30% p.a. (linked to 1 month MCLR) repayable as Bullet in the month of June 2019 amounting to ` 5,000 lakhs) (Borrowing-2: ROI varying between 8.35% p.a. to 8.45% p.a. (linked to 3 months MCLR) repayable as Bullet in the month of Sep 2019 amounting to ` 10,000 lakhs) (iii) CTBC Bank - 4,000.88 (ROI varying between 7.96% p.a. ( linked to 1 months MIBOR + 75 bps) to 8.42% p.a. (linked to 3 months MIBOR + 82 bps) repayable as Bullet in the month of Feb 2019 amounting to ` 4,000.00 Lakhs) (iv) ICICI Bank UK Plc 4,976.16 5,075.52 (ROI: 6 month LIBOR plus 135 bps repayable as bullet payment in the month of March 2020 amounting to GBP 5.50 Millions) (v) Investec Bank, UK - 2,774.14 (ROI: 2 month LIBOR plus 350 bps repaid as bullet payment in the month of June 2018 amounting to GBP 3 Millions) 83,548.62 71,377.27 Less: Interest accrued on current borrowings 3.69 33.21 Total 83,544.93 71,344.06 190 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 27 Trade payables ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Trade payable for goods and services Total outstanding dues of micro enterprises and small enterprises 8,214.58 - Total outstanding dues of creditors other than micro and small enterprises 1,40,513.89 1,51,612.76 Total 1,48,728.47 1,51,612.76 a) Trade payable are subject to confirmations, reconciliation and consequential adjustments that may arise on reconciliation. b) Amounts payable to related parties are disclosed in note 48. c) Some trade payables had reserved title to goods supplied to the Group. Since the extent to which such trade payables are effectively secured depends on a number of factors and conditions, some of which are not readily determinable, it is not possible to indicate how much of the above amount is secured under reservation of title. 28 Other current financial liabilities ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Current maturities of non-current borrowings (refer note 20) 17,149.14 8,735.24 Interest accrued on borrowings 5,645.74 5,474.42 Unclaimed interest on bonds 1.61 - Liabilities for expenses 2,333.37 2,193.85 Retention money 15,546.09 13,703.52 Earnest money deposit 430.81 700.16 Security Deposit 138.94 72.85 Payable to employees 936.16 5.11 Commitment fee payable 238.07 48.13 Tax on dividend payable - 264.35 Total 42,419.93 31,197.63 29 Other current liabilities ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Statutory dues (refer note a below) 20,004.60 6,578.13 Liquidated damages 93.25 314.64 Advance from customers 1,308.50 5.87 Unearned income 1,957.67 40.52 Operating lease liabilities - 0.19 Deferred income on account of government grants (refer note 25) 238.54 67.21 Total 23,602.56 7,006.56 a) The sales, corresponding output tax liability and purchases along with the corresponding input tax credit reported in GST and VAT returns, the net input tax credit receivable or the net output tax liability payable as the case may be are subject to reconciliation with the books of accounts. Differences which will be identified on reconciliation of GST/ VAT returns will be addressed in annual GST/ VAT statements/ revised returns to be filed in due course. 30 Current provisions ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Provision for employee benefits Gratuity 3.29 1.39 Leave encashment 8.37 14.77 Pay revision - 550.00 Total 11.66 566.16 a) Disclosures required by Ind AS 19 'Employee Benefits' is made in Note 40. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 191 31 Revenue from operations ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Sale of goods 1,48,987.15 1,10,114.73 Sale of services 96,097.44 32,521.57 Rent received 16.72 146.16 Total 2,45,101.31 1,42,782.46 a) Refer note 53 for disclosure in respect of Ind AS 115, 'Revenue from contracts with customers'. b) The Company has recognised revenue under agreements with ULB’s based on certain assumptions / estimate like the start date of the project period is taken as the date of completion specified in the first Completion Certificate received from the ULB, the actual expenses towards PMC, AMC and interest (including indirect finance costs) are more than the percentage specified in the agreement, the billing commences from next month of the month of completion mentioned in the completion certificate except in the case where the date of completion is the first day of the month, in which case the billing is done for the same month. The company is seeking necessary clarifications on such and other matters. 32 Other income ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Interest income from financial assets measured at amortised cost Bank deposits 3,411.73 1,233.99 Trade receivables/unbilled revenue 1,332.14 2,166.34 Loans to employees 4.85 3.49 Security deposit 41.50 14.50 Others 971.30 1,436.57 Other non-operating income Tender document fees 38.63 59.37 E- Tendering registration fee 11.10 15.49 Net gain on foreign currency transactions and translation 3,410.89 - Gain on investments mandatorily measured at fair value through profit or loss (FVTPL) 116.48 6.81 EMD forfeited 1,424.00 - Deferred rent income 15.97 - Grant income 420.42 0.20 Miscellaneous income 154.03 585.59 Total 11,353.04 5,522.35 33 (Increase)/ Decrease in inventories ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening stock 41,221.60 15,475.14 Closing stock 34,855.02 30,003.74 Total 6,366.58 (14,528.60) 192 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 34 Employee benefits expense ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Salaries and wages 12,673.31 3,913.15 Leave encashment (100.11) 148.31 Contribution to provident and other funds 616.22 230.83 Staff welfare expenses 314.98 227.97 Total 13,504.40 4,520.26 a) Disclosures as per Ind AS 19 in respect of provision made towards various employee benefits are made in Note 40. b) The pay revision of the employees of the parent company was due with effect from 1 January 2017. The Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises, Government of India vide office memorandums No. W-02/0028/2017-DPE(WC)-GL- XIII/17 dated 3 August 2017 had revised scales of pay in respect of Board level and below Board level executives and Non-unionised Supervisors of Central Public Sector Enterprises with effect from 1 January 2017. Since the pay scales of regular employees in EESL have been formulated in accordance with NTPC pay scales of the regular employees, in terms of the guidelines issued by the Department of Public Enterprises applicable to NTPC, a provision was made on an estimated basis in respect of regular employees on account of pay revision. Movement in provision is as follows: Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 550.00 - Addition during the year - 550.00 Amounts used during the year (550.00) - Total - 550.00 35 Finance costs ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Finance charges on financial liabilities measured at amortised cost Debentures/Bonds 8,237.85 4,595.01 Loans 10,800.07 5,054.68 Unwinding of discount on retention money 1,067.48 604.38 Unwinding of discount on trade payable 1,048.69 - Others - 176.30 Net loss on foreign currency transactions and translation 118.25 2,687.04 Other borrowing costs Commitment Fees (KFW Loan) 188.02 11.05 Guarantee Fee 547.70 395.51 Total 22,008.06 13,523.97 a) Borrowing costs capitalised during the year is ` 3,582.44 Lakhs (31 March 2018: ` 2,449.16 Lakhs). 36 Other expenses ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Annual maintenance charges (projects) 9,396.79 2,042.59 Legal fees & professional charges 2,464.20 1,314.10 Conveyance expenses 25.20 150.24 Communication expenses 633.16 211.12 Recruitment expenses 72.77 303.47 EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 193 36 Other expenses (Continued) ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Repair and maintenance expenses - Building maintenance 123.16 88.36 - Plant and machinery 57.80 - - Computer maintenance 119.45 6.73 - House maintenance - 0.94 Internal audit fees 6.00 3.00 Advertisement and publicity expenses 444.13 267.80 Printing and stationery expenses 210.91 80.60 Books and periodicals 0.78 - Meeting expense/ Hospitality expenses 175.76 1.66 Tour and traveling expenses 2,573.65 337.74 Rent 2,131.12 934.00 Electricity expenses 162.46 73.29 Payment to auditors 169.25 41.92 Bank charges 209.36 153.75 Sponsorship expenses 142.54 3.00 Manpower expenses 1,336.91 573.71 Subscription fees 98.38 3.30 Insurance charges 641.41 59.56 Deferred rent expenses - 29.03 Testing expenses 117.29 22.36 Business promotion 205.89 770.74 Rate and taxes 15.87 617.31 Net loss on sale of property plant and equipment 135.66 - Awareness creation, training & outreach activities - 6.12 Diwali gift expenses - 25.26 Annual day celebration expenses - 4.48 Corporate social responsibility expenses 20.06 12.27 Net loss on foreign currency transactions and translation - 1,167.00 Allowance for doubtful receivables 196.65 196.65 Other project expenses 2,757.36 2,677.63 Bad debts 76.58 - Miscellaneous expenses 250.88 553.46 Total 24,971.43 12,733.19 a) Ujala scheme expenses amounting to ` 1,801.27 Lakhs (software expenses ` 361.55 Lakhs, project maintenance expenses ` 0.92 Lakhs and other project expenses ` 1,438.80 Lakhs) and other project expenses amounting to ` 876.36 Lakhs have been aggregated and presented as project expenses (` 2,677.63 Lakhs) in the comparative period to enhance comparability with current year. 37 Fair Value Measurements (a) Financial instruments by category All of the Group's financial assets and liabilities except for investment in Maple Leaf viz. loans, cash and cash equivalents, other bank balances, unbilled revenue, trade and other receivables, borrowings, retention money payable, liability for expenses and other payables are measured at amortised cost. 194 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 b) Fair value hierarchy To provide an indication about the reliability of the inputs used in determining fair value of financial instruments measured at fair value or measured at amortised cost for which fair value is being disclosed, the group has classified these into levels prescribed under the Ind AS 113, ' Fair value measurement' details of which are as under: ` in Lakhs Financial assets measured at fair value- Recurring fair As at 31 March 2019 As at 31 March 2018 value measurements (Level 2*) Financial assets: Investments 1,527.24 1,440.51 Total 1,527.24 1,440.51 ` in Lakhs Assets and liabilities which are measured at amortised cost for which fair As at 31 March 2019 As at 31 March 2018 values are disclosed (Level 2*) Financial assets: Loan to EnergyPro Asset Management Ltd 5,479.76 5,712.31 Loan to employees 200.55 151.00 Security deposits 633.96 498.69 Unbilled revenue 4,596.36 9,936.59 Finance lease receivables 7,687.96 - Bank deposits 1,521.68 1,496.90 Total 20,120.27 17,795.49 Financial liabilities: Borrowings 3,06,247.22 2,26,347.04 Retention money 65,682.89 23,132.00 Trade payables 12,884.96 - Total 3,84,815.07 2,49,479.04 * Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. (c) Valuation technique used to determine fair value: (i) For financial assets (security deposits, employee loans, unbilled revenue) - Discounted future cash flow; appropriate market rate as of each balance sheet date used for discounting. (ii) For financial liabilities (retention money liabilities, debentures,foreign currency loans): Discounted cash flow; appropriate market borrowing rate of the entity as of each balance sheet date used for discounting. (d) Fair value of financial assets and liabilities measured at amortised cost ` in Lakhs As at 31 March 2019 As at 31 March 2018 Particulars Carrying Fair value Carrying Fair value amount amount Financial assets Loan to EnergyPro Asset Management Ltd 5,219.77 5,479.76 5,009.66 5,712.31 Loan to employees 233.95 200.55 182.91 151.00 Security deposits 624.34 633.96 449.35 498.69 Unbilled revenue 3,543.10 4,596.36 7,283.55 9,936.59 Finance lease receivables 7,687.96 7,687.96 - - Bank deposits 1,521.68 1,521.68 1,496.90 1,496.90 18,830.80 20,120.27 14,422.37 17,795.49 Financial liabilities Borrowings 3,10,850.20 3,06,247.22 2,15,250.19 2,26,347.04 Retention money 56,226.18 65,682.89 21,723.37 23,132.00 Trade payables 11,801.46 12,884.96 - - 3,78,877.84 3,84,815.07 2,36,973.56 2,49,479.04 EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 195 The carrying amounts of current trade receivables, cash and cash equivalents, other financial assets, trade payables, payable for capital expenditure and other financial liabilities are considered to be the same as their fair values, due to their short-term nature. The carrying values for finance lease receivables approximates the fair value as these are periodically evaluated based on credit worthiness of customer and allowance for estimated losses is recorded based on this evaluation. Also, carrying amount of bank deposits approximates its fair value. The fair values for security deposits, unbilled revenue, employee term loans, borrowings and retention money were calculated based on cash flows discounted using a current lending rate/borrowing rate. They are classified as level 2 fair values in the fair value hierarchy due to the use of observable market inputs. 38 Financial risk management The Group’s principal financial assets include loans, trade & other receivables, and cash and short-term deposits that derive directly from its operations. The Group’s principal financial liabilities comprise loans and borrowings in foreign as well as domestic currency, trade payables and other payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group is exposed to the following risks from its use of financial instruments: - Credit risk - Liquidity risk - Market risk This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk. a) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations resulting in a financial loss to the Group. Credit risk arises principally from trade receivables, unbilled revenue, loans & advances, cash & cash equivalents and deposits with banks. Trade receivables The Group earns its revenue mainly from government controlled entities (both central and state government). As these entities are government controlled, the counter party risk attached to such receivables are considered to be insignificant. For rest of the customers, Group evaluates and manages its credit risk by taking into consideration the ageing of the dues, specific credit circumstances, nature of the customers and credit worthiness of the customers. The impairment loss allowance is assessed by the Group using life time ECL approach which is based on the business environment in which the Group operates. The trade receivables are considered in default (credit impaired) when the possibility of recovery of receivables based on the assessment/ evaluation on the parameters stated above are deteriorating and are required to be provided as allowance for doubtful receivables in a systematic manner. The Group has not experienced any significant impairment losses in respect of trade receivables in the past years. Since the Group has its customers within different states of India and different countries outside India, geographically there is no concentration of credit risk. Cash and cash equivalents The Group held cash and cash equivalents of ` 43,820.05 Lakhs (31 March 2018: ` 55,872.89 Lakhs). The cash and cash equivalents are held with banks with high rating. Deposits with banks and financial institutions The Group held deposits with banks and financial institutions of ` 35,316.11 Lakhs (31 March 2018: ` 8,354.82 Lakhs). In order to manage the risk, Group places deposits with only high rated banks/institutions. Loan to employees The Group has given loans to employees. The Group manages its credit risk in respect of loan and advances to employee through settlement of dues against full and final payment to employees. Loan to EnergyPro Asset Management Ltd (EPAM) As per joint venture agreement between the parent company and EPAM, in case, EPAM defaults in payment of any amount due under loan given by EPAL by its due date, a deemed transfer notice will be deemed to be served on the Company which will impact EPAM as below: - EPAM shall be deprived of all its voting rights at any meetings of Shareholders; - the Director(s) appointed by EPAM shall be deprived of all voting rights (and such Director(s) will lose its rights to attend Board meetings); - the Defaulting Shareholder shall not be entitled to receive any dividend or other distribution payable by the Company. - EPAL will have the right to purchase all of EPAM's shares at 90% of the Fair Value per equity share. As per the loan agreement, in case of any default, interest on the unpaid amount shall accrue daily, from the date of non-payment to the date of actual payment, at 2% above the rate specified under the agreement. Also, EnergyPro Asset Management Ltd along with its nominee director shall be deprived of all of its voting rights as shareholder in EPAL, and it shall not be entitled to any dividend or other distribution payable by the EPAL. In view of above-mentioned clauses of the joint venture agreement and loan agreement, management is of the view that risk of default is low. 196 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 Investment EESL EnergyPro Asset Limited (EPAL) has made a strategic investment in a partnership firm Maple Leaf Storage LPI. As per the terms of subscription agreement, if conditions laid down in the agreement are not achieved by the LP within one year of the Closing Date, the cash flow allocation to EPAL in relation to its investment shall be established, at that time, in a manner to provide EPAL a projected IRR of at least 10.0% (based on the 15-year financial model). (i) Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Financial assets for which loss allowance is measured using 12 months Expected Credit Losses (ECL) Non-current investments 1,527.24 1,440.51 Non-current loans 5,713.72 5,475.59 Other non-current financial assets* 9,209.64 1,496.90 Cash and cash equivalents 43,820.05 55,872.89 Deposits with banks 33,794.43 6,857.92 Current loans 364.34 166.33 Other current financial assets* 5,888.88 655.91 Total 1,00,318.30 71,966.05 Financial assets for which loss allowance is measured using Life time Expected Credit Losses (ECL) Trade receivables 1,94,375.67 1,29,847.96 Unbilled revenue 3,543.10 7,283.55 Total 1,97,918.77 1,37,131.51 * Excluding unbilled (ii) Provision for expected credit losses Financial assets for which loss allowance is measured using 12 month expected credit losses The Group has assets where the counter- parties have sufficient capacity to meet the obligations and where the risk of default is very low. Accordingly, no loss allowance for impairment has been recognised. Financial assets for which loss allowance is measured using life time expected credit losses The Group has customers with capacity to meet the obligations and therefore the risk of default is low. Further, management believes that the unimpaired amounts that are past due are still collectible in full, based on historical payment behaviour. However, an allowance for doubtful receivables of ` 196.65 Lakhs (31 March 2018: ` 196.64 Lakh) has been recognised during the year to the extent of additional 10% of the total outstanding of ` 1,966.40 Lakhs of cases which are under litigation for recovery. Financial assets for which loss allowance is measured and recommended by Comptroller and Auditor General of India The Group has not made a provision of ` 16.50 crores on account of subsidy not received from Delhi Government/DERC as per the recommendation made by the CAG of India of their report dated 18 October 2017 issued to Group. However, the management is of the view that the recovery is being followed up with concerned authority, which is under review and the management is confident for recovery of their dues. (iii) Ageing analysis of trade receivables The ageing analysis of the trade receivables is as below: Particulars Gross carrying amount As at 31 March 2019 As at 31 March 2018 Not due 6,676.23 - 0-30 days past due 39,888.90 32,876.18 31-60 days past due 20,006.21 8,626.13 61-90 days past due 5,968.02 4,779.35 91-120 days past due 15,384.35 1,793.50 More than 120 days past due 1,06,845.25 81,969.44 Total 1,94,768.96 1,30,044.60 EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 197 (iv) Reconciliation of allowance for doubtful receivables The movement in the allowance for doubtful receivables in respect of trade receivables during the year is as follows: ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance 196.64 - Add: Allowance for doubtful debts recognised during the year 196.65 196.64 Closing balance 393.29 196.64 b) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group has an appropriate liquidity risk management framework for the management of short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations, this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. (i) Financing arrangements The Group had access to the following undrawn borrowing facilities at the end of the reporting period: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Fixed-rate borrowings Foreign currency loans 1,81,436.83 1,99,144.30 Short term credit facility 15,304.76 922.85 Total 1,96,741.59 2,00,067.15 Floating-rate borrowings Term loans 10,002.41 11,500.00 Foreign currency loans 2,08,762.33 1,20,331.59 Working capital loan 2,500.10 - Total 2,21,264.84 1,31,831.59 Total 4,18,006.43 3,31,898.73 (ii) Maturitites of financial liabilities The following are the contractual maturities of non-derivative financial liabilities, based on contractual cash flows: As at 31 March 2019 ` in Lakhs Particulars 3 months 3-12 1-2 2-5 More than Total or less months years years 5 years Non-current borrowings* 4,510.71 37,733.56 43,619.06 1,82,689.04 1,35,117.51 4,03,669.88 Current borrowings 46,465.85 37,082.77 - - - 83,548.62 Trade payables 75,681.78 73,046.69 2,895.60 7,061.74 1,844.12 1,60,529.93 Retention money 1,868.79 16,946.77 15,003.01 19,632.53 2,775.08 56,226.18 Liability for expenses 2,333.37 - - - - 2,333.37 Payable to employees 936.16 - - - - 936.16 Others 378.62 430.81 - - - 809.43 Total 1,32,175.28 1,65,240.60 61,517.67 2,09,383.31 1,39,736.71 7,08,053.57 198 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 As at 31 March 2018 ` in Lakhs Particulars 3 months 3-12 1-2 2-5 More than Total or less months years years 5 years Non-current borrowings* 3,380.54 23,633.88 35,004.76 1,54,629.77 63,206.89 2,79,855.84 Current borrowings 12,801.75 58,575.52 - - - 71,377.27 Trade payables 23,674.12 1,27,911.77 13.42 13.42 - 1,51,612.73 Retention money - 11,874.46 837.97 5,724.99 3,285.94 21,723.36 Liability for expenses 9.08 2,186.77 - - - 2,195.85 Payable to employees 5.11 - - - - 5.11 Others 383.33 700.16 - - - 1,083.49 Total 40,253.93 2,24,882.56 35,856.15 1,60,368.18 66,492.83 5,27,853.65 * includes interest accrued c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Board of Directors is responsible for setting up of policies and procedures to manage market risks of the Group. All such transactions are carried out within the guidelines set by the risk management committee. Currency risk The Group is exposed to foreign currency risk on certain transactions that are denominated in a currency other than respective entity’s functional currency, hence exposure to exchange rate fluctuations arises. The risk is that the functional currency value of cash flows will vary as a result of movements in exchange rates. The currency profile of financial liabilities as at 31 March 2019 and 31 March 2018 are as below: ` in Lakhs As at 31 March 2019 As at 31 March 2018 Particulars EURO USD GBP EURO USD GBP Financial liabilities Foreign currency borrowings 47,385.00 81,875.23 - 42,722.30 9,756.61 - Trade payables 4,185.63 - 50.96 3,336.46 - 60.80 Total 51,570.63 81,875.23 50.96 46,058.76 9,756.61 60.80 Financial assets Trade receivables 128.56 - 806.83 559.22 - 125.02 Balance with bank-current account - 2,017.42 38.97 - 6,191.77 6.93 Investment - 1,527.24 - 1,440.51 - Total 128.56 3,544.66 845.80 559.22 7,632.28 131.95 Net Exposure 51,442.07 78,330.57 (794.84) 45,499.54 2,124.33 (71.15) Sensitivity analysis A strengthening of the Indian Rupee, as indicated below, against GBP , Euro and USD at 31 March would have increased/ (decreased) profit or loss (before tax) by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for previous year, except that the reasonably possible foreign exchange rate variances were different, as indicated below. ` in Lakhs 31 March 2019 31 March 2018 Particulars Strengthening Weakening Strengthening Weakening 10% movement INR/EUR 5,144.21 (5,144.21) 4,549.95 (4,549.95) INR/USD 7,833.06 (7,833.06) 212.43 (212.43) INR/GBP (79.48) 79.48 (7.12) 7.12 Total 12,897.78 (12,897.78) 4,755.27 (4,755.27) EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 199 (i) Interest rate risk The Group is exposed to interest rate risk arising mainly from non-current borrowings with floating interest rates. The Group is exposed to interest rate risk because the cash flows associated with floating rate borrowings will fluctuate with changes in interest rates. The Group manages the interest rate risks by entering into different kinds of loan arrangements with varied terms (e.g. fixed rate loans, floating rate loans, rupee term loans, foreign currency loans, etc.). At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments is as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Financial assets Fixed-rate instruments Employee Loans 57.38 178.11 Sub total 57.38 178.11 Variable-rate instruments Loan to EnergyPro Asset Management Ltd 5,219.77 5,009.66 Sub total 5,219.77 5,009.66 Total 5,277.15 5,187.77 Financial liabilities: Fixed-rate instruments Foreign currency loans 47,099.92 42,722.30 Debentures 1,27,500.00 1,27,500.00 Rupee term loans 39,997.59 - Cash credit 15,600.00 26,000.00 Sub total 2,30,197.51 1,96,222.30 Variable-rate instruments Foreign currency loans 81,661.00 9,756.61 Cash credit 47,079.00 37,500.00 Term loan from banks 14,591.68 35,271.26 Short term 20,865.94 7,844.06 Sub total 1,64,197.62 90,371.94 Total 3,94,395.13 2,86,594.24 Fair value sensitivity analysis for fixed-rate instruments The Group’s fixed rate instruments are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates. Cash flow sensitivity analysis for variable-rate instruments A change of 50 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for the previous year. ` in Lakhs Profit or loss (before tax) Particulars 31 March 2019 31 March 2018 Increase Decrease Increase Decrease Loan to EnergyPro Asset Management Ltd. 26.10 (26.10) 25.05 (25.05) Foreign currency loans (408.31) 408.31 (48.78) 48.78 Rupee term loans (235.40) 235.40 (187.50) 187.50 Term loan from banks (72.96) 72.96 (176.36) 176.36 Short term (104.33) 104.33 (39.22) 39.22 Total (794.89) 794.89 (426.81) 426.81 39 Capital Management The Group’s objectives when managing capital are to: - safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and - maintain an appropriate capital structure of debt and equity. 200 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management in deployment of funds and sourcing by leveraging opportunities in domestic and international financial markets so as to maintain investors, creditors & markets' confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as result from operating activities divided by total shareholders’ equity. The Board of Directors also monitors the level of dividends to equity shareholders. Under the terms of major borrowing facilities, the Group is required to comply with the following financial covenants: (a) Borrowings of parent company: (i) Maintain a current ratio (current assets divided by current liabilities) of at least 1.0 (ii) Maintain a minimum asset coverage of 1.00 times (iii) Maintain a Debt:Equity ratio (long-term debt divided by equity net of accumulated profits/losses) not exceeding 80:20 (iv) Maintain a asset debt service coverage ratio (net cash flow from operations divided by debt service obligations, including all principal payments and tax-shielded interest and lease payments following due within the year) of at least 1.2 (v) Borrower shall inform the Bank simultaneously along with Stock Exchange if substantial effect on their profit or business means an adverse variance of 20% or more. (b) Borrowings of subsidiary companies: (i) EESL EnergyPro Assets Limited- Maintain cash flow cover (cash flow to debt service including finance charges) of at leaset 1.4:1.0. (ii) Edina Acquisition Limited- Maintain cash flow cover (cash flow to debt service including finance charges) of at leaset 1.0:1.0, maintain interest cover (EBITDA to finance charges) ranging between 4.08:1 to 10.27:1 and maintain leverage cover (total debt to EBITDA) ranging between 1.25:1 to 3.88:1. (iii) Edina UK Limited- Maintain debt servicing cover (cash flow available for debt servicing to debt service liability) of at least 1.10:1 and maintain EBITDA for each 12 month period ending on the last day of a financial quarter of at least £1,500,000. There have been no breaches in the financial covenants of any interest bearing borrowings. The Group monitors capital, using a medium term view of three to five years, on the basis of a number of financial ratios generally used by industry and by the rating agencies. The Group is not subject to externally imposed capital requirements. The Company monitors capital using gearing ratio which is net debt divided by total equity. Debt companies of non-current and current borrowings.Net debt comprises of non-current and current borrowings less cash and cash equivalent. Equity includes equity share capital and reserves that are managed as capital. The gearing ratios at the end of the reporting periods were as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Borrowings 4,00,040.87 2,92,068.67 Less : Cash and cash equivalents 43,820.05 55,872.89 Net debt 3,56,220.82 2,36,195.78 Total equity 86,993.77 69,007.29 Net debt to equity ratio 4.09 3.42 ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Borrowings 4,00,040.87 2,92,068.67 Total equity 86,993.77 69,007.29 Debt to equity ratio 4.60 4.23 40 Disclosure as per Ind AS 19 'Employee Benefits' a) Defined contribution plans: (i) Provident fund The parent company pays fixed contribution to provident fund at predetermined rates to a registered provident fund administered by the Government, which invests the funds in permitted securities. Amount of ` 82.09 Lakhs (31 March 2018: ` 178.02 Lakhs) pertaining to employers' contribution to provident fund is recognised as an expense and included in "Employee benefits expense" in note 34. (ii) Superannuation fund The parent company pays fixed contribution to superannuation fund to a separate trust. Amount of ` 213.91 Lakhs (31 March 2018: ` 119.57 Lakhs) pertaining to employers' contribution to superannuation fund is recognised as an expense and included in "Employee benefits expense" in note 34. (iii) Pension fund The Group voluntary contributes 6% to an external pension fund for its employees of subsidiaries. Amount of ` 467.54 Lakhs (31 March 2018: ` 51.98 Lakhs) is recognised as an expense and included in "Employee benefits expense" in note 34. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 201 b) Defined benefit plan (gratuity) The parent company operates a gratuity plan which provides lump sum benefits linked to the qualifying salary and completed years of service with the parent company at the time of separation. Every employee who has completed 5 years of continuous service is entitled to receive gratuity at the time of his retirement or separation from the organisation, whichever is earlier. The gratuity benefit that is payable to any employee, is computed in accordance with the provisions of "The Payment of Gratuity Act, 1972". The parent company has set up a fund with Life Insurance Corporation (LIC) of India and contribution is made to the gratuity policy issued by LIC of India. Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the parent company’s financial statements as at balance sheet date: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Net defined benefit (asset)/liability: 140.02 142.27 Gratuity 140.02 142.27 Non-current 136.73 140.89 Current 3.29 1.38 (i) Movement in net defined benefit (asset)/liability ` in Lakhs Particulars For the year ended 31 March 2019 For the year ended 31 March 2018 Defined Fair value Net defined Defined Fair value Net defined benefit of plan benefit liability/ benefit of plan benefit liability/ obligation assets (asset) obligation assets (asset) Opening balance 142.27 6.51 135.76 61.91 - 61.91 Included in profit or loss: Current service cost 74.89 - 74.89 61.16 - 61.16 Past service cost - - - - - Net Interest cost 11.09 1.00 10.09 4.55 - 4.55 Total amount recognised in profit or loss 85.98 1.00 84.98 65.71 - 65.71 Included in other comprehensive income (OCI): Remeasurement loss/(gain) arising from: Financial assumptions 2.15 - 2.15 (10.39) - (10.39) Experience adjustment 38.74 - 38.74 22.39 - 22.39 Return on plan assets excluding interest 6.86 (6.86) income Total amount recognised in OCI 40.89 6.86 34.03 12.00 - 12.00 Other Contributions paid by the employer - 114.20 (114.20) - 14.92 (14.92) Acquisition adjustment 5.70 - 5.70 11.05 - 11.05 Adjustment in plan assets - 6.25 (6.25) - - - Benefits paid 2.72 2.72 - 8.41 8.41 - Closing balance 272.12 132.10 140.02 142.27 6.51 135.76 (ii) Plan assets The plan assets of the Company are managed by Life Insurance Corporation of India through a trust managed by the Company in terms of an insurance policy taken to fund obligations of the Company. Information on categories of plan assets as at 31 March 2019 and 31 March 2018 has not been provided by Life Insurance Corporation of India. Actual return on plan assets is ` 7.86 Lakhs (31 March 2018: Nil). 202 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 (iii) Actuarial assumptions The following were the principal actuarial assumptions at the reporting date: Particulars As at 31 March 2019 As at 31 March 2018 Discount rate 7.75 7.80% Salary escalation rate 6.00% 6.00% Retirement age (years) 60 60 Mortality rates inclusive of provision for disability 100% of IALM (2006 - 08) Withdrawal rate Up to 30 Years 3.00% 3.00% From 31 to 44 years 2.00% 2.00% Above 44 years 1.00% 1.00% The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. (iv) Sensitivity analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below. ` in Lakhs 31 March 2019 31 March 2018 Increase Decrease Increase Decrease Discount rate (0.5% movement) (20.77) 23.10 (11.09) 12.34 Salary escalation rate (0.5% movement) 23.39 (21.19) 12.44 (11.32) Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. This analysis may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. (v) Risk exposure Changes in discount rate: Reduction in discount rate in subsequent valuations can increase the plan’s liability. Salary increases: Actual salary increases will increase the plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability. Life expectancy: The plan obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans’ liabilities. This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy. Investment risk: Assets liabilities mismatch and actual investment return on assets lower than the discount rate assumed at the last valaution date can impact the liability. (vi) Expected maturity analysis of the defined benefit plans in future years ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Less than 1 year 3.30 1.39 Between 1-2 years 2.50 1.36 Between 2-5 years 13.28 7.78 Over 5 years 253.05 131.74 Total 272.13 142.27 Expected contributions to post-employment benefit plans for the year ending 31 March 2020 are ` 100.80 Lakhs (31 March 2018: ` 86.04 Lakhs). The weighted average duration of the defined benefit plan obligation at the end of the reporting period is 19.77 years (31 March 2018: 20.25 years). EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 203 c) Other long term employee benefit plans Leave encashment The parent company provides for earned leave (EL) benefit (including compensated absences) to the employees of the parent company which accrue annually at 30 days. Leave Encashment subject to maximum of 300 days (Earned Leave) is permissible on superannuation/ separation. The parent company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date and accumulated leave is treated as Long Term Employee Benefit. The scheme is unfunded and liability for the same is recognised on the basis of actuarial valuation. An amount of ` (-)100.11 Lakhs (31 March 2018: ` 143.65 Lakhs) for the year have been made on the basis of actuarial valuation at the year end and debited to the statement of profit and loss. 41 The Company raises funds through various sources including series of Non-Convertible Bond issue. The details of redeemable, taxable, non-cumulative, non-convertible bonds in the nature of debentures issued by the Company are as follows: ` in Lakhs Series Secured/ Total issue Face value Allotment First Due Date Next Due Date Unsecured Size of each Bond Date o principal of Annual repayment Interest Series-I Secured* 50,000.00 ` 40.00 Lakh** 20-Sep-16 20-Mar-20 20-Sep-19 Series-II Unsecured 45,000.00 ` 10.00 Lakh 18-Jul-17 18-Jul-22 18-Jul-19 Series-III Unsecured 20,000.00 ` 10.00 Lakh 10-Jan-18 10-Feb-21 10-Jan-20 Series-IV Unsecured 12,500.00 ` 10.00 Lakh 29-Jan-18 28-May-21 29-Jan-20 * Series-I is secured by first pari-passu charge over moveable fixed assets of the Company with minimum asset coverage of 1.00 times. ** Each bond of Series-I comprises of 2 STRPP of the value of ` 10.00 Lakh each and 1 STRPP of the value of ` 20.00 Lakh. The Company is creating Debenture Redemption Reserve for Bonds issued @ 25% (as required by Companies (Share Capital and Debentures) Rules, 2014). 42 Disclosure as per Ind AS 108 'Operating Segments' A. General Information The Group has four reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Chief operating decision maker (CODM) reviews internal management reports on at least a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments: Trading: Sale of energy efficient appliances to the different customers Services: Providing the energy efficient technology services on ESCO mode and consultancy services. Industrial engine and component: Manufacture, sale, installation, hire and service of diesel and gas powered generators and related spare parts. Energy saving services (UK): Providing the energy efficient technology services on ESCO mode in United Kingdom (UK). Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Group’s Board. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. b) Information about reportable segments and reconciliations to amounts reflected in the financial statements: For the year ended 31 March 2019 ` in Lakhs Particulars Trading Services Industrial engine Energy saving Total & component services (UK) Segment revenue Sale of products/ ESCO Project income/ 1,11,527.89 72,237.35 61,499.45 - 2,45,264.69 Other consultancy Segment expenses 1,02,232.39 35,202.63 59,933.01 - 1,97,368.03 Segment results 9,295.50 37,034.72 1,566.44 - 47,896.66 Unallocated corporate interest and 11,888.37 other income Unallocated corporate expenses, 40,318.11 finance charges Profit before tax 19,466.92 Income tax (net) 7,338.89 Profit after tax 12,128.03 Depreciation and amortisation expense - 33,086.46 569.35 - 33,655.81 Non-cash expenses other than depreciation 196.65 - 76.58 - 273.23 Capital expenditure - 1,23,889.79 210.92 - 1,24,100.71 204 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 For the year ended 31 March 2018 ` in Lakhs Particulars Trading Services Industrial engine Energy saving Total & component services (UK) Segment revenue Sale of products/ ESCO Project income/ 1,04,788.27 30,806.00 7,165.63 22.56 1,42,782.46 Other consultancy Segment expenses 94,188.71 13,670.39 6,454.02 10.48 1,14,323.60 Segment results 10,599.56 17,135.61 711.61 12.08 28,458.86 Unallocated corporate interest and other 5,473.52 income Unallocated corporate expenses, finance 27,705.54 charges Profit before tax 6,226.84 Income tax (net) 2,835.33 Profit after tax 3,391.51 Depreciation and amortisation expense - 13,327.71 26.42 7.05 13,361.18 Non-cash expenses other than depreciation 196.64 - - - 196.64 Capital expenditure - 1,27,998.48 - 1,570.81 1,29,569.29 As at 31 March 2019 ` in Lakhs Particulars Trading Services Industrial engine Energy saving Total & component services (UK) Segment assets 1,07,206.41 3,95,645.51 34,100.75 - 5,36,952.67 Unallocated corporate and other assets 2,01,910.43 Total assets 1,07,206.41 3,95,645.51 34,100.75 - 7,38,863.10 Segment liabilities 56,331.83 79,113.56 20,103.48 - 1,55,548.87 Unallocated corporate and other liabilities 5,00,896.79 Total liabilities 56,331.83 79,113.56 20,103.48 - 6,56,445.66 As at 31 March 2018 ` in Lakhs Particulars Trading Services Industrial engine Energy saving Total & component services (UK) Segment assets 1,15,878.05 2,57,907.92 81,795.41 4,609.91 4,60,191.29 Unallocated corporate and other assets 86,722.65 Total assets 1,15,878.05 2,57,907.92 81,795.41 4,609.91 5,46,913.94 Segment liabilities 12,092.64 96,313.10 63,467.47 4,529.78 1,76,402.99 Unallocated corporate and other liabilities 3,06,188.50 Total liabilities 12,092.64 96,313.10 63,467.47 4,529.78 4,82,591.49 c) Information about geographical areas Particulars Non-current assets* Revenue from external customers As at 31 March As at 31 March For the year ended For the year ended 2019 2018 31 March 2019 31 March 2018 India 3,08,268.49 2,16,490.41 1,83,601.86 1,35,594.27 United Kingdom 44,868.44 49,575.12 52,845.84 3,468.17 Ireland 1,680.43 1,893.26 7,204.82 2,499.31 Rest of the World 63.86 54.00 1,448.79 1,220.71 Total 3,54,881.22 2,68,012.79 2,45,101.31 1,42,782.46 *other than financial instruments and deferred tax assets d) Information about major customers No external customer individually accounted for more than 10% of the revenues during the year ended 31 March 2019 and 31 March 2018. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 205 43 Disclosure as per Ind AS 112 'Disclosure of interest in other entities' a) Investment in subsidiary company: The group's subsidiaries are listed below. Unless otherwise stated, they have share capital consisting solely of equity shares that are held directly by the group, and the proportion of ownership interests held equals the voting rights held by the group. The country of incorporation or registration is also their principal place of business. Name of entity Country of Ownership interest held Ownership interest held Principal incorporation by the group (%) by non-controlling Activities interests (%) 31-Mar-19 31-Mar-18 31-Mar-19 31-Mar-18 EESL EnergyPro Assets Limited United Kingdom 84.55 80.00 15.45 20.00 Holding company & business support Anesco Energy Services (South) Limited United Kingdom 84.55 80.00 15.45 20.00 Provision of energy saving services Creighton Energy Limited United Kingdom 84.55 80.00 15.45 20.00 EPAL Holdings Limited United Kingdom 84.55 80.00 15.45 20.00 Investment holding company Edina Acquisition Limited United Kingdom 84.55 80.00 15.45 20.00 Edina Power Services Limited Ireland 84.55 80.00 15.45 20.00 Edina Limited Ireland 84.55 80.00 15.45 20.00 Manufacture, sale, installation, hire and service of diesel and gas powered generators and related spare parts Edina UK Limited United Kingdom 84.55 80.00 15.45 20.00 Edina Manufacturing Limited United Kingdom 84.55 80.00 15.45 20.00 Edina Power Limited United Kingdom 84.55 80.00 15.45 20.00 Containerisation of diesel and gas powered generators and production of equipment for containerisation Edina Australia Pty Limited Australia 84.55 80.00 15.45 20.00 Equipment wholesale sales and maintenance activities Armoura Holdings Limited Ireland 84.55 80.00 15.45 20.00 Investment in and rental of property Stanbeck Limited Ireland 84.55 80.00 15.45 20.00 Property investment company EPSL Trigeneration Private Ltd India 84.55 - 15.45 - Trigeneration technology solutions b) Non-controlling interests Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to the group. The amounts disclosed for subsidiary are before inter-company eliminations. 206 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 ` in Lakhs Summarised balance sheet 31-Mar-19 31-Mar-18 Current assets 24,843.11 31,346.99 Current liabilities 40,239.26 36,935.90 Net current assets (15,396.15) (5,588.91) Non-current assets 59,629.66 60,295.82 Non-current liabilities 14,617.46 31,282.77 Net non-current assets 45,012.20 29,013.05 Net assets 29,616.05 23,424.14 Accumulated NCI 4,576.33 4,684.84 Summarised statement of profit and loss For the year ended For the year ended 31 March 2019 31 March 2018 Revenue 61,499.45 7,221.81 Profit for the year 2,615.00 (386.91) Other comprehensive income (OCI) (2,111.51) 469.26 Total comprehensive income 503.49 82.35 Profits attributable to NCI 469.80 (77.38) OCI attributable to NCI (293.61) 93.85 Total comprehensive income attributable to NCI 176.19 16.47 Dividends paid to NCI - - Summarised cash flows For the year ended For the year ended 31 March 2019 31 March 2018 Cash flows from operating activities (1,787.78) (13,014.39) Cash flows from investing activities (188.72) (47,871.24) Cash flows from financing activities (497.51) 33,465.02 Net increase/(decrease) in cash and cash equivalents (2,474.01) (27,420.61) c) Change in parent's ownership interest in Subsidiary During the year ended 31 March 2019, the parent's ownership interest in EPAL has changed from 80.00% to 84.55%. The effect of the same is as under: ` in Lakhs Particulars Owners interest Minority interest Total Share capital Other equity Share capital Other equity Share capital Other equity As at 1 April 2018 19,621.43 (882.12) 4,905.36 (220.52) 24,526.79 (1,102.64) Equity investment during the year 7,762.05 - - - 7,762.05 - Share in statement of profit and loss - 2,145.20 - 469.80 - 2,615.00 for the year Share in other comprehensive income - (1,817.90) - (293.61) - (2,111.51) for the year Effects of change in accounting policy - (1,658.90) - (414.73) - (2,073.63) Impact of change in ownership interest - (130.03) - 130.03 - - adjusted in retained earnings As at 31 March 2019 27,383.48 (2,343.75) 4,905.36 (329.03) 32,288.84 (2,672.78) EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 207 d) Investment in joint venture company: The group's joint ventures at 31 March 2018 are listed below. They have share capital consisting solely of equity shares that are held directly by the group. The country of incorporation or registration is also their principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held. ` in Lakhs Company name Country of Accounting Ownership interest Carrying Amount incorporation method held by group 31-Mar-19 31-Mar-18 31-Mar-19 31-Mar-18 NEESL Private Limited India Equity Method 26.00% 26.00% 5.96 2.91 The joint ventures are unlisted and hence the quoted price are not available. ` in Lakhs Summarised balance sheet NEESL Private Limited 31-Mar-19 31-Mar-18 Current assets Cash and cash equivalents 0.05 1.01 Other assets 1,132.64 639.53 Total current assets 1,132.69 640.54 Total non-current assets - - Current liabilities Financial liabilities (excluding trade payables) 51.24 0.79 Other liabilities 1,058.51 628.55 Total current liabilities 1,109.75 629.34 Non-current liabilities Financial liabilities (excluding trade payables) - - Other liabilities - - Total non-current liabilities - - Net assets 22.94 11.20 Summarised statement of profit and loss NEESL Private Limited 31-Mar-19 31-Mar-18 Revenue 2,883.33 565.28 Interest income - - Other income 8.83 1.18 Cost of material consumed (2,819.69) (551.76) Depreciation and amortisation - - Interest expense (0.01) (0.02) Income tax expense (0.96) (3.54) Profit from continuing operations 1.35 10.20 Profit from discontinued operations - - Profit for the year 1.35 10.20 Other comprehensive income - - Total comprehensive income 1.35 10.20 Dividend received - - 208 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 ` in Lakhs Reconciliation of carrying amount NEESL Private Limited 31-Mar-19 31-Mar-18 Opening net assets 11.20 1.00 Profit for the year 1.35 10.20 Capital expenditure annuity reserve 10.39 - Other comprehensive income - - Closing net assets 22.94 11.20 Group share in % 26.00% 26.00% Group share in INR 5.96 2.91 Goodwill - - Carrying amount 5.96 2.91 e) Details of significant restrictions EESL EnergyPro Assets Limited (EPAL): There is a restriction on disposal of investment in EESL EnergyPro Assets Limited for three years from the date of agreement, i.e. 13 March 2018. In the event of default of loan repayments of ICICI Bank, the bank may by notice stop EPAL from making dividend payments to its shareholders including EESL. NEESL Private Limited: There is a restriction on disposal of investments in NEESL Private Limited until the expiry date or earlier termination of the last subsisting Supply, Installation, Operation and Maintenance Agreement entered into by NEESL Private Limited for implemention of developing an energy efficient public lighting system in the cities of Bhubaneswar, Cuttack, Berhampur, Rourkela and Sambalpur comprising of their respective municipal area as determined in accordance with the Orissa Municipal Corporation Act, 2003 in relation to the Project Public Street Lighting Points, on a public private partnership basis. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 209 44 Disclosure as per Schedule III to the Companies Act, 2013 ` in Lakhs 210 As at 31 March 2019 For the year ended 31 March 2019 Name of the entity in the Group Net Assets, i.e., total assets Share in profit or loss Share in OCI Share in total minus total liabilities comprehensive income As % of consolidated Amount As % of consolidated Amount As % of consolidated Amount As % of totalcompr- Amount net assets profit or loss OCI ehensive income Parent company Energy Efficiency Services Limited 96.55% 83,996.53 78.41% 9,509.98 1.04% (22.14) 94.93% 9,487.84 Foreign subsidiaries EESL EnergyPro Assets Limited 34.48% 29,997.80 17.14% 2,078.46 0.00% - 20.80% 2,078.46 Anesco Energy Services South Ltd 3.51% 3,049.84 4.58% 555.93 0.00% - 5.56% 555.93 Notes to Consolidated Financial Statements Creighton Energy Limited 1.35% 1,174.99 0.87% 106.08 0.00% - 1.06% 106.08 EPAL Holdings Limited 7.03% 6,112.17 -0.04% (4.97) 0.00% - -0.05% (4.97) Edina Acquisition Limited 3.43% 2,980.77 -34.40% (4,172.45) 0.00% - -41.75% (4,172.45) Edina Power Services Limited 6.42% 5,585.46 0.55% 66.80 6.69% (142.67) -0.76% (75.87) Edina Limited 6.64% 5,775.58 0.14% 17.24 9.03% (192.70) -1.76% (175.46) Edina UK Limited 9.61% 8,362.41 29.86% 3,621.89 1.25% (26.57) 35.97% 3,595.32 Edina Australia Pty Limited* -0.21% (184.85) -0.69% (83.99) 0.00% - -0.84% (83.99) Armoura Holdings Limited 0.08% 67.44 0.02% 2.95 0.67% (14.37) -0.11% (11.42) Stanbeck Limited -0.03% (23.42) -0.24% (28.83) 0.13% (2.69) -0.32% (31.52) Edina Manufacturing Limited 0.02% 14.59 -0.09% (10.97) -0.25% 5.33 -0.06% (5.64) Edina Power Limited 0.64% 554.22 -3.35% (406.45) -17.51% 373.67 -0.33% (32.78) EPSL Trigeneration Private Limited 0.01% 7.26 -0.01% (1.42) 0.00% - -0.01% (1.42) Non-controlling interest in all subsidiaries 5.26% 4,576.33 3.87% 469.80 13.76% (293.61) 1.76% 176.19 Indian joint ventures NEESL Private Limited 0.01% 5.96 0.03% 3.05 0.00% - 0.03% 3.05 Consolidation adjustment -74.79% (65,059.32) 3.34% 404.93 85.20% (1,817.90) -14.14% (1,412.97) Total 100.00% 86,993.77 100.00% 12,128.03 100.00% (2,133.65) 100.00% 9,994.38 EESL Annual Report 2018-19 44 Disclosure as per Schedule III to the Companies Act, 2013 ` in Lakhs As at 31 March 2018 For the year ended 31 March 2018 Name of the entity in the Group Net Assets, i.e., total assets Share in profit or loss Share in OCI Share in total minus total liabilities comprehensive income As % of consolidated Amount As % of consolidated Amount As % of consolidated Amount As % of totalcompr- Amount net assets profit or loss OCI ehensive income EESL Annual Report 2018-19 Parent company Energy Efficiency Services Limited 93.39% 64,442.96 116.36% 3,946.24 -1.74% (7.85) 102.49% 3,938.39 Foreign subsidiaries EESL EnergyPro Assets Limited* 35.61% 24,575.36 2.32% 78.74 0.00% - 2.05% 78.74 Anesco Energy Services South Ltd 5.92% 4,084.47 0.36% 12.18 0.00% - 0.32% 12.18 Creighton Energy Limited 2.25% 1,555.97 0.05% 1.84 0.00% - 0.05% 1.84 EPAL Holdings Limited -0.01% (3.96) -0.12% (3.92) 0.00% - -0.10% (3.92) Edina Acquisition Limited -0.30% (203.64) -23.41% (793.87) 0.00% - -20.66% (793.87) Edina Power Services Limited 4.87% 3,361.16 0.18% 6.12 0.00% - 0.16% 6.12 Edina Limited 10.48% 7,232.68 0.68% 23.06 0.00% - 0.60% 23.06 Edina UK Limited 7.13% 4,922.81 12.43% 421.66 0.00% - 10.97% 421.66 Edina Australia Pty Limited 0.14% 93.96 -0.10% (3.30) 0.00% - -0.09% (3.30) Armoura Holdings Limited 0.14% 93.77 -0.52% (17.58) 0.00% - -0.46% (17.58) Stanbeck Limited -0.37% (253.66) -0.16% (5.37) 0.00% - -0.14% (5.37) Edina Manufacturing Limited 0.03% 23.28 0.27% 9.32 0.00% - 0.24% 9.32 Edina Power Limited 0.97% 666.71 -4.96% (168.24) 0.00% - -4.38% (168.24) Non-controlling interest in all subsidiaries 6.79% 4,684.84 -2.28% (77.38) 20.80% 93.85 0.43% 16.47 Foreign joint ventures EESL EnergyPro Assets Limited* 0.00% - -5.03% (170.49) -2.25% (10.14) -4.70% (180.63) Indian joint ventures NEESL Private Limited 0.00% 2.91 0.08% 2.65 0.00% - 0.07% 2.65 Consolidation adjustment -67.05% (46,272.33) 3.83% 129.85 83.19% 375.41 13.15% 505.26 Total 100.00% 69,007.29 100.00% 3,391.51 100.00% 451.27 100.00% 3,842.78 *became subsidiary with effect from 13 March 2018. Notes to Consolidated Financial Statements 211 45 Disclosure as per Ind AS 12 'Income taxes' i) Income tax recognised in Statement of Profit and Loss ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Current tax expense Current year 7,045.92 2,252.10 Earlier years - 421.40 7,045.92 2,673.50 Deferred tax expense Origination and reversal of temporary differences 292.97 161.82 292.97 161.82 Total income tax expense 7,338.89 2,835.32 ii) Income tax recognised in other comprehensive income ` in Lakhs Particulars Before tax Tax expense/ (benefit) Net of tax For the year ended 31 March 2019 Net actuarial losses on defined benefit plans (34.03) (11.89) (22.14) Exchange differences on translation of foreign operations (2,111.51) - (2,111.51) Total (2,145.54) (11.89) (2,133.65) For the year ended 31 March 2018 Net actuarial losses on defined benefit plans (12.00) (4.15) (7.85) Exchange differences on translation of foreign operations 459.12 - 459.12 Total 447.12 (4.15) 451.27 iii) Reconciliation of tax expense and the accounting profit multiplied by India’s domestic tax rate ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Profit before tax 19,463.87 6,394.67 Tax using the Company’s domestic tax rate of 34.944% (31 March 2018: 34.608%) 6,736.06 2,213.07 Tax effect of: Non-deductible tax expenses 1,051.90 (282.17) Previous year tax liability - 421.40 Others (449.07) 483.02 At the effective income tax rate of 37.71% (31 March 2018: 44.34%) 7,338.89 2,835.32 46 Disclosure as per Ind AS 33 'Earnings per Share' ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Basic earnings per share* [A/B] 1.78 0.75 Diluted earnings per share* [A/C] 1.36 0.75 Nominal value per share 10.00 10.00 *rounded upto two decimal places a) Profit attributable to equity shareholders (` in Lakhs) [A] 11,658.23 3,468.89 212 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 b) Weighted average number of equity shares ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Opening balance of issued equity shares 46,20,00,000 46,20,00,000 Effect of shares issued during the year, if any 19,15,91,854 - Weighted average number of equity shares for Basic EPS [B] 65,35,91,854 46,20,00,000 Effect of dilution 20,50,69,246 2,71,233 Weighted average number of equity shares for Diluted EPS [C] 85,86,61,100 46,22,71,233 47 Disclosure as per Ind AS 17 on 'Leases' a) Operating leases The parent company has taken certain residential/office premises and warehouses under non-cancellable operating lease arrangements. Lease rentals are subject to escalation of upto 15% per annum. Lease rental expenses charged during the year to the Statement of Profit and Loss amounts to ` 2,015.59 Lakhs (31 March 2018: ` 757.37 Lakhs). Total future minimum lease payments due under non-cancellable operating leases are as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Less than one year 1,370.95 1,538.58 Between one and five years 2,410.64 3,108.80 More than five years - 1,054.46 Total 3,781.59 5,701.84 The Group has taken certain office premises and warehouses on operating lease for a period ranging from 1 to 5 years, which can be further extended at mutually agreed terms but are not non-cancellable. The lease rental expenses charged during the year in the statement of profit and loss for the year in respect of leases is ` 115.53 Lakhs (31 March 2018: ` 176.63). The Group has provided certain office buildings and warehouses on operating lease for a period of 1 to 5 years, which can be further extended at mutually agreed terms but are not non-cancellable. The lease rental income recognised in the statement of profit and loss for the year in respect of leases is ` 16.72 Lakhs (31 March 2018: ` 146.16 Lakhs). b) Finance leases (i) The parent company provides electrical vehicles (E-vehicles) on finance lease for a period of six years. Lease rentals are subject to escalation of 0% to 10% per annum. Total future minimum lease payments due under non-cancellable finance leases are as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Less than one year 1,077.85 - Between one and five years 4,171.86 - More than five years 68.11 - Total minimum lease payments 5,917.82 - Unearned finance income 1,204.79 - Present value of minimum lease payments 4,713.03 - Present value of future minimum lease payments due under non-cancellable finance leases are as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Less than one year 812.22 - Between one and five years 3,254.16 - More than five years 646.65 - Present value of minimum lease payments 4,713.03 - EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 213 The Company provides E-vehicles on lease to various customers. Up to 31 March 2018, such leases were classified as operating lease. The Company has reevaluated the leasing arrangements and concluded that these lease should be classified as finance lease as per Ind AS 17, 'Leases'. The change in classification of leases has resulted in a reduction in profit before tax by ` 13.33 Lakhs and tax expense by ` 4.66 Lakhs for the year ended 31 March 2019. Impact of such change on earnings per share is not material. (ii) The group also leases out energy saving equipments to customers for a period upto 19 years. Lease rentals are subject to escalation of 2.5% to 6% per annum. Total future minimum lease payments due under non-cancellable finance leases are as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Less than one year 325.69 - Between one and five years 2,006.99 - More than five years 3,636.83 - Total minimum lease payments 5,969.51 - Unearned finance income 2,106.13 - Present value of minimum lease payments 3,863.38 - Present value of future minimum lease payments due under non-cancellable finance leases are as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Less than one year 76.23 - Between one and five years 1,117.17 - More than five years 2,669.98 - Present value of minimum lease payments 3,863.38 - 48. Disclosure as per Ind AS 24 'Related Party Disclosures' a) List of Related parties: (i) Entities having joint control over the company: Power Finance Corporation Limited NTPC Limited REC Limited Powergrid Corporation of India Limited (ii) Subsidiary of the company: Interest in subsidiaries are set out in Note 43. (iii) Joint Ventures of the company: NEESL Private Limited iv) Key Managerial Personnel (KMP): Parent company Saurabh Kumar Managing Director w.e.f. 7 May, 2013 Rajeev Sharma Director and Chairman w.e.f. 5 February, 2018 Kaushal Kishore Sharma Director and Chairman w.e.f. 21 October, 2016 upto 31 October, 2017 Raj Pal Nominee Director w.e.f.14 July, 2016 Vijay Kumar Singh Nominee Director w.e.f. 21 October, 2016 upto 14 November, 2018 Avakash Saxena Nominee Director w.e.f. 22 September, 2016 till 5 February, 2018 Pankaj Kumar Nominee Director w.e.f. 4 August, 2017 till 15 March, 2018 Mohit Bhargava Nominee Director w.e.f. 5 February, 2018 Sanjiv Garg Nominee Director w.e.f. 21 October, 2018 Abhay Bakre Nominee Director w.e.f. 8 May, 2018 Seethapathy Chander Independent Director w.e.f. 5 February, 2018 Gauri Surendra Trivedi Independent Director w.e.f. 5 February, 2018 Renu Narang Director (Finance) w.e.f. 1 March, 2018 upto 23 January, 2019 Venkatesh Dwivedi Director (P & BD) w.e.f. 7 February, 2019 Shankar Gopal Director (Comm) w.e.f. 7 February, 2019 Shankar Gopal Chief Financial Officer w.e.f. 8 June, 2016 upto 5 April, 2018 Shankar Gopal Chief Financial Officer w.e.f. 7 February, 2019 Renu Narang Chief Financial Officer w.e.f. 6 April, 2018 upto 23 January, 2019 Pooja Shukla Company Secretary w.e.f. 27 December, 2012 214 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 Subsidiary Companies: EESL EnergyPro Assets Limited Saurabh Kumar Director w.e.f. 13 March 2018 Neelima Jain Director w.e.f. 13 March 2018 Steven Derrick Fawkes Director w.e.f. 13 March 2018 Shankar Gopal Director w.e.f. 20 March 2019 Anesco Energy Services South Limited Matthew William Pumfrey Director w.e.f. 13 March 2018 Michael Anthony Tivey Director w.e.f. 13 March 2018 Neelima Jain Director w.e.f. 13 March 2018 Amit Kumar Bharadwaj Director w.e.f. 20 March 2019 Nitin Wadhwa Director w.e.f. 20 March 2019 Creighton Energy Limited Matthew William Pumfrey Director w.e.f. 13 March 2018 Michael Anthony Tivey Director w.e.f. 13 March 2018 Neelima Jain Director w.e.f. 13 March 2018 Amit Kumar Bharadwaj Director w.e.f. 20 March 2019 Nitin Wadhwa Director w.e.f. 20 March 2019 EPAL Holdings Limited Saurabh Kumar Director w.e.f. 13 March 2018 Neelima Jain Director w.e.f. 13 March 2018 Steven Derrick Fawkes Director w.e.f. 13 March 2018 Edina Acquisitions Limited Saurabh Kumar Director w.e.f. 13 March 2018 Neelima Jain Director w.e.f. 13 March 2018 Steven Derrick Fawkes Director w.e.f. 13 March 2018 Edina Power Services Limited Saurabh Kumar Director w.e.f. 13 March 2018 Neelima Jain Director w.e.f. 13 March 2018 Steven Derrick Fawkes Director w.e.f. 13 March 2018 Delvin Lane Director w.e.f. 13 March 2018 upto 17 July 2018 Hugh Kerr Richmond Director w.e.f. 17 July 2018 Shankar Gopal Director w.e.f. 19 February 2019 Edina Limited Neelima Jain Director w.e.f. 13 March 2018 Delvin Lane Director w.e.f. 13 March 2018 upto 17 July 2018 Hugh Kerr Richmond Director w.e.f. 17 July 2018 Edina UK Limited Neelima Jain Director w.e.f. 13 March 2018 Delvin Lane Director w.e.f. 13 March 2018 upto 17 July 2018 Hugh Kerr Richmond Director w.e.f. 17 July 2018 Edina Australia Pty Limited Neelima Jain Director w.e.f. 13 March 2018 Delvin Lane Director w.e.f. 13 March 2018 upto 17 July 2018 Hugh Kerr Richmond Director w.e.f. 17 July 2018 Armoura Holdings Limited Neelima Jain Director w.e.f. 13 March 2018 Delvin Lane Director w.e.f. 13 March 2018 upto 17 July 2018 Hugh Kerr Richmond Director w.e.f. 17 July 2018 Stanbeck Limited Neelima Jain Director w.e.f. 13 March 2018 Delvin Lane Director w.e.f. 13 March 2018 upto 17 July 2018 Hugh Kerr Richmond Director w.e.f. 17 July 2018 Edina Manufacturing Limited Neelima Jain Director w.e.f. 13 March 2018 Delvin Lane Director w.e.f. 13 March 2018 upto 17 July 2018 Hugh Kerr Richmond Director w.e.f. 17 July 2018 EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 215 Edina Power Limited Neelima Jain Director w.e.f. 13 March 2018 Delvin Lane Director w.e.f. 13 March 2018 upto 17 July 2018 Hugh Kerr Richmond Director w.e.f. 17 July 2018 EPSL Trigeneration Private Limited Saurabh Kumar Director w.e.f. 20 December 2018 Neelima Jain Director w.e.f. 20 December 2018 (v) Subsidiaries, joint ventures and associates of entities having joint control over the Group: PFC Capital Advisory Services Limited PFC Consulting Limited PFC Green Energy Limited REC Power Distribution Co. Limited Utility Powertech Limited (vi) Post Employment Benefit Plans: Energy Efficiency Services Limited Employees Group Superannuation Defined Contribution Scheme Trust (vii) Non-controlling interest: EnergyPro Asset Management Limited (viii) Entities under the control of the same government: The Group is controlled by Central Government through its controlled entities (refer Note 18). Pursuant to Paragraph 25 and 26 of Indian Accounting Standard 24, entities over which the same government has control or joint control of, or significant influence, then the reporting entity and other entities shall be regarded as related parties. The Group has applied the exemption available for government related entities and have made limited disclosures in the financial statements. Such entities with which the Group has significant transactions include but not limited are: Bureau of Energy Efficiency NHPC Limited Oil and Natural Gas Corporation Limited Bharat Heavy Electricals Limited Coal India Limited Central Electronics Limited Indian Renewable Energy Development Agency Limited (IREDA) b) Transactions with the related parties are as follows: ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018 Manpower services received by the Group Utility Powertech Limited 1,984.82 1,917.19 Sales of goods NTPC Limited 5,873.43 7,953.05 Power Grid Corporation of India Limited 2,257.51 434.72 REC Limited 2.47 95.76 Power Finance Corporation Limited 8.11 205.94 Bureau of Energy Efficiency 10.52 2,269.46 Oil and Natural Gas Corporation Limited 728.75 380.10 Bharat Heavy Electricals Limited - 15.88 Total 8,880.79 11,354.90 Consultancy services Coal India Limited - 148.72 Indian Renewable Energy Development Agency Limited (IREDA) - 221.28 NHPC Limited - 555.95 Total - 925.96 Purchase of goods and services Bharat Heavy Electricals Limited 5,026.00 1,035.00 Central Electronics Limited 9,329.00 - Total 14,355.00 1,035.00 216 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 Deputation of employees NTPC Limited 680.32 88.49 Equity contribution received NTPC Limited - 9,900.00 Power Grid Corporation of India Limited 1,520.44 - Power Finance Corporation Limited 9,900.00 - Total 11,420.44 9,900.00 Equity contribution paid NEESL Private Limited - 0.26 Interest income EnergyPro Asset Management Limited 233.83 8.25 Banking fee and guarantee fees recovered EnergyPro Asset Management Limited 139.74 93.40 Loan given EnergyPro Asset Management Limited 210.11 4,963.76 Final dividend paid NTPC Limited 401.04 880.35 Power Grid Corporation of India Limited 61.59 135.21 REC Limited 239.31 880.35 Power Finance Corporation Limited 401.04 880.35 Total 1,102.98 2,776.27 Interim dividend paid NTPC Limited - 411.72 Power Grid Corporation of India Limited - 63.23 REC Limited - 411.72 Power Finance Corporation Limited - 411.72 Total - 1,298.39 Transactions with post employment benefit plan Contributions made during the year 208.42 119.57 Compensation to Key Management Personnel (KMP) Short term benefits 140.75 96.02 Post employment benefits 15.92 5.85 Other long term benefits 0.40 0.28 Total 157.07 102.15 c) Outstanding balances with related parties are as follows: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Amount recoverable for sale/purchase of goods and services NTPC Limited 4,349.98 4,894.98 Power Grid Corporation of India Limited 1,564.61 110.74 REC Limited 156.63 538.85 Power Finance Corporation Limited 133.16 263.76 PFC Capital Advisory Services Limited 2.32 2.32 PFC Consulting Limited 133.57 0.20 PFC Green Energy Limited 0.08 0.08 Total 6,340.35 5,810.92 Amount recoverable (loans) EnergyPro Asset Management Limited 5,219.77 5,009.66 Amount payable (other than loans) Utility Powertech Limited 27.49 202.36 EnergyPro Asset Management Limited 36.19 - Outstanding compensation to KMP - 0.13 EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 217 d) Terms and conditions of transactions with the related parties (i) Transactions with the related parties are made on normal commercial terms and conditions and at market rates. (ii) The contracts or arrangements or transactions entered into during the year ended 31 March 2019 which were at arm's length basis. (iii) The Group is receiving manpower services from M/s Utility Powertech Ltd (UPL), a 50:50 joint venture between NTPC Limited and Reliance Infrastructure Ltd. (iv) The Group provides consultancy services and sell goods to companies having joint control on which it recovers cost plus services charges from such companies. (v) Loan is given to EnergyPro Asset Management Limited (EPAM) at interest rate of LIBOR plus margin (2.80%). Banking fee and guarantee fees are recovered on cost to cost basis. As per the loan agreement, in case of any default, EnergyPro Asset Management Ltd along with its nominee director shall be deprived of all of its voting rights as shareholder in EESL EnergyPro Asset Limited (EPAL), and it shall not be entitled to any dividend or other distribution payable by the EPAL. (vi) Outstanding balances of related parties at the year-end are unsecured and interest free except for loan to EPAM and settlement occurs in cash. For the year ended 31 March 2019, the Group has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2018: ` Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. 49 Central Board of Direct Taxes on 31 March 2015 notified 10 ICDS vide Notification no. 32/2015 [F. No. 134/48/2010 – TPL]/ SO 892(E), which is applicable to all taxpayers (corporate and non-corporate) following mercantile method of accounting including nonresident taxpayers. It applies to income computed under the head Profit and Gains of Business and Profession and Income from Other Sources. However, there is no impact on computation of Book Profits for the purposes of MAT (Minimum Alternate Tax), which will continue to be governed by the methodology according to the Companies Act, 2013. 50 Major Investments made during the year: a) The parent company has made an advance payment of ` 48.23 Lakhs (31 March 2018: ` 89.21 Lakhs) during the year towards the purchase of property at NBCC Center, Sahkar Marg, Jaipur for its Regional Office at Jaipur. b) The parent company has also made an advance payment of ` 88.89 Lakhs (31 March 2018: ` 88.89 Lakhs) during the year towards the purchase of Built up offices in NBCC Square, Action Area-III, Rajarhat, Kolkata. c) The parent company has also made an advance payment of ` Nil (31 March 2018: ` 1,103.72 Lakhs) towards the purchase of Built up offices in commercial complex, NBCC, Nauroji Nagar New Delhi. 51 Disclosure as per Ind AS 21 'The Effects of Changes in Foreign Exchange Rates' The amount of exchange differences (net) credited to the statement of profit and loss is ` 3,292.64 Lakhs (31 March 2018: debited to Statement of profit and loss ` 3,854.04 Lakhs). 52 Disclosure as per Ind AS 12 'Accounting for Government Grants and Disclosure of Government Assistance' International Bank for Reconstruction and Development ("World Bank") acting as an implementation agency of the Global Environment Facility ("GEF") had sanctioned a grant of USD 1,500,000 for implemention of SAP . Total grant amounting to ` 1,062.56 Lakhs has been received out of the sanctioned amount. There are no unfulfilled conditions or other contingencies attached to above grant. During the year, the Group has received ` 290.73 Lakhs (31 March 2018: ` 611.37 Lakhs) as grant from World Bank. The Group has recognised ` 420.42 Lakhs (31 March 2018: ` 0.20 Lakhs) as grant income for the year (refer note 32). 53 Disclosure as per Ind AS 115, 'Revenue from contracts with customers' a) Nature of goods and services The revenue of the Group comprises of revenue from sale of goods, rendering of services and sale/servicing of industrial engine and components. The following is a description of the principal activities: Revenue from sale of goods The Group sells energy efficient appliances such as LEDs, streetlights, solar lamps, agricultural pumps, energy efficient fans/tubes etc. (including standard warranties) to various customers. Majority of the revenue is derived from government customers. Sale of goods is made as per the terms and conditions mentioned in agreement entered into between the Group and the customer. Nature, timing of satisfaction of performance obligation and significant payment terms The Group recognises revenue from sale of goods at a point in time when control of the goods is transferred to the customers. The amount of revenue recognised as per the terms of the contracts and is adjusted for components of variable consideration, wherever applicable, which are estimated based on the historical data available with the Group. The amounts are billed as per the terms of the contracts and are payable within contractually agreed credit period which varies from 30 to 60 days. Revenue from rendering of services The Group provides energy efficiency services on ESCO model and consultancy services to various customers. Majority of the revenue is derived from government customers. Services are provided as per the terms and conditions mentioned in agreement entered into between the Group and the customer. 218 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 Nature, timing of satisfaction of performance obligation and significant payment terms The Group recognises revenue from rendering of services over time as the customers simultaneously receive and consume the benefits provided by the Group. The amount of revenue recognised as per the terms of the contracts and is adjusted for components of variable consideration, wherever applicable, which are estimated based on the historical data available with the Group. The amounts are billed as per the terms of the contracts and are payable within contractually agreed credit period which varies from 30 to 60 days. Revenue from industrial engine and component The group is a distributor of MWM engines technology. The in-house production facility manufactures bespoke control panel systems and containerized MWM engines that are designed to expedite site installation, provide low maintenance cost and ensure maximum plant availability. The Group sells MWM engines, provides engine containerisation and installation service to customers. The Group further provides after sales services through long term service contracts and selss MWM engine parts. Nature, timing of satisfaction of performance obligation and significant payment terms In respect to MWM engines and its installation at client site, the company recognizes revenue from sale of goods over a period of time based on measurement of performance obligations. The amounts are billed as per the terms of the contracts and are payable within contractually agreed credit period which varies between 7 days to 30 days. In respect to MWM engines parts, the company recognizes revenue from sale of goods at a point of time. The company recognizes revenue from sale of services over a period of time. The amounts are billed as per the terms of the contracts and are payable within contractually agreed credit period of up to 30 days. b) Disaggregation of revenue Revenue is disaggregated by type and nature of goods and services and timing of revenue recognition. ` in Lakhs Particulars For the year ended For the year ended 31 March 2019 31 March 2018* (i) Nature of goods and services Sale of goods Ujala Scheme 37,231.30 57,887.33 Agricultural Demand Side Management 13,249.56 7,925.36 Street light projects 34,140.86 12,928.64 Solar lamps 15,395.60 6,471.45 Solar street light projects 7,307.51 18,543.46 Building projects 1,758.06 17.28 Others 2,445.00 1,014.75 Total [A] 1,11,527.89 1,04,788.27 Rendering of services Solar street light projects 64,290.18 23,741.35 Building projects 1,982.10 199.14 Solar lamps 191.57 834.73 Agricultural Demand Side Management 521.14 1,125.21 Solar street light projects 354.92 793.82 Others 4,734.06 4,111.75 Total [B] 72,073.97 30,806.00 Industrial engine and component Sale of spare parts 2,322.55 - Sale of goods 35,136.71 5,326.46 Operation and maintenance services 24,023.47 1,715.57 Total [C] 61,482.73 7,042.03 Total [A + B + C] 2,45,084.59 1,42,636.30 (ii) Timing of revenue recognition Products and services transferred at a point in time 1,13,850.44 1,04,788.27 Products and services transferred over time 1,31,234.15 37,848.03 Total 2,45,084.59 1,42,636.30 * The Company has applied Ind AS 115 using the cumulative effect method. Under this method, the comparative information is not restated. EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 219 c) Reconciliation of revenue recognised with contract price: ` in Lakhs Particulars For the year ended 31 March 2019 Contract price 2,45,084.59 Adjustments - Revenue from operations 2,45,084.59 d) Contract balances Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are transferred to unbilled revenue when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. The contract liabilities primarily relate to the advance consideration received from the customers which are referred as 'advances from customers' and advance billings referred as 'unearned revenue'. The following table provides information about trade receivables, unbilled revenue, advances from customers and unearned revenue from contracts with customers: ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018* Trade receivables 1,94,375.67 1,29,847.96 Unbilled revenue Non-current 1,080.93 2,317.59 Current 2,462.17 4,965.96 Advances from customers 1,308.50 5.87 Unearned revenue 1,957.67 40.52 * The Group has applied Ind AS 115 using the cumulative effect method. Under this method, the comparative information is not restated. The amount of revenue recognised in 2018-19 from performance obligations satisfied (or partially satisfied) in previous periods, mainly due to delay in issuance of completion certificate by competent authorities is ` 3,956.70 Lakhs. The Group recognized revenue of ` 40.52 Lakhs arising from opening unearned revenue from customers as at 1 April 2018. There have been no significant changes in unearned revenue during the year ended 31 March 2019. Significant increase in advances from customers during the year ended 31 March 2019 is on account of cash received, excluding amounts recognised as revenue or adjusted against expenses during the year ended 31 March 2019. e) Practical expedients applied as per Ind AS 115: (i) The Group has not disclosed information about remaining performance obligations that have original expected duration of one year or less and where the revenue recognised corresponds directly with the value to the customer of the entity's performance completed to date. There are no performance obligations that are completely or partially unsatisfied as of 31 March, 2019, other than those meeting this exclusion criteria. (ii) The Group does not expect to have any contracts for which revenue is recognised during the year where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group has not adjusted the transaction prices for the time value of money. f) Incremental costs of obtaining contracts The Group has not incurred any incremental costs of obtaining contracts with a customer and therefore, not recognised an asset for such costs. g) Significant Judgments (i) Significant judgments in determining the timing of satisfaction of performance obligation The Group exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Group considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and transfer of significant risks and rewards to the customer etc. For performance obligations that are satisfied over time, the Group uses judgement to determine the method used for revenue recognition. The Group uses input method where the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of performance obligation. Revenue is recorded proportionally based on measure of progress. The Group uses output method where direct measurements of value to the customer is based on survey’s of performance completed to date. (ii) Significant judgment in determining the transaction price and allocation of transaction price Judgement is also required to determine the transaction price for the contract. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. 220 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 h) The Group adopted Ind AS 115 using the cumulative effect method and therefore the comparatives have not been restated and continues to be reported as per Ind AS 18. On account of adoption of Ind AS 115, cumulative adjustment of ` 2,073.63 Lakhs (` 1,658.90 Lakhs in retained earnings and ` 414.73 Lakhs in non-controlling interest) was required as at 1 April 2018. Had we followed Ind AS 18, revenue from operations less cost of goods sold would have been lower by ` 2,073.63 Lakhs without any adjustment in retained earning on the transition date. 54 Contingent liabilities and commitments ` in Lakhs Particulars As at 31 March 2019 As at 31 March 2018 Contingent liabilities Claims against the parent company not acknowledged as debt 9,291.06 5,921.11 (VAT paid under protest) Bank guarantees- lien against fixed deposits 2,027.90 23.65 On account of wage revision as per agreeement with - 28.00 Mass Management Services Private Limited Total 11,318.96 5,972.76 Commitments Estimated value of contract to be executed on capital/revenue account and 13,83,403.70 10,00,354.48 not provided for in the books of accounts Commitment of further investments in Maple Leaf amounting to 6,917.13 6,504.41 USD 10 Millions Total 13,90,320.83 10,06,858.89 55 Reclassifications and comparative figures Certain reclassifications have been made to the comparative period’s financial statements to enhance comparability with the current year’s financial statements. As a result, certain line items have been reclassified in the statement of cash flows and notes to the financial statements, the details of which are as under: Items of balance sheet before and after reclassification as at 31 March 2018 ` in Lakhs Particulars Before Reclassification After reclassification reclassification Cash and cash equivalents 55,878.19 (5.30) 55,872.89 Other financial assets 6,351.65 (729.78) 5,621.87 Other current assets 24,864.90 735.08 25,599.98 Items of statement of cash flows before and after reclassification for the year ended 31 March 2018 ` in Lakhs Particulars Before Reclassification After reclassification reclassification Cash flow from operating activities 67,517.41 461.08 67,978.49 Cash flow from operating activities (1,67,634.05) 221.93 (1,67,412.12) Net cash from financing activities 1,29,140.42 (688.32) 1,28,452.10 Cash and cash equivalents at the end of the period 55,878.19 (5.30) 55,872.89 56 Standards issued but not yet effective On 30 March 2019, Ministry of Corporate Affairs (MCA) has notified the following standards/ appendix/ amendments which will come into force from 1 April 2019: a) Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments Appendix C of Ind AS 12, 'Uncertainty over Income Tax Treatments' is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The standard permits two possible methods of transition: • Full retrospective approach – Under this approach, Appendix C will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 – Accounting Policies, Changes in Accounting Estimates and Errors EESL Annual Report 2018-19 Notes to Consolidated Financial Statements 221 • Retrospectively with cumulative effect of initially applying Appendix C recognized by adjusting equity on initial application The Group will adopt the standard on 1 April 2019 and has decided to adjust the cumulative effect in equity on the date of initial application i.e. 1 April 2019 without adjusting comparatives. b) Ind AS 116 ‘Leases’ The new leasing standard will replace the existing leases standard, Ind AS 17 Leases, and related Interpretations. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Currently, operating lease expenses are charged to the statement of profit and loss on a straight line basis. Lessor accounting remains similar to the current standard – i.e. lessors continue to classify leases as finance or operating leases. Further, the new standard contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17. The standard permits two possible methods of transition: • Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors • Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (modified retrospective approach) Under modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease payments, discounted at the incremental borrowing rate and the right of use asset either as: • Its carrying amount as if the standard had been applied since the commencement date, but discounted at lessee’s incremental borrowing rate at the date of initial application or • An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that lease recognized under Ind AS 17 immediately before the date of initial application. Certain practical expedients are available under both the methods. Certain practical expedients are available under both the methods. The Group will adopt the standard on 1 April 2019 by using the modified retrospective approach and accordingly comparatives for the year ended 31 March 2019 will not be retrospectively adjusted. c) Amendment to Ind AS 12 'Income taxes' The amendments to the guidance in Ind AS 12, ‘Income Taxes’, clarifies that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the past transactions or events that generated distributable profits were originally recognized. d) Amendment to Ind AS 19 'Employee benefits' The amendments to the guidance in Ind AS 19, ‘Employee Benefits’, in connection with accounting for plan amendments, curtailments and settlements require an entity: • to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and • to recognize in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognised because of the impact of the asset ceiling. e) Amendment to Ind AS 23 'Borrowing Costs' The amendments to the guidance in Ind AS 23, ‘Borrowing Costs’, clarifies the following: • while computing the capitalisation rate for funds borrowed generally, borrowing costs applicable to borrowings made specifically for obtaining a qualified asset should be excluded, only until the asset is ready for its intended use or sale. • borrowing costs (related to specific borrowings) that remain outstanding after the related qualifying asset is ready for its intended use or sale would subsequently be considered as part of the general borrowing costs. f) Amendment to Ind AS 28 'Investments in Associates and Joint Ventures' The amendments to the guidance in Ind AS 28, 'Investments in Associates and Joint Ventures', clarifies that an entity applies Ind AS 109 Financial Instruments, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. The Group is evaluating the requirements of the above amendments and the effect on the financial statements is being evaluated. For and on behalf of the Board of Directors As per our audit report of even date annexed. For KK Soni & Co. Chartered Accountants (FRN 000947N) Saurabh Kumar S. Gopal Pooja Shukla Sant Sujat Soni Managing Director Director Commercial and CFO Company Secretary Partner DIN : 06576793 DIN : 08339439 M. No. 094227 Place : New Delhi Date : 2nd July, 2019 222 Notes to Consolidated Financial Statements EESL Annual Report 2018-19 Form AOC-1 Salient features of the financial statement of subsidiaries, associates and joint ventures for the year ended March 31, 2019, pursuant to Section 129 (3) of the Companies Act 2013 Part A - Subsidiaries ` in Lakhs 1 S. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 2 Name of subsidiary EESL Anesco Creighton EPAL Edina Edina Power Edina Edina UK Edina Armoura Stanbeck Edina Edina EPSL EnergyPro Energy Energy Holdings Acquisition Services Limited Limited Australia Holdings Limited Manufact- Power Trigeneration Assets (Services) Limited Limited Limited Limited Pty Limited Limited uring Limited Private Ltd Limited South Ltd Limited EESL Annual Report 2018-19 3 The date since when 13-Mar-18 13-Mar-18 13-Mar-18 13-Mar-18 13-Mar-18 14-Mar-18 14-Mar-18 14-Mar-18 14-Mar-18 14-Mar-18 14-Mar-18 14-Mar-18 14-Mar-18 20-Dec-18 subsidiary was acquired 4 Reporting period for the Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable 20-Dec-18 subsidiary concerned, if to 31-Mar-19 different from the holding company’s reporting period. 5 Reporting currency of GBP GBP GBP GBP GBP EURO EURO GBP AUD$ EURO EURO GBP GBP INR foreign subsidiaries. Exchange rate as on the 90.4756 90.4756 90.4756 90.4756 90.4756 77.8380 77.8380 90.4756 49.2271 77.8380 77.8380 90.4756 90.4756 1.0000 last date of the relevant Financial year in the case of foreign subsidiaries. 6 Share capital 31,831.22 4,460.59 1,809.51 7,238.05 7,238.05 5,855.67 6,648.54 3,619.02 0.05 0.00 155.68 0.09 0.09 100.00 7 Reserves and surplus 1,480.60 (324.38) (299.56) (8.79) (3,617.45) 807.52 194.53 6,271.73 (217.50) 79.91 (431.94) 17.17 630.22 (14.11) 8 Total assets 54,324.13 4,191.47 1,627.21 39,544.58 54,980.76 14,649.40 13,916.33 29,327.26 438.46 612.14 720.17 36.19 2,914.92 2,190.45 9 Total Liabilities 21,012.31 55.26 117.26 32,315.32 51,360.17 7,986.21 7,073.26 19,436.51 656.21 532.23 996.43 18.93 2,284.61 2,104.55 10 Investments 1,527.24 - - - - - - - - - - - - - 11 Turnover 784.95 425.63 116.38 - - - 14,083.81 55,234.83 590.56 19.20 5.58 - 6,153.50 - 12 Profit before taxation 2,133.11 1.87 (13.15) (6.14) (3,635.77) 23.60 56.80 3,488.37 (115.89) 4.80 (28.46) (10.97) (411.17) (19.06) 13 Provision for taxation 127.00 (131.65) 2.57 (1.17) (173.15) - 39.55 (62.20) (33.97) 1.86 0.37 - (10.91) (4.96) 14 Profit after taxation 2,006.11 133.53 (15.72) (4.97) (3,462.62) 23.60 17.24 3,550.57 (81.92) 2.95 (28.83) (10.97) (400.25) (14.11) 15 Proposed Dividend - - - - - - - - - - - - - - 16 % of shareholding 84.55% 84.55% 84.55% 84.55% 84.55% 84.55% 84.55% 84.55% 84.55% 84.55% 84.55% 84.55% 84.55% 84.55% Note: 1 The above financial information is based on audited financial information considered for the purpose of consolidated audited Ind AS financial statements. 2 Financial information has been extracted from the submission considered for the purpose of consolidated audited Ind AS financial statements. 3 Investments exclude investments in subsidiaries. 4 Share capital of Edina Power Services Limited includes preference share capital. Part B - Associates and Joint Ventures S. No. Name of Joint venture Date on which Joint Venture Latest audited balance Shares of Joint Venture held Description of how there is Net Worth attributable to Profit / (loss) for the year was associated or acquired sheet date by the company on the year end joint control shareholders as per latest ended March 31, 2019 audited Balance Sheet Number of Amount of Extent of Considered in Not considered Not considered shares Investment holding consolidation in consolidation in consolidation 1 NEESL Private Limited 12-Jul-17 31-Mar-19 2,600 0.26 26% By virtue of shareholding 5.96 3.05 - - Notes to Consolidated Financial Statements Note: 1 Amount of investment in joint venture is based on the carrying value of investments in the consolidated financial statements of Energy Efficiency Services Limited. 223 2 No subsidiaries or joint venture are yet to commence operations and no subsidiaries or joint venture have been liquidated or sold during the year. The Group does not have any associate.